G III APPAREL GROUP LTD /DE/ 10-Q

Item 1. Financial Statements. ​ ­­ G-III APPAREL GROUP, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, ​ July 31, ​ January 31, ​ ​ 2020 ​ 2019 ​ 2020 ​ (Unaudited) (Unaudited) ​ ​ ​ ​ (In thousands, except per share amounts) ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 252,798 ​ $ 39,568 ​ $ 197,372 Accounts receivable, net of allowance for doubtful accounts of $ 11.2 million, $ 0.9 million and $ 0.7 million, respectively ​ ​ 276,502 ​ ​ 464,663 ​ ​ 530,137 Inventories ​ ​ 574,767 ​ ​ 842,136 ​ ​ 551,918 Prepaid income taxes ​ ​ 13,949 ​ ​ 12,500 ​ ​ 8,566 Prepaid expenses and other current assets ​ ​ 55,709 ​ ​ 93,353 ​ ​ 80,695 Total current assets ​ ​ 1,173,725 ​ ​ 1,452,220 ​ ​ 1,368,688 Investments in unconsolidated affiliates ​ ​ 59,132 ​ ​ 63,773 ​ ​ 61,987 Property and equipment, net ​ ​ 66,627 ​ ​ 85,548 ​ ​ 76,023 Operating lease assets ​ ​ 168,071 ​ ​ 309,421 ​ ​ 270,032 Other assets, net ​ ​ 31,900 ​ ​ 35,681 ​ ​ 32,629 Other intangibles, net ​ ​ 36,423 ​ ​ 40,444 ​ ​ 38,363 Deferred income tax assets, net ​ ​ 34,548 ​ ​ 25,253 ​ ​ 18,135 Trademarks ​ ​ 438,721 ​ ​ 439,409 ​ ​ 438,658 Goodwill ​ ​ 260,667 ​ ​ 260,687 ​ ​ 260,622 Total assets ​ $ 2,269,814 ​ $ 2,712,436 ​ $ 2,565,137 LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ Current portion of notes payable ​ $ 3,717 ​ $ 683 ​ $ 673 Accounts payable ​ ​ 192,192 ​ ​ 346,642 ​ ​ 204,786 Accrued expenses ​ ​ 60,257 ​ ​ 89,137 ​ ​ 101,838 Customer refund liabilities ​ ​ 115,370 ​ ​ 179,078 ​ ​ 233,418 Current operating lease liabilities ​ ​ 91,700 ​ ​ 74,297 ​ ​ 63,166 Income tax payable ​ ​ 9,075 ​ ​ 6,966 ​ ​ 8,468 Other current liabilities ​ ​ 109 ​ ​ 425 ​ ​ 1,611 Total current liabilities ​ ​ 472,420 ​ ​ 697,228 ​ ​ 613,960 Notes payable, net of discount and unamortized issuance costs ​ ​ 405,003 ​ ​ 553,118 ​ ​ 396,794 Deferred income tax liabilities, net ​ ​ 7,960 ​ ​ 15,019 ​ ​ 7,952 Noncurrent operating lease liabilities ​ ​ 140,283 ​ ​ 272,632 ​ ​ 249,040 Other noncurrent liabilities ​ ​ 6,399 ​ ​ 6,619 ​ ​ 6,719 Total liabilities ​ ​ 1,032,065 ​ ​ 1,544,616 ​ ​ 1,274,465 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders' Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred stock; 1,000 shares authorized; no shares issued ​ ​ — ​ ​ — ​ ​ — Common stock - $ 0.01 par value; 120,000 shares authorized; 49,396 , 49,394 and, 49,396 shares issued, respectively ​ ​ 264 ​ ​ 264 ​ ​ 264 Additional paid-in capital ​ ​ 444,384 ​ ​ 456,195 ​ ​ 452,142 Accumulated other comprehensive loss ​ ​ ( 18,260 ) ​ ​ ( 16,848 ) ​ ​ ( 18,008 ) Retained earnings ​ ​ 838,867 ​ ​ 772,463 ​ ​ 893,138 Common stock held in treasury, at cost - 1,037 , 1,649 and 1,386 shares, respectively ​ ​ ( 27,506 ) ​ ​ ( 44,254 ) ​ ​ ( 36,864 ) Total stockholders' equity ​ ​ 1,237,749 ​ ​ 1,167,820 ​ ​ 1,290,672 Total liabilities and stockholders' equity ​ $ 2,269,814 ​ $ 2,712,436 ​ $ 2,565,137 ​ The accompanying notes are an integral part of these statements . ​ 3 Table of Contents G-III APPAREL GROUP, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 31, ​ Six Months Ended July 31, ​ 2020 2019 2020 2019 ​ ​ (Unaudited) ​ ​ (In thousands, except per share amounts) Net sales ​ $ 297,212 ​ $ 643,892 ​ $ 702,343 ​ $ 1,277,444 Cost of goods sold ​ ​ 162,519 ​ ​ 412,123 ​ ​ 443,249 ​ ​ 809,611 Gross profit ​ ​ 134,693 ​ ​ 231,769 ​ ​ 259,094 ​ ​ 467,833 Selling, general and administrative expenses ​ ​ 122,102 ​ ​ 196,448 ​ ​ 276,722 ​ ​ 398,307 Depreciation and amortization ​ ​ 9,691 ​ ​ 9,789 ​ ​ 19,558 ​ ​ 19,262 Asset impairments, net of gain on lease modifications ​ ​ 14,302 ​ ​ ( 1,393 ) ​ ​ 17,489 ​ ​ ( 2,222 ) Operating profit (loss) ​ ​ ( 11,402 ) ​ ​ 26,925 ​ ​ ( 54,675 ) ​ ​ 52,486 Other income (loss) ​ ​ 1,943 ​ ​ ( 751 ) ​ ​ ( 113 ) ​ ​ ( 1,399 ) Interest and financing charges, net ​ ​ ( 9,177 ) ​ ​ ( 10,785 ) ​ ​ ( 19,556 ) ​ ​ ( 21,105 ) Income (loss) before income taxes ​ ​ ( 18,636 ) ​ ​ 15,389 ​ ​ ( 74,344 ) ​ ​ 29,982 Income tax expense (benefit) ​ ​ ( 3,660 ) ​ ​ 4,270 ​ ​ ( 20,073 ) ​ ​ 6,820 Net income (loss) ​ $ ( 14,976 ) ​ $ 11,119 ​ $ ( 54,271 ) ​ $ 23,162 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME (LOSS) PER COMMON SHARE: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per common share ​ $ ( 0.31 ) ​ $ 0.23 ​ $ ( 1.13 ) ​ $ 0.48 Weighted average number of shares outstanding ​ ​ 48,214 ​ ​ 48,450 ​ ​ 48,121 ​ ​ 48,619 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per common share ​ $ ( 0.31 ) ​ $ 0.23 ​ $ ( 1.13 ) ​ $ 0.47 Weighted average number of shares outstanding ​ ​ 48,214 ​ ​ 49,116 ​ ​ 48,121 ​ ​ 49,436 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ ( 14,976 ) ​ $ 11,119 ​ $ ( 54,271 ) ​ $ 23,162 Other comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ ​ 3,774 ​ ​ 1,573 ​ ​ ( 252 ) ​ ​ ( 1,654 ) Other comprehensive income (loss) ​ ​ 3,774 ​ ​ 1,573 ​ ​ ( 252 ) ​ ​ ( 1,654 ) Comprehensive income (loss) ​ $ ( 11,202 ) ​ $ 12,692 ​ $ ( 54,523 ) ​ $ 21,508 ​ The accompanying notes are an integral part of these statements. ​ 4 Table of Contents G-III APPAREL GROUP, LTD. AND SUBSIDIARIES ​ CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ Common ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ Stock ​ ​ ​ ​ Common ​ Paid-In ​ Comprehensive ​ Retained ​ Held In ​ ​ ​ Stock Capital Loss Earnings Treasury Total ​ ​ (Unaudited) ​ ​ (In thousands) Balance as of April 30, 2020 ​ $ 264 ​ $ 449,840 ​ $ ( 22,034 ) ​ $ 853,843 ​ $ ( 35,679 ) ​ $ 1,246,234 Equity awards exercised/vested, net ​ ​ — ​ ​ ( 7,993 ) ​ ​ — ​ ​ — ​ ​ 8,173 ​ ​ 180 Share-based compensation expense ​ ​ — ​ ​ 2,548 ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,548 Taxes paid for net share settlements ​ ​ — ​ ​ ( 11 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 11 ) Other comprehensive income, net ​ ​ — ​ ​ — ​ ​ 3,774 ​ ​ — ​ ​ — ​ ​ 3,774 Net loss ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 14,976 ) ​ ​ — ​ ​ ( 14,976 ) Balance as of July 31, 2020 ​ $ 264 ​ $ 444,384 ​ $ ( 18,260 ) ​ $ 838,867 ​ $ ( 27,506 ) ​ $ 1,237,749 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of April 30, 2019 ​ $ 264 ​ $ 456,835 ​ $ ( 18,421 ) ​ $ 761,344 ​ $ ( 13,196 ) ​ $ 1,186,826 Equity awards exercised/vested, net ​ ​ — ​ ​ ( 4,082 ) ​ ​ — ​ ​ — ​ ​ 4,158 ​ ​ 76 Share-based compensation expense ​ ​ — ​ ​ 5,122 ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,122 Taxes paid for net share settlements ​ ​ — ​ ​ ( 1,680 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,680 ) Other comprehensive income, net ​ ​ — ​ ​ — ​ ​ 1,573 ​ ​ — ​ ​ — ​ ​ 1,573 Repurchases of common stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 35,216 ) ​ ​ ( 35,216 ) Net income ​ ​ — ​ ​ — ​ ​ — ​ ​ 11,119 ​ ​ — ​ ​ 11,119 Balance as of July 31, 2019 ​ $ 264 ​ $ 456,195 ​ $ ( 16,848 ) ​ $ 772,463 ​ $ ( 44,254 ) ​ $ 1,167,820 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 31, 2020 ​ $ 264 ​ $ 452,142 ​ $ ( 18,008 ) ​ $ 893,138 ​ $ ( 36,864 ) ​ $ 1,290,672 Equity awards exercised/vested, net ​ ​ — ​ ​ ( 9,178 ) ​ ​ — ​ ​ — ​ ​ 9,358 ​ ​ 180 Share-based compensation expense ​ ​ — ​ ​ 1,737 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,737 Taxes paid for net share settlements ​ ​ — ​ ​ ( 317 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 317 ) Other comprehensive loss, net ​ ​ — ​ ​ — ​ ​ ( 252 ) ​ ​ — ​ ​ — ​ ​ ( 252 ) Net loss ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 54,271 ) ​ ​ — ​ ​ ( 54,271 ) Balance as of July 31, 2020 ​ $ 264 ​ $ 444,384 ​ $ ( 18,260 ) ​ $ 838,867 ​ $ ( 27,506 ) ​ $ 1,237,749 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 31, 2019 ​ $ 264 ​ $ 464,112 ​ $ ( 15,194 ) ​ $ 758,881 ​ $ ( 19,054 ) ​ $ 1,189,009 Equity awards exercised/vested, net ​ ​ — ​ ​ ( 9,900 ) ​ ​ — ​ ​ — ​ ​ 10,016 ​ ​ 116 Share-based compensation expense ​ ​ — ​ ​ 9,349 ​ ​ — ​ ​ — ​ ​ — ​ ​ 9,349 Taxes paid for net share settlements ​ ​ — ​ ​ ( 7,366 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 7,366 ) Other comprehensive loss, net ​ ​ — ​ ​ — ​ ​ ( 1,654 ) ​ ​ — ​ ​ — ​ ​ ( 1,654 ) Repurchases of common stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 35,216 ) ​ ​ ( 35,216 ) Cumulative effect of adoption of ASC 842 ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 9,580 ) ​ ​ — ​ ​ ( 9,580 ) Net income ​ ​ — ​ ​ — ​ ​ — ​ ​ 23,162 ​ ​ — ​ ​ 23,162 Balance as of July 31, 2019 ​ $ 264 ​ $ 456,195 ​ $ ( 16,848 ) ​ $ 772,463 ​ $ ( 44,254 ) ​ $ 1,167,820 ​ The accompanying notes are an integral part of these statements. ​ ​ 5 Table of Contents G-III APPAREL GROUP, LTD. AND SUBSIDIARIES ​ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended July 31, ​ 2020 2019 ​ ​ (Unaudited) ​ ​ (In thousands) Cash flows from operating activities ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ ( 54,271 ) ​ $ 23,162 Adjustments to reconcile net income (loss) to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 19,558 ​ ​ 19,262 Loss on disposal of fixed assets ​ ​ 169 ​ ​ 1,230 Non-cash operating lease costs ​ ​ 44,732 ​ ​ 36,729 Gain on lease modifications ​ ​ ( 2,524 ) ​ ​ ( 2,222 ) Asset impairments ​ ​ 20,013 ​ ​ — Dividend received from unconsolidated affiliate ​ ​ 2,695 ​ ​ 1,960 Equity (gain) loss in unconsolidated affiliates ​ ​ 175 ​ ​ ( 867 ) Share-based compensation ​ ​ 1,737 ​ ​ 9,349 Deferred financing charges and debt discount amortization ​ ​ 5,425 ​ ​ 4,577 Deferred income taxes ​ ​ ( 16,414 ) ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ​ 253,634 ​ ​ 37,470 Inventories ​ ​ ( 22,849 ) ​ ​ ( 265,753 ) Income taxes, net ​ ​ ( 4,979 ) ​ ​ ( 5,987 ) Prepaid expenses and other current assets ​ ​ 25,128 ​ ​ 3,321 Other assets, net ​ ​ ( 678 ) ​ ​ ( 1,164 ) Customer refund liabilities ​ ​ ( 118,047 ) ​ ​ ( 64,512 ) Operating lease liabilities ​ ​ ( 37,785 ) ​ ​ ( 38,300 ) Accounts payable, accrued expenses and other liabilities ​ ​ ( 55,914 ) ​ ​ 108,838 Net cash provided by (used in) operating activities ​ ​ 59,805 ​ ​ ( 132,907 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ Operating lease assets initial direct costs ​ ​ ( 3,968 ) ​ ​ ( 1,940 ) Capital expenditures ​ ​ ( 9,101 ) ​ ​ ( 17,531 ) Net cash used in investing activities ​ ​ ( 13,069 ) ​ ​ ( 19,471 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ Repayment of borrowings - revolving facility ​ ​ ( 676,019 ) ​ ​ ( 942,973 ) Proceeds from borrowings - revolving facility ​ ​ 676,019 ​ ​ 1,102,973 Repayment of borrowings - unsecured term loan ​ ​ — ​ ​ ( 170 ) Proceeds from borrowings - unsecured term loan ​ ​ 7,071 ​ ​ 3,407 Proceeds from exercise of equity awards ​ ​ 180 ​ ​ 116 Purchase of treasury shares ​ ​ — ​ ​ ( 35,216 ) Taxes paid for net share settlements ​ ​ ( 317 ) ​ ​ ( 7,366 ) Net cash provided by financing activities ​ ​ 6,934 ​ ​ 120,771 ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ ​ 1,756 ​ ​ 1,037 Net increase (decrease) in cash and cash equivalents ​ ​ 55,426 ​ ​ ( 30,570 ) Cash and cash equivalents at beginning of period ​ ​ 197,372 ​ ​ 70,138 Cash and cash equivalents at end of period ​ $ 252,798 ​ $ 39,568 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information ​ ​ ​ ​ ​ ​ Cash payments: ​ ​ ​ ​ ​ ​ Interest, net ​ $ 12,937 ​ $ 15,735 Income tax payments, net ​ $ 1,385 ​ $ 12,791 ​ The accompanying notes are an integral part of these statements. ​ ​ 6 Table of Contents G-III APPAREL GROUP, LTD. AND SUBSIDIARIES ​ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 – Basis of Presentation As used in these financial statements, the term “Company” or “G-III” refers to G-III Apparel Group, Ltd. and its subsidiaries. The Company designs, sources and markets an extensive range of apparel, including outerwear, dresses, sportswear, swimwear, women’s suits and women’s performance wear, as well as women’s handbags, footwear, small leather goods, cold weather accessories and luggage. The Company also operates retail stores and licenses its proprietary brands for several product categories. The Company consolidates the accounts of its wholly-owned and majority-owned subsidiaries. KL North America B.V. (“KLNA”) and Fabco Holding B.V. (“Fabco”) are Dutch joint venture limited liability companies that are 49 % owned by the Company. Karl Lagerfeld Holding B.V. (“KLH”) is a Dutch limited liability company that is 19 % owned by the Company. These investments are accounted for using the equity method of accounting. All material intercompany balances and transactions have been eliminated. Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by the Company, KLH, KLNA and Fabco report results on a calendar year basis rather than on the January 31 fiscal year basis used by the Company. Accordingly, the results of Vilebrequin, KLH, KLNA and Fabco are, and will be, included in the financial statements for the quarter ended or ending closest to the Company’s fiscal quarter end. For example, with respect to the Company’s results for the six-month period ended July 31, 2020, the results of Vilebrequin, KLH, KLNA and Fabco are included for the six-month period ended June 30, 2020. The Company’s retail operations segment reports on a 52/53-week fiscal year. The Company’s three and six-month periods ended July 31, 2020 and 2019 were each 13-week and 26-week periods, respectively, for the retail operations segment. For fiscal 2021 and 2020, the three and six-month periods for the retail operations segment ended on August 1, 2020 and August 3, 2019, respectively. The results for the three and six months ended July 31, 2020 are not necessarily indicative of the results expected for the entire fiscal year, given the seasonal nature of the Company’s business and the significant effects of the COVID-19 pandemic on the Company’s business. The accompanying financial statements included herein are unaudited. All adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations and cash flows for the interim period presented have been reflected. The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2020 filed with the Securities and Exchange Commission (the “SEC”). Assets and liabilities of the Company’s foreign operations, where the functional currency is not the U.S. dollar (reporting currency), are translated from foreign currency into U.S. dollars at period-end rates, while income and expenses are translated at the weighted-average exchange rates for the period. The related translation adjustments are reflected as a foreign currency translation adjustment in accumulated other comprehensive loss within stockholders’ equity. ​ Accounting Policies ​ On April 10, 2020, the Financial Accounting Standards Board (“FASB”) issued a Staff Q&A to respond to frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 outbreak. Consequently, for lease concessions related to the effects of the COVID-19 outbreak, an entity will not have to analyze each lease to determine whether the enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance to those leases. Entities may make the elections for any lessor-provided concessions related to the effects of the outbreak (e.g., deferrals of lease payments, lease payment forgiveness, cash payments made to the lessee or reduced future lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. The Company has elected to not apply the lease modification guidance for contracts with COVID-19 related rent concessions. As of July 31, 2020, the Company has $ 8.0 million of deferred lease payments recorded within accounts payable on its condensed consolidated balance sheets. ​ 7 Table of Contents Liquidity and Impact of COVID-19 ​ The Company relies on its cash flows generated from operations and the borrowing capacity under its credit facilities to meet the cash requirements of its business. The primary cash requirements of its business are the seasonal buildup in inventory, compensation paid to employees, payments to suppliers in the normal course of business, capital expenditures, maturities of debt and related interest payments and income tax payments. The rapid expansion of the COVID-19 pandemic resulted in a sharp decline in net sales and earnings in the first and second quarters of fiscal 2021. The Company is focused on preserving its liquidity and managing its cash flow during these unprecedented conditions. The Company has taken preemptive actions to enhance its ability to meet its short-term liquidity needs, including, but not limited to, reducing payroll costs through employee furloughs, job eliminations, salary reductions, reductions in discretionary spending, deferring certain lease payments and deferral of capital projects. In addition, the Company is closely monitoring its inventory needs and is working with its suppliers to curtail, or cancel, production of product that the Company believes will not be able to be sold in season. The Company has also been working with its suppliers and licensors to negotiate extended payment terms in order to preserve capital. ​ As of July 31, 2020, the Company had cash and cash equivalents of $ 252.8 million. The Company believes it has adequate cash flows to meet the cash requirements of its business. As of July 31, 2020, the Company was in compliance with all covenants under its term loan and revolving credit facility. On August 7, 2020, the Company refinanced its term loan and revolving credit facility. See Note 16 – Subsequent Events. ​ Note 2 – Retail Restructuring ​ On June 5, 2020, the Company announced the restructuring of its retail operations segment including the closing of all Wilsons Leather and G.H. Bass stores. Additionally, the Company will close its Calvin Klein Performance stores. In connection with the restructuring of the retail operations segment, the Company expects to incur an aggregate charge of approximately $ 100 million related to store operating costs, landlord termination fees, severance costs, store liquidation and closing costs, write-offs related to right-of-use assets and legal and professional fees. The Company expects the net cash outflow from the retail restructuring to be approximately $ 65 million. ​ As a result of the restructuring of the Company’s retail operations, the Company recorded a charge of $ 1.2 million during the three months ended July 31, 2020. The charge consisted primarily of severance payments, benefit continuation costs and store closing costs. Restructuring charges are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income (loss). The following is a reconciliation of the accrual for the quarter ended July 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Severance and Benefit Costs Store Closing Costs Total ​ ​ (In thousands) Balance at April 30, 2020 ​ $ — ​ $ — ​ $ — Amounts charged to expense ​ ​ 480 ​ ​ 792 ​ ​ 1,272 Cash payments ​ ​ ( 26 ) ​ ​ — ​ ​ ( 26 ) Balance at July 31, 2020 ​ $ 454 ​ $ 792 ​ $ 1,246 ​ The Company has accounted for the remaining rent and termination payments under Accounting Standards Codification (“ASC”) 842 – Leases. As of July 31, 2020, the total operating lease liability related to Wilsons Leather, G.H Bass, and Calvin Klein Performance stores is $ 54.5 million and will be paid by the end of fiscal 2021. ​ Note 3 – Allowance for Doubtful Accounts ​ On February 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which had no material impact on the Company’s financial statements. The Company’s financial instruments consist of trade receivables arising from revenue transactions in the ordinary course of business. The Company considers its trade receivables to consist of two portfolio segments: wholesale and retail trade receivables. Wholesale trade receivables result from credit the Company has extended to its wholesale customers based on pre-defined criteria and are generally due within 30 to 60 days. Retail trade receivables primarily relate to amounts due from third-party credit card processors for the settlement of debit and credit card transactions and are typically collected within 3 to 5 days. ​ 8 Table of Contents The Company’s accounts receivable and allowance for doubtful accounts as of July 31, 2020 were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, 2020 ​ Wholesale Retail Total ​ ​ (In thousands) Accounts receivable, gross ​ $ 284,031 ​ $ 3,679 ​ $ 287,710 Allowance for doubtful accounts ​ ​ ( 11,178 ) ​ ​ ( 30 ) ​ ​ ( 11,208 ) Accounts receivable, net ​ $ 272,853 ​ $ 3,649 ​ $ 276,502 ​ The allowance for doubtful accounts for wholesale trade receivables is estimated based on several factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligation (such as in the case of bankruptcy filings (including potential bankruptcy filings), extensive delay in payment or substantial downgrading by credit rating agencies), a specific reserve for bad debts is recorded against amounts due from that customer to reduce the net recognized receivable to the amount reasonably expected to be collected. For all other wholesale customers, an allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the end of the reporting period for financial statements, assessments of collectability based on historical trends and an evaluation of the impact of economic conditions. The Company considers both current and forecasted future economic conditions in determining the adequacy of its allowance for doubtful accounts. ​ The allowance for doubtful accounts for retail trade receivables is estimated as the credit card chargeback rate applied to the previous 90 days of credit card sales. In addition, the Company considers both current and forecasted future economic conditions in determining the adequacy of its allowance for doubtful accounts. ​ During the three and six months ended July 31, 2020, the Company recorded a $ 0.8 million and $ 10.5 million increase in its allowance for doubtful accounts primarily due to allowances recorded against the outstanding receivables of certain department store customers that have publicly announced bankruptcy filings or possible bankruptcy filings. The Company had the following activity in its allowance for credit losses for the six months ended July 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, 2020 ​ Wholesale Retail Total ​ ​ (In thousands) Balance as of January 31, 2020 ​ $ ( 628 ) ​ $ ( 82 ) ​ $ ( 710 ) Provision for credit losses ​ ​ ( 10,557 ) ​ ​ 52 ​ ​ ( 10,505 ) Accounts written off as uncollectible ​ ​ 7 ​ ​ — ​ ​ 7 Balance as of July 31, 2020 ​ $ ( 11,178 ) ​ $ ( 30 ) ​ $ ( 11,208 ) ​ ​ Note 4 – Inventories ​ Wholesale inventories, which comprise a significant portion of the Company’s inventory, are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. Retail inventories are valued at the lower of cost or market as determined by the retail inventory method. Vilebrequin inventories are stated at the lower of cost (determined by the weighted average method) or net realizable value. Substantially all of the Company’s inventories consist of finished goods. ​ The inventory return asset, which consists of the amount of goods that are anticipated to be returned by customers, represented $ 15.1 million, $ 24.8 million and $ 31.0 million as of July 31, 2020, July 31, 2019 and January 31, 2020 respectively. The inventory return asset is recorded within prepaid expenses and other current assets on the condensed consolidated balance sheets. ​ Inventory held on consignment by the Company’s customers totaled $ 6.3 million, $ 3.9 million and $ 9.1 million at July 31, 2020, July 31, 2019 and January 31, 2020, respectively. Consignment inventory is stored at the facilities of the Company’s customers. The Company reflects this inventory on its condensed consolidated balance sheets. ​ ​ ​ 9 Table of Contents Note 5 – Fair Value of Financial Instruments ​ Generally Accepted Accounting Principles establish a three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy for a particular asset or liability depends on the inputs used in its valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally-derived (unobservable). A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: ​ ● Level 1 — inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets. ​ ● Level 2 — inputs to the valuation methodology based on quoted prices for similar assets or liabilities in active markets for substantially the full term of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term of the financial instrument; and model-derived valuations whose inputs or significant value drivers are observable. ​ ● Level 3 — inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement. The following table summarizes the carrying values and the estimated fair values of the Company’s debt instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying Value ​ Fair Value ​ ​ ​ July 31, ​ July 31, ​ January 31, July 31, ​ July 31, ​ January 31, Financial Instrument ​ Level ​ 2020 ​ 2019 ​ 2020 ​ 2020 ​ 2019 ​ 2020 ​ ​ ​ ​ (In thousands) Term loan ​ 2 ​ $ 300,000 ​ $ 300,000 ​ $ 300,000 ​ $ 300,000 ​ $ 300,000 ​ $ 300,000 Revolving credit facility ​ 2 ​ ​ — ​ ​ 160,000 ​ ​ — ​ ​ — ​ ​ 160,000 ​ ​ — Note issued to LVMH ​ 3 ​ ​ 104,884 ​ ​ 99,266 ​ ​ 102,009 ​ ​ 102,304 ​ ​ 96,437 ​ ​ 95,126 Unsecured loans ​ 2 ​ ​ 6,401 ​ ​ 3,243 ​ ​ 2,860 ​ ​ 6,401 ​ ​ 3,243 ​ ​ 2,860 Overdraft facilities ​ 2 ​ ​ 3,530 ​ ​ — ​ ​ — ​ ​ 3,530 ​ ​ — ​ ​ — ​ The Company’s debt instruments are recorded at their carrying values in its condensed consolidated balance sheets, which may differ from their respective fair values. The carrying amount of the Company’s variable rate debt approximates the fair value, as interest rates change with the market rates. Furthermore, the carrying value of all other financial instruments potentially subject to valuation risk (principally consisting of cash, accounts receivable and accounts payable) also approximates fair value due to the short-term nature of these accounts. On August 7, 2020, the Company refinanced its term loan and revolving credit facility. See Note 16 – Subsequent Events. ​ The 2 % note in the principal amount of $ 125 million issued to LVMH Moet Hennessy Louis Vuitton Inc. (“LVMH”) in connection with the acquisition of Donna Karan International (“DKI”) was recorded on the balance sheet at a discount of $ 40.0 million in accordance with ASC 820 – Fair Value Measurements . For purposes of this fair value disclosure, the Company based its fair value estimate for the note issued to LVMH on the initial fair value as determined at the date of the acquisition of DKI and records the amortization using the effective interest method over the term of the note. ​ The fair value of the note issued to LVMH was considered a Level 3 valuation in the fair value hierarchy. ​ Non-Financial Assets and Liabilities ​ The Company’s non-financial assets that are measured at fair value on a nonrecurring basis include long-lived assets, which consist primarily of property and equipment and operating lease assets. The Company reviews these assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable. For impaired assets, an impairment loss is recognized equal to the difference between the carrying amount of the asset or asset group and its estimated fair value. For operating lease assets, the Company determines the fair value of the assets by discounting the estimated market rental rates over the remaining term of the lease. These fair value measurements are considered level 3 measurements in the fair value hierarchy. During the second quarter of fiscal 2021, the Company recorded a $ 20 million impairment charge primarily related to operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather, G.H. Bass, DKNY and Vilebrequin stores as a result of the performance at these stores. During the first quarter of fiscal 2020, the Company recorded an impairment of $ 9.6 million, net of tax, in connection with the adoption of ASC 842 – Leases (“ASC 842”) that was recognized through retained earnings. ​ 10 Table of Contents Note 6 – Leases ​ The Company leases retail stores, warehouses, distribution centers, office space and certain equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. ​ Most leases are for a term of one to ten years . Some leases include one or more options to renew , with renewal terms that can extend the lease term from one to ten years . Several of the Company’s retail store leases include an option to terminate the lease based on failure to achieve a specified sales volume. The exercise of lease renewal options is generally at the Company’s sole discretion. The exercise of lease termination options is generally by mutual agreement between the Company and the lessor. ​ Certain of the Company’s lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants. ​ The Company’s lease assets and liabilities as of July 31, 2020, July 31, 2019 and January 31, 2020 consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leases ​ Classification ​ July 31, 2020 ​ July 31, 2019 ​ January 31, 2020 ​ ​ ​ ​ (In thousands) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ Operating lease assets ​ $ 168,071 ​ $ 309,421 ​ $ 270,032 Total lease assets ​ ​ ​ $ 168,071 ​ $ 309,421 ​ $ 270,032 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current operating ​ Current operating lease liabilities ​ $ 91,700 ​ $ 74,297 ​ $ 63,166 Noncurrent operating ​ Noncurrent operating lease liabilities ​ ​ 140,283 ​ ​ 272,632 ​ ​ 249,040 Total lease liabilities ​ ​ ​ $ 231,983 ​ $ 346,929 ​ $ 312,206 ​ The Company’s operating lease assets and operating lease liabilities significantly declined during the second quarter of fiscal 2021 due to the restructuring of the retail operations segment. As a result of this restructuring, the Company expects to close all of its Wilsons Leather, G.H. Bass and Calvin Klein Performance stores by the end of fiscal 2021. In addition, primarily due to the restructuring, in the second quarter of fiscal 2021 the Company recorded a $ 19.4 million impairment charge related to the operating lease assets at certain Wilsons Leather, G.H. Bass, DKNY and Vilebrequin stores as a result of the performance at these stores. ​ The Company recorded lease costs of $ 36.0 million and $ 58.4 million during the three and six months ended July 31, 2020, respectively. The Company recorded lease costs of $ 24.9 million and $ 49.9 million during the three and six months ended July 31, 2019, respectively. Lease costs are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income (loss). The Company recorded negative variable lease costs and short-term lease costs of ($ 4.3 ) million and ($ 0.9 ) million for the three and six months ended July 31, 2020, respectively. The negative variable lease costs were primarily due to rent forgiveness received by the Company’s retail operations segment that was recorded as negative variable lease costs in accordance with the Staff Q&A issued by the FASB on April 10, 2020. The Company recorded variable leases costs and short-term lease costs of $ 2.7 million and $ 5.0 million for the three and six months ended July 31, 2019, respectively. Short-term lease costs are immaterial. ​ 11 Table of Contents As of July 31, 2020, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2025 and thereafter are as follows: ​ ​ ​ ​ ​ Year Ending January 31, ​ Amount ​ ​ (In thousands) 2021 ​ $ 79,178 2022 ​ ​ 50,509 2023 ​ ​ 43,058 2024 ​ ​ 31,339 2025 ​ ​ 24,239 After 2025 ​ ​ 46,971 Total lease payments ​ $ 275,294 Less: Interest ​ ​ 43,311 Present value of lease liabilities ​ $ 231,983 ​ As of July 31, 2020, there are no material leases that are legally binding but have not yet commenced. ​ As of July 31, 2020, the weighted average remaining lease term related to operating leases is 4.1 years. The weighted average discount rate related to operating leases is 8.1 %. ​ Cash paid for amounts included in the measurement of operating lease liabilities is $ 51.0 million and $ 51.9 million during the six months ended July 31, 2020 and July 31, 2019, respectively. Right-of-use assets obtained in exchange for lease obligations were $ 10.8 million and $ 15.6 million as of July 31, 2020 and July 31, 2019, respectively. ​ Note 7 – Goodwill and Intangible Assets ​ As of July 31, 2020, there is $ 260.7 million of goodwill and $ 438.7 million of indefinite-lived trademarks recorded on the Company’s condensed consolidated balance sheet. The Company reviews and tests its goodwill and intangible assets with indefinite lives for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may be impaired. Due to the impact of the COVID-19 pandemic on the Company’s operations, the Company performed a quantitative test of its goodwill as of April 30, 2020 using an income approach through a discounted cash flow analysis methodology. The discounted cash flow approach requires that certain assumptions and estimates be made regarding industry economic factors and future profitability. The Company also performed quantitative tests of each of its indefinite-lived intangible assets using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. There were no impairments identified as of April 30, 2020 as a result of these tests. ​ While no impairment was identified as of April 30, 2020, $ 370.0 million of the Company’s indefinite-lived trademarks could be deemed to have a risk of future impairment as there is limited excess fair value over the carrying value of these assets at July 31, 2020. ​ During the second quarter of 2020, the Company conducted a review to assess whether indicators of impairment existed. As a result of this review, the Company concluded that no indicators existed that would make management believe it is more likely than not that the fair value of its goodwill or indefinite-lived trademarks is less than its carrying value. The continued impact of the COVID-19 pandemic could give rise to global and regional macroeconomic factors that could impact the Company’s assumptions relating to future net sales, discount rates, tax rates or royalty rates and may result in future impairment charges for indefinite-lived intangible assets. ​ The fair value of the Company’s goodwill and indefinite-lived intangible assets are considered a Level 3 valuation in the fair value hierarchy. ​ 12 Table of Contents Note 8 – Net Income (Loss) per Common Share ​ Basic net income (loss) per common share has been computed using the weighted average number of common shares outstanding during each period. Diluted net income per share, when applicable, is computed using the weighted average number of common shares and potential dilutive common shares, consisting of unvested restricted stock unit awards and stock options outstanding during the period. All unvested restricted stock unit awards and stock options have been excluded from the diluted net income per share calculation for the three and six months ended July 31, 2020 as a result of the Company recording a net loss during each of those periods. Approximately 794,400 and 606,500 shares of common stock have been excluded from the diluted net income per share calculation for the three and six months ended July 31, 2019, respectively. All share-based payments outstanding that vest based on the achievement of performance and/or market price conditions, and for which the respective performance and/or market price conditions have not been achieved, have been excluded from the diluted per share calculation. ​ The following table reconciles the numerators and denominators used in the calculation of basic and diluted net income (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 31, ​ Six Months Ended July 31, ​ 2020 2019 2020 2019 ​ ​ (In thousands, except per share amounts) Net income (loss) ​ $ ( 14,976 ) ​ $ 11,119 ​ $ ( 54,271 ) ​ $ 23,162 Basic net income (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic common shares ​ ​ 48,214 ​ ​ 48,450 ​ ​ 48,121 ​ ​ 48,619 Basic net income (loss) per share ​ $ ( 0.31 ) ​ $ 0.23 ​ $ ( 1.13 ) ​ $ 0.48 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted net income (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic common shares ​ ​ 48,214 ​ ​ 48,450 ​ ​ 48,121 ​ ​ 48,619 Dilutive restricted stock unit awards and stock options ​ ​ — ​ ​ 666 ​ ​ — ​ ​ 817 Diluted common shares ​ ​ 48,214 ​ ​ 49,116 ​ ​ 48,121 ​ ​ 49,436 Diluted net income (loss) per share ​ $ ( 0.31 ) ​ $ 0.23 ​ $ ( 1.13 ) ​ $ 0.47 ​ ​ ​ Note 9 – Notes Payable ​ Long-term debt consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, 2020 July 31, 2019 January 31, 2020 ​ ​ (In thousands) Term loan ​ $ 300,000 ​ $ 300,000 ​ $ 300,000 Revolving credit facility ​ ​ — ​ ​ 160,000 ​ ​ — Note issued to LVMH ​ ​ 125,000 ​ ​ 125,000 ​ ​ 125,000 Unsecured loans ​ ​ 6,401 ​ ​ 3,243 ​ ​ 2,860 Overdraft facilities ​ ​ 3,530 ​ ​ — ​ ​ — Subtotal ​ ​ 434,931 ​ ​ 588,243 ​ ​ 427,860 Less: Net debt issuance costs (1) ​ ​ ( 6,095 ) ​ ​ ( 8,708 ) ​ ​ ( 7,402 ) Debt discount ​ ​ ( 20,116 ) ​ ​ ( 25,734 ) ​ ​ ( 22,991 ) Current portion of long-term debt ​ ​ ( 3,717 ) ​ ​ ( 683 ) ​ ​ ( 673 ) Total ​ $ 405,003 ​ $ 553,118 ​ $ 396,794 (1) Does not include debt issuance costs, net of amortization, totaling $ 3.3 million, $ 5.8 million and $ 4.6 million as of July 31, 2020, July 31, 2019 and January 31, 2020, respectively, related to the revolving credit facility. These debt issuance costs have been deferred and are classified in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets in accordance with ASU 2015-15. ​ 13 Table of Contents On August 7, 2020, the Company refinanced its term loan and revolving credit facility. See Note 16 – Subsequent Events. ​ Term Loan ​ The Company borrowed $ 350.0 million under a senior secured term loan facility (the “Term Loan”) that matures in December 2022. The Company prepaid $ 50.0 million in principal amount of the Term Loan, reducing the principal balance of the Term Loan to $ 300.0 million. The Term Loan is guaranteed by certain of the Company’s subsidiaries. ​ Interest on the outstanding principal amount of the Term Loan accrues at a rate equal to the London Interbank Offered Rate (“LIBOR”), subject to a 1 % floor, plus an applicable margin of 5.25 % or an alternate base rate (defined as the greatest of (i) the “prime rate” as published by the Wall Street Journal from time to time, (ii) the federal funds rate plus 0.5 % or (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 4.25 %, per annum, payable in cash. As of July 31, 2020, interest under the Term Loan was being paid at a weighted average rate of 6.45 % per annum. ​ The Term Loan is secured by certain assets of the Company and certain of its subsidiaries. The Term Loan is required to be prepaid with the proceeds of certain asset sales if such proceeds are not applied as required by the Term Loan within specified deadlines. The Term Loan contains covenants that, among other things, restrict the Company’s ability, subject to certain exceptions, to 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. This loan also includes a mandatory prepayment provision based on excess cash flow as defined in the term loan agreement. A first lien leverage covenant requires the Company to maintain a level of debt to EBITDA at a ratio as defined in the term loan agreement. As of July 31, 2020, the Company was in compliance with these covenants. ​ Revolving Credit Facility ​ The Company has a $ 650 million credit agreement (the “revolving credit facility”) under which amounts available are subject to borrowing base formulas and over advances as specified in the revolving credit facility agreement. Borrowings bear interest, at the Company’s option, at LIBOR plus a margin of 1.25 % to 1.75 % or an alternate base rate (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 % or (iii) the LIBOR rate for a borrowing with an interest period of one month) plus a margin of 0.25 % to 0.75 %, with the applicable margin determined based on the availability under the revolving credit facility agreement. The revolving credit facility has a five-year term ending December 1, 2021 . In addition to paying interest on any outstanding borrowings under the revolving credit facility, the Company is 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 rate equal to 0.25 % per annum on the average daily amount of the available commitments. ​ The revolving credit facility is secured by specified assets of the Company and certain of its subsidiaries. ​ The revolving credit facility contains covenants that, among other things, restrict the Company’s ability, subject to specified exceptions, to 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 the Company 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 of the Company. As of July 31, 2020, the Company was in compliance with these covenants. ​ As of July 31, 2020, the Company had no borrowings outstanding under the revolving credit facility. As of July 31, 2020, interest under the revolving credit agreement was being paid at an average rate of 2.06 % per annum. The revolving credit facility also includes amounts available for letters of credit. As of July 31, 2020, there were outstanding trade and standby letters of credit amounting to $ 7.0 million and $ 3.4 million, respectively. ​ LVMH Note ​ As a portion of the consideration for the acquisition of DKI, the Company issued to LVMH a junior lien secured promissory note in the principal amount of $ 125.0 million (the “LVMH Note”) that bears interest at the rate of 2 % per year. $ 75.0 million of the principal amount of the LVMH Note is due and payable on June 1, 2023 and $ 50.0 million of such principal amount is due and payable on December 1, 2023 . ​ 14 Table of Contents ASC 820 requires the note to be recorded at fair value at issuance. As a result, the Company recorded a $ 40.0 million debt discount. This discount is being amortized as interest expense using the effective interest method over the term of the LVMH Note. ​ Unsecured Loans ​ On April 15, 2019, T.R.B. International SA (“TRB”), a subsidiary of Vilebrequin, borrowed € 3.0 million under an unsecured loan (the “2019 Unsecured Loan”). During the term of the 2019 Unsecured Loan, TRB is required to make quarterly installment payments of € 0.2 million. Interest on the outstanding principal amount of the 2019 Unsecured Loan accrues at a fixed rate equal to 1.50 % per annum, payable quarterly. The 2019 Unsecured Loan originally matured on April 15, 2024. Due to the COVID-19 outbreak, the bank agreed to amend the 2019 Unsecured Loan to suspend the March and June 2020 quarterly installment payments and add these payments to the balance due at the end of the loan term. The 2019 Unsecured Loan now matures on September 15, 2024 . ​ On February 3, 2020, TRB borrowed € 1.7 million under another unsecured loan (the “February 2020 Unsecured Loan”). During the term of the February 2020 Unsecured Loan, TRB is required to make quarterly installment payments of € 0.1 million. Interest on the outstanding principal amount of the February 2020 Unsecured Loan accrues at a fixed rate equal to 1.50 % per annum, payable quarterly. The February 2020 Unsecured Loan originally matured on March 31, 2025. Due to the COVID-19 outbreak, the bank agreed to amend the 2020 Unsecured Loan to suspend the June 2020 quarterly installment payment and add this payment to the balance due at the end of the loan term. The February 2020 Unsecured Loan now matures on June 30, 2025 . ​ On June 12, 2020, a subsidiary of TRB borrowed € 1.5 million under a French state backed loan provided by UBS Bank (the “June 2020 Unsecured Loan”) as part of a COVID-19 relief program. The June 2020 Unsecured Loan provides for an initial one year term with the option to extend the term by an additional one to five years at the end of the initial term. The June 2020 Unsecured Loan requires no interest or principal payments during the initial term of the agreement. ​ Overdraft Facilities ​ During the second quarter of fiscal 2021, TRB entered into several overdraft facilities that allow for applicable bank accounts to be in a negative position up to a certain maximum overdraft. TRB entered into an uncommitted overdraft facility with HSBC Bank allowing for a maximum overdraft of € 5 million. Interest on drawn balances accrues at a rate equal to the Euro Interbank Offered Rate plus a margin of 1.75 % per annum, payable quarterly. The facility may be cancelled at any time by TRB or HSBC Bank. As part of a COVID-19 relief program, TRB and its subsidiaries 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 July 31, 2020, TRB had an aggregate € 3.1 million drawn across these various facilities. ​ Note 10 – Revenue Recognition ​ Disaggregation of Revenue ​ In accordance with ASC 606 – Revenue from Contracts with Customers , the Company discloses its revenues by segment. Each segment presents its own characteristics with respect to the timing of revenue recognition and the type of customer. In addition, disaggregating revenues using a segment basis is consistent with how the Company’s Chief Operating Decision Maker manages the Company. The Company has identified the wholesale operations segment and the retail operations segment as distinct sources of revenue. ​ Wholesale Operations Segment. Wholesale revenues include sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin business. Wholesale revenues from sales of products are recognized when control transfers to the customer. The Company considers control to have been transferred when the Company has transferred physical possession of the product, the Company has a right to payment for the product, the customer has legal title to the product and the customer has the significant risks and rewards of the product. Wholesale revenues are adjusted by variable considerations arising from implicit or explicit obligations. Wholesale revenues also include revenues from license agreements related to the DKNY, Donna Karan, G.H. Bass, Andrew Marc and Vilebrequin trademarks owned by the Company. As of July 31, 2020, revenues from license agreements represented an insignificant portion of wholesale revenues. ​ 15 Table of Contents Retail Operations Segment. Retail store revenues are generated by direct sales to consumers through company-operated stores and product sales through the Company’s owned websites for the DKNY, Donna Karan, Wilsons, G.H. Bass, Andrew Marc and Karl Lagerfeld Paris businesses. Retail stores primarily consist of Wilsons Leather, G.H. Bass and DKNY retail stores, substantially all of which are operated as outlet stores. Retail operations segment revenues are recognized at the point of sale when the customer takes possession of the goods and tenders payment. Digital-based revenues primarily consist of sales to consumers through the Company’s digital platforms. Digital-based revenue is recognized when a customer takes possession of the goods. Retail sales are recorded net of applicable sales tax. As a result of the restructuring of the Company’s retail operations, the Company is in the process of closing all of its Wilsons Leather and G.H. Bass retail stores. After completion of the restructuring, the Company’s retail operations segment will consist of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and G.H. Bass. ​ Contract Liabilities ​ The Company’s contract liabilities, which are recorded within accrued expenses in the accompanying condensed consolidated balance sheets, primarily consist of gift card liabilities and advance payments from licensees. In some of its retail concepts, the Company also offers a limited loyalty program where customers accumulate points redeemable for cash discount certificates that expire 90 days after issuance. Total contract liabilities were $ 5.1 million, $ 6.6 million and $ 5.9 million at July 31, 2020, July 31, 2019 and January 31, 2020, respectively. The Company recognized $ 1.3 million in revenue for the three months ended July 31, 2020 related to contract liabilities that existed at April 30, 2020. The Company recognized $ 4.0 million in revenue for the six months ended July 31, 2020 related to contract liabilities that existed at January 31, 2020. There were no contract assets recorded as of July 31, 2020, July 31, 2019 and January 31, 2020. Substantially all of the advance payments from licensees as of July 31, 2020 are expected to be recognized as revenue within the next twelve months. ​ Note 11 – Segments ​ The Company’s reportable segments are business units that offer products through different channels of distribution. The Company has two reportable segments: wholesale operations and retail operations. The wholesale operations segment includes sales of products under the Company’s owned, licensed and private label brands, as well as sales related to the Vilebrequin business. Wholesale revenues also include revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Vilebrequin, G.H. Bass and Andrew Marc. The retail operations segment consists primarily of direct sales to consumers through Company-operated stores, consisting primarily of Wilsons Leather, G.H. Bass and DKNY stores, substantially all of which are operated as outlet stores. Sales through Company-owned channels, with the exception of Vilebrequin, are also included in the retail operations segment. As a result of the restructuring of the Company’s retail operations, the Company is in the process of closing all of its Wilsons Leather and G.H. Bass retail stores. After completion of the restructuring, the Company’s retail operations segment will consist of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and G.H. Bass. ​ The following segment information is presented for the three and six-month periods indicated below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 31, 2020 ​ Wholesale Retail Elimination (1) Total ​ ​ (In thousands) Net sales ​ $ 266,809 ​ $ 34,507 ​ $ ( 4,104 ) ​ $ 297,212 Cost of goods sold ​ ​ 143,340 ​ ​ 23,283 ​ ​ ( 4,104 ) ​ ​ 162,519 Gross profit ​ ​ 123,469 ​ ​ 11,224 ​ ​ — ​ ​ 134,693 Selling, general and administrative expenses ​ ​ 76,727 ​ ​ 45,375 ​ ​ — ​ ​ 122,102 Depreciation and amortization ​ ​ 8,392 ​ ​ 1,299 ​ ​ — ​ ​ 9,691 Asset impairments, net of gain on lease modifications ​ ​ 612 ​ ​ 13,690 ​ ​ — ​ ​ 14,302 Operating profit (loss) ​ $ 37,738 ​ $ ( 49,140 ) ​ $ — ​ $ ( 11,402 ) ​ 16 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 31, 2019 ​ Wholesale Retail Elimination (1) Total ​ ​ (In thousands) Net sales ​ $ 588,601 ​ $ 83,706 ​ $ ( 28,415 ) ​ $ 643,892 Cost of goods sold ​ ​ 395,728 ​ ​ 44,810 ​ ​ ( 28,415 ) ​ ​ 412,123 Gross profit ​ ​ 192,873 ​ ​ 38,896 ​ ​ — ​ ​ 231,769 Selling, general and administrative expenses ​ ​ 141,540 ​ ​ 54,908 ​ ​ — ​ ​ 196,448 Depreciation and amortization ​ ​ 7,763 ​ ​ 2,026 ​ ​ — ​ ​ 9,789 Gain on lease modifications ​ ​ — ​ ​ ( 1,393 ) ​ ​ — ​ ​ ( 1,393 ) Operating profit (loss) ​ $ 43,570 ​ $ ( 16,645 ) ​ $ — ​ $ 26,925 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended July 31, 2020 ​ Wholesale Retail Elimination (1) Total ​ ​ (In thousands) Net sales ​ $ 645,681 ​ $ 68,415 ​ $ ( 11,753 ) ​ $ 702,343 Cost of goods sold ​ ​ 409,981 ​ ​ 45,021 ​ ​ ( 11,753 ) ​ ​ 443,249 Gross profit ​ ​ 235,700 ​ ​ 23,394 ​ ​ — ​ ​ 259,094 Selling, general and administrative expenses ​ ​ 189,327 ​ ​ 87,395 ​ ​ — ​ ​ 276,722 Depreciation and amortization ​ ​ 16,683 ​ ​ 2,875 ​ ​ — ​ ​ 19,558 Asset impairments, net of gain on lease modifications ​ ​ 608 ​ ​ 16,881 ​ ​ — ​ ​ 17,489 Operating profit (loss) ​ $ 29,082 ​ $ ( 83,757 ) ​ $ — ​ $ ( 54,675 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended July 31, 2019 ​ Wholesale Retail Elimination (1) Total ​ ​ (In thousands) Net sales ​ $ 1,159,240 ​ $ 165,610 ​ $ ( 47,406 ) ​ $ 1,277,444 Cost of goods sold ​ ​ 767,308 ​ ​ 89,709 ​ ​ ( 47,406 ) ​ ​ 809,611 Gross profit ​ ​ 391,932 ​ ​ 75,901 ​ ​ — ​ ​ 467,833 Selling, general and administrative expenses ​ ​ 288,797 ​ ​ 109,510 ​ ​ — ​ ​ 398,307 Depreciation and amortization ​ ​ 15,284 ​ ​ 3,978 ​ ​ — ​ ​ 19,262 Gain on lease modifications ​ ​ — ​ ​ ( 2,222 ) ​ ​ — ​ ​ ( 2,222 ) Operating profit (loss) ​ $ 87,851 ​ $ ( 35,365 ) ​ $ — ​ $ 52,486 ​ (1) Represents intersegment sales to the Company’s retail operations segment. ​ The total assets for each of the Company’s reportable segments, as well as assets not allocated to a segment, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, 2020 July 31, 2019 January 31, 2020 ​ ​ (In thousands) Wholesale ​ $ 1,685,530 ​ $ 2,109,198 ​ $ 1,912,175 Retail ​ ​ 139,373 ​ ​ 362,595 ​ ​ 272,832 Corporate ​ ​ 444,911 ​ ​ 240,643 ​ ​ 380,130 Total assets ​ $ 2,269,814 ​ $ 2,712,436 ​ $ 2,565,137 ​ ​ Note 12 – Stockholders’ Equity ​ For the three months ended July 31, 2020, the Company issued no shares of common stock and utilized 307,147 shares of treasury stock in connection with the vesting of equity awards. For the three months ended July 31, 2019, the Company issued 1,651 shares of common stock and utilized 148,025 shares of treasury stock in connection with the vesting of equity awards. For the six months ended July 31, 2020, the Company issued no shares of common stock and utilized 349,342 shares of treasury stock in connection with the vesting of equity awards. For the six months ended July 31, 2019, the Company issued 7,651 shares of common stock and utilized 356,550 shares of treasury stock in connection with the vesting of equity awards. ​ 17 Table of Contents Note 13 – Income Taxes ​ The Company recorded an income tax benefit of $ 3.7 million and $ 20.1 million for the three and six months ended July 31, 2020, respectively. The Company recorded income tax expense of $ 4.3 million and $ 6.8 million for the three and six months ended July 31, 2019, respectively. Historically, the Company has calculated its provision for income taxes during interim reporting periods by applying the estimated annual effective tax rate for the full fiscal year to pre-tax income or loss, excluding discrete items, for the reporting period. Due to the uncertainty related to the impact of the COVID-19 pandemic on our operations, the Company used a discrete effective tax rate method to calculate taxes for the three- and six-month periods ended July 31, 2020. The Company will continue to evaluate income tax estimates under the historical method in subsequent quarters and employ a discrete effective tax rate method if warranted. ​ Note 14 – Canadian Customs Duty Examination ​ In October 2017, the Canada Border Service Agency (“CBSA”) issued a final audit report to G-III Apparel Canada ULC (“G-III Canada”), a wholly-owned subsidiary of the Company. The report challenged the valuation used by G-III Canada for certain goods imported into Canada. The period covered by the examination is February 1, 2014 through October 27, 2017, the date of the final report. The CBSA has requested G-III Canada to reassess its customs entries for that period using the price paid or payable by the Canadian retail customers for certain imported goods rather than the price paid by G-III Canada to the vendor. The CBSA has also requested that G-III Canada change the valuation method used to pay duties with respect to goods imported in the future. ​ In March 2018, G-III Canada provided a bond to guarantee payment to the CBSA for additional duties payable as a result of the reassessment required by the final audit report. The Company secured a bond in the amount of CAD$ 26.9 million ($ 20.9 million) representing customs duty and interest through December 31, 2017 that is claimed to be owed to the CBSA. In March 2018, the Company amended the duties filed for the month of January 2018 based on the new valuation method. This amount was paid to the CBSA. Beginning February 1, 2018, the Company began paying duties based on the new valuation method. There were no amounts paid and deferred for the three and six months ended July 31, 2020, related to the higher dutiable values. Cumulative amounts paid and deferred through July 31, 2020, related to the higher dutiable values, were CAD$ 13.0 million ($ 9.7 million). ​ Effective June 1, 2019, G-III commenced paying based on the dutiable value of G-III Canada’s imports based on the pre-audit levels. G-III continued to defer the additional duty paid through the month of May 2019 pending the final outcome of the appeal. ​ G-III Canada, based on the advice of counsel, believes it has positions that support its ability to receive a refund of amounts claimed to be owed to the CBSA on appeal and intends to vigorously contest the findings of the CBSA. G-III Canada filed its appeal with the CBSA in May 2018. ​ Note 15 – Recent Adopted and Issued Accounting Pronouncements ​ Recently Adopted Accounting Guidance ​ In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This pronouncement changed how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 replaced the “incurred loss” model with an “expected loss” model. Under the “incurred loss” model, a loss (or allowance) was recognized only when an event had occurred (such as a payment delinquency) that caused the entity to believe that a loss was probable (i.e., that it had been “incurred”). Under the “expected loss” model, an entity recognizes a loss (or allowance) upon initial recognition of the asset that reflects all future events that may lead to a loss being realized, regardless of whether it is probable that the future event will occur. The “incurred loss” model considered past events and current conditions, while the “expected loss” model includes expectations for the future which have yet to occur. The Company adopted ASU 2016-16 as of February 1, 2020. The adoption of this standard did not result in a material change to the Company’s condensed consolidated financial statements. ​ ​ 18 Table of Contents In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which made a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement among or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in ASU 2018-13 modified the disclosure requirements with respect to fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty have been applied prospectively in the initial fiscal year of adoption. All other amendments have been applied retrospectively to all periods presented in the initial year of adoption. The Company adopted the standard effective February 1, 2020. The adoption of this standard did not result in a material change to the Company’s condensed consolidated financial statements. ​ In August 2018, the FASB issued ASU 2018-15, Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is A Service Contract, which addresses the accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 aligned the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amended ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. The Company adopted the standard effective February 1, 2020. The adoption of this standard did not result in a material change to the Company’s condensed consolidated financial statements. ​ In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard is intended to provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The guidance was effective upon issuance, and may be applied prospectively through December 31, 2022. The adoption of this standard did not result in a material change to the Company’s condensed consolidated financial statements. ​ Issued Accounting Guidance Being Evaluated for Adoption ​ The Company has reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements. ​ Note 16 – Subsequent Events ​ Secured Notes ​ On August 7, 2020, the Company completed a private debt offering of $ 400 million aggregate principal amount of its 7.875 % Senior Secured Notes due 2025 (the “Notes”). The terms of the Notes are governed by an indenture (the “Indenture”), among the Company, the guarantors party thereto and U.S. Bank, National Association, as trustee and collateral agent (the “Collateral Agent”). The net proceeds of the Notes have been used (i) to repay the Company’s existing term loan facility due 2022, (ii) to pay related fees and expenses and (iii) for general corporate purposes. ​ The Notes bear interest at a rate of 7.875 % per year payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2021. ​ The Notes are unconditionally guaranteed on a senior-priority secured basis by the Company’s current and future wholly-owned domestic subsidiaries that guarantee any of the Company’s credit facilities, including the Company’s ABL facility (the “ABL Facility”) pursuant to the ABL Credit Agreement, or certain future capital markets indebtedness of the Company or guarantors. ​ The Notes and the related guarantees are secured by (i) first priority liens on the Company’s Cash Flow Priority Collateral (as defined in the Indenture), and (ii) a second-priority lien on the Company’s ABL Priority Collateral (as defined in the Indenture), in each case subject to permitted liens described in the Indenture. ​ 19 Table of Contents In connection with the issuance of the Notes and execution of the Indenture, the Company and the Guarantors entered into a pledge and security agreement (the “Pledge and Security Agreement”), among the Company, the Guarantors and the Collateral Agent. ​ The Notes are subject to the terms of the intercreditor agreement which governs the relative rights of the secured parties in respect of the ABL Facility and the Notes (the “Intercreditor Agreement”). The Intercreditor Agreement restricts the actions permitted to be taken by the Collateral Agent with respect to the Collateral on behalf of the holders of the Notes. The Notes are also subject to the terms of the seller note subordination agreement which governs the relative rights of the secured parties in respect of the Seller Note (as defined therein), the ABL Facility and the Notes. ​ At any time prior to August 15, 2022, the Company may redeem some or all of the Notes at a price equal to 100 % of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date plus a “make-whole” premium, as described in the Indenture. On or after August 15, 2022, the Company may redeem some or all of the Notes at any time and from time to time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to August 15, 2022, the Company may redeem up to 40 % of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at the redemption price set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to August 15, 2022, during any twelve month period, the Company may redeem up to 10 % of the aggregate principal amount of the Notes at a redemption price equal to 103 % of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. ​ If the Company experiences a Change of Control (as defined in the Indenture), the Company is required to offer to repurchase the Notes at 101 % of the principal amount of such Notes plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. ​ The Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, incur restrictions on the ability of the Company’s restricted subsidiaries that are not guarantors to pay dividends or make certain other payments, create or incur certain liens, sell assets and subsidiary stock, impair the security interests, transfer all or substantially all of the Company’s assets or enter into merger or consolidation transactions, and enter into transactions with affiliates. The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in the Indenture, failure to pay certain other indebtedness, failure of certain guarantees to be enforceable, failure to perfect certain collateral securing the Notes failure to pay certain final judgments, and certain events of bankruptcy or insolvency. ​ Second Amended and Restated ABL Credit Agreement ​ On August 7, 2020, the Company’s subsidiaries, G-III Leather Fashions, Inc., Riviera Sun, Inc., CK Outerwear, LLC, AM Retail Group, Inc. and The Donna Karan Company Store LLC (collectively, the “Borrowers”), entered into the second amended and restated credit agreement (the “ABL Credit Agreement”) with the Lenders named therein and with JPMorgan Chase Bank, N.A., as Administrative Agent. The ABL Credit Agreement is a five year senior secured credit facility subject to a springing maturity date if, subject to certain conditions, certain material indebtedness is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. The ABL Credit Agreement provides for borrowings in the aggregate principal amount of up to $ 650 million. The Company and its subsidiaries, G-III Apparel Canada ULC, Gabrielle Studio, Inc., Donna Karan International Inc. and Donna Karan Studio LLC (the “Guarantors”), are Loan Guarantors under the ABL Credit Agreement. ​ The ABL Credit Agreement refinances, amends and restates the Amended Credit Agreement, dated as of December 1, 2016 (as amended, supplemented or otherwise modified from time to time prior to August 7, 2020, the “Prior Credit Agreement”), by and among the Borrowers and the Loan Guarantors (each as defined therein) party thereto, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., in its capacity as the administrative agent thereunder. The Prior Credit Agreement provided for borrowings of up to $ 650 million and was due to expire in December 2021. The ABL Credit Agreement extends the maturity date, subject to a springing maturity date if, subject to certain conditions, certain material indebtedness is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. ​ 20 Table of Contents Amounts available under the ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the ABL Credit Agreement. Borrowings bear interest, at the Borrowers’ option, at LIBOR plus a margin of 1.75 % to 2.25 % or an alternate base rate margin of 0.75 % to 1.25 % (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) the LIBOR rate for a borrowing with an interest period of one month) plus 1.00 %, with the applicable margin determined based on Borrowers’ availability under the ABL Credit Agreement. The ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors. ​ Fabco Holding B.V. ​ On August 31, 2020, the Company and Amlon Capital B.V. (“Amlon”) amended, effective October 1, 2020, their joint venture agreement for Fabco Holding B.V. Fabco operates the DKNY/Donna Karan business in China. Pursuant to this amended agreement, the Company, through a wholly-owned subsidiary, will own 75 % of the joint venture and Amlon will own 25 %. Prior to the effectiveness of this amended agreement, the Company owns 49 % of the joint venture with Amlon owning the remaining 51 % interest. Beginning on October 1, 2020, the Company will consolidate Fabco’s results of operations into its consolidated financial statements. ​ 21 Table of Contents