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, ​ ​ 2021 ​ 2020 ​ 2021 ​ (Unaudited) (Unaudited) ​ ​ ​ ​ (In thousands, except per share amounts) ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 509,988 ​ $ 252,798 ​ $ 351,934 Accounts receivable, net of allowance for doubtful accounts of $ 17.4 million, $ 11.2 million and $ 17.5 million, respectively ​ ​ 385,047 ​ ​ 276,502 ​ ​ 492,698 Inventories ​ ​ 499,337 ​ ​ 574,767 ​ ​ 416,503 Prepaid income taxes ​ ​ 1,115 ​ ​ 13,949 ​ ​ 26,102 Prepaid expenses and other current assets ​ ​ 66,343 ​ ​ 55,709 ​ ​ 56,803 Total current assets ​ ​ 1,461,830 ​ ​ 1,173,725 ​ ​ 1,344,040 Investments in unconsolidated affiliates ​ ​ 63,383 ​ ​ 59,132 ​ ​ 63,523 Property and equipment, net ​ ​ 51,425 ​ ​ 66,627 ​ ​ 57,064 Operating lease assets ​ ​ 172,916 ​ ​ 168,071 ​ ​ 186,070 Other assets, net ​ ​ 61,476 ​ ​ 31,900 ​ ​ 38,785 Other intangibles, net ​ ​ 33,136 ​ ​ 36,423 ​ ​ 35,059 Deferred income tax assets, net ​ ​ 5,260 ​ ​ 34,548 ​ ​ 5,098 Trademarks ​ ​ 441,788 ​ ​ 438,721 ​ ​ 443,612 Goodwill ​ ​ 262,372 ​ ​ 260,667 ​ ​ 263,135 Total assets ​ $ 2,553,586 ​ $ 2,269,814 ​ $ 2,436,386 LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ Current portion of notes payable ​ $ 5,624 ​ $ 3,717 ​ $ 4,402 Accounts payable ​ ​ 252,313 ​ ​ 192,192 ​ ​ 139,183 Accrued expenses ​ ​ 114,030 ​ ​ 60,257 ​ ​ 102,787 Customer refund liabilities ​ ​ 63,082 ​ ​ 115,370 ​ ​ 99,355 Current operating lease liabilities ​ ​ 43,119 ​ ​ 91,700 ​ ​ 43,560 Income tax payable ​ ​ 5,699 ​ ​ 9,075 ​ ​ 11,853 Other current liabilities ​ ​ 1,674 ​ ​ 109 ​ ​ 862 Total current liabilities ​ ​ 485,541 ​ ​ 472,420 ​ ​ 402,002 Notes payable, net of discount and unamortized issuance costs ​ ​ 512,017 ​ ​ 405,003 ​ ​ 507,950 Deferred income tax liabilities, net ​ ​ 20,133 ​ ​ 7,960 ​ ​ 20,353 Noncurrent operating lease liabilities ​ ​ 147,119 ​ ​ 140,283 ​ ​ 161,668 Other noncurrent liabilities ​ ​ 7,204 ​ ​ 6,399 ​ ​ 7,208 Total liabilities ​ ​ 1,172,014 ​ ​ 1,032,065 ​ ​ 1,099,181 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interests ​ ​ 960 ​ ​ — ​ ​ 964 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders' Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred stock; 1,000 shares authorized; no shares issued ​ ​ — ​ ​ — ​ ​ — Common stock - $ 0.01 par value; 120,000 shares authorized; 49,396 , 49,396 and, 49,396 shares issued, respectively ​ ​ 264 ​ ​ 264 ​ ​ 264 Additional paid-in capital ​ ​ 447,476 ​ ​ 444,384 ​ ​ 448,417 Accumulated other comprehensive loss ​ ​ ( 7,026 ) ​ ​ ( 18,260 ) ​ ​ ( 2,094 ) Retained earnings ​ ​ 961,901 ​ ​ 838,867 ​ ​ 916,683 Common stock held in treasury, at cost - 829 , 1,037 and 1,019 shares, respectively ​ ​ ( 22,003 ) ​ ​ ( 27,506 ) ​ ​ ( 27,029 ) Total stockholders' equity ​ ​ 1,380,612 ​ ​ 1,237,749 ​ ​ 1,336,241 Total liabilities, redeemable noncontrolling interests and stockholders' equity ​ $ 2,553,586 ​ $ 2,269,814 ​ $ 2,436,386 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, ​ ​ 2021 2020 2021 2020 ​ ​ (Unaudited) ​ ​ (In thousands, except per share amounts) Net sales ​ $ 483,081 ​ $ 297,212 ​ $ 1,002,991 ​ $ 702,343 Cost of goods sold ​ ​ 290,203 ​ ​ 162,519 ​ ​ 614,644 ​ ​ 443,249 Gross profit ​ ​ 192,878 ​ ​ 134,693 ​ ​ 388,347 ​ ​ 259,094 Selling, general and administrative expenses ​ ​ 146,840 ​ ​ 122,102 ​ ​ 288,443 ​ ​ 276,722 Depreciation and amortization ​ ​ 7,098 ​ ​ 9,691 ​ ​ 14,142 ​ ​ 19,558 Asset impairments, net of gain on lease modifications ​ ​ — ​ ​ 14,302 ​ ​ — ​ ​ 17,489 Operating profit (loss) ​ ​ 38,940 ​ ​ ( 11,402 ) ​ ​ 85,762 ​ ​ ( 54,675 ) Other income (loss) ​ ​ 1,975 ​ ​ 1,943 ​ ​ 3,795 ​ ​ ( 113 ) Interest and financing charges, net ​ ​ ( 12,574 ) ​ ​ ( 9,177 ) ​ ​ ( 24,578 ) ​ ​ ( 19,556 ) Income (loss) before income taxes ​ ​ 28,341 ​ ​ ( 18,636 ) ​ ​ 64,979 ​ ​ ( 74,344 ) Income tax expense (benefit) ​ ​ 9,235 ​ ​ ( 3,660 ) ​ ​ 19,494 ​ ​ ( 20,073 ) Net income (loss) ​ ​ 19,106 ​ ​ ( 14,976 ) ​ ​ 45,485 ​ ​ ( 54,271 ) Less: Loss attributable to noncontrolling interests ​ ​ ( 62 ) ​ ​ — ​ ​ ( 4 ) ​ ​ — Net income (loss) attributable to G-III Apparel Group, Ltd. ​ $ 19,168 ​ $ ( 14,976 ) ​ $ 45,489 ​ $ ( 54,271 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO G-III APPAREL GROUP, LTD.: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per common share ​ $ 0.40 ​ $ ( 0.31 ) ​ $ 0.94 ​ $ ( 1.13 ) Weighted average number of shares outstanding ​ ​ 48,476 ​ ​ 48,214 ​ ​ 48,427 ​ ​ 48,121 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per common share ​ $ 0.39 ​ $ ( 0.31 ) ​ $ 0.92 ​ $ ( 1.13 ) Weighted average number of shares outstanding ​ ​ 49,523 ​ ​ 48,214 ​ ​ 49,502 ​ ​ 48,121 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 19,106 ​ $ ( 14,976 ) ​ $ 45,485 ​ $ ( 54,271 ) Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ ​ 2,021 ​ ​ 3,774 ​ ​ ( 4,938 ) ​ ​ ( 252 ) Other comprehensive income (loss): ​ ​ 2,021 ​ ​ 3,774 ​ ​ ( 4,938 ) ​ ​ ( 252 ) Comprehensive income (loss) ​ ​ 21,127 ​ ​ ( 11,202 ) ​ $ 40,547 ​ $ ( 54,523 ) Comprehensive income attributable to noncontrolling interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ ​ ( 62 ) ​ ​ — ​ ​ ( 4 ) ​ ​ — Foreign currency translation adjustments ​ ​ 10 ​ ​ — ​ ​ 6 ​ ​ — Comprehensive income (loss) attributable to noncontrolling interests ​ ​ ( 52 ) ​ ​ — ​ ​ 2 ​ ​ — Comprehensive income (loss) attributable to G-III Apparel Group, Ltd. ​ $ 21,075 ​ $ ( 11,202 ) ​ $ 40,549 ​ $ ( 54,523 ) ​ 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, 2021 ​ $ 264 ​ $ 450,961 ​ $ ( 9,057 ) ​ $ 942,733 ​ $ ( 27,025 ) ​ $ 1,357,876 Equity awards exercised/vested, net ​ ​ — ​ ​ ( 5,022 ) ​ ​ — ​ ​ — ​ ​ 5,022 ​ ​ — Share-based compensation expense ​ ​ — ​ ​ 5,871 ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,871 Taxes paid for net share settlements ​ ​ — ​ ​ ( 4,334 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 4,334 ) Other comprehensive loss, net ​ ​ — ​ ​ — ​ ​ 2,031 ​ ​ — ​ ​ — ​ ​ 2,031 Net income attributable to G-III Apparel Group, Ltd. ​ ​ — ​ ​ — ​ ​ — ​ ​ 19,168 ​ ​ — ​ ​ 19,168 Balance as of July 31, 2021 ​ $ 264 ​ $ 447,476 ​ $ ( 7,026 ) ​ $ 961,901 ​ $ ( 22,003 ) ​ $ 1,380,612 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 loss, net ​ ​ — ​ ​ — ​ ​ 3,774 ​ ​ — ​ ​ — ​ ​ 3,774 Net loss attributable to G-III Apparel Group, Ltd. ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 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 January 31, 2021 ​ $ 264 ​ $ 448,417 ​ $ ( 2,094 ) ​ $ 916,683 ​ $ ( 27,029 ) ​ $ 1,336,241 Equity awards exercised/vested, net ​ ​ — ​ ​ ( 5,026 ) ​ ​ — ​ ​ — ​ ​ 5,026 ​ ​ — Share-based compensation expense ​ ​ — ​ ​ 8,419 ​ ​ — ​ ​ — ​ ​ — ​ ​ 8,419 Taxes paid for net share settlements ​ ​ — ​ ​ ( 4,334 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 4,334 ) Cumulative effect of change in accounting principle ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 271 ) ​ ​ — ​ ​ ( 271 ) Other comprehensive income, net ​ ​ — ​ ​ — ​ ​ ( 4,932 ) ​ ​ — ​ ​ — ​ ​ ( 4,932 ) Net income attributable to G-III Apparel Group, Ltd. ​ ​ — ​ ​ — ​ ​ — ​ ​ 45,489 ​ ​ — ​ ​ 45,489 Balance as of July 31, 2021 ​ $ 264 ​ $ 447,476 ​ $ ( 7,026 ) ​ $ 961,901 ​ $ ( 22,003 ) ​ $ 1,380,612 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 income, net ​ ​ — ​ ​ — ​ ​ ( 252 ) ​ ​ — ​ ​ — ​ ​ ( 252 ) Net loss attributable to G-III Apparel Group, Ltd. ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 54,271 ) ​ ​ — ​ ​ ( 54,271 ) Balance as of July 31, 2020 ​ $ 264 ​ $ 444,384 ​ $ ( 18,260 ) ​ $ 838,867 ​ $ ( 27,506 ) ​ $ 1,237,749 ​ 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, ​ 2021 2020 ​ ​ (Unaudited) ​ ​ (In thousands) Cash flows from operating activities ​ ​ ​ ​ ​ ​ Net income (loss) attributable to G-III Apparel Group, Ltd. ​ $ 45,489 ​ $ ( 54,271 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 14,142 ​ ​ 19,558 Loss on disposal of fixed assets ​ ​ 21 ​ ​ 169 Non-cash operating lease costs ​ ​ 20,598 ​ ​ 44,732 Gain on lease modifications ​ ​ — ​ ​ ( 2,524 ) Asset impairments ​ ​ — ​ ​ 20,013 Dividend received from unconsolidated affiliate ​ ​ 392 ​ ​ 2,695 Equity (gain)/loss in unconsolidated affiliates ​ ​ ( 2,254 ) ​ ​ 175 Share-based compensation ​ ​ 8,419 ​ ​ 1,737 Deferred financing charges and debt discount amortization ​ ​ 4,781 ​ ​ 5,425 Deferred income taxes ​ ​ ( 163 ) ​ ​ ( 16,414 ) Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ​ 107,652 ​ ​ 253,634 Inventories ​ ​ ( 82,835 ) ​ ​ ( 22,849 ) Income taxes, net ​ ​ 18,833 ​ ​ ( 4,979 ) Prepaid expenses and other current assets ​ ​ ( 9,598 ) ​ ​ 25,128 Other assets, net ​ ​ 717 ​ ​ ( 678 ) Customer refund liabilities ​ ​ ( 36,274 ) ​ ​ ( 118,047 ) Operating lease liabilities ​ ​ ( 22,562 ) ​ ​ ( 37,785 ) Accounts payable, accrued expenses and other liabilities ​ ​ 126,468 ​ ​ ( 55,914 ) Net cash provided by operating activities ​ ​ 193,826 ​ ​ 59,805 ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ Operating lease assets initial direct costs ​ ​ — ​ ​ ( 3,968 ) Minority investment in e-commerce retailer ​ ​ ( 25,000 ) ​ ​ — Capital expenditures ​ ​ ( 7,526 ) ​ ​ ( 9,101 ) Net cash used in investing activities ​ ​ ( 32,526 ) ​ ​ ( 13,069 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ Repayment of borrowings - revolving facility ​ ​ — ​ ​ ( 676,019 ) Proceeds from borrowings - revolving facility ​ ​ — ​ ​ 676,019 Proceeds from borrowings - foreign facilities ​ ​ 1,706 ​ ​ — Proceeds from borrowings - unsecured term loan ​ ​ — ​ ​ 7,071 Proceeds from exercise of equity awards ​ ​ — ​ ​ 180 Taxes paid for net share settlements ​ ​ ( 4,334 ) ​ ​ ( 317 ) Net cash (used in) provided by financing activities ​ ​ ( 2,628 ) ​ ​ 6,934 ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ ​ ( 618 ) ​ ​ 1,756 Net increase in cash and cash equivalents ​ ​ 158,054 ​ ​ 55,426 Cash and cash equivalents at beginning of period ​ ​ 351,934 ​ ​ 197,372 Cash and cash equivalents at end of period ​ $ 509,988 ​ $ 252,798 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information ​ ​ ​ ​ ​ ​ Cash payments: ​ ​ ​ ​ ​ ​ Interest, net ​ $ 19,545 ​ $ 12,937 Income tax payments, net ​ $ 682 ​ $ 1,385 ​ 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. Fabco Holding B.V (“Fabco”) is a Dutch joint venture limited liability company that was 49 % owned by the Company through November 30, 2020 and was accounted for using the equity method of accounting. Effective December 1, 2020, the Company increased its ownership interest in Fabco to 75 % and Fabco is treated as a consolidated majority-owned subsidiary. KL North America B.V. (“KLNA”) is a Dutch joint venture limited liability company that is 49 % owned by the Company. Karl Lagerfeld Holding B.V. (“KLH”) is a Dutch limited liability company that is 19 % owned by the Company. The Company accounts for these two investments 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, 2021, the results of Vilebrequin, KLH, KLNA and Fabco are included for the six-month period ended June 30, 2021. The Company’s retail operations segment reports on a 52/53-week fiscal year. For fiscal 2022 and 2021, the three and six-month periods for the retail operations segment were each 13-week and 26-week periods, respectively, and ended on July 31, 2021 and August 1, 2020, respectively. ​ The results for the three and six months ended July 31, 2021 are not necessarily indicative of the results expected for the entire fiscal year, given the seasonal nature of the Company’s business and the 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, 2021 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. ​ Change in Accounting Principle ​ Effective February 1, 2021, the Company elected to change its method of accounting for retail inventories from the lower of cost or market as determined by the retail inventory method to the lower of cost or net realizable value using the weighted average cost method. The Company believes the new method is preferable as it provides better matching of cost of goods sold with revenue, improves the precision of inventory valuation at the balance sheet dates, and more closely aligns with the valuation methods used throughout the rest of the Company. In addition, the change in inventory valuation better aligns with the way the Company manages its business with a focus on the actual margin realized. ​ ​ 7 Table of Contents The Company determined that it was impractical to apply this change in accounting principle retrospectively due to a lack of available information. As a result, the Company applied the change prospectively as of February 1, 2021. The cumulative adjustment as of February 1, 2021 was a decrease in both inventories and retained earnings of $ 0.3 million. The change in accounting principle did not have a material effect on the Company’s condensed consolidated financial statements as of and for the three and six-month periods ended July 31, 2021. ​ Note 2 – Retail Restructuring ​ In fiscal 2021, the Company restructured its retail operations segment, including the closing of the Wilsons Leather, G.H. Bass and Calvin Klein Performance stores. Restructuring charges are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income. As of July 31, 2021, the Company had a remaining restructuring accrual of $ 46,000 related to store closing costs. The remaining store closing costs are expected to be paid during the third quarter of fiscal 2022. ​ Note 3 – Allowance for Doubtful Accounts ​ 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. ​ The Company’s accounts receivable and allowance for doubtful accounts as of July 31, 2021, July 31, 2020 and January 31, 2021 were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, 2021 ​ Wholesale Retail Total ​ ​ (In thousands) Accounts receivable, gross ​ $ 400,714 ​ $ 1,775 ​ $ 402,489 Allowance for doubtful accounts ​ ​ ( 17,386 ) ​ ​ ( 56 ) ​ ​ ( 17,442 ) Accounts receivable, net ​ $ 383,328 ​ $ 1,719 ​ $ 385,047 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 31, 2021 ​ ​ Wholesale Retail Total ​ ​ (In thousands) Accounts receivable, gross ​ $ 509,010 ​ $ 1,147 ​ $ 510,157 Allowance for doubtful accounts ​ ​ ( 17,429 ) ​ ​ ( 30 ) ​ ​ ( 17,459 ) Accounts receivable, net ​ $ 491,581 ​ $ 1,117 ​ $ 492,698 ​ 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 obligations (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. 8 Table of Contents The allowance for doubtful accounts for retail trade receivables is estimated at 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. ​ The Company had the following activity in its allowance for credit losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Wholesale Retail Total ​ ​ (In thousands) Balance as of January 31, 2021 ​ $ ( 17,429 ) ​ $ ( 30 ) ​ $ ( 17,459 ) Provision for credit losses ​ ​ ( 28 ) ​ ​ ( 26 ) ​ ​ ( 54 ) Accounts written off as uncollectible ​ ​ 71 ​ ​ — ​ ​ 71 Balance as of July 31, 2021 ​ $ ( 17,386 ) ​ $ ( 56 ) ​ $ ( 17,442 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 31, 2020 ​ $ ( 628 ) ​ $ ( 82 ) ​ $ ( 710 ) Provision for credit losses ​ ​ ( 16,934 ) ​ ​ 52 ​ ​ ( 16,882 ) Accounts written off as uncollectible ​ ​ 133 ​ ​ — ​ ​ 133 Balance as of January 31, 2021 ​ $ ( 17,429 ) ​ $ ( 30 ) ​ $ ( 17,459 ) ​ ​ 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. Prior to February 1, 2021, retail inventories were valued at the lower of cost or market as determined by the retail inventory method. Effective February 1, 2021, the Company elected to change its method of accounting for retail inventories to the lower of cost (determined by the weighted average method) or net realizable value. See Note 1 – Basis of Presentation for more details on the preferability and application of this change in accounting principle. 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 $ 11.2 million, $ 15.1 million and $ 22.5 million as of July 31, 2021, July 31, 2020 and January 31, 2021, 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 $ 4.7 million, $ 6.3 million and $ 3.5 million at July 31, 2021, July 31, 2020 and January 31, 2021, respectively. Consignment inventory is stored at the facilities of the Company’s customers. The Company reflects this inventory on its condensed consolidated balance sheets. ​ 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. ​ 9 Table of Contents ● 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 ​ 2021 ​ 2020 ​ 2021 ​ 2021 ​ 2020 ​ 2021 ​ ​ ​ ​ (In thousands) Secured notes ​ 2 ​ $ 400,000 ​ $ — ​ $ 400,000 ​ $ 400,000 ​ $ — ​ $ 400,000 Term loan ​ 2 ​ ​ — ​ ​ 300,000 ​ ​ — ​ ​ — ​ ​ 300,000 ​ ​ — Note issued to LVMH ​ 3 ​ ​ 111,005 ​ ​ 104,884 ​ ​ 107,869 ​ ​ 105,885 ​ ​ 102,304 ​ ​ 101,810 Unsecured loans ​ 2 ​ ​ 8,930 ​ ​ 6,401 ​ ​ 9,119 ​ ​ 8,930 ​ ​ 6,401 ​ ​ 9,119 Overdraft facilities ​ 2 ​ ​ 4,500 ​ ​ 3,530 ​ ​ 3,007 ​ ​ 4,500 ​ ​ 3,530 ​ ​ 3,007 ​ 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. ​ The 2 % note in the principal amount of $ 125 million (the “LVMH Note”) 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 LVMH Note 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 LVMH Note. ​ The fair value of the LVMH Note 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. ​ 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 10 Table of Contents 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, 2021, July 31, 2020 and January 31, 2021 consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leases ​ Classification ​ July 31, 2021 ​ July 31, 2020 ​ January 31, 2021 ​ ​ ​ ​ (In thousands) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ Operating lease assets ​ $ 172,916 ​ $ 168,071 ​ $ 186,070 Total lease assets ​ ​ ​ $ 172,916 ​ $ 168,071 ​ $ 186,070 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current operating ​ Current operating lease liabilities ​ $ 43,119 ​ $ 91,700 ​ $ 43,560 Noncurrent operating ​ Noncurrent operating lease liabilities ​ ​ 147,119 ​ ​ 140,283 ​ ​ 161,668 Total lease liabilities ​ ​ ​ $ 190,238 ​ $ 231,983 ​ $ 205,228 ​ The Company’s operating lease liabilities significantly declined during fiscal 2021 due to the restructuring of the retail operations segment, partially offset by other leasing activity. As a result of this restructuring, the Company closed its Wilsons Leather, G.H. Bass and Calvin Klein Performance stores during fiscal 2021. ​ The Company recorded lease costs of $ 13.5 million and $ 27.1 million during the three and six months ended July 31, 2021, respectively. The Company recorded lease costs of $ 36.0 million and $ 58.4 million during the three and six months ended July 31, 2020, respectively. Lease costs are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income. The Company recorded variable lease costs and short-term lease costs of $ 1.9 million and $ 3.3 million for the three and six months ended July 31, 2021, respectively. 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. Short-term lease costs are immaterial. As of July 31, 2021, the Company has $ 1.0 million of deferred lease payments recorded within accounts payable on its condensed consolidated balance sheets. ​ As of July 31, 2021, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2026 and thereafter are as follows: ​ ​ ​ ​ ​ Year Ending January 31, ​ Amount ​ ​ (In thousands) 2022 ​ $ 28,868 2023 ​ ​ 53,011 2024 ​ ​ 39,807 2025 ​ ​ 32,577 2026 ​ ​ 25,970 After 2026 ​ ​ 58,911 Total lease payments ​ $ 239,144 Less: Interest ​ ​ 48,906 Present value of lease liabilities ​ $ 190,238 ​ As of July 31, 2021, there are no material leases that are legally binding but have not yet commenced. ​ As of July 31, 2021, the weighted average remaining lease term related to operating leases is 5.5 years. The weighted average discount rate related to operating leases is 8.4 %. ​ 11 Table of Contents Cash paid for amounts included in the measurement of operating lease liabilities is $ 29.4 million and $ 51.0 million during the six months ended July 31, 2021 and July 31, 2020, respectively. Right-of-use assets obtained in exchange for lease obligations were $ 8.6 million and $ 10.8 million during the six months ended July 31, 2021 and July 31, 2020, respectively. ​ Note 7 – 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. Approximately 15,100 and 8,200 shares of common stock have been excluded from the diluted net income per share calculation for the three and six months ended July 31, 2021, respectively. 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. All share-based payments outstanding that vest based on the achievement of performance conditions, and for which the respective performance 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, ​ 2021 2020 2021 2020 ​ ​ (In thousands, except share and per share amounts) Net income (loss) attributable to G-III Apparel Group, Ltd. ​ $ 19,168 ​ $ ( 14,976 ) ​ $ 45,489 ​ $ ( 54,271 ) Basic net income (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic common shares ​ ​ 48,476 ​ ​ 48,214 ​ ​ 48,427 ​ ​ 48,121 Basic net income (loss) per share ​ $ 0.40 ​ $ ( 0.31 ) ​ $ 0.94 ​ $ ( 1.13 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted net income (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic common shares ​ ​ 48,476 ​ ​ 48,214 ​ ​ 48,427 ​ ​ 48,121 Dilutive restricted stock unit awards and stock options ​ ​ 1,047 ​ ​ — ​ ​ 1,075 ​ ​ — Diluted common shares ​ ​ 49,523 ​ ​ 48,214 ​ ​ 49,502 ​ ​ 48,121 Diluted net income (loss) per share ​ $ 0.39 ​ $ ( 0.31 ) ​ $ 0.92 ​ $ ( 1.13 ) ​ ​ Note 8 – Notes Payable ​ Long-term debt consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, 2021 July 31, 2020 January 31, 2021 ​ ​ (In thousands) Secured Notes ​ $ 400,000 ​ $ — ​ $ 400,000 Term Loan ​ ​ — ​ ​ 300,000 ​ ​ — Revolving credit facility ​ ​ — ​ ​ — ​ ​ — LVMH Note ​ ​ 125,000 ​ ​ 125,000 ​ ​ 125,000 Unsecured loans ​ ​ 8,930 ​ ​ 6,401 ​ ​ 9,119 Overdraft facilities ​ ​ 4,500 ​ ​ 3,530 ​ ​ 3,007 Subtotal ​ ​ 538,430 ​ ​ 434,931 ​ ​ 537,126 Less: Net debt issuance costs (1) ​ ​ ( 6,794 ) ​ ​ ( 6,095 ) ​ ​ ( 7,643 ) Debt discount ​ ​ ( 13,995 ) ​ ​ ( 20,116 ) ​ ​ ( 17,131 ) Current portion of long-term debt ​ ​ ( 5,624 ) ​ ​ ( 3,717 ) ​ ​ ( 4,402 ) Total ​ $ 512,017 ​ $ 405,003 ​ $ 507,950 (1) Does not include debt issuance costs, net of amortization, totaling $ 6.4 million, $ 3.3 million and $ 7.2 million as of July 31, 2021, July 31, 2020 and January 31, 2021, respectively, related to the revolving credit facility. These debt issuance costs have been deferred and are classified in assets in the accompanying condensed consolidated balance sheets in accordance with ASC 835. 12 Table of Contents Senior Secured Notes ​ In August 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 $ 300 million that was outstanding under the Company’s prior term loan facility due 2022 (the “Term Loan”), (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. ​ 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 LVMH Note subordination agreement which governs the relative rights of the secured parties in respect of the LVMH Note, 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, 13 Table of Contents failure to perfect certain collateral securing the Notes failure to pay certain final judgments, and certain events of bankruptcy or insolvency. ​ The Company incurred debt issuance costs totaling $ 8.5 million related to the Notes that will be amortized over the term of the Notes. In accordance with ASC 835, the debt issuance costs have been deferred and are presented as a contra-liability, offsetting the outstanding balance of the Notes, and are amortized over the remaining life of the Notes. In addition, the Company had unamortized debt issuance costs of $ 6.1 million associated with the Term Loan. Upon repayment of the Term Loan, these debt issuance costs were fully extinguished and charged to interest expense in the Company’s results of operations. ​ Second Amended and Restated ABL Credit Agreement ​ In August 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, the LVMH Note 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 refinanced, amended and restated 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 extended the maturity date to August 2025, subject to a springing maturity date if, subject to certain conditions, the LVMH Note is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. ​ 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. In addition to paying interest on any outstanding borrowings under the ABL Credit Agreement, 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 tiered rate equal to 0.50 % 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 0.35 % 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 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, 2021, the Company was in compliance with these covenants. ​ As of July 31, 2021, the Company had no borrowings outstanding under the ABL Credit Agreement. The ABL credit agreement also includes amounts available for letters of credit. As of July 31, 2021, there were outstanding trade and standby letters of credit amounting to $ 9.2 million and $ 4.0 million, respectively. ​ 14 Table of Contents At the date of the refinancing of the Prior Credit Agreement, the Company had $ 3.3 million of unamortized debt issuance costs remaining from the Prior Credit Agreement. The Company extinguished and charged to interest expense $ 0.4 million of the prior debt issuance costs and incurred new debt issuance costs totaling $ 5.1 million related to the ABL Credit Agreement. The Company has a total of $ 8.0 million debt issuance costs related to the ABL Credit Agreement. As permitted under ASC 835, the debt issuance costs have been deferred and are presented as an asset which is to be subsequently amortized ratably over the term of the ABL Credit Agreement. ​ 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 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 . ​ 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 ​ During fiscal 2020 and fiscal 2021, T.R.B International SA (“TRB”), a subsidiary of Vilebrequin, borrowed funds under several unsecured loans. A portion of the unsecured loans were to provide funding for operations in the normal course of business, while other unsecured loans were various European state backed loans as part of COVID-19 relief programs. In the aggregate, TRB is currently required to make quarterly installment payments of € 0.2 million under these loans. Interest on the outstanding principal amount of the unsecured loans accrues at a fixed rate equal to 0 % to 2.0 % per annum, payable on either a quarterly or monthly basis. As of July 31, 2021, TRB had an aggregate outstanding balance of € 7.5 million under these unsecured loans. ​ Overdraft Facilities ​ During 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, 2021, TRB had an aggregate of € 3.8 million drawn under these facilities. ​ Note 9 – 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 consideration 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 15 Table of Contents trademarks owned by the Company. As of July 31, 2021, revenues from license agreements represented an insignificant portion of wholesale revenues. ​ Retail Operations Segment. Retail store revenues are generated by direct sales to consumers through company-operated stores and product sales through the Company’s digital channels for the DKNY, Donna Karan, G.H. Bass, Karl Lagerfeld Paris, Andrew Marc and Wilsons Leather businesses. Prior to completion of the restructuring in fiscal 2021, retail stores primarily consisted of Wilsons Leather, G.H. Bass, DKNY and Karl Lagerfeld Paris retail stores, substantially all of which are operated as outlet stores. The Company’s Wilsons Leather, G.H. Bass and Calvin Klein Performance stores were closed in fiscal 2021 as a result of the restructuring. Retail operations segment revenues are recognized at the point of sale when the customer takes possession of the goods and tenders payment. Digital revenues primarily consist of sales to consumers through the Company’s digital platforms. Digital revenue is recognized when a customer takes possession of the goods. Retail sales are recorded net of applicable sales tax. ​ 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 $ 4.3 million, $ 5.1 million and $ 5.9 million at July 31, 2021, July 31, 2020 and January 31, 2021, respectively. The Company recognized $ 2.9 million in revenue for the three months ended July 31, 2021 related to contract liabilities that existed at April 30, 2021. The Company recognized $ 3.8 million in revenue for the six months ended July 31, 2021 related to contract liabilities that existed at January 31, 2021. There were no contract assets recorded as of July 31, 2021, July 31, 2020 and January 31, 2021. Substantially all of the advance payments from licensees as of July 31, 2021 are expected to be recognized as revenue within the next twelve months. ​ Note 10 – 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, which, prior to the completion of the retail restructuring in fiscal 2021, consisted primarily of Wilsons Leather, G.H. Bass, DKNY and Karl Lagerfeld Paris stores, substantially all of which were 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 closed its Wilsons Leather, G.H. Bass and Calvin Klein Performance retail stores during fiscal 2021. After completion of the restructuring, the Company’s retail operations segment consists of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, G.H. Bass, Andrew Marc and Wilsons Leather. ​ The following segment information is presented for the three-month periods indicated below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended July 31, 2021 ​ Wholesale Retail Elimination (1) Total ​ ​ (In thousands) Net sales ​ $ 467,013 ​ $ 27,285 ​ $ ( 11,217 ) ​ $ 483,081 Cost of goods sold ​ ​ 288,306 ​ ​ 13,114 ​ ​ ( 11,217 ) ​ ​ 290,203 Gross profit ​ ​ 178,707 ​ ​ 14,171 ​ ​ — ​ ​ 192,878 Selling, general and administrative expenses ​ ​ 129,291 ​ ​ 17,549 ​ ​ — ​ ​ 146,840 Depreciation and amortization ​ ​ 6,086 ​ ​ 1,012 ​ ​ — ​ ​ 7,098 Operating profit (loss) ​ $ 43,330 ​ $ ( 4,390 ) ​ $ — ​ $ 38,940 ​ 16 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 (Gain) loss on lease modifications ​ ​ 612 ​ ​ 13,690 ​ ​ — ​ ​ 14,302 Operating loss ​ $ 37,738 ​ $ ( 49,140 ) ​ $ — ​ $ ( 11,402 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended July 31, 2021 ​ Wholesale Retail Elimination (1) Total ​ ​ (In thousands) Net sales ​ $ 978,527 ​ $ 46,704 ​ $ ( 22,240 ) ​ $ 1,002,991 Cost of goods sold ​ ​ 614,127 ​ ​ 22,757 ​ ​ ( 22,240 ) ​ ​ 614,644 Gross profit ​ ​ 364,400 ​ ​ 23,947 ​ ​ — ​ ​ 388,347 Selling, general and administrative expenses ​ ​ 254,625 ​ ​ 33,818 ​ ​ — ​ ​ 288,443 Depreciation and amortization ​ ​ 12,299 ​ ​ 1,843 ​ ​ — ​ ​ 14,142 Asset impairments, net of gain on lease modifications ​ ​ — ​ ​ — ​ ​ — ​ ​ — Operating profit (loss) ​ $ 97,476 ​ $ ( 11,714 ) ​ $ — ​ $ 85,762 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 Gain on lease modifications ​ ​ 608 ​ ​ 16,881 ​ ​ — ​ ​ 17,489 Operating profit (loss) ​ $ 29,082 ​ $ ( 83,757 ) ​ $ — ​ $ ( 54,675 ) ​ (1) Represents intersegment sales to the Company’s retail operations segment. ​ Note 11 – Stockholders’ Equity ​ For the three months ended July 31, 2021, the Company issued no shares of common stock and utilized 189,313 shares of treasury stock in connection with the vesting of equity awards. 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 six months ended July 31, 2021, the Company issued no shares of common stock and utilized 189,471 shares of treasury stoc k 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. ​ Note 12 – Income Taxes ​ For the three months ended July 31, 2021 and July 31, 2020, the Company recorded a $ 9.2 million income tax expense and a $ 3.7 million income tax benefit, respectively. For the six months ended July 31, 2021 and July 31, 2020, the Company recorded a $ 19.5 million income tax expense and a $ 20.1 million income tax benefit, respectively. Historically, the Company 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 the Company’s operations, the Company used a discrete effective tax rate method to calculate taxes for the six-month period ended July 31, 2020. For the six-month period ended July 31, 2021, the Company returned to the historical practice of applying an estimated annual effective tax rate based on full fiscal year income to pre-tax income for the reporting period. ​ 17 Table of Contents Note 13 – 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, 2021, related to the higher dutiable values, however, the Company paid interest in the amount of CAD$ 1.0 million (US$ 0.8 million) on the additional duties for the period January 15, 2018 through November 25, 2020, the date of the CBSA’s final decision as discussed below. Cumulative amounts paid and deferred through July 31, 2021, related to the higher dutiable values, were CAD$ 14.4 million (US$ 11.6 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. ​ The CBSA has issued its final decision denying the appeal filed by G-III Canada with the President’s Office of the CBSA. G-III Canada has filed a Notice of Appeal with the Canadian International Trade Tribunal (the “Tribunal”) further appealing the CBSA decision. The Tribunal has confirmed receipt of the Notice of Appeal. G-III Canada filed its case brief and evidence on April 13, 2021. The CBSA filed its brief on June 14, 2021. The hearing date, originally scheduled for August 10, 2021, was rescheduled for September 1, 2021 but has been postponed by the Tribunal. A new hearing date has not yet been set. ​ G-III Canada, based on the advice of counsel, believes it has positions that support its valuations for duty as declared and therefore 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. ​ Note 14 – Recent Adopted and Issued Accounting Pronouncements ​ Recently Adopted Accounting Guidance ​ There was no accounting guidance adopted during the three months ended July 31, 2021. ​ 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. ​ 18 Table of Contents