GIII

G-III Apparel ($GIII) Insiders Buy the Dip as Stock Plunges 30% - Extreme Undervaluation Signals Bottom?

06/25/2025 20:41

G-III Apparel Group ($GIII) has caught investor attention as management family members and directors made consecutive purchases amid the stock's sharp decline in June. The New York-based apparel company owns renowned fashion brands including DKNY, Karl Lagerfeld, and Donna Karan, operating a diversified business model spanning both wholesale and retail operations. On June 17, Officer Jeffrey Goldfarb purchased 23,076 shares at an average price of $21.33, investing $492,000. A week later on June 24, Director Amigo Herrero bought 5,000 shares at $21.95 per share. Notably, Jeffrey Goldfarb is the son of CEO Morris Goldfarb, making this family management's aggressive buying activity particularly significant. This contrasts sharply with CEO Morris Goldfarb's large-scale selling in September 2024, when he sold 167,014 shares over two days for a total of $5.16 million at an average price of $30.95. The family and board's buying activity after a nearly 30% stock decline over nine months suggests they view current price levels as a bottom. $GIII's stock weakness is directly tied to U.S. tariff policy uncertainty. The company withdrew its annual profit guidance during Q1 earnings, citing concerns over approximately $135 million in additional costs from tariffs. However, actual performance remains solid, contrasting with market concerns. Adjusted earnings per share for the quarter ended April was 19 cents, beating consensus estimates of 13 cents, while revenue of $583.61 million also exceeded expectations. Currently, $GIII trades at severely undervalued levels with a P/E ratio of 5.1x and P/B ratio of 0.57x, significantly below industry averages. The company maintains excellent financial health with only 17% debt ratio, $258 million in cash, and annual operating cash flow of $365 million, providing solid liquidity. Particularly noteworthy is the strong growth in owned brands. Core brands like DKNY, Karl Lagerfeld, and Donna Karan are posting double-digit growth, while retail segment gross margins improved to 54.4%, significantly enhancing profitability. The company is also expanding into Europe by increasing its stake in Spanish fashion group AWWG to 19%, securing long-term growth drivers. Investors should monitor the specifics of tariff policy developments and the company's response strategies. If tariff burdens prove lighter than expected or if the company successfully implements cost-pass-through mechanisms, the current undervaluation could present an attractive opportunity. Conversely, prolonged tariff pressures or weakening consumer demand could lead to further downside. In an optimistic scenario, resolution of tariff issues combined with continued owned-brand growth could see the stock recover to the mid-$30s. The base case scenario envisions gradual improvement through earnings growth while trading in a box pattern around current levels. The risk scenario could see further decline to the low $20s due to increased tariff burdens and consumption slowdown. In conclusion, despite near-term uncertainties, $GIII merits consideration from a medium to long-term perspective based on solid fundamentals and extreme undervaluation. The consecutive insider purchases particularly signal that current price levels may be excessively discounted.

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