How a Supreme Court Ruling Turned G-III’s Tariff Bill Into a Refund

Key takeaways

• G-III cut its fiscal 2026 profit outlook in September 2025 over an estimated $155 million in tariff costs; a year later it raised its fiscal 2027 outlook.
• The reversal follows a February 2026 Supreme Court ruling that IEEPA tariffs were unlawful, triggering a government refund process worth more than $160 billion industrywide.
• G-III’s own filings and its earnings call give different figures for the refund it collected, and its outlook still assumes tariffs stay at current rates for the rest of the year.

In September 2025, G-III Apparel Group told investors it expected roughly $155 million in extra tariff costs for the year and cut its profit guidance sharply. In September 2026, the company reported the opposite: it raised its full-year earnings guidance for fiscal 2027.

The turnaround was not just better sales. It was driven in large part by a tariff refund that followed a Supreme Court ruling striking down the legal basis for many of the tariffs G-III and other importers had been paying.

The Guidance Cut a Year Earlier

On September 4, 2025, G-III reported second-quarter results for fiscal 2026 and told investors it anticipated a total incremental tariff cost of approximately $155 million for the year, based on tariff rates in effect at the time. The company said it had offset part of that cost through vendor participation, sourcing shifts and targeted price increases, leaving an unmitigated impact of about $75 million, most of it weighted to the second half of the fiscal year.

That guidance cut was steep. G-III lowered its projected net income for fiscal 2026 to a range of $112 million to $122 million, or $2.53 to $2.73 per diluted share, down from $193.6 million, or $4.20 per share, in the prior year. Adjusted EBITDA guidance dropped to $198 million to $208 million from $325.9 million a year earlier.

The Refund by the Numbers
The National Retail Federation says businesses paid more than $160 billion in tariffs under the International Emergency Economic Powers Act before the Supreme Court ruled the tariffs unlawful in February 2026; U.S. Customs and Border Protection launched its refund system on April 20, 2026.

A Supreme Court Ruling Changes the Math

The tariffs behind that cost estimate were largely imposed under the International Emergency Economic Powers Act, or IEEPA. On February 20, 2026, the Supreme Court ruled that IEEPA did not give the president the power to impose tariffs of the kind that had been collected.

The American Apparel & Footwear Association, an industry trade group, said the ruling required refunds of “hundreds of billions of dollars” in tariffs it said had been incorrectly collected, without citing a specific total. The National Retail Federation put the figure businesses had paid under the invalidated tariffs at more than $160 billion.

The Supreme Court did not itself order refunds; that task fell to the U.S. Court of International Trade, which directed U.S. Customs and Border Protection to return the money. According to the National Retail Federation, CBP needed 45 days to build a refund system, which launched on April 20, 2026, through a module of its Automated Commercial Environment platform. Refunds go to the importer of record or its agent that paid the tariffs, and CBP reviews each entry for issues such as product classification and rules of origin before paying out, a process the NRF said takes 60 to 90 days once a declaration is accepted.

What G-III Recovered

G-III’s second-quarter fiscal 2027 results, reported September 2, 2026, reflect that refund process. The company’s financial statements show a tariff refund benefit of $102.8 million for the six months ended July 31, 2026, plus $3.1 million in related interest income.

On the earnings call, chief financial officer Neal Nackman described the cash impact in different terms, saying the company’s cash position “benefited from the receipt of approximately $134 million in tariff refunds, including interest income during the second quarter.” That figure does not line up cleanly with the six-month amount disclosed in the filing. Readers should treat the exact size of G-III’s refund as unsettled pending clarification.

Either way, the refund helped support a full-year guidance increase. G-III now projects fiscal 2027 net sales of approximately $2.71 billion, GAAP net income between $181 million and $185 million, and GAAP diluted earnings per share between $4.10 and $4.20. On a non-GAAP basis, which strips out one-time items including the refund, the company projects net income of $97 million to $101 million and diluted EPS of $2.20 to $2.30. Nackman said the updated outlook assumes tariffs for the rest of the fiscal year hold at current rates.

A cost treated as a fixed drag on one year’s earnings became, a year later, a source of cash that helped lift the next year’s guidance.

Other Moving Parts in G-III’s Business

The tariff refund arrived alongside two other significant changes at G-III. The company is losing its Calvin Klein and Tommy Hilfiger licenses, which it said will remove approximately $460 million in annual sales as the licenses expire on a staggered basis during fiscal 2027. Second-quarter net sales fell to $554.1 million from $613.3 million a year earlier, a decline the company attributed in part to lower sales from those two brands as it winds the licenses down.

At the same time, G-III completed its acquisition of Marc Jacobs on September 1, 2026. Chief executive Morris Goldfarb said the company owns 100 percent of the Marc Jacobs operating company and holds the brand’s intellectual property through a 50-50 joint venture. G-III has said it believes Marc Jacobs can generate $1 billion in annual revenue for the company over the long term. Nackman said the acquisition is expected to be dilutive to earnings for its first 12 months of ownership and accretive after that. The company’s full-year guidance does not include any financial impact from the Marc Jacobs deal.

What It Signals for This Earnings Season

G-III’s shift from a tariff-driven guidance cut to a refund-aided guidance increase illustrates how quickly the tariff picture has moved for apparel companies reporting results this year. A cost that was treated as a fixed drag on fiscal 2026 earnings became, a year later, a source of cash that helped lift fiscal 2027 earnings guidance for the same company.

That does not mean tariff exposure has disappeared for apparel importers. G-III’s own guidance assumes tariffs stay at their current levels rather than falling further, and the refund process itself remains incomplete: the National Retail Federation noted that more complex entries, including those that are “fully liquidated,” are reserved for later phases of CBP’s refund rollout that had not yet been scheduled as of its report. Other apparel and footwear companies working through the same refund process this earnings season are likely to face similar questions about how much of their tariff costs will actually come back, and when.

Photo: Joe Ravi · CC BY-SA 3.0 · via Wikimedia Commons