G III APPAREL GROUP LTD /DE/

Previous wording

We consolidate the accounts of all of our wholly-owned and majority-owned subsidiaries. Our DKNY and Donna Karan business in China is operated by Fabco Holding B.V. (“Fabco”), a Dutch joint venture limited liability company that was 75% owned by us through April 16, 2024 and was treated as a consolidated majority-owned subsidiary. Effective April 17, 2024, we acquired the remaining 25% interest in Fabco that we did not previously own and, as a result, Fabco began being treated as a wholly-owned subsidiary. AWWG Investments B.V. (“AWWG”) is a Dutch corporation that was 12.1% owned by us from May 3, 2024 through July 18, 2024 and was accounted for using the cost method of accounting. Effective July 19, 2024, we acquired an additional 6.6% minority interest in AWWG, increasing our total ownership interest to 18.7% and, as a result, AWWG began being accounted for under the equity method of accounting. Karl Lagerfeld Holding B.V. (“KLH”) is a Dutch limited liability company that was 19% owned by us through May 30, 2022 and was accounted for during that time using the equity method of accounting. Effective May 31, 2022, we acquired the remaining 81% interest in KLH that we did not previously own and, as a result, KLH began being treated as a consolidated wholly-owned subsidiary. KL North America B.V. (“KLNA”) is a Dutch joint venture limited liability that was 49% owned by us and 51% indirectly owned by KLH through May 30, 2022 and was accounted for during that time using the equity method of accounting. KLNA operates the Karl Lagerfeld business in the United States, Mexico and Canada. Effective May 31, 2022, KLNA became an indirect wholly-owned subsidiary of us as a result of our acquisition of the remaining 81% interest in KLH we did not previously own. The results of KLH are included in our consolidated financial statements beginning May 31, 2022. All material intercompany balances and transactions have been eliminated.

Current wording

We consolidate the accounts of all of our wholly-owned and majority-owned subsidiaries. Fabco Holding B.V. (“Fabco”), a Dutch joint venture limited liability company, was 75% owned by us through April 16, 2024 and was treated as a consolidated majority-owned subsidiary. Effective April 17, 2024, we acquired the remaining 25% interest in Fabco that we did not previously own and, as a result, Fabco began being treated as a wholly-owned subsidiary. AWWG Investments B.V. (“AWWG”) is a Dutch corporation that was 12.1% owned by us from May 3, 2024 through July 18, 2024 and was accounted for using the cost method of accounting. Effective July 19, 2024, we acquired an additional 6.6% minority interest in AWWG, increasing our total ownership interest to 18.7% and, as a result, AWWG began being accounted for under the equity method of accounting. All material intercompany balances and transactions have been eliminated.

Previous wording

Each of Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by us, KLH, Fabco, Sonia Rykiel, a Swiss Corporation that is wholly-owned by us, and AWWG report results on a calendar year basis rather than on the January 31 fiscal year basis used by G-III. Accordingly, the results of Vilebrequin, KLH, Fabco, Sonia Rykiel and AWWG are and will be included in our financial statements for the year ended or ending closest to G-III’s fiscal year. For example, for G-III’s fiscal year ended January 31, 2025, the results of Vilebrequin, KLH, Fabco, Sonia Rykiel and AWWG are included for the year ended December 31, 2024. For the year ended January 31, 2023, the results of KLH, which includes KLNA, are included for the period from May 31, 2022 through December 31, 2022. The results of our previous 49% ownership interest in KLNA and 19% ownership interest in KLH are included for the period from January 1, 2022 through May 30, 2022. Our retail operations segment uses a 52/53-week fiscal year. Our fiscal year ended January 31, 2025 was a 52-week fiscal year for the retail operations segment. Our fiscal year ended January 31, 2024 was a 53-week fiscal year for the retail operations segment. For fiscal 2025 and 2024, the retail operations segment ended on February 1, 2025 and February 3, 2024, respectively. In fiscal 2024, the net sales and operating results generated by the 53 rd week of our retail operations segment were not material.

Current wording

Karl Lagerfeld Holding B.V. (“KLH”), a Dutch limited liability company that is wholly-owned by us, Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by us, certain other subsidiaries and AWWG report results on a calendar year basis rather than on the January 31 fiscal year basis used by G-III. Accordingly, the results of KLH, Vilebrequin, certain other subsidiaries and AWWG are and will be included in our financial statements for the year ended or ending closest to G-III’s fiscal year. For example, for G-III’s fiscal year ended January 31, 2026, the results of KLH, Vilebrequin, certain other subsidiaries and AWWG are included for the year ended December 31, 2025. Our retail operations segment uses a 52/53-week fiscal year. Our fiscal years ended January 31, 2026 and 2025 were both 52-week fiscal years for the retail operations segment. Our fiscal year ended January 31, 2024 was a 53-week fiscal year for the retail operations segment. For fiscal 2026, 2025 and 2024, the retail operations segment ended on January 31, 2026, February 1, 2025 and February 3, 2024, respectively. In fiscal 2024, the net sales and operating results generated by the 53 rd week of our retail operations segment were not material.

Previous wording

A discussion with respect to a comparison of the results of operations of fiscal 2024 compared to the fiscal year ended January 31, 2023 (“fiscal 2023”), other financial information related to fiscal 2023 and information with respect to Liquidity and Capital Resources at January 31, 2023 and for fiscal 2023 is contained under the headings “Results of Operations” and “Liquidity and Capital Resources” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.

Current wording

A discussion with respect to a comparison of the results of operations of fiscal 2025 compared to the fiscal year ended January 31, 2024, other financial information related to fiscal 2024 and information with respect to Liquidity and Capital Resources at January 31, 2024 and for fiscal 2025 is contained under the headings “Results of Operations” and “Liquidity and Capital Resources” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Previous wording

G-III is a global leader in fashion with expertise in design, sourcing, distribution and marketing, which enables us to fuel growth across a portfolio of over 30 globally recognized owned and licensed brands anchored by our key owned brands DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin as well as other major brands that currently drive our business. We develop product across a diverse range of lifestyle categories which include: outerwear, dresses, sportswear, suit separates, athleisure, jeans, swimwear, as well as handbags, footwear, small leather goods, cold weather accessories and luggage. Our brands are positioned to sell at various price points with global distribution across a diverse mix of channels and geographies to reach a broad range of consumers, with approximately 77% and 23% of our net sales in fiscal 2025 being generated in the United States and internationally, respectively. We also license the use of our trademarks to third parties for product categories and in regions where we believe our licensees’ expertise can better serve our brands.

Current wording

G-III is a global leader in fashion with expertise in design, sourcing, distribution and marketing, which enables us to fuel growth across a portfolio of over 30 globally recognized owned and licensed brands anchored by our key owned brands DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin. We develop products across a diverse range of lifestyle categories which include outerwear, dresses, sportswear, suit separates, athleisure, jeans, swimwear, as well as handbags, footwear, small leather goods, cold weather accessories and luggage. Our brands are positioned to sell at various price points with global distribution across a diverse mix of channels and geographies to reach a broad range of consumers, with approximately 77% and 23% of our net sales in fiscal 2026 being generated in the United States and internationally, respectively.

Previous wording

Our owned brands include DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc, Marc New York, Wilsons Leather and Sonia Rykiel. We have an extensive portfolio of well-known licensed brands, including Calvin Klein, Tommy Hilfiger, Nautica, Halston, Levi’s, Kenneth Cole, Cole Haan, Vince Camuto, Dockers, Champion, Converse and BCBG. Through our licensed team sports business, we have partnerships with the National Football League, National Basketball Association, Major League Baseball, National Hockey League and over 150 U.S. colleges and universities. We also source and sell products to major retailers for their own private label programs.

Current wording

Our owned brands include DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, Eliza J, Jessica Howard, Andrew Marc, G.H. Bass, Wilsons Leather and Sonia Rykiel. We have an extensive portfolio of well-known licensed brands, including Calvin Klein, Tommy Hilfiger, Levi’s, Nautica, Halston, Champion, Converse, BCBG, French Connection, Starter and

Previous wording

Our products are sold through a cross section of leading retailers such as Macy’s, Bloomingdales, Dillard’s, Hudson’s Bay Company, Saks Fifth Avenue, Nordstrom, El Cortes Ingles, Kohl’s, Saks OFF 5 TH, TJ Maxx, Marshall’s Ross Stores, Burlington and Costco. We also sell our products using digital channels through retail partners such as macys.com, bloomingdales.com, nordstrom.com and dillards.com, each of which operates significant digital businesses. In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos.

Current wording

Our products are sold through a cross section of leading retailers such as Macy’s, Bloomingdales, Dillard’s, Nordstrom, El Cortes Ingles, Kohl’s, TJ Maxx, Marshall’s, Ross Stores, Burlington and Costco. We also sell our products using digital channels through retail partners such as macys.com, bloomingdales.com, nordstrom.com and dillards.com, each of which operates significant digital businesses. In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos.

Previous wording

We also distribute apparel and other products directly to consumers through our own DKNY, Karl Lagerfeld, Karl Lagerfeld Paris and Vilebrequin retail stores, as well as through our digital sites for our DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H. Bass, Wilsons Leather and Sonia Rykiel brands.

Current wording

We also distribute apparel and other products directly to consumers through our own DKNY, Karl Lagerfeld, Karl Lagerfeld Paris and Vilebrequin retail stores, as well as through our digital sites for our DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H. Bass and Wilsons Leather brands.

Previous wording

We believe that significant opportunity exists in the categories subject to these license agreements where we have strong expertise, and the products produced, or expected to be produced, under these license agreements align with G-III’s core competencies.

Current wording

Effective February 2026, we entered into a license agreement with French Connection Limited to design and produce women’s and men’s apparel (subject to certain exclusions), women’s and men’s outerwear, handbags and men’s footwear under the French Connection brand. The license agreement includes an initial term of five-years with an option to renew for an additional five-year term. The products produced under this license agreement are expected to be distributed in North America through our diversified distribution network, including premier department stores, digital channels, as well as other channels. First deliveries of our French Connection product began in February 2026 for Spring 2026. We believe that significant opportunity exists in the categories subject to this license agreement where we have strong expertise, and the products expected to be produced align with G-III’s core competencies.

Previous wording

Our retail operations segment consists primarily of direct sales to consumers through our company operated stores and product sales through our digital sites for the DKNY, Donna Karan, Karl Lagerfeld Paris, G.H. Bass and Wilsons Leather brands. As of January 31, 2025, our retail operations segment consisted of 49 company operated stores for our DKNY and Karl Lagerfeld Paris brands, substantially all of which are operated as outlet stores in North America.

Current wording

Our retail operations segment consists primarily of direct sales to consumers through our company operated stores and product sales through our digital sites for the DKNY, Donna Karan, Karl Lagerfeld Paris, G.H. Bass and Wilsons Leather

Previous wording

Additional tariffs on Chinese imports are causing importers to shift production to lower tariff territories further exacerbating ocean carrier’s capacities. These tariffs are increasing costs for importers, impacting demand and affecting ocean container shipping due to limited alternatives for moving goods.

Current wording

Additional tariffs imposed on imports are causing importers to shift production to lower tariff territories if possible, impacting the importers’ ability to plan production schedules and securing capacity with its ocean carriers. The recent changes to tariffs are increasing costs for importers, impacting demand and affecting ocean container shipping due to limited alternatives for moving goods.

Previous wording

Recent developments in the U.S. trade policy have introduced uncertainty regarding the future of global trade relations. The current administration has made numerous announcements and taken actions to increase tariffs and impose other trade restrictions regarding imports into the United States. We source all of our products from a global network of independent, third-party manufacturers, primarily located in Asia. Any new or increased tariffs, quotas, embargoes or other trade barriers could impact our supply chain and cost structure. Additionally, retaliatory measures by affected countries could further disrupt our operations or reduce our competitiveness in international markets. We continue to monitor these changing tariffs and trade restrictions. We will attempt to mitigate the impact of new and increased tariffs by working with our long standing vendors to participate in the increased costs, increasing prices where possible and continuing to look for alternative sourcing options.

Current wording

We continue to monitor these changing tariffs and trade restrictions. We are taking steps to mitigate the impact of new and increased tariffs by working with our long standing vendors to participate in the increased costs, increasing prices where possible and continuing to look for alternative sourcing options.

Previous wording

We distribute our products through multiple channels, including online through retail partners such as macys.com, bloomingdales.com, nordstrom.com and dillards.com, each of which operates a significant online business. In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos. We also distribute apparel and other products directly to consumers through our own DKNY, Karl Lagerfeld and Vilebrequin retail stores, as well as through our digital sites for our DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H. Bass, Wilsons Leather and Sonia Rykiel brands. As sales of apparel through digital channels continue to increase, we are developing additional digital marketing initiatives on both our own web sites and third party web sites and through social media. We are investing in digital personnel, marketing, logistics, planning, distribution and other strategic opportunities to expand our digital footprint.

Current wording

We distribute our products through multiple channels, including online through retail partners such as macys.com, bloomingdales.com, nordstrom.com and dillards.com, each of which operates a significant online business. In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos. We also distribute apparel and other products directly to consumers through our own DKNY, Karl Lagerfeld and Vilebrequin retail stores, as well as through our digital sites for our DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H. Bass and Wilsons Leather brands. As sales of apparel through digital channels continue to increase, we are developing additional digital marketing initiatives on both our own web sites and third party web sites and through social media. We are investing in digital personnel, marketing, logistics, planning, distribution and other strategic opportunities to expand our digital footprint.

Previous wording

A number of retailers have experienced financial difficulties, which in some cases have resulted in bankruptcies, liquidations and/or store closings. The financial difficulties of a retail customer of ours could result in reduced business with that customer. We may also assume higher credit risk relating to receivables of a retail customer experiencing financial difficulty that could result in higher reserves for doubtful accounts or increased write-offs of accounts receivable. We attempt to mitigate credit risk from our customers by closely monitoring accounts receivable balances and shipping levels, as well as the ongoing financial performance and credit standing of customers.

Current wording

A number of retailers have experienced financial difficulties, which in some cases have resulted in bankruptcies, liquidations and/or store closings, such as the recent bankruptcy filing by Saks Global. The financial difficulties of a retail customer of ours could result in reduced business with that customer. We may also assume higher credit risk relating to receivables of a retail customer experiencing financial difficulty that could result in higher reserves for doubtful accounts or increased write-offs of accounts receivable. We attempt to mitigate credit risk from our customers by closely monitoring accounts receivable balances and shipping levels, as well as the ongoing financial performance and credit standing of customers. We may also obtain credit insurance in certain circumstances to further mitigate credit risk.

Previous wording

We have attempted to respond to general trends in our industry by continuing to focus on selling products with recognized brand equity, by attention to design, quality and value and by improving our sourcing capabilities. We have also responded with the strategic acquisitions made by us, such as our purchase of the interests not previously owned by us that resulted in Karl Lagerfeld becoming our wholly-owned subsidiary, new license agreements entered into by us, such as our recent license agreements for the Nautica, Halston, Champion, Converse and BCBG brands and investments to accelerate our strategic priorities, such as our investment in AWWG. Our actions added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines and expanding distribution channels. We believe that our broad distribution capabilities help us to respond to the various shifts by consumers between distribution channels and that our operational capabilities will enable us to continue to be a vendor of choice for our retail partners.

Current wording

We have attempted to respond to general trends in our industry by continuing to focus on selling products with recognized brand equity, by attention to design, quality and value and by improving our sourcing capabilities. We have also responded with the strategic acquisitions made by us, such as our purchase of the interests not previously owned by us that resulted in Karl Lagerfeld becoming our wholly-owned subsidiary, new license agreements entered into by us, such as our recent license agreements for the Nautica, Halston, Champion, Converse, BCBG and French Connection brands and investments to accelerate our strategic priorities, such as our investment in AWWG. Our actions added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines and expanding distribution channels. We believe that our broad distribution capabilities help us to respond to the various shifts by consumers between distribution channels and that our operational capabilities will enable us to continue to be a vendor of choice for our retail partners.

Previous wording

The sale of licensed products is an important part of our business. Net sales of products under the Calvin Klein and Tommy Hilfiger brands constituted approximately 34.0% of our net sales in fiscal 2025 and approximately 41.0% of our net sales in fiscal 2024.

Current wording

The sale of licensed products is an important part of our business. Net sales of products under the Calvin Klein and Tommy Hilfiger brands constituted approximately 28.0% of our net sales in fiscal 2026 and approximately 34.0% of our net sales in fiscal 2025.

Previous wording

Our licenses for Calvin Klein and Tommy Hilfiger products expire on a staggered basis beginning on December 31, 2024 and continuing through December 31, 2027. We have the right to request an extension of the Calvin Klein and Tommy Hilfiger licenses for the women’s suits category through December 31, 2029. PVH Corp., the owner of Calvin Klein and Tommy Hilfiger, has indicated publicly that it will produce these products itself once the license agreements expire. Unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the staggered expirations of the Calvin Klein and Tommy Hilfiger license agreements will cause a significant decrease in our net sales and have a material adverse effect on our results of operations.

Current wording

Our licenses for Calvin Klein and Tommy Hilfiger products expire on a staggered basis which began on December 31, 2024 and continue through December 31, 2027. Unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the staggered expirations of the Calvin Klein and Tommy Hilfiger license agreements will cause a significant decrease in our net sales and have a material adverse effect on our results of operations.

Previous wording

In fiscal 2025, we experienced a $188.4 million decrease in net sales of Calvin Klein and Tommy Hilfiger licensed products which were more than offset by a $254.4 million increase in net sales of our DKNY, Donna Karan and Karl Lagerfeld products. In fiscal 2024, we experienced a $278.4 million decrease in net sales of Calvin Klein and Tommy Hilfiger licensed products which were partially offset by a $139.1 million increase in net sales of our DKNY and Karl Lagerfeld products. Our relaunch of our Donna Karan brand began in Spring 2024 and did not have a significant impact on net sales in fiscal 2024. We also recognize higher gross profit percentages on sales of products under our owned brands. While our recent ability to offset decreases in net sales of Calvin Klein and Tommy Hilfiger licensed products either in full or in part does not guarantee our ability to continue to do so in the future, we believe we will achieve strong growth of our owned brands. We will take strategic actions to mitigate the loss of this business by continuing to develop and expand our owned brands, such as DKNY, Donna Karan and Karl Lagerfeld, through new product lines, marketing initiatives, international growth and executing on digital channel business opportunities. We also seek to expand sales in our go-forward portfolio of licensed brands, including our team sports business, as well as through our recent licenses for the Nautica, Halston and Champion brands that launched in fiscal 2025 and the Converse and BCBG brands that will launch in fiscal 2026.

Current wording

We continue to take strategic actions to mitigate the loss of this business by continuing to develop and expand our owned brands, such as DKNY, Donna Karan and Karl Lagerfeld, through new product lines, marketing initiatives, international growth and executing on digital channel business opportunities. Additionally, we also recognize higher gross profit percentages on sales of our owned brands. We also seek to expand sales in our go-forward portfolio of licensed brands, including our team sports business, as well as through our recent licenses for the Nautica, Halston and Champion brands that launched in fiscal 2025, the Converse and BCBG brands that launched in fiscal 2026 and the French Connection brand that will launch in fiscal 2027.

Previous wording

Excluding licenses that we have the right to request a term extension, the Calvin Klein and Tommy Hilfiger licenses that expired in fiscal 2025 or have expirations in our upcoming fiscal 2026 through fiscal 2028 years contributed the following net sales to our total net sales in in fiscal 2025:

Current wording

The Calvin Klein and Tommy Hilfiger licenses that expired in fiscal 2026 or have expirations in our upcoming fiscal 2027 through fiscal 2028 years contributed the following net sales to our total net sales in in fiscal 2026:

Previous wording

In December 2022, the Council of the European Union (“EU”) announced that EU member states reached an agreement to implement the minimum tax component of the Organization for Economic Co-operation and Development’s international tax reform initiative, known as Pillar Two. The Pillar Two Model Rules provide for a global minimum tax of 15% for multinational enterprise groups and is effective for fiscal 2025. While these rules did not have a material impact

Current wording

In December 2022, the Council of the EU announced that EU member states reached an agreement to implement the minimum tax component of the OECD’s international tax reform initiative, known as Pillar Two. The Pillar Two Model Rules provide for a global minimum tax of 15% for MNEs and was effective beginning fiscal 2025. In January 2026, the OECD introduced a side-by-side agreement in which U.S.-parented MNEs are exempt from certain aspects of the global minimum tax. This agreement is effective for our fiscal year ending January 31, 2027, but is subject to adoption by each jurisdiction. While these rules did not have a material impact on our effective tax rate or financial results for fiscal 2026, we continue to monitor our operations and evolving tax legislation in the jurisdictions in which we operate.

Previous wording

Inflationary pressures have impacted the entire economy, including our industry. Recent high rates of inflation, including increased fuel and food prices, have led to a softening of consumer demand and increased promotional activity in the apparel categories we sell. Ongoing inflation may lead to further challenges to increase our sales and may also negatively impact our cost structure and labor costs in the future.

Current wording

Inflationary pressures have impacted the entire economy, including our industry. Recent high rates of inflation, including increased fuel and food prices and the enactment of additional tariffs by the United States government, have led to a softening of consumer demand, increased promotional activity in the apparel categories we sell and higher pricing of our products. Ongoing inflation may lead to further challenges to increase our sales and may also negatively impact our cost structure and labor costs in the future.

Previous wording

The Federal Reserve increased interest rates several times in fiscal 2024 in response to concerns about inflation. The Federal Reserve began to decreased interest rates in fiscal 2025, however it is unclear whether the Federal Reserve will reduce, increase or maintain the current rates in the future. Higher interest rates increase the cost of our borrowing under our revolving credit facility, may increase economic uncertainty and may negatively affect consumer spending. Volatility in interest rates may adversely affect our business or our customers. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, or at all.

Current wording

The Federal Reserve increased interest rates several times in fiscal 2024 in response to concerns about inflation. The Federal Reserve decreased interest rates in both fiscal 2025 and fiscal 2026, however it is unclear whether the Federal Reserve will reduce, increase or maintain the current rates in the future. Higher interest rates increase the cost of our borrowing under our revolving credit facility, may increase economic uncertainty and may negatively affect consumer spending. Volatility in interest rates may adversely affect our business or our customers. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, or at all.

Previous wording

We are monitoring the direct and indirect impacts from the military conflicts in Ukraine and the Middle East. These international conflicts and the continued threat of terrorism, heightened security measures and military action in response to acts of terrorism or civil unrest have disrupted commerce and intensified concerns regarding the United States and world economies. Our sales in Russia, Ukraine and Israel are not material to our financial results. However, the imposition of additional sanctions by the United States and/or foreign governments, as well as the sanctions already in place, could lead to restrictions related to sales and our supply chain for which the financial impact is uncertain. In addition, the continuation or escalation of these international conflicts, including the potential for additional countries to declare war against each other, may lead to further, broader unfavorable macroeconomic conditions, including unfavorable foreign exchange rates, increases in fuel prices, food shortages, a weakening of the worldwide economy, lower consumer demand and volatility in financial markets. The possible effects of these international conflicts could have a material adverse effect on our business and our results of operations.

Current wording

We are monitoring the direct and indirect impacts from the military conflicts in Ukraine and the latest developments across the Middle East. These international conflicts and the continued threat of terrorism, heightened security measures and military action in response to acts of terrorism or civil unrest have disrupted commerce and intensified concerns regarding the United States and world economies. Our operations in these regions could be impacted as a result of these conflicts. The imposition of additional sanctions by the United States and/or foreign governments, as well as the sanctions already in place, could lead to restrictions related to sales and our supply chain for which the financial impact is uncertain. In addition, the continuation or escalation of these international conflicts, including the potential for additional countries to declare war against each other, may lead to further, broader unfavorable macroeconomic conditions, including unfavorable foreign exchange rates, increases in fuel prices, food shortages, a weakening of the worldwide economy, lower consumer demand and volatility in financial markets. The possible effects of these international conflicts could have a material adverse effect on our business and our results of operations.

Previous wording

The global supply chain continues to be negatively impacted by various factors, including the ongoing disruptions in the Red Sea, port congestion and capacity shortages in Asia, and the recent and threatened port strikes in the United States, Gulf Coast and Canada.

Current wording

The global supply chain continues to be negatively impacted by various factors, including the ongoing disruptions in the Middle East and the reciprocal tariffs imposed across all countries. The latest developments as it relates to Iran have added further uncertainty to our supply chain operations. Conflicts in the Middle East continue to cause major disruptions to global supply chains by impacting critical shipping routes through the Suez Canal and Red Sea for cargo, adding time and cost to shipments. To date, our business has not been significantly impacted by such disruptions, however we have experienced shipping delays impacting the timing of inventory receipts. These delays have not resulted in a significant loss of customer sales. We expect the escalation of these conflicts as a result of the latest developments in Iran to further negatively impact the timely receipt of inventory as well as increase our shipping costs. We will continue to monitor supply chain challenges and coordinate with our partners to divert or adjust routes and destinations accordingly to ensure timely delivery of our product.

Previous wording

Critical accounting policies are those that are most important to the portrayal of our financial condition and our results of operations, and require management’s most difficult, subjective and complex judgments, as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our most critical accounting estimates, discussed below, pertain to revenue recognition, accounts receivable, inventories, income taxes, goodwill and intangible assets, impairment of long-lived assets and equity awards. In determining these estimates, management must use amounts that are based upon its informed judgments and best estimates. We continually evaluate our estimates, including those related to customer allowances and discounts, product returns, bad debts and inventories, and carrying values of intangible assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Current wording

Critical accounting policies are those that are most important to the portrayal of our financial condition and our results of operations, and require management’s most difficult, subjective and complex judgments, as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our most critical accounting estimates, discussed below, pertain to revenue recognition, accounts receivable, inventories, income taxes, intangible assets, impairment of long-lived assets and equity awards. In determining these estimates, management must use amounts that are based upon its informed judgments and best estimates. We continually evaluate our estimates, including those related to customer allowances and discounts, product returns, bad debts and inventories, and carrying values of intangible assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Previous wording

Both wholesale revenues and retail store revenues are shown net of returns, discounts and other allowances. We classify cooperative advertising as a reduction of net sales.

Current wording

Both wholesale revenues and retail store revenues are shown net of returns, discounts and other allowances.

Previous wording

Wholesale inventories and Karl Lagerfeld inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value, which comprises a significant portion of our inventory. Retail and Vilebrequin inventories are stated at the lower of cost (determined by the weighted average method) or net realizable value.

Current wording

Wholesale inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value, which comprises a significant portion of our inventory. Retail and Vilebrequin inventories are stated at the lower of cost (determined by the weighted average method) or net realizable value.

Previous wording

ASC Topic 350 –Intangibles – Goodwill and Other (“ASC 350”) requires that goodwill and intangible assets with an indefinite life be tested for impairment at least annually and are required to be written down when impaired. We perform our test in the fourth fiscal quarter of each year, or more frequently, if events or changes in circumstances indicate the carrying amount of such assets may be impaired. Goodwill and intangible assets with an indefinite life are tested for

Current wording

ASC Topic 350 –Intangibles – Goodwill and Other (“ASC 350”) requires that intangible assets with an indefinite life be tested for impairment at least annually and are required to be written down when impaired. We perform our test as of January 31 each year, or more frequently, if events or changes in circumstances indicate the carrying amount of such assets may be impaired.

Previous wording

We also perform our annual test for intangible assets with indefinite lives as of January 31 of each year using a qualitative evaluation or a quantitative test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. Critical estimates in valuing intangible assets include future expected cash flows from license agreements, trade names and customer relationships. In addition, other factors considered are the brand awareness and market position of the products sold by the acquired companies and assumptions about the period of time the brand will continue to be used in the combined company’s product portfolio. Management’s estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable.

Current wording

We perform our annual test for intangible assets with indefinite lives using a qualitative evaluation or a quantitative test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. Critical estimates in valuing intangible assets include estimates of future cash flows, future short-term and long-term growth rates, weighted average cost of capital, future expected cash flows from license agreements, trade names and customer relationships. In addition, other factors considered are the brand awareness and market position of the products sold by the acquired companies and assumptions about the period of time the brand will continue to be used in the combined company’s product portfolio. Management’s estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for intangible assets with an indefinite life.

Previous wording

We have allocated the purchase price of the companies we acquired to the tangible and intangible assets acquired and liabilities we assumed, based on their estimated fair values. These valuations require management to make significant estimations and assumptions, especially with respect to intangible assets.

Current wording

We have allocated the purchase price of the companies we acquired to the tangible and intangible assets acquired and liabilities we assumed, based on their estimated fair values. These valuations require management to make significant estimations and assumptions, especially with respect to intangible assets. If we did not appropriately allocate these components or we incorrectly estimate the useful lives of these components, our computation of amortization expense may not appropriately reflect the actual impact of these costs over future periods, which may affect our results of operations.

Previous wording

We performed our annual test of our indefinite-lived trademarks as of January 31, 2025 and January 31, 2024 using a qualitative evaluation or a quantitative impairment test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. Our fiscal 2025 testing determined that the fair value of each of our indefinite-lived intangible assets substantially exceeded its carrying value except for our Sonia Rykiel trademark. As a result of our fiscal 2025 annual impairment test, we recorded a $7.4 million non-cash impairment charge during our fourth quarter of fiscal 2025 to fully impair the carrying value of our Sonia Rykiel trademark, which was included in asset impairments in our consolidated statements of operations and comprehensive income (loss). Our fiscal 2024 testing determined that the fair value of each of our indefinite-lived intangible assets substantially exceeded its carrying value except for our Sonia Rykiel trademark. As a result of our fiscal 2024 annual impairment test, we recorded a $5.9 million non-cash impairment charge during our fourth quarter of fiscal 2024 to partially impair the carrying value of our Sonia Rykiel trademark, which was included in asset impairments in our consolidated statements of operations and comprehensive income (loss). These impairment charges were recorded to our wholesale operations segment.

Current wording

We performed our annual test of our indefinite-lived trademarks as of January 31, 2026 and January 31, 2025 using a qualitative evaluation or a quantitative impairment test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. Our fiscal 2026 testing determined that the fair value of our most significant indefinite-lived intangible assets substantially exceeded its carrying value and, therefore, there were no impairments identified as of January 31, 2026. Our fiscal 2025 testing determined that the fair value of each of our indefinite-lived intangible assets substantially exceeded its carrying value except for our Sonia Rykiel trademark. As a result of our fiscal 2025 annual impairment test, we recorded a $7.4 million non-cash impairment charge during our fourth quarter of fiscal 2025 to fully impair the carrying value of our Sonia Rykiel trademark, which was included in asset impairments in our consolidated statements of operations and comprehensive income. This impairment charge was recorded to our wholesale operations segment.

Previous wording

In fiscal 2024, we recorded a $1.3 million impairment charge primarily related to leasehold improvements, furniture, computer hardware and fixtures and operating lease assets at certain retail stores as a result of their performance.

Current wording

In fiscal 2026, we recorded a $2.8 million impairment charge primarily related to furniture and fixtures and computer hardware at certain retail stores as a result of their performance as well as the write-off of assets related to an e-commerce platform that was replaced by a new platform.

Previous wording

Restricted stock units (“RSUs”) are time based awards that do not have market or performance conditions and generally either (i) cliff vest after three years or (ii) vest over a three year period. The grant date fair value for RSUs are based on the quoted market price on the date of grant. Compensation expense for RSUs are recognized in the consolidated financial statements on a straight-line basis over the service period based on their grant date fair value.

Current wording

Restricted stock units (“RSUs”) are time based awards that do not have market or performance conditions and generally cliff vest after three years or five years. The grant date fair value for RSUs are based on the quoted market price on the date of grant. Compensation expense for RSUs are recognized in the consolidated financial statements on a straight-line basis over the service period based on their grant date fair value.

Previous wording

Performance stock units (“PSUs”) vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur. PSUs granted in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer shares for two years subsequent to the date of vesting. Compensation expense for PSUs are recognized in the consolidated financial statements over the service period under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals.

Current wording

Performance stock units (“PSUs”) vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur. Compensation expense for PSUs are recognized in the consolidated financial statements over the service period under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals.

Previous wording

Net sales for fiscal 2025 increased to $3.18 billion from $3.10 billion in the prior year. Net sales of our segments are reported before intercompany eliminations.

Current wording

Net sales for fiscal 2026 decreased to $2.96 billion from $3.18 billion in the prior year. Net sales of our segments are reported before intercompany eliminations.

Previous wording

Net sales of our wholesale operations segment increased to $3.08 billion from $3.01 billion in the comparable period last year. We sell a broad range of products at varying price points and deliver newly designed products each year. In addition, we have certain revenues, primarily from royalty revenues, that are not based on our shipping units of product. In total, our increase in sales was driven by an increase in the number of units we shipped at a slightly lower average price.** **The increase in net sales of our wholesale operations segment was primarily the result of increases in net sales of $254.4 million of our DKNY, Donna Karan and Karl Lagerfeld products. We also had an increase in net sales of $65.3 million from sales of licensed products for our newly launched Nautica, Halston and Champion brands. The increase in sales of DKNY products was primarily related to performance wear, sportswear and denim categories. The increase in net sales of Donna Karan products was primarily related to dresses, suits and sportswear categories. The increase in sales of Karl Lagerfeld products was primarily related to handbags, sportswear and women’s shoes categories. These increases were partially offset by decreases in net sales of $188.4 million of Calvin Klein and Tommy Hilfiger licensed products, as well as a decrease in net sales of $40.6 million of Guess licensed products as our licenses expired in December 2023.

Current wording

Net sales of our wholesale operations segment decreased to $2.87 billion from $3.08 billion in the comparable period last year. We sell a broad range of products at varying price points and deliver newly designed products each year. In addition, we have certain revenues, primarily from royalty revenues, that are not based on our shipping units of product. In total, our decrease in sales was driven by a decrease in the number of units we shipped, partially offset by a slightly higher average price. The decrease in net sales of our wholesale operations segment was primarily the result of decreases in net sales of $285.8 million of our Calvin Klein and Tommy Hilfiger licensed products, due in part to several expired licenses that are not part of our go-forward business, as well as in third-party private label products. These decreases were partially offset by increases in net sales of $80.8 million of our Karl Lagerfeld and Donna Karan products. The increase in sales of Karl Lagerfeld products was primarily related to sportswear, shoes and men’s and women’s outerwear categories. The increase in sales of Donna Karan products was primarily related to the dress, handbags, outerwear and sportswear categories.

Previous wording

Net sales of our retail operations segment increased to $166.5 million from $148.4 million in the same period last year. The number of retail stores operated by us decreased from 53 at January 31, 2024 to 49 at January 31, 2025. The increase in sales in our retail operations segment was the result of increased sales at our Karl Lagerfeld Paris and DKNY stores. Comparable store sales, which include both stores and digital channels, increased by strong double-digits at our Karl Lagerfeld Paris and DKNY stores compared to the same period in the prior year.

Current wording

Net sales of our retail operations segment increased to $186.0 million from $166.5 million in the same period last year. The number of retail stores operated by us decreased from 49 at January 31, 2025 to 47 at January 31, 2026. The increase in sales in our retail operations segment was the result of increased sales through our Donna Karan website and Karl Lagerfeld Paris stores, partially offset by decreases in our DKNY store sales. Comparable store sales, which include both stores and digital channels, increased for DKNY and Karl Lagerfeld Paris compared to the same period in the prior year.

Previous wording

Gross profit was $1.30 billion, or 40.8% of net sales, for fiscal 2025 compared to $1.24 billion, or 40.1% of net sales, last year. The gross profit percentage in our wholesale operations segment was 39.4% for the year ended January 31, 2025 compared to 38.9% for the year ended January 31, 2024. The gross profit percentage in the current year period was positively impacted by a shift in sales to product related to our owned brands which have no royalty costs, as well as a more favorable product mix. The gross profit percentage in our retail operations segment was 50.4% for the year ended January 31, 2025 compared to 48.1% for the same period last year. The gross profit percentage in our retail operations segment was positively impacted from a better product assortment.

Current wording

Gross profit was $1.16 billion, or 39.4% of net sales, for fiscal 2026 compared to $1.30 billion, or 40.8% of net sales, last year. The gross profit percentage in our wholesale operations segment was 37.4% for the year ended January 31, 2026 compared to 39.4% for the year ended January 31, 2025. The gross profit percentage in the current year period decreased primarily due to the impact of tariffs. The gross profit percentage in our retail operations segment was 50.1% for the year ended January 31, 2026 compared to 50.4% for the same period last year.

Previous wording

Selling, general and administrative expenses increased to $969.8 million in fiscal 2025 from $924.2 million in fiscal 2024. Selling, general and administrative expenses of our wholesale operations segment increased to $876.3 million from $826.9 million in the comparable period last year. The increase in expenses was primarily due increases of (i) $21.3 million in advertising expenses, primarily due to the relaunch of the Donna Karan brand and higher spending on the DKNY brand that was partially offset by reduced royalty advertising expenses resulting from lower net sales of licensed product, (ii) $21.5 million in compensation expenses, primarily due to an increase in salaries and share-based compensation expense and (iii) $5.3 million in bad debt expense primarily related to allowances recorded against the outstanding receivables of certain department store customersdue to bankruptcy, including Hudson’s Bay Company. Selling, general and administrative expenses of our retail operations segment decreased to $93.5 million from $97.3 million in the comparable period last year. The decrease in expenses was primarily due to decreases of (i) $3.8 million in compensation expenses, primarily due to a decrease in salaries and (ii) $3.1 million in third-party warehouse and facility expenses. These decreases were partially offset by an increase of $3.0 million in advertising expenses.

Current wording

bad debt expense primarily related to net allowances recorded against the outstanding receivables of certain customers due to bankruptcy, including Saks Global and Hudson’s Bay Company and (ii) $9.7 million in professional fees related to consulting fees related to new technologies, a potential strategic opportunity that did not come to fruition and legal fees. These increases were offset in part by a decrease of $11.4 million in compensation expenses, primarily due to a decrease in incentive compensation and share-based compensation expense. Selling, general and administrative expenses of our retail operations segment increased to $94.9 million from $93.5 million in the comparable period last year. The increase in expenses was primarily due to an increase of $3.7 million in advertising expenses, partially offset by a decrease of $2.3 million in third-party warehouse and facility expenses.

Previous wording

Depreciation and amortization was $27.4 million in fiscal 2025 compared to $27.5 million in fiscal 2024. Depreciation and amortization of our wholesale operations segment was $23.0 million in fiscal 2025 compared to $22.5 million in fiscal 2024. Depreciation and amortization of our retail operations segment was $4.5 million in fiscal 2025 compared to $5.0 million in fiscal 2024.

Current wording

Depreciation and amortization was $29.0 million in fiscal 2026 compared to $27.4 million in fiscal 2025. Depreciation and amortization of our wholesale operations segment was $25.6 million in fiscal 2026 compared to $23.0 million in fiscal 2025. This increase primarily results from higher depreciation related to capital expenditures for warehousing and technology projects as well as fixturing costs at department stores. Depreciation and amortization of our retail operations segment was $3.5 million in fiscal 2026 compared to $4.5 million in fiscal 2025.

Previous wording

In fiscal 2025, we recorded $8.2 million of asset impairments. This charge is primarily comprised of (i) a $7.4 million impairment charge related to our Sonia Rykiel trademark and (ii) a $0.8 million impairment charge related to leasehold improvements and furniture and fixtures at certain stores as a result of their performance. In fiscal 2024, we recorded $6.8 million of asset impairments. This charge is primarily comprised of (i) a $5.9 million impairment charge related to our Sonia Rykiel trademark and (ii) a $1.3 million impairment charge related to leasehold improvements, furniture and fixtures, computer hardware and operating lease assets at certain retail stores as a result of their performance. The annual test of our trademarks resulted in an impairment of the trademark based upon our most recent forecasted results and was impacted by higher interest rates. Asset impairments are recorded primarily in our wholesale operations segment.

Current wording

In fiscal 2026, we recorded $48.6 million of asset impairments. This charge is primarily comprised of (i) a $40.0 million impairment charge related to our minority investments in Saks Global and Saks Off 5 th.com, (ii) a $5.8 million impairment charge related to an equity method investment in an e-commerce retailer, (iii) a $1.6 million impairment charge for the write-off of assets related to an e-commerce platform that was replaced by a new platform and (iv) a $1.2 million impairment charge related to furniture and fixtures and computer hardware at certain retail stores as a result of their performance. In fiscal 2025, we recorded $8.2 million of asset impairments. This charge is primarily comprised of (i) a $7.4 million impairment charge related to our Sonia Rykiel trademark and (ii) a $0.8 million impairment charge related to leasehold improvements and furniture and fixtures at certain stores as a result of their performance. The annual test of our trademarks resulted in an impairment of the trademark based upon our most recent forecasted results and was impacted by higher interest rates. Asset impairments are recorded primarily in our wholesale operations segment.