What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-06-08 compared with 2025-12-09 · 173 added, 195 removed, 171 unchanged (68% of the section changed)

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For example, our fiscal year ending January 31, 2027 is referred to as “fiscal 2027.”

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.

Each of Vilebrequin, KLH, certain other subsidiaries and AWWG Investments B.V.

(“AWWG”), an 18.7% owned investment accounted for under the equity method of accounting, 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, certain other subsidiaries and AWWG 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 three-month period ended April 30, 2026, the results of Vilebrequin, KLH, certain other subsidiaries and AWWG are included for the three-month period ended March 31, 2026.

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.

For fiscal 2027 and 2026, the three-month periods for the retail operations segment were each 13-week periods and ended on May 2, 2026 and May 3, 2025, 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.

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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;

● the failure to maintain or renew our material license agreements could cause us to lose significant revenues and have a material adverse effect on our results of operations;

● our dependence on the strategies and reputation of our licensors;

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● our use of social media and our collaborations with influencers;

● risks associated with customers changing buying patterns, requesting additional allowances, developing private-label brands, or entering exclusive agreements with national brand manufacturers;

● 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;

● our ability to make strategic acquisitions and investments and possible disruptions from acquisitions, including our recent formation of a joint venture to acquire Marc Jacobs Holdings, LLC, and the risks associated with our ability to maintain an effective internal control environment;

● risks relating to our pending acquisition of Marc Jacobs Holdings, LLC, including risks related to the possibility that the acquisition does not close, our ability to transition the Marc Jacobs business and to realize the benefits of the acquisition on a timely basis, the expenses related to the acquisition, and our ability to operate the Marc Jacobs business being dependent on a license agreement that is terminable under certain circumstances;

● seasonal nature of our business and effect of unseasonable or extreme weather on our business;

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● 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;

● consolidation, bankruptcy or liquidation of major department, mass merchant and specialty store chains;

● 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;

● our ability to anticipate and respond to changing customer preferences and shifts in fashion and industry trends in a timely manner;

● our dependence on foreign manufacturers and arrangements with them, exposing us to potential import restrictions, duties and tariffs;

● 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;

● risks associated with evolving privacy laws that impose additional limits on how we collect or use customer information;

● our ability to comply with rules relating to the processing of credit card payments;

● possible adverse effects of data security or privacy breaches;

● risks related to use of artificial intelligence;

● changes in trade policies and tariffs imposed by the United States government and the governments of other nations;

● the impact on our business of the imposition of tariffs by the United States government and the escalation of trade tensions between countries;

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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;

● 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;

● impairment of our trademarks or other intangibles may require us to record charges against earnings;

● risks related to our indebtedness.

● our ability to pay dividends on our common stock;

● the impact our indebtedness may have on our financial condition and our ability to obtain financing in the future;

● the operating and financial restrictions related to our ABL credit agreement that may limit our current and future operating flexibility.

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.

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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.

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.

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.

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.

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, BCBG, Converse, French Connection, Halston, Levi’s, Champion, Nautica, Starter and major national sports leagues, among others.

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.

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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.

Our products are sold through a cross section of leading retailers such as Macy’s, Bloomingdale’s, 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.

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.

We operate in fashion markets that are intensely competitive.

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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.

Recent Developments

Marc Jacobs Acquisition and License

On May 14, 2026, we entered into certain agreements relating to the acquisition of the Marc Jacobs business (the “Marc Jacobs Acquisition”) from LVMH Moet Hennessy Louis Vuitton Inc.

and its affiliates (“LVMH”).

The transaction is structured such that (i) MJ Topco, LLC (“IPCo”), a newly formed joint venture between a subsidiary of the Company and an affiliate of WHP Global (“WHP”), will acquire all of the issued and outstanding units of Marc Jacobs Holdings, LLC through a wholly owned indirect subsidiary, Majestic AcqCo, LLC, (ii) following such acquisition, we will acquire the Marc Jacobs operating business through our subsidiaries, and (iii) IPCo will retain the Marc Jacobs intellectual property and certain other retained assets.

We will fund our approximately $500 million investment using cash on hand and borrowings under our revolving credit facility.

We will operate the business pursuant to a license from IPCo.

Subject to closing, the license agreement will provide an exclusive right to use the Marc Jacobs brand in the United States, Canada, Mexico and Western Europe for the distribution, promotion and sale of specified product categories, including women’s and men’s apparel, handbags, footwear, swim, small leather goods, luggage and cold weather accessories, through wholesale channels, branded retail stores and branded e-commerce sites.

The initial term of the license agreement is from the effective date through December 2041, and we have 10 successive options to renew the license agreement for periods of 5 years.

French Connection License Agreement

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.

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.

Our wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, including from retail stores operated by Vilebrequin and Karl Lagerfeld, 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.

As of April 30, 2026, 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

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.

Beginning in April 2025, the United States announced additional tariffs on goods imported into the United States, with incremental tariffs on products imported from many countries, including China, Vietnam and Bangladesh, 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.

During fiscal 2026, approximately 71.6% of our product was sourced from China, Vietnam and Bangladesh.

In February 2026, the Supreme Court of the United States ruled against the current administration’s use of the International Emergency Economic Powers Act (“IEEPA”) to impose certain tariffs levied since February 2025.

Pursuant to a court order on March 4, 2026 from the U.S.

Court of International Trade (“CIT”) directing the refund of such tariffs, including applicable interest, on April 20, 2026, U.S.

Customs and Border Protection (“CBP”) launched the Consolidated Administration and Processing of Entries (“CAPE”) system to facilitate refund claims, to which we have successfully submitted our refund claim.

The timing of cash receipts for tariff refunds remains dependent upon the processing of refund claims by CBP and the U.S.

Department of Treasury.

Following the Supreme Court ruling, the current administration announced a new global tariff of 10% effective February 24, 2026, under Section 122 Trade Act of 1974 which will expire in 150 days unless renewed by Congress.

On May 7, 2026, the CIT ruled that the Section 122 tariffs exceeded the President’s authority and is currently under review in the Court of Appeals, with a decision anticipated by Fall 2026.

While the court's opinion invalidated the tariffs, it only provided injunctive relief for the specific plaintiffs involved in the lawsuit.

Because the government appealed the decision, CBP continues to collect these duties at ports of entry.

Depending on that outcome, the matter could proceed to the Supreme Court.

Additionally, the administration initiated additional trade actions, including investigations under Section 301 of the Trade Act of 1974, that may result in further tariffs.

While the elimination of IEEPA tariffs is expected to have a favorable impact on gross margin, the imposition of additional tariffs, including those under Section 122 and potential measures arising from Section 301 actions, may offset such benefits and could adversely affect our financial results.

We continue to monitor these changing tariffs and trade restrictions.

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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.

We are investing in

digital personnel, marketing, logistics, planning, distribution and other strategic opportunities to expand our digital footprint.

The financial difficulties of a retail customer of ours could result in reduced business with that customer.

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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.

We have also pursued several strategic opportunities, such as (i) our purchase of the interests not previously owned by us that resulted in Karl Lagerfeld becoming our wholly-owned subsidiary, (ii) new license agreements entered into by us, such as our recent license agreements for the Halston, Champion, Converse, BCBG and French Connection brands and (iii) our formation of a joint venture with WHP to acquire Marc Jacobs Holdings, LLC.

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.

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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.

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.

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, 2026.

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

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:

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, executing on digital channel business opportunities and our recent formation of a joint venture with WHP to acquire Marc Jacobs Holdings, LLC.

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 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 launched in fiscal 2027.

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

Portion of Total G-III Fiscal 2026 Net Sales

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December 31, 2026

December 31, 2027

Litigation with PVH Corp.

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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.

Tax Laws and Regulations

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States.

In July 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.

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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.

The impact of the OBBBA was immaterial to our provision for income taxes for the three months ended April 30, 2026 and our condensed consolidated balance sheet as of April 30, 2026.

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 (“OECD”) 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 (“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 are not expected to have a material impact on our effective tax rate or financial results for fiscal 2027, we continue to monitor our operations and evolving tax legislation in the jurisdictions in which we operate.

Inflation and Interest Rates

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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.

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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.

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.

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.

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 negative impact on the reported results of certain of our non-United States subsidiaries in the future, when translated to the U.S.

International Conflicts

We are monitoring the direct and indirect impacts from the military conflicts in Ukraine and the Middle East.

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.

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The possible effects of these international conflicts could have a material adverse effect on our business and our results of operations.

The global supply chain continues to be negatively impacted by various factors, including the ongoing disruptions in the Middle East and the various tariffs imposed across all countries.

The latest developments as it relates to Iran have added further uncertainty to our supply chain operations.

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.

If there is further escalation of these conflicts, it may 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.

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.

We source substantially all of our products from a global network of independent, third-party manufacturers, primarily located in Asia.

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.

Three months ended April 30, 2026 compared to three months ended April 30, 2025

Net sales for the three months ended April 30, 2026 decreased to $536.0 million from $583.6 million 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.

Net sales of our wholesale operations segment decreased to $514.8 million for the three months ended April 30, 2026 from $562.6 million 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.

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.

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 $86.9 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 products.

These decreases were partially offset by increases in net sales of $42.9 million of our Donna Karan products and our BCBG, Converse and French Connection licensed products.

The increase in sales of Donna Karan products was primarily related to the dresses, suits and sportswear categories.

Net sales of our retail operations segment increased to $40.6 million for the three months ended April 30, 2026 from $36.4 million in the same period last year.

The number of retail stores operated by us decreased from 48 at April 30, 2025 to 47 at April 30, 2026.

The increase in sales in our retail operations segment was the result of increased sales through our Karl Lagerfeld Paris stores, DKNY stores and Donna Karan website.

Comparable store sales, which include both stores and digital channels, increased for Karl Lagerfeld Paris, Donna Karan and DKNY compared to the same period in the prior year.

Gross profit was $347.7 million, or 64.9% of net sales, for the three months ended April 30, 2026, compared to $246.5 million, or 42.2% of net sales, in the same period last year.

The gross profit percentage in our wholesale operations segment was 63.8% in the three months ended April 30, 2026 compared to 40.4% in the same period last year.

The gross profit percentage in the current year period was positively impacted by a benefit of $102.7 million recognized in cost of goods sold related to the expected recovery of previously incurred IEEPA tariffs on inventory sold in the prior year.

Excluding the impact of the IEEPA tariff benefit, the gross profit percentage in our wholesale operations segment was 43.8% for the three months ended April 30, 2026, which was positively impacted by price increases as well as a shift in product mix to owned brands in which we recognize higher gross profit percentages compared to licensed brands.

The gross profit percentage in our retail operations segment was 48.0% for the three months ended April 30, 2026 compared to 53.5% for the same period last year.

The gross profit percentage in the current year period was negatively impacted by increased promotional activity.

Selling, general and administrative expenses increased to $255.3 million in the three months ended April 30, 2026 from $231.5 million in the same period last year.

Selling, general and administrative expenses of our wholesale operations segment increased to $234.4 million from $209.7 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.

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.

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.

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.

The increase in expenses was primarily due to increases of (i) $17.3 million in compensation expenses, primarily due to an increase in incentive compensation and share-based compensation expense and (ii) $6.4 million inclusive of professional fees related to our strategic joint venture to acquire the Marc Jacobs operating business as well as legal fees related to other matters.

Selling, general and administrative expenses of our retail operations segment decreased to $20.9 million from $21.8 million in the comparable period last year.

Depreciation and amortization was $7.2 million for the three months ended April 30, 2026 compared to $6.6 million in the same period last year.

Other loss was $0.8 million in the three months ended April 30, 2026 compared to other income of $3.5 million in the same period last year.

Other loss in the current period consisted of $0.8 million of foreign currency loss during the current year period compared to $1.9 million of foreign currency income in the same period last year.

Our foreign currency income and losses are primarily related to the euro.

Additionally, other loss in the current period consisted of a nominal loss from unconsolidated affiliates during the current year period compared to $1.6 million of income from unconsolidated affiliates in the same period last year.

Interest and financing charges, net, for the three months ended April 30, 2026 resulted in income of $1.2 million compared to expense of $0.5 million in the same period last year.

The decrease in interest and financing charges was primarily due to a $1.2 increase in investment income from having a larger cash position in the current period compared to the prior year’s period.

Income tax expense was $19.1 million for the three months ended April 30, 2026 compared to $3.7 million for the same period last year.

Our effective tax rate decreased to 22.3% in the current year’s quarter from 32.4% in last year’s comparable quarter.

The lower effective tax rate in the current year period was driven by discrete items in the quarter, principally the anticipated tariff refund, that were taxed at a lower rate.

Liquidity and Capital Resources

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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.

As of April 30, 2026, we had cash and cash equivalents of $394.2 million and availability under our revolving credit facility of approximately $425.0 million.

As of April 30, 2026, we were in compliance with all covenants under our revolving credit facility.

On May 26, 2026, our Board of Directors declared a cash dividend of $0.10 per share.

The dividend will be paid on July 8, 2026 to all stockholders of record as of June 22, 2026.

Tariff Refund Receivable

As of April 30, 2026, the Company recognized a receivable of $139.5 million related to the expected refund of tariffs previously paid under the IEEPA, following recent legal developments, including a ruling by the United States Supreme Court and subsequent actions by the U.S.

Court of International Trade directing the refund of such tariffs, including applicable interest.

While we assessed that the recovery of previously paid IEEPA tariffs is probable based on currently available information, the timing of cash receipts remains dependent upon the processing of refund claims by CBP and the U.S.

Department of Treasury.

Third Amended and Restated ABL Credit Agreement

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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.

As of April 30, 2026, interest under the Third ABL Credit Agreement was being paid at an average rate of 7.25% per annum.

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;

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, restrict our ability to, subject to specified exceptions, incur additional debt;

sell or dispose of certain assets;

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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.

As of April 30, 2026, we were in compliance with these covenants.

As of April 30, 2026, 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.

As of April 30, 2026, there were no outstanding trade letters of credit and $2.4 million of standby letters of credit.

We have a total of $6.3 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.

Total debt issuance costs, net of amortization, were $3.9 million, $5.1 million and $4.2 million as of April 30, 2026, April 30, 2025 and January 31, 2026, 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.

Several of the Company’s foreign entities borrow funds under various unsecured loans of which a portion is 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.

Interest on the outstanding principal amount of the unsecured loans accrues at a fixed rate equal to 0% to 5.0% per annum, payable on either a quarterly or monthly basis.

As of April 30, 2026, we had an aggregate outstanding balance of €2.3 million ($2.7 million) under these various unsecured loans.

Overdraft Facilities

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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

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.

Certain of our foreign entities have also entered into several state backed overdraft facilities with UBS Bank in Switzerland for an aggregate of CHF 4.7 million at varying interest rates of 0% to 0.5%.

As of April 30, 2026, we had an aggregate outstanding balance of €7.0 million ($8.1 million) under these various facilities.

Foreign Credit Facilities

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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.

As of April 30, 2026, we had an aggregate outstanding balance of €4.0 million ($4.6 million) in borrowings outstanding under these credit facilities.

Outstanding Borrowings

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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.

We had no borrowings outstanding under our Third ABL Credit Agreement at April 30, 2026 and 2025, respectively.

Our contingent liability under open letters of credit was approximately $2.4 million and $2.6 million at April 30, 2026 and

2025, respectively.

We had an aggregate of €2.3 million ($2.7 million) and €4.9 million ($5.3 million) outstanding under our various unsecured loans as of April 30, 2026 and 2025, respectively.

We had €7.0 million ($8.1 million) and €7.4 million ($8.0 million) outstanding under our overdraft facilities as of April 30, 2026 and 2025, respectively.

We had €4.0 million ($4.6 million) and €5.0 million ($5.4 million) outstanding under our foreign credit facilities as of April 30, 2026 and 2025, respectively.

Supply Chain Finance Program

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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.

In April 2026, 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.

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.

No shares were repurchased during the three months ended April 30, 2026.

As of April 30, 2026, we had remaining 10,000,000 shares that are authorized for purchase under this program.

As of June 3, 2026, we had 42,190,573 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

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.

We used $2.0 million in cash from operating activities during the three months ended April 30, 2026, representing a decrease of $95.8 million from $93.8 million of cash generated from operating activities during the three months ended April 30, 2025.

This decrease is primarily driven by changes in operating assets and liabilities of $158.8 million, partially offset by an increase in our net income of $58.8 million.

The $158.8 million decrease in changes in operating asset and liabilities balances was primarily driven by the following:

● Prepaid expenses and other current assets increased $138.7 million in the current year period compared to an increase of $1.6 million in the prior year period as a result of the $139.5 million receivable recorded as of April 30, 2026 related to our expected recovery of previously paid IEEPA tariffs.

The tariff refund receivable did not result in any impact on our cash from operations in the current year period as we expect to receive the refund during the remainder of the year.

● Accounts receivable decreased $104.2 million in the current year period compared to a decrease of $143.7 million in the same period last year as a result of a decline in net sales in the fourth quarter of fiscal 2026 compared to the fourth quarter of fiscal 2025.

● Accounts payable, accrued expenses and other liabilities decreased $92.0 million in the current year period compared to a decrease of $67.6 million in the same period last year as a result of decreased inventory purchases and accrued royalties in the current year period due to expired licenses, partially offset by a higher bonus accrual 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.

We used $8.5 million of cash in investing activities during the three months ended April 30, 2026 as a result of 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.

Net cash used by financing activities was $0.2 million during the three months ended April 30, 2026 primarily as a result of $4.2 million of cash dividends paid to common stockholders, offset, in part, by net proceeds of $4.0 million under our various foreign facilities.

Critical Accounting Policies

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The accounting policies and related estimates described in our Annual Report on Form 10-K for the year ended January 31, 2026 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.

As of April 30, 2026, there have been no material changes to our critical accounting policies.

Quantitative and Qualitative Disclosures About Market Risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis