Business Overview and Segments
GIII is a clothing company that has more than 30 brands, some owned, and some merely licensed (borrowed). This would normally be an immediate red-flag, as having more than a few brands tells me that the company has bit off more than it can chew, will get distracted by owning so many different brands, won’t give any single brand the attention it needs, and will probably just end up running all of them into the ground. However, our investment in GIII is based on only three of its brands; Calvin Klein (CK), Tommy Hilfiger, and DKNY, but we’ll get into that later. For now, let’s focus on GIII as a whole. It has two parts; retail, and wholesale. In the retail segment, GIII has physical (and online) stores for its owned brands, most of which are nothing-brands, except DKNY which still has some value. In the wholesale segment, GIII owns licenses to design and produce specific CK and Tommy clothing, which it then sells to clothing stores (Glue, General Pants, Macy’s, Nordstrom, etc). GIII is especially focused on Tommy jeans and CK jeans.
Brand – GIII owns the exclusive license to produce specific CK and Tommy clothing – with these offering a strong brand moat. However, this moat is only temporary, as it will only last for as long as the license does. Therefore, be sure to get out of this investment before the moat ends. The CK license ends on December 31st 2023, and the Tommy license ends on December 31st 2021.
Key Facts and Figures
| Risk of Bankruptcy | Moderate |
| Last Year’s Growth | 10% (Moderate) |
| ROIC (Company Quality) | 13% (Moderate) |
| Free Cash Flow Margin (Company Strength) | 9% (Moderate) |