$126.4 million. That was the reduction in G-III Apparel’s cost of goods sold that the company included in its cash-flow explanation for the six months ended July 31. Sales fell 9.6% to $554.1 million, but net income rose 84.8% to $20.2 million.
The odd part is that the operating business did not improve in the same direction. Gross profit was essentially flat at $250.4 million, lifting gross margin to 45.2% from 40.8%, while operating income fell 33.5% to $10.8 million. The profit increase arrived below that line, with tariff-related income and a larger cash balance doing some of the work.
G-III’s own explanation puts the tariff benefit in unusually plain numbers:
"This increase was primarily driven by an increase in our net income of $68.0 million, which includes the $126.4 million reduction in cost of goods sold and $4.2 million of interest income related to the IEEPA tariff refund, partially offset by a change in operating assets and liabilities of $53.2 million."
10-Q, September 8, 2026
That is cash-flow language, not a claim that customers suddenly bought more clothes. Operating cash flow rose 5.8% to $178.7 million, and cash climbed to $529.2 million from $301.8 million. Inventory fell 13.2% and accounts receivable fell 15.1%, moves that reduced the balance-sheet investment required during a period of lower sales.
The gross-margin improvement does contain an operating element. G-III said price increases and a shift toward owned brands helped its wholesale operations, which carry higher gross-profit percentages than licensed brands.
"Excluding the impact of the IEEPA tariff benefit, the gross profit percentage in our wholesale operations segment was 43.6% for the six months ended July 31, 2026, which was positively impacted by price increases as well as a shift in product mix to owned brands in which we recognize higher gross profit percentages compared to licensed brands."
10-Q, September 8, 2026
The distinction matters. The filing describes a higher gross-margin percentage even after removing the tariff benefit, but the company still reported lower sales overall. G-III attributed the sales decline to expired licenses, while saying lower inventory purchases followed from that decline. The smaller operating profit coincided with higher costs: compensation expense rose $22.5 million, and professional fees tied to the Marc Jacobs joint venture and other legal matters rose $12.7 million.
That leaves a business with more cash and less inventory, but also with a thinner revenue base and an earnings line helped by an unusual trade-policy payment. The balance sheet gives the company room; the six-month income statement does not yet show that the lost sales have been replaced.
G-III shares closed at $27.59 on September 8, down 0.5% that day. At the latest annual figures, the company carried $402.0 million of net cash against a $1.2 billion market value, while the annual operating margin was 3.7%. Those figures frame the filing’s unresolved issue: cash is substantial, but recurring operating profit remains modest.