G-III Apparel Group Ltd. (GIII) shares climbed Tuesday after the fashion company delivered a solid profit beat and unveiled a new dividend program, even as tariff concerns and softer sales cast some shadows over the results.

The company reported third-quarter adjusted earnings per share of $1.90, comfortably ahead of the $1.61 analyst consensus. That's the good news. The less-good news? Quarterly sales came in at $988.6 million, down 9% year-over-year and missing the Street's expectation of $1.012 billion.

The Margin Story

The decline in sales showed up across the financial statements. Gross profit fell to $381.5 million from $432.1 million a year earlier. Operating profit dropped even more sharply, landing at $112.3 million compared to $166.3 million in the prior-year quarter. Adjusted EBITDA also declined, coming in at $124.9 million versus $174.4 million last year.

Despite the revenue headwinds, G-III strengthened its balance sheet considerably. The company ended the quarter with $184.1 million in cash and equivalents, up substantially from $104.7 million a year ago. Total debt plummeted 95% to just $10.6 million. Inventories ticked up 3% to $547.1 million.

A New Chapter: Dividends

In a notable shift in capital allocation strategy, G-III's Board approved the company's first quarterly dividend program. The initial dividend will be 10 cents per share, payable on December 29, 2025. It's a symbolic move that signals management's confidence in cash generation even amid industry pressures.

Tariffs Loom Large

"Looking ahead, we are raising our fiscal 2026 earnings guidance to reflect our third quarter outperformance tempered by the uncertainties around the consumer environment and tariff-related margin pressures," said Morris Goldfarb, chairman and CEO.

Here's where things get interesting. The company expects tariffs to deliver a gross impact of approximately $135 million. But management isn't taking that hit lying down. Through a combination of supplier support, sourcing adjustments, and selective price increases, G-III plans to offset about half of that pain. The net unmitigated impact embedded in guidance? Roughly $65 million.

Raised Guidance Despite Headwinds

Even with tariff pressures factored in, the company boosted its fiscal 2026 adjusted earnings per share guidance from a range of $2.55-$2.75 to $2.80-$2.90. The previous consensus estimate was $2.68, so the new midpoint sits comfortably above that mark.

On the flip side, G-III lowered its full-year sales outlook from $3.020 billion to $2.980 billion, below the Street's $3.020 billion estimate. The company also raised its adjusted EBITDA guidance for fiscal 2026 to between $208 million and $213 million, up from the prior range of $198 million to $208 million.

Shares of G-III Apparel Group traded up 5.51% to $31.30 following the results, as investors appeared to focus more on the earnings beat and improved outlook than the sales miss and tariff uncertainties.