Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Unless the context otherwise requires, “G-III,” “us,” “we” and “our” refer to G-III Apparel Group, Ltd. and its subsidiaries. References to fiscal years refer to the year ended or ending on January 31 of that year. For example, our fiscal year ending January 31, 2026 is referred to as “fiscal 2026.”
Each of Vilebrequin, KLH, Sonia Rykiel, AWWG and certain other subsidiaries 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, Sonia Rykiel, AWWG and certain other subsidiaries are included in the financial statements for the quarter ended or ending closest to G-III’s fiscal quarter end. For example, with respect to our results for the nine-month period ended October 31, 2025, the results of Vilebrequin, KLH, Sonia Rykiel, AWWG and certain other subsidiaries are included for the nine-month period ended September 30, 2025. Our retail operations segment reports on a 52/53 week fiscal year. For fiscal 2026 and 2025, the three and nine-month periods for the retail operations segment were each 13-week and 39-week periods, respectively, and ended on November 1, 2025 and November 2, 2024, respectively.
Various statements contained in this Quarterly Report on Form 10-Q, in future filings by us with the SEC in our press releases and in oral statements made from time to time by us or on our behalf constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicated by words or phrases such as “anticipate,” “estimate,” “expect,” “will,” “project,” “believe,” “envision,” “forecast” and similar words or phrases and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed in or implied by such forward-looking statements. Forward-looking statements also include representations of our expectations or beliefs concerning future events that involve risks and uncertainties, including, but not limited to, the following:
● the failure to maintain our material license agreements could cause us to lose significant revenues and have a material adverse effect on our results of operations;
● u nless 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 limited extension period of the amended Calvin Klein and Tommy Hilfiger license agreements could cause a significant decrease in our net sales and have a material adverse effect on our results of operations;
● any adverse change in our relationship with PVH Corp. and its Calvin Klein or Tommy Hilfiger brands could have a material adverse effect on our results of operations;
● our dependence on the strategies and reputation of our licensors;
● risks associated with our wholesale operations including risks relating to the image of our proprietary brands and business practices of our customers;
● our use of social media and our collaborations with influencers;
● our significant customer concentration, and the risk that the loss of one of our largest customers could adversely affect our business;
● risks relating to our retail operations segment;
● our ability to achieve operating enhancements and cost reductions from our retail operations;
● dependence on existing management;
● our ability to make strategic acquisitions and investments and possible disruptions from acquisitions, including our ownership of the entire Karl Lagerfeld business, and the risks associated with our ability to maintain an effective internal control environment;
● the need for additional financing;
● seasonal nature of our business and effect of unseasonable or extreme weather on our business;
● possible adverse effects from disruptions to the worldwide supply chain;
● price, availability and quality of materials used in our products;
● the need to protect our trademarks and other intellectual property;
● risk that our partners may not generate expected sales or maintain the value of our brands;
● the impact of the current economic and credit environment on us, our customers, suppliers and vendors, including without limitation, the effects of inflationary cost pressures and higher interest rates;
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● effects of war, acts of terrorism, natural disasters or public health crises could adversely affect our business and results of operations, including the conflicts in Ukraine and the Middle East;
● our dependence on foreign manufacturers;
● risks of expansion into foreign markets, conducting business internationally and exposures to foreign currencies;
● risks related to the implementation of the national security law in Hong Kong;
● the need to successfully upgrade, maintain and secure our information systems;
● increased exposure to consumer privacy, cybersecurity and fraud concerns;
● possible adverse effects of data security or privacy breaches;
● the impact on our business of the imposition of tariffs by the United States government and the escalation of trade tensions between countries;
● changes in tax legislation or exposure to additional tax liabilities that could impact our business;
● the effect of regulations applicable to us as a U.S. public company;
● focus on corporate responsibility issues by stakeholders;
● potential effect on the price of our stock if actual results are worse than financial forecasts or if we are unable to provide financial forecasts;
● fluctuations in the price of our common stock;
● impairment of our trademarks or other intangibles may require us to record charges against earnings; and
● risks related to our indebtedness.
Any forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. A detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations is described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended January 31, 2025. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Overview
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. 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.
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.
Our products are sold through a cross section of leading retailers such as Macy’s, Bloomingdale’s, Dillard’s, 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.
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.
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We operate in fashion markets that are intensely competitive. Our ability to continuously evaluate and respond to changing consumer demands and tastes, across multiple market segments, distribution channels and geographic areas is critical to our success. Although our portfolio of brands is aimed at diversifying our risks in this regard, misjudging shifts in consumer preferences could have a negative effect on our business. Our continued success depends on our ability to design products that are accepted in the marketplace, source the manufacture of our products on a competitive basis and continue to diversify our product portfolio and the markets we serve.
We believe that consumers prefer to buy brands they know, and we have continually sought to increase the portfolio of name brands we can offer through different tiers of retail distribution, for a wide array of products at a variety of price points. We have increased the portfolio of brands we offer through licenses, acquisitions and joint ventures. It is our objective to continue to expand our product offerings and we are continually discussing new licensing opportunities with brand owners and seeking to acquire established brands.
Segments
We report based on two segments: wholesale operations and retail operations.
Our wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Karl Lagerfeld and Vilebrequin businesses, including from retail stores operated by Karl Lagerfeld and Vilebrequin, other than sales of product under the Karl Lagerfeld Paris brand generated by our retail stores and digital sites. Wholesale revenues also include royalty revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Karl Lagerfeld, G.H. Bass, Andrew Marc, Vilebrequin and Sonia Rykiel in product categories we do not produce ourselves.
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 October 31, 2025, our retail operations segment consisted of 47 company-operated stores for our DKNY and Karl Lagerfeld Paris brands, substantially all of which are operated as outlet stores in North America.
Trends Affecting Our Business
Tariffs
Beginning in April 2025, the United States announced additional tariffs on goods imported into the United States, with incremental tariffs on products imported from most countries, including China, Vietnam and Indonesia, and the potential for further increases and revisions or terminations to existing trade agreements. In response, some countries have announced or are otherwise considering retaliatory tariffs on United States exports and other trade restrictions. These actions have led to significant volatility and uncertainty in global markets. During fiscal 2025, approximately 76% of our product was sourced from China, Vietnam and Indonesia.
Additional tariffs imposed on imports are causing importers to shift production, if possible, to lower tariff territories, impacting the importers’ ability to plan as well as the capacity of our 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.
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.
Industry Trends
Significant trends that affect the apparel industry include retail chains closing unprofitable stores, an increased focus by retail chains and others on expanding digital sales and providing convenience-driven fulfillment options, the continued consolidation of retail chains and the desire on the part of retailers to consolidate vendors supplying them.
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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 websites and third party websites and through social media. We continue to invest in digital personnel, marketing, logistics, planning, distribution and other strategic opportunities to expand our digital footprint.
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 Hudson’s Bay Company. 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.
Retailers are seeking to differentiate their offerings by devoting more resources to the development of exclusive products, whether by focusing on their own private label products or on products produced exclusively for a retailer by a national brand manufacturer. Exclusive brands are only made available to a specific retailer. As a result, customers loyal to their brands can only find them in the stores of that retailer.
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.
Calvin Klein and Tommy Hilfiger Licenses
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.
Our licenses for Calvin Klein and Tommy Hilfiger products began expiring on a staggered basis 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.
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, Karl Lagerfeld and Donna Karan products, the latter of which we relaunched in Spring 2024. 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. 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, which we also recognize higher gross profit percentages on. 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. We also seek to expand sales in
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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 launched in fiscal 2026.
The Calvin Klein and Tommy Hilfiger licenses that expired in fiscal 2025 or have expiration dates in our fiscal 2026 through fiscal 2028 years contributed the following net sales to our total net sales in fiscal 2025:
Portion of Total G-III Fiscal 2025 Net Sales
$
%
(in thousands, except for percentages)
Calvin Klein and Tommy Hilfiger license expirations by date:
December 31, 2024
$
174,279
5
%
December 31, 2025
467,834
15
%
December 31, 2026
413,202
13
%
December 31, 2027
26,034
1
%
Litigation with PVH Corp.
On June 13, 2025, we filed a complaint against PVH Corp. and two of its subsidiaries (“Defendants”) in the New York County Commercial Division of the Supreme Court of the State of New York for breach of contract, breach of the implied covenant of good faith and fair dealing, and tortious interference with contract arising out of the unreasonable denial of our request to extend the Calvin Klein and Tommy Hilfiger licenses for the women’s suits category for an additional three-year period and other actions taken by Defendants that undermined our ability to perform under Calvin Klein and Tommy Hilfiger license agreements and subjected us to contractual penalties. On July 30, 2025, Calvin Klein, Inc. and Tommy Hilfiger Licensing LLC filed their own complaint against G-III in the same court alleging breaches of the license agreements between the parties. We believe that Calvin Klein, Inc. and Tommy Hilfiger Licensing LLC’s complaint is without merit, and we intend to vigorously defend the Company. Due to the uncertainty inherent in any litigation, we are unable to estimate any reasonably possible loss, or range of loss, with respect to this matter.
Political Environment
The potential long-term impact of new policies that may be implemented as a result of the current administration is currently uncertain. Any resulting changes in international trade relations, legislation and regulations (including those related to taxation and importation), economic and monetary policies, heightened diplomatic tensions or political and civil unrest, among other potential impacts, could adversely impact the global economy and our operating results.
Foreign Currency Fluctuation
Our consolidated operations are impacted by the relationships between our reporting currency, the U.S. dollar, and those of our non-United States subsidiaries whose functional/local currency is other than the U.S. dollar, primarily the Euro. Volatility in the global foreign currency exchange rates may have a positive or negative impact on the reported results of certain of our non-United States subsidiaries in the future, when translated to the U.S. dollar.
Tax Laws and Regulations
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The legislation has multiple effective dates, with certain provisions becoming effective in 2025 and others implemented through 2029. The OBBBA makes key elements of the Tax Cuts and Jobs Act permanent, including 100% bonus depreciation, and makes modifications to the international tax framework. We recognized the impact of the OBBBA in our second fiscal quarter ended July 31, 2025, the period in which the legislation was enacted. The impact of the OBBBA was immaterial to our provision for income taxes for the three and nine months ended October 31, 2025 and our condensed consolidated balance sheet as of October 31, 2025.
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Inflation and Interest Rates
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.
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.
Supply Chain
The global supply chain continues to be negatively impacted by various factors, including the recent reciprocal tariffs imposed across all countries and the ongoing disruptions in the Red Sea.
The imposition of tariffs by the U.S. government and certain foreign jurisdictions, along with geopolitical tensions, have created an uncertain environment for global trade. As the impact of new or increased tariffs, quotas, embargoes or other trade barriers that could impact our supply chain and cost structure is dependent on global trade negotiations, we continue to monitor these changing tariffs and trade restrictions. We source substantially all of our products from a global network of independent, third-party manufacturers, primarily located in Asia.
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. Although our business has not been significantly impacted by such disruptions, we have experienced shipping delays, impacting the timing of inventory receipts. These delays have not resulted in any significant losses of customer sales. We 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.
International Conflicts
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.
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Results of Operations
Three months ended October 31, 2025 compared to three months ended October 31, 2024
Net sales for the three months ended October 31, 2025 decreased to $988.6 million from $1.09 billion in the same period last year. Net sales of our segments are reported before intercompany eliminations.
Net sales of our wholesale operations segment decreased to $977.3 million for the three months ended October 31, 2025 from $1.07 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. The decrease in net sales of our wholesale operations segment was primarily the result of decreases in net sales of $122.5 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 DKNY and third-party private label products. These decreases were partially offset by increases in net sales of $33.0 million of our Karl Lagerfeld and Donna Karan products as well as our Converse and BCBG licensed products, the latter two of which launched during fiscal 2026. The increase in sales of Karl Lagerfeld products was primarily related to sportswear, men’s outerwear and dress categories. The increase in sales of Donna Karan products was primarily related to sportswear and suits categories.
Net sales of our retail operations segment increased to $45.7 million for the three months ended October 31, 2025 from $42.3 million in the same period last year. The number of retail stores operated by us decreased from 51 at October 31, 2024 to 47 at October 31, 2025. 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.
Gross profit was $381.5 million, or 38.6% of net sales, for the three months ended October 31, 2025, compared to $432.1 million, or 39.8% of net sales, in the same period last year. The gross profit percentage in our wholesale operations segment was 36.7% in the three months ended October 31, 2025 compared to 38.4% in the same period last year. The gross profit percentage in the current year period decreased due to the impact of tariffs. The gross profit percentage in our retail operations segment was 50.8% for the three months ended October 31, 2025 compared to 52.3% for the same period last year. The gross profit percentage in the current year period was negatively impacted by tariffs and reduced gross profit from digital sales of our G.H. Bass products. The G.H. Bass digital business will be transitioning to a licensee in the next fiscal year.
Selling, general and administrative expenses increased to $260.4 million in the three months ended October 31, 2025 from $259.2 million in the same period last year. Selling, general and administrative expenses of our wholesale operations segment increased to $236.0 million from $235.6 million in the comparable period last year. The increase in expenses was primarily due to an increase of $4.7 million in professional fees related to a potential strategic opportunity that did not come to fruition and legal fees. This increase was offset in part primarily by a decrease of $4.2 million in third-party warehouse and facility expenses related to lower net sales. Selling, general and administrative expenses of our retail operations segment increased to $24.4 million from $23.6 million in the comparable period last year.
Depreciation and amortization was $7.2 million for the three months ended October 31, 2025 compared to $6.6 million in the same period last year.
In the third quarter of fiscal 2026, we recorded $1.6 million of asset impairments in our wholesale operations segment. This charge was primarily related to the write-off of assets related to an e-commerce platform that was replaced by a new platform.
Other income was $1.4 million in the three months ended October 31, 2025 compared to other income of $0.9 million in the same period last year. Other income in the current period consisted of $0.8 million of income from unconsolidated affiliates compared to $0.3 million of income from unconsolidated affiliates in the same period last year. Additionally, other income in the current period consisted of $0.6 million of foreign currency income during the current year period compared to $0.5 million of foreign currency income in the same period last year.
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Interest and financing charges, net, for the three months ended October 31, 2025 were $0.2 million compared to $6.4 million in the same period last year. The decrease in interest and financing charges was primarily due to a $3.6 million decrease in interest charges resulting from the redemption of the entire $400 million principal amount of the Senior Secured Notes due 2025 in August 2024 and a $1.6 million charge to interest expense from extinguished debt issuance costs upon the redemption of the Notes recognized in the prior year’s third quarter.
Income tax expense was $32.9 million for the three months ended October 31, 2025 compared to $46.2 million for the same period last year. Our effective tax rate increased to 29.0% in the current year’s quarter from 28.7% in last year’s comparable quarter. The higher effective tax rate in the current year’s quarter was primarily due to the impact of permanent tax adjustments on the annual effective tax rate, partially offset by the favorable tax impact of discrete items in the quarter.
Nine months ended October 31, 2025 compared to nine months ended October 31, 2024
Net sales for the nine months ended October 31, 2025 decreased to $2.19 billion from $2.34 billion in the same period last year. Net sales of our segments are reported before intercompany eliminations.
Net sales of our wholesale operations segment decreased to $2.13 billion for the nine months ended October 31, 2025 from $2.28 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. The decrease in net sales of our wholesale operations segment was primarily the result of decreases in net sales of $209.4 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 $58.6 million of our Karl Lagerfeld, DKNY and Donna Karan products. The increase in sales of Karl Lagerfeld products was primarily related to sportswear, shoes and men’s outerwear categories. The increase in sales of DKNY products was primarily related to outerwear, jeanswear and performance categories. The increase in sales of Donna Karan products was primarily related to the dress, handbags and sportswear categories.
Net sales of our retail operations segment increased to $123.1 million for the nine months ended October 31, 2025 from $110.1 million in the same period last year. The number of retail stores operated by us decreased from 51 at October 31, 2024 to 47 at October 31, 2025. 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.
Gross profit was $878.5 million, or 40.2% of net sales, for the nine months ended October 31, 2025, compared to $966.9 million, or 41.3% of net sales, in the same period last year. The gross profit percentage in our wholesale operations segment was 38.3% in the nine months ended October 31, 2025 compared to 39.8% in the same period last year. The gross profit percentage in the current period decreased primarily due to the impact of tariffs. The gross profit percentage in our retail operations segment was 52.1% for the nine months ended October 31, 2025 compared to 51.1% for the same period last year. The gross profit percentage in the current period was positively impacted from an improved product assortment as well as increased digital sales of our Donna Karan products which have higher average unit retail prices.
Selling, general and administrative expenses decreased to $718.8 million in the nine months ended October 31, 2025 from $724.9 million in the same period last year. Selling, general and administrative expenses of our wholesale operations segment decreased to $651.7 million from $658.6 million in the comparable period last year. The decrease in expenses was primarily due to decreases of (i) $12.9 million in compensation expenses, primarily due to a decrease in bonus expense accruals and (ii) $8.5 million in advertising expenses, primarily due to the relaunch of the Donna Karan brand and higher spending on the DKNY brand in the prior year’s period and reduced royalty advertising expenses resulting from lower net sales of licensed product in the current period. These decreases were offset in part by increases of (i) $8.4 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 and (ii) $3.3 million in bad debt expense primarily related to allowances recorded against the outstanding receivables of certain customers due to bankruptcy, including Hudson’s Bay Company. Selling, general and administrative expenses of our retail operations segment increased to $67.1 million from $66.2 million in the comparable period last year.
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Depreciation and amortization was $21.1 million for the nine months ended October 31, 2025 compared to $20.7 million in the same period last year.
In fiscal 2026, we recorded $1.6 million of asset impairments in our wholesale operations segment. This charge was primarily related to the write-off of assets related to an e-commerce platform that was replaced by a new platform.
Other income was $4.2 million in the nine months ended October 31, 2025 compared to other loss of $2.2 million in the same period last year. Other income in the current period consisted of $3.8 million of foreign currency income during the current year period compared to $0.2 million of foreign currency loss in the same period last year. Additionally, other income in the current period consisted of $0.4 million of income from unconsolidated affiliates during the current period compared to $2.8 million of losses from unconsolidated affiliates in the same period last year.
Interest and financing charges, net, for the nine months ended October 31, 2025 were $0.4 million compared to $16.7 million in the same period last year. The decrease in interest and financing charges was primarily due to a $19.3 million decrease in interest charges resulting from the redemption of the entire $400 million principal amount of the Senior Secured Notes due 2025 in August 2024 and a $1.6 million charge to interest expense from extinguished debt issuance costs upon the redemption of the Notes recognized in the prior period last year. These decreases were partially offset by a $7.7 million decrease in investment income from having a larger cash position in the prior year’s period compared to the current period.
Income tax expense was $41.6 million for the nine months ended October 31, 2025 compared to $57.9 million for the same period last year. Our effective tax rate increased to 29.5% in the current year’s period from 28.6% in last year’s comparable period. The higher effective tax rate in the current year period was primarily due to the impact of permanent tax adjustments on the annual effective tax rate.
Liquidity and Capital Resources
Cash Availability
We rely on our cash flows generated from operations, cash and cash equivalents and the borrowing capacity under our revolving credit facility to meet the cash requirements of our business. The cash requirements of our business are primarily related to the seasonal buildup in inventories, compensation paid to employees, occupancy, payments to vendors in the normal course of business, capital expenditures, interest payments on debt obligations, payments of cash dividends to stockholders and income tax payments. We have also used cash to repurchase our shares and make strategic investments.
As of October 31, 2025, we had cash and cash equivalents of $184.1 million and availability under our revolving credit facility of approximately $700 million. As of October 31, 2025, we were in compliance with all covenants under our revolving credit facility. On December 4, 2025, our Board of Directors declared a cash dividend of $0.10 per share. The dividend will be paid on December 29, 2025 to all stockholders of record as of December 15, 2025.
Senior Secured Notes
In August 2024, we used cash on hand and borrowings from our revolving credit facility to voluntarily redeem the entire $400.0 million principal amount of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest. At the date of redemption, we had unamortized debt issuance costs of $1.6 million associated with the Notes. These debt issuance costs were fully extinguished and charged to interest expense in our results of operations.
Third Amended and Restated ABL Credit Agreement
On June 4, 2024, our subsidiaries, G-III Leather Fashions, Inc., Riviera Sun, Inc., AM Retail Group, Inc. and The Donna Karan Company Store LLC (collectively, the “Borrowers”), entered into the third amended and restated credit agreement (the “Third ABL Credit Agreement”) with the lenders named therein and with JPMorgan Chase Bank, N.A., as administrative agent. The Third ABL Credit Agreement is a five-year senior secured asset-based revolving credit facility providing for borrowings in an aggregate principal amount of up to $700.0 million. We and certain of our wholly-owned domestic subsidiaries, as well as G-III Apparel Canada ULC (collectively, the “Guarantors”), are guarantors under the Third ABL Credit Agreement.
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The Third ABL Credit Agreement amends and restates the Second Amended Credit Agreement, dated as of August 7, 2020 (as amended, supplemented or otherwise modified from time to time prior to June 4, 2024, the “Second Credit Agreement”), by and among the Borrowers and the Guarantors, the lenders from time-to-time party thereto, and JPMorgan Chase Bank, N.A., in its capacity as the administrative agent thereunder. The Second Credit Agreement provided for borrowings of up to $650 million and was due to expire on August 7, 2025. The Third ABL Credit Agreement extends the maturity date to June 2029, subject to a springing maturity date as defined within the credit agreement.
Amounts available under the Third ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the Third ABL Credit Agreement. Borrowings bear interest, at the Borrowers’ option, at Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.50% to 2.00%, or the alternate base rate plus a margin of 0.50% to 1.00% (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A. from time to time, (ii) the federal funds rate plus 0.5% and (iii) SOFR for a borrowing with an interest period of one month plus 1.00%), with the applicable margin determined based on the Borrowers’ average daily availability under the Third ABL Credit Agreement. The Third ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors. As of October 31, 2025, interest under the Third ABL Credit Agreement was being paid at an average rate of 7.98% per annum.
The Third ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors. In addition to paying interest on any outstanding borrowings under the Third ABL Credit Agreement, we are required to pay a commitment fee to the lenders under the credit agreement with respect to the unutilized commitments. The commitment fee accrues at a tiered rate equal to 0.375% per annum on the average daily amount of the available commitments when the average usage is less than 50% of the total available commitments and decreases to 0.25% per annum on the average daily amount of the available commitments when the average usage is greater than or equal to 50% of the total available commitments.
The Third ABL Credit Agreement contains covenants that, among other things, restricts our ability to, subject to specified exceptions, incur additional debt; incur liens; sell or dispose of certain assets; merge with other companies; liquidate or dissolve the Company; acquire other companies; make loans, advances, or guarantees; and make certain investments. In certain circumstances, the revolving credit facility also requires us to maintain a fixed charge coverage ratio, as defined in the agreement, not less than 1.00 to 1.00 for each period of twelve consecutive fiscal months. As of October 31, 2025, we were in compliance with these covenants.
As of October 31, 2025, we had no borrowings outstanding under the Third ABL Credit Agreement. The Third ABL Credit Agreement also includes amounts available for letters of credit. As of October 31, 2025, there were no outstanding trade letters of credit and $2.4 million of standby letters of credit.
We have a total of $5.6 million debt issuance costs related to our Third ABL Credit Agreement. As permitted under ASC 835, the debt issuance costs have been deferred and are presented as an asset which is amortized ratably over the term of the Third ABL Credit Agreement. Total debt issuance costs, net of amortization, were $4.5 million, $5.2 million and $5.4 million as of October 31, 2025, October 31, 2024 and January 31, 2025, respectively.
Unsecured Loans
Several of the Company’s foreign entities borrow funds under various unsecured loans to provide funding for operations in the normal course of business. In the aggregate, the Company is currently required to make quarterly installment payments of principal in the amount of €0.8 million under these loans. Interest on the outstanding principal amount of the loans accrues at a fixed rate equal to 0% to 5.0% per annum, payable on either a quarterly or monthly basis. As of October 31, 2025, the Company had an aggregate outstanding balance of €3.9 million ($4.6 million) under these unsecured loans.
Overdraft Facilities
Certain of our foreign entities entered into overdraft facilities that allow for applicable bank accounts to be in a negative position up to a certain maximum overdraft. These uncommitted overdraft facilities with HSBC Bank allow for an aggregate maximum overdraft of €10 million. Interest on drawn balances accrues at a rate equal to the EURIBOR plus a margin of 1.75% per annum, payable quarterly. The facility may be cancelled at any time by us or HSBC Bank. Certain of our foreign entities have also entered into overdraft facilities with UBS Bank in Switzerland for an aggregate of CHF
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4.7 million at varying interest rates of 0% to 0.5%. As of October 31, 2025, the Company had no borrowings outstanding under these various facilities.
Foreign Credit Facilities
KLH has a credit agreement with ABN AMRO Bank N.V. with a credit limit of €15.0 million which is secured by specified assets of KLH. Borrowings bear interest at the EURIBOR plus a margin of 1.7%. A subsidiary of Vilebrequin has a credit agreement with CIC Bank with a credit limit of €5.0 million. Borrowings bear interest at the Euro Short-Term Rate plus a margin of 1.75%. As of October 31, 2025, we had an aggregate balance of €5.1 million ($6.0 million) in borrowings outstanding under these credit facilities.
Outstanding Borrowings
Our primary operating cash requirements are to fund our seasonal buildup in inventories and accounts receivable, primarily during the second and third fiscal quarters each year. The primary sources to meet our operating cash requirements have been borrowings under the revolving credit facility and cash generated from operations.
We had no borrowings outstanding under our Third ABL Credit Agreement at October 31, 2025. We had $210.1 million in borrowings outstanding under our Third ABL Credit Agreement at October 31, 2024. We redeemed the entire $400 million principal amount of the Notes in August 2024. Our contingent liability under open letters of credit was approximately $2.4 million and $9.0 million at October 31, 2025 and 2024, respectively. We had an aggregate of €3.9 million ($4.6 million) and €6.0 million ($7.3 million) outstanding under our various unsecured loans as of October 31, 2025 and 2024, respectively. We had no borrowings outstanding under our overdraft facilities as of October 31, 2025. We had €4.1 million ($4.6 million) outstanding under our overdraft facilities as of October 31, 2024. We had €5.1 million ($6.0 million) and €2.0 million ($2.2 million) outstanding under our foreign credit facilities as of October 31, 2025 and 2024, respectively.
Supply Chain Finance Program
We have a voluntary supply chain finance program (the “SCF Program”) administered through a third-party platform. Our payment obligations confirmed under the SCF Program are due to a financial intermediary that will remit payment to our suppliers. The SCF Program also provides participating suppliers with the option to sell their receivables due from us, at their sole discretion, to a third-party financial institution at terms negotiated between the supplier and the financial institution. We are not a party to the agreements between the suppliers and the financial institution and have no economic interest in a supplier’s decision to sell a receivable. Our payment obligations to our suppliers, including the amounts due and payment terms, which generally do not exceed 75 days, are not impacted by a suppliers’ participation in the SCF Program. See Note 8 – “Supply Chain Finance Program” in the Notes to Condensed Consolidated Financial Statements for further discussion of the SCF Program.
Share Repurchase Program
In August 2023, our Board of Directors authorized an increase in the number of shares covered by our share repurchase program to an aggregate amount of 10,000,000 shares. Pursuant to this program, during the nine months ended October 31, 2025, we acquired 2,158,276 of our shares of common stock for an aggregate purchase price of $49.8 million, excluding excise tax. The timing and actual number of shares repurchased, if any, will depend on a number of factors, including market conditions and prevailing stock prices, and are subject to compliance with certain covenants contained in our loan agreement. Share repurchases may take place on the open market, in privately negotiated transactions or by other means, and would be made in accordance with applicable securities laws. As of October 31, 2025, we had remaining 5,631,892 shares that are authorized for purchase under this program. As of December 3, 2025, we had 42,189,287 shares of common stock outstanding.
Cash from Operating Activities
We generated $71.6 million in cash from operating activities during the nine months ended October 31, 2025, primarily as a result of our net income of $99.3 million and increases of $108.7 million in accounts payable and accrued expenses
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and $17.5 million in income taxes payable, net. We also generated cash from operating activities as a result of non-cash charges relating primarily to depreciation and amortization of $21.1 million and share-based compensation of $17.0 million. These items were offset, in part, by increases of $147.0 million in accounts receivable and $69.0 million in inventories.
The changes in operating cash flow items are consistent with our seasonal pattern of higher sales and building up inventory for the fall shipping season resulting in the increases in accounts receivable, inventory and accounts payable. The fall shipping season begins during the latter half of our second fiscal quarter. The increase in accounts receivable during the nine months ended October 31, 2025 was less than the increase in accounts receivable during the nine months ended October 31, 2024 as a result of a decline in net sales and an increase in collections of receivables in the current year period.
Cash from Investing Activities
We used $28.3 million of cash in investing activities during the nine months ended October 31, 2025. We had $27.5 million in capital expenditures primarily related to leasehold improvement and computer software expenditures.
Cash from Financing Activities
Net cash used by financing activities was $51.2 million during the nine months ended October 31, 2025 primarily as a result of $49.8 million of cash used to repurchase 2,158,276 shares of our common stock under our share repurchase program, excluding excise tax, and $5.0 million for taxes paid in connection with net share settlements of stock grants that vested. These items were offset, in part, by net proceeds of $3.5 million under our various foreign facilities.
Critical Accounting Policies
Our discussion of results of operations and financial condition relies on our consolidated financial statements that are prepared based on certain critical accounting policies that require management to make judgments and estimates that are subject to varying degrees of uncertainty. We believe that investors need to be aware of these policies and how they impact our financial statements as a whole, as well as our related discussion and analysis presented herein. While we believe that these accounting policies are based on sound measurement criteria, actual future events can, and often do, result in outcomes that can be materially different from these estimates or forecasts.
The accounting policies and related estimates described in our Annual Report on Form 10-K for the year ended January 31, 2025 are those that depend most heavily on these judgments and estimates. As of October 31, 2025, there have been no material changes to our critical accounting policies.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There are no material changes to the disclosure made with respect to these matters in our Annual Report on Form 10-K for the year ended January 31, 2025.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.