G III APPAREL GROUP LTD /DE/ 10-Q

Item 1. Financial Statements. G-III APPAREL GROUP, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ April 30, ​ April 30, ​ January 31, ​ ​ 2023 ​ 2022 ​ 2023 ​ (Unaudited) (Unaudited) ​ ​ ​ ​ (In thousands, except per share amounts) ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 289,729 ​ $ 438,411 ​ $ 191,652 Accounts receivable, net of allowance for doubtful accounts of $ 18.8 million, $ 16.9 million and $ 18.3 million, respectively ​ ​ 494,601 ​ ​ 573,613 ​ ​ 674,963 Inventories ​ ​ 630,308 ​ ​ 550,059 ​ ​ 709,345 Prepaid income taxes ​ ​ 7,692 ​ ​ 1,071 ​ ​ 5,886 Prepaid expenses and other current assets ​ ​ 69,432 ​ ​ 53,425 ​ ​ 70,654 Total current assets ​ ​ 1,491,762 ​ ​ 1,616,579 ​ ​ 1,652,500 Investments in unconsolidated affiliates ​ ​ 27,585 ​ ​ 89,827 ​ ​ 24,467 Property and equipment, net ​ ​ 53,157 ​ ​ 47,274 ​ ​ 53,742 Operating lease assets ​ ​ 237,056 ​ ​ 164,607 ​ ​ 239,665 Other assets, net ​ ​ 52,183 ​ ​ 54,132 ​ ​ 52,644 Other intangibles, net ​ ​ 34,131 ​ ​ 30,512 ​ ​ 34,842 Deferred income tax assets, net ​ ​ 26,389 ​ ​ 1,647 ​ ​ 26,389 Trademarks ​ ​ 632,220 ​ ​ 451,967 ​ ​ 628,156 Goodwill ​ ​ — ​ ​ 261,727 ​ ​ — Total assets ​ $ 2,554,483 ​ $ 2,718,272 ​ $ 2,712,405 LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ Current portion of notes payable ​ $ 139,418 ​ $ 4,554 ​ $ 135,518 Accounts payable ​ ​ 140,064 ​ ​ 215,489 ​ ​ 169,508 Accrued expenses ​ ​ 99,092 ​ ​ 94,359 ​ ​ 115,586 Customer refund liabilities ​ ​ 69,408 ​ ​ 78,052 ​ ​ 89,760 Current operating lease liabilities ​ ​ 51,024 ​ ​ 41,112 ​ ​ 52,917 Income tax payable ​ ​ 8,234 ​ ​ 17,060 ​ ​ 14,875 Other current liabilities ​ ​ 863 ​ ​ 1,358 ​ ​ 905 Total current liabilities ​ ​ 508,103 ​ ​ 451,984 ​ ​ 579,069 Notes payable, net of discount and unamortized issuance costs ​ ​ 403,586 ​ ​ 516,828 ​ ​ 483,840 Deferred income tax liabilities, net ​ ​ 45,561 ​ ​ 38,021 ​ ​ 44,783 Noncurrent operating lease liabilities ​ ​ 202,406 ​ ​ 139,686 ​ ​ 204,974 Other noncurrent liabilities ​ ​ 15,325 ​ ​ 12,998 ​ ​ 15,141 Total liabilities ​ ​ 1,174,981 ​ ​ 1,159,517 ​ ​ 1,327,807 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interests ​ ​ ( 945 ) ​ ​ 463 ​ ​ ( 850 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 472,474 ​ ​ 460,999 ​ ​ 468,712 Accumulated other comprehensive loss ​ ​ ( 6,936 ) ​ ​ ( 18,657 ) ​ ​ ( 11,653 ) Retained earnings ​ ​ 987,180 ​ ​ 1,147,639 ​ ​ 983,944 Common stock held in treasury, at cost - 3,802 , 1,209 and 2,680 shares, respectively ​ ​ ( 72,535 ) ​ ​ ( 31,953 ) ​ ​ ( 55,819 ) Total stockholders' equity ​ ​ 1,380,447 ​ ​ 1,558,292 ​ ​ 1,385,448 Total liabilities, redeemable noncontrolling interests and stockholders' equity ​ $ 2,554,483 ​ $ 2,718,272 ​ $ 2,712,405 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended April 30, ​ ​ 2023 2022 ​ ​ (Unaudited) ​ ​ (In thousands, except per share amounts) Net sales ​ $ 606,589 ​ $ 688,757 Cost of goods sold ​ ​ 356,788 ​ ​ 442,718 Gross profit ​ ​ 249,801 ​ ​ 246,039 Selling, general and administrative expenses ​ ​ 227,961 ​ ​ 185,407 Depreciation and amortization ​ ​ 6,576 ​ ​ 6,095 Operating profit ​ ​ 15,264 ​ ​ 54,537 Other income (loss) ​ ​ 973 ​ ​ ( 2,708 ) Interest and financing charges, net ​ ​ ( 12,151 ) ​ ​ ( 12,203 ) Income before income taxes ​ ​ 4,086 ​ ​ 39,626 Income tax expense ​ ​ 945 ​ ​ 9,000 Net income ​ ​ 3,141 ​ ​ 30,626 Less: Loss attributable to noncontrolling interests ​ ​ ( 95 ) ​ ​ ( 8 ) Net income attributable to G-III Apparel Group, Ltd. ​ $ 3,236 ​ $ 30,634 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME PER COMMON SHARE ATTRIBUTABLE TO G-III APPAREL GROUP, LTD.: ​ ​ ​ ​ ​ ​ Basic: ​ ​ ​ ​ ​ ​ Net income per common share ​ $ 0.07 ​ $ 0.64 Weighted average number of shares outstanding ​ ​ 46,286 ​ ​ 48,016 ​ ​ ​ ​ ​ ​ ​ Diluted: ​ ​ ​ ​ ​ ​ Net income per common share ​ $ 0.07 ​ $ 0.62 Weighted average number of shares outstanding ​ ​ 47,442 ​ ​ 49,108 ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 3,141 ​ $ 30,626 Other comprehensive income: ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ ​ 4,715 ​ ​ ( 4,130 ) Other comprehensive income (loss): ​ ​ 4,715 ​ ​ ( 4,130 ) Comprehensive income ​ $ 7,856 ​ $ 26,496 Comprehensive loss attributable to noncontrolling interests: ​ ​ ​ ​ ​ ​ Net loss ​ ​ ( 95 ) ​ ​ ( 8 ) Foreign currency translation adjustments ​ ​ 2 ​ ​ 2 Comprehensive loss attributable to noncontrolling interests ​ ​ ( 93 ) ​ ​ ( 6 ) Comprehensive income attributable to G-III Apparel Group, Ltd. ​ $ 7,763 ​ $ 26,490 ​ 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 January 31, 2023 ​ $ 264 ​ $ 468,712 ​ $ ( 11,653 ) ​ $ 983,944 ​ $ ( 55,819 ) ​ $ 1,385,448 Equity awards exercised/vested, net ​ ​ — ​ ​ ( 53 ) ​ ​ — ​ ​ — ​ ​ 53 ​ ​ — Share-based compensation expense ​ ​ — ​ ​ 3,837 ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,837 Taxes paid for net share settlements ​ ​ — ​ ​ ( 22 ) ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ( 22 ) Other comprehensive income, net ​ ​ — ​ ​ — ​ ​ 4,717 ​ ​ — ​ ​ — ​ ​ 4,717 Repurchases of common stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 16,769 ) ​ ​ ( 16,769 ) Net income attributable to G-III Apparel Group, Ltd. ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,236 ​ ​ — ​ ​ 3,236 Balance as of April 30, 2023 ​ $ 264 ​ $ 472,474 ​ $ ( 6,936 ) ​ $ 987,180 ​ $ ( 72,535 ) ​ $ 1,380,447 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 31, 2022 ​ $ 264 ​ $ 456,329 ​ $ ( 14,529 ) ​ $ 1,117,005 ​ $ ( 39,157 ) ​ $ 1,519,912 Equity awards exercised/vested, net ​ ​ — ​ ​ ( 7,204 ) ​ ​ — ​ ​ — ​ ​ 7,204 ​ ​ — Share-based compensation expense ​ ​ — ​ ​ 20,549 ​ ​ — ​ ​ — ​ ​ — ​ ​ 20,549 Taxes paid for net share settlements ​ ​ — ​ ​ ( 8,675 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 8,675 ) Other comprehensive loss, net ​ ​ — ​ ​ — ​ ​ ( 4,128 ) ​ ​ — ​ ​ — ​ ​ ( 4,128 ) Net income attributable to G-III Apparel Group, Ltd. ​ ​ — ​ ​ — ​ ​ — ​ ​ 30,634 ​ ​ — ​ ​ 30,634 Balance as of April 30, 2022 ​ $ 264 ​ $ 460,999 ​ $ ( 18,657 ) ​ $ 1,147,639 ​ $ ( 31,953 ) ​ $ 1,558,292 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended April 30, ​ 2023 2022 ​ ​ (Unaudited, in thousands) Cash flows from operating activities ​ ​ ​ ​ ​ ​ Net income attributable to G-III Apparel Group, Ltd. ​ $ 3,236 ​ $ 30,634 Adjustments to reconcile net income to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 6,576 ​ ​ 6,095 Loss on disposal of fixed assets ​ ​ 393 ​ ​ 24 Non-cash operating lease costs ​ ​ 14,902 ​ ​ 11,852 Equity loss (gain) in unconsolidated affiliates ​ ​ 482 ​ ​ ( 676 ) Change in fair value of equity securities ​ ​ ( 1,009 ) ​ ​ 1,126 Share-based compensation ​ ​ 3,837 ​ ​ 20,549 Deferred financing charges and debt discount amortization ​ ​ 2,640 ​ ​ 2,494 Deferred income taxes ​ ​ 778 ​ ​ 71 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ​ 180,362 ​ ​ 31,898 Inventories ​ ​ 79,037 ​ ​ ( 37,904 ) Income taxes, net ​ ​ ( 8,448 ) ​ ​ 20,496 Prepaid expenses and other current assets ​ ​ 2,422 ​ ​ ( 9 ) Other assets, net ​ ​ 448 ​ ​ 62 Customer refund liabilities ​ ​ ( 20,352 ) ​ ​ ( 8,736 ) Operating lease liabilities ​ ​ ( 16,724 ) ​ ​ ( 11,675 ) Accounts payable, accrued expenses and other liabilities ​ ​ ( 46,749 ) ​ ​ ( 55,130 ) Net cash provided by operating activities ​ ​ 201,831 ​ ​ 11,171 ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ Operating lease assets initial direct costs ​ ​ ( 52 ) ​ ​ — Investment in e-commerce retailer ​ ​ — ​ ​ ( 25,000 ) Investment in equity interest of private company ​ ​ ( 3,600 ) ​ ​ — Capital expenditures ​ ​ ( 4,978 ) ​ ​ ( 4,334 ) Net cash used in investing activities ​ ​ ( 8,630 ) ​ ​ ( 29,334 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ Repayment of borrowings - revolving facility ​ ​ ( 85,400 ) ​ ​ — Proceeds from borrowings - revolving facility ​ ​ 5,313 ​ ​ — Repayment of borrowings - foreign facilities ​ ​ ( 36,073 ) ​ ​ ( 356 ) Proceeds from borrowings - foreign facilities ​ ​ 37,199 ​ ​ 287 Purchase of treasury shares ​ ​ ( 16,769 ) ​ ​ — Taxes paid for net share settlements ​ ​ ( 22 ) ​ ​ ( 8,675 ) Net cash used in financing activities ​ ​ ( 95,752 ) ​ ​ ( 8,744 ) ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ ​ 628 ​ ​ ( 666 ) Net increase (decrease) in cash and cash equivalents ​ ​ 98,077 ​ ​ ( 27,573 ) Cash and cash equivalents at beginning of period ​ ​ 191,652 ​ ​ 465,984 Cash and cash equivalents at end of period ​ $ 289,729 ​ $ 438,411 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information ​ ​ ​ ​ ​ ​ Cash payments: ​ ​ ​ ​ ​ ​ Interest, net ​ $ 16,781 ​ $ 17,236 Income tax payments, net ​ $ 9,176 ​ $ ( 11,694 ) ​ 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 under 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 is 75 % owned by the Company and is treated as a consolidated majority-owned subsidiary. In October 2021, the Company purchased Sonia Rykiel, a wholly-owned operating subsidiary. The results of Sonia Rykiel are included in the Company’s consolidated financial statements beginning in the fourth quarter of fiscal 2022. Karl Lagerfeld Holding B.V. (“KLH”) is a Dutch limited liability company that was 19 % owned by the Company through May 30, 2022 and was accounted for during that time using the equity method of accounting. Effective May 31, 2022, the Company acquired the remaining 81 % interest in KLH that it did not previously own and, as a result, KLH began being treated as a consolidated wholly-owned subsidiary. KL North America B.V. (“KLNA”) is a Dutch joint venture limited liability company that was 49 % owned by the Company and 51 % indirectly owned by KLH through May 30, 2022 and was accounted for during that time using the equity method of accounting. Effective May 31, 2022, KLNA became an indirect wholly-owned subsidiary of the Company as a result of the Company’s acquisition of the remaining 81 % interest in KLH it did not previously own. All material intercompany balances and transactions have been eliminated. The results of KLH are included in the Company’s consolidated financial statements beginning May 31, 2022. ​ Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by the Company, KLH, Fabco and Sonia Rykiel, 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, Fabco and Sonia Rykiel are 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 three-month period ended April 30, 2023, the results of Vilebrequin, Fabco, KLH and Sonia Rykiel are included for the three-month period ended March 31, 2023. For the year ended December 31, 2022, the results of KLH, which includes KLNA, are included for the period from June 1, 2022 through December 31, 2022. The results of the Company’s previous 49 % ownership interest in KLNA and 19 % ownership interest in KLH are included for the period from February 1, 2022 through May 30, 2022. The Company’s retail operations segment reports on a 52/53 week fiscal year. The Company’s three-month periods ended April 30, 2023 and 2022 were each 13-week periods for the retail operations segment. For fiscal 2024 and 2023, the three-month periods for the retail operations segment ended on April 29, 2023 and April 30, 2022, respectively. ​ The results for the three months ended April 30, 2023 are not necessarily indicative of the results expected for the entire fiscal year, given the seasonal nature of 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, 2023 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 the 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. ​ 7 Table of Contents NOTE 2 – 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 April 30, 2023, April 30, 2022 and January 31, 2023 were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ April 30, 2023 ​ Wholesale Retail Total ​ ​ (In thousands) Accounts receivable, gross ​ $ 512,315 ​ $ 1,118 ​ $ 513,433 Allowance for doubtful accounts ​ ​ ( 18,769 ) ​ ​ ( 63 ) ​ ​ ( 18,832 ) Accounts receivable, net ​ $ 493,546 ​ $ 1,055 ​ $ 494,601 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ April 30, 2022 ​ ​ Wholesale Retail Total ​ ​ (In thousands) Accounts receivable, gross ​ $ 589,233 ​ $ 1,319 ​ $ 590,552 Allowance for doubtful accounts ​ ​ ( 16,858 ) ​ ​ ( 81 ) ​ ​ ( 16,939 ) Accounts receivable, net ​ $ 572,375 ​ $ 1,238 ​ $ 573,613 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 31, 2023 ​ ​ Wholesale Retail Total ​ ​ (In thousands) Accounts receivable, gross ​ $ 692,033 ​ $ 1,227 ​ $ 693,260 Allowance for doubtful accounts ​ ​ ( 18,237 ) ​ ​ ( 60 ) ​ ​ ( 18,297 ) Accounts receivable, net ​ $ 673,796 ​ $ 1,167 ​ $ 674,963 ​ 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 debt 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 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. ​ 8 Table of Contents The Company had the following activity in its allowance for credit losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Wholesale Retail Total ​ ​ (In thousands) Balance as of January 31, 2023 ​ $ ( 18,237 ) ​ $ ( 60 ) ​ $ ( 18,297 ) Provision for credit losses, net ​ ​ ( 532 ) ​ ​ ( 3 ) ​ ​ ( 535 ) Accounts written off as uncollectible ​ ​ — ​ ​ — ​ ​ — Balance as of April 30, 2023 ​ $ ( 18,769 ) ​ $ ( 63 ) ​ $ ( 18,832 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 31, 2022 ​ $ ( 17,307 ) ​ $ ( 84 ) ​ $ ( 17,391 ) Provision for credit losses, net ​ ​ 411 ​ ​ 3 ​ ​ 414 Accounts written off as uncollectible ​ ​ 38 ​ ​ — ​ ​ 38 Balance as of April 30, 2022 ​ $ ( 16,858 ) ​ $ ( 81 ) ​ $ ( 16,939 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 31, 2022 ​ $ ( 17,307 ) ​ $ ( 84 ) ​ $ ( 17,391 ) Provision for credit losses, net ​ ​ ( 1,002 ) ​ ​ 24 ​ ​ ( 978 ) Accounts written off as uncollectible ​ ​ 72 ​ ​ — ​ ​ 72 Balance as of January 31, 2023 ​ $ ( 18,237 ) ​ $ ( 60 ) ​ $ ( 18,297 ) ​ ​ NOTE 3 – 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 and 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, was $ 12.9 million, $ 16.4 million and $ 19.2 million as of April 30, 2023, April 30, 2022 and January 31, 2023, 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 $ 7.6 million, $ 5.9 million and $ 6.6 million at April 30, 2023, April 30, 2022 and January 31, 2023, respectively. Consignment inventory is held by the Company’s customers. The Company reflects this inventory on its condensed consolidated balance sheets. ​ NOTE 4 – 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. 9 Table of Contents The following table summarizes the carrying values and the estimated fair values of the Company’s debt instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying Value ​ Fair Value ​ ​ ​ April 30, ​ April 30, ​ January 31, April 30, ​ April 30, ​ January 31, Financial Instrument ​ Level ​ 2023 ​ 2022 ​ 2023 ​ 2023 ​ 2022 ​ 2023 ​ ​ ​ ​ (In thousands) Secured Notes ​ 1 ​ $ 400,000 ​ $ 400,000 ​ $ 400,000 ​ $ 376,000 ​ $ 416,000 ​ $ 380,000 Revolving credit facility ​ 2 ​ ​ — ​ ​ — ​ ​ 80,087 ​ ​ — ​ ​ — ​ ​ 80,087 Note issued to LVMH ​ 3 ​ ​ 123,019 ​ ​ 115,926 ​ ​ 121,202 ​ ​ 121,476 ​ ​ 112,306 ​ ​ 119,426 Unsecured loans ​ 2 ​ ​ 11,212 ​ ​ 7,845 ​ ​ 10,866 ​ ​ 11,212 ​ ​ 7,845 ​ ​ 10,866 Overdraft facilities ​ 2 ​ ​ 4,132 ​ ​ 3,131 ​ ​ 3,657 ​ ​ 4,132 ​ ​ 3,131 ​ ​ 3,657 Foreign credit facility ​ 2 ​ ​ 8,462 ​ ​ — ​ ​ 7,792 ​ ​ 8,462 ​ ​ — ​ ​ 7,792 ​ 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 fair value of the Company’s secured notes is based on their current market price as of April 30, 2023. 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 DKNY and Donna Karan 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 DKNY and Donna Karan 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 assets that are not recoverable, 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 fiscal 2023, the Company recorded a $ 2.7 million impairment charge related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance of these stores. ​ NOTE 5 – 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. ​ 10 Table of Contents The Company’s lease assets and liabilities as of April 30, 2023, April 30, 2022 and January 31, 2023 consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leases ​ Classification ​ April 30, 2023 ​ April 30, 2022 ​ January 31, 2023 ​ ​ ​ ​ (In thousands) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ Operating lease assets ​ $ 237,056 ​ $ 164,607 ​ $ 239,665 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current operating ​ Current operating lease liabilities ​ $ 51,024 ​ $ 41,112 ​ $ 52,917 Noncurrent operating ​ Noncurrent operating lease liabilities ​ ​ 202,406 ​ ​ 139,686 ​ ​ 204,974 Total lease liabilities ​ ​ ​ $ 253,430 ​ $ 180,798 ​ $ 257,891 ​ The Company’s operating lease assets and operating lease liabilities increased during fiscal 2023 primarily due to the acquisition of KLH. The Company recorded lease costs of $ 18.6 million and $ 14.1 million during the three months ended April 30, 2023 and 2022, 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 $ 5.9 million and $ 5.1 million for the three months ended April 30, 2023 and 2022, respectively. Short-term lease costs are immaterial. ​ As of April 30, 2023, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2028 and thereafter are as follows: ​ ​ ​ ​ ​ Year Ending January 31, ​ Amount ​ ​ (In thousands) 2024 ​ $ 51,368 2025 ​ ​ 67,036 2026 ​ ​ 56,130 2027 ​ ​ 45,065 2028 ​ ​ 36,772 After 2028 ​ ​ 57,057 Total lease payments ​ $ 313,428 Less: Interest ​ ​ 59,998 Present value of lease liabilities ​ $ 253,430 ​ As of April 30, 2023, there are no material leases that are legally binding but have not yet commenced. ​ As of April 30, 2023, the weighted average remaining lease term related to operating leases is 5.4 years. The weighted average discount rate related to operating leases is 8.0 %. ​ Cash paid for amounts included in the measurement of operating lease liabilities is $ 21.2 million and $ 15.0 million during the three months ended April 30, 2023 and 2022, respectively. Right-of-use assets obtained in exchange for lease obligations were $ 10.5 million and $ 8.6 million during the three months ended April 30, 2023 and 2022, respectively. ​ NOTE 6 – KARL LAGERFELD ACQUISITION ​ On April 29, 2022, the Company entered into a share purchase agreement (the “Purchase Agreement”) with a group of investors pursuant to which the Company agreed to acquire, on the terms set forth and subject to the conditions set forth in the Purchase Agreement, the remaining 81 % interest in KLH that it did not already own, for an aggregate consideration of € 193.4 million (approximately $ 207.6 million) in cash, after taking into account certain adjustments. The acquisition closed on May 31, 2022. The Company funded the purchase price from cash on hand. ​ On May 31, 2022, the effective date of the acquisition, the Company’s previously held 19 % investment in KLH and 49 % investment in KLNA were remeasured at fair value using a market approach based on the purchase price of the acquisition 11 Table of Contents and a discount for lack of control related to the Company’s previously held minority investment in KLH. As a result of this remeasurement, a non-cash gain of $ 27.1 million was recorded as of the effective date of the acquisition. ​ The addition of KLH to the Company’s portfolio of owned brands advances several of its strategic initiatives, including increasing its direct ownership of brands and their licensing opportunities and further diversifying its global presence. This acquisition offers additional opportunities to expand the Company’s international growth by further developing its European-based brands, which also include Vilebrequin and Sonia Rykiel. The Company believes that KLH’s existing digital channel presence provides an opportunity for the Company to enhance its omni-channel business and further accelerate its digital initiatives. ​ Purchase Price Consideration ​ The purchase price of $ 207.6 million, after taking into account certain adjustments, was paid from cash on hand. The purchase price has been revised to include adjustments in accordance with the Purchase Agreement. ​ The initial purchase price and the valuation of the prior minority ownership for the acquisition of KLH is as follows (in thousands): ​ ​ ​ ​ ​ Cash disbursed for the acquisition of KLH ​ $ 168,592 Plus: cash acquired ​ ​ 38,499 Plus: aggregate adjustments to purchase price ​ ​ 516 Initial purchase price ​ ​ 207,607 Plus: fair value of prior minority ownership ​ ​ 102,858 Total consideration ​ $ 310,465 ​ Allocation of the Purchase Price Consideration ​ The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition: ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ Cash and cash equivalents ​ $ 38,499 Accounts receivable, net ​ ​ 28,449 Inventories ​ ​ 33,489 Prepaid income taxes ​ ​ 1,100 Prepaid expenses and other current assets ​ ​ 3,347 Property, plant and equipment, net ​ ​ 11,545 Operating lease assets ​ ​ 55,753 Goodwill ​ ​ 84,336 Trademarks ​ ​ 178,823 Customer relationships ​ ​ 4,294 Deferred income taxes ​ ​ 5,131 Other long-term assets ​ ​ 2,237 Total assets acquired ​ $ 447,003 Notes payable ​ ​ 3,606 Accounts payable ​ ​ 9,175 Accrued expenses ​ ​ 15,261 Operating lease liabilities ​ ​ 58,942 Income taxes payable ​ ​ 2,099 Deferred income taxes ​ ​ 42,222 Other long-term liabilities ​ ​ 5,233 Total liabilities assumed ​ $ 136,538 Total fair value of acquisition consideration ​ $ 310,465 ​ During the year ended January 31, 2023, the Company recorded adjustments to the fair values of assets acquired and liabilities assumed at the date of acquisition based on additional information obtained. The Company recorded an 12 Table of Contents additional $ 36.9 million in both total assets and total liabilities , primarily related to goodwill, deferred tax assets and liabilities, operating lease assets, inventories, accounts receivable, net, accounts payable, customer relationships and operating lease liabilities. ​ The Company recognized goodwill of approximately $ 84.3 million in connection with the acquisition of KLH. The goodwill was assigned to the Company’s wholesale operations reporting unit. The Company intends to make an election under Internal Revenue Code Section 338(g) to amortize the total goodwill and intangible assets over a 15 year period for income tax purposes in the United States. ​ The fair values assigned to identifiable intangible assets acquired were based on assumptions and estimates made by management using unobservable inputs reflecting the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available. The fair values of the trademarks were determined using the relief from royalty method and the fair value of the customer relationships were determined using an income approach. The Company classifies these intangibles as Level 3 fair value measurements. Identifiable intangible assets acquired include the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Fair Value ​ Amortization Period Trademarks ​ $ 178,823 ​ ​ — Customer relationships ​ ​ 4,294 ​ ​ 8 ​ ​ $ 183,117 ​ ​ — ​ The Company recognized approximately $ 5.6 million of acquisition related costs that were expensed in fiscal 2023 and fiscal 2022. The fiscal 2023 and fiscal 2022 acquisition and integration costs were recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income for the fiscal years ended January 31, 2023 and 2022, respectively. ​ The estimates of fair value of assets acquired and liabilities assumed are preliminary and subject to change based on completion of certain working capital adjustments and the tax implications of the Company’s purchase price allocation. The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition. ​ NOTE 7 – NET INCOME PER COMMON SHARE ​ Basic net income 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 outstanding during the period. Approximately 302,200 and 113,300 shares of common stock have been excluded from the diluted net income per share calculation for the three months ended April 30, 2023 and 2022, respectively. 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 per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended April 30, ​ 2023 2022 ​ ​ (In thousands, except share and per share amounts) Net income attributable to G-III Apparel Group, Ltd. ​ $ 3,236 ​ $ 30,634 Basic net income per share: ​ ​ ​ ​ ​ ​ Basic common shares ​ ​ 46,286 ​ ​ 48,016 Basic net income per share ​ $ 0.07 ​ $ 0.64 ​ ​ ​ ​ ​ ​ ​ Diluted net income per share: ​ ​ ​ ​ ​ ​ Basic common shares ​ ​ 46,286 ​ ​ 48,016 Dilutive restricted stock unit awards and stock options ​ ​ 1,156 ​ ​ 1,092 Diluted common shares ​ ​ 47,442 ​ ​ 49,108 Diluted net income per share ​ $ 0.07 ​ $ 0.62 ​ ​ 13 Table of Contents NOTE 8 – NOTES PAYABLE ​ Long-term debt consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ April 30, 2023 April 30, 2022 January 31, 2023 ​ ​ (In thousands) Secured Notes ​ $ 400,000 ​ $ 400,000 ​ $ 400,000 Revolving credit facility ​ ​ — ​ ​ — ​ ​ 80,087 LVMH Note ​ ​ 125,000 ​ ​ 125,000 ​ ​ 125,000 Unsecured loans ​ ​ 11,212 ​ ​ 7,845 ​ ​ 10,866 Overdraft facilities ​ ​ 4,132 ​ ​ 3,131 ​ ​ 3,657 Foreign credit facility ​ ​ 8,462 ​ ​ — ​ ​ 7,792 Subtotal ​ ​ 548,806 ​ ​ 535,976 ​ ​ 627,402 Less: Net debt issuance costs (1) ​ ​ ( 3,821 ) ​ ​ ( 5,520 ) ​ ​ ( 4,246 ) Debt discount ​ ​ ( 1,981 ) ​ ​ ( 9,074 ) ​ ​ ( 3,798 ) Current portion of long-term debt ​ ​ ( 139,418 ) ​ ​ ( 4,554 ) ​ ​ ( 135,518 ) Total ​ $ 403,586 ​ $ 516,828 ​ $ 483,840 (1) Does not include debt issuance costs, net of amortization, totaling $ 3.6 million, $ 5.2 million and $ 4.0 million as of April 30, 2023, April 30, 2022 and January 31, 2023, 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. ​ 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 were 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. ​ 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. ​ 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. ​ 14 Table of Contents 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. ​ The Company incurred debt issuance costs totaling $ 8.5 million related to 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. ​ 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 certain of its subsidiaries (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”). The Prior Credit Agreement provided for borrowings of up to $ 650 million. The ABL Credit Agreement extended the maturity date of this facility from December 2021 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 calculation of the interest rate under the ABL Credit Agreement has been revised as set forth in the next paragraph. 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. As of April 30, 2023, interest under the ABL Credit Agreement was being paid at an average rate of 6.62 % per annum. ​ On April 20, 2023, the Company amended the ABL Credit Agreement to replace LIBOR with the Adjusted Term Secured Overnight Financing Rate (“SOFR”) as a successor rate. All other material terms and conditions of the ABL Credit Agreement were unchanged. Borrowings under the amended ABL Credit Agreement will bear interest, at the Borrower’s 15 Table of Contents option, at the alternate base rate (defined as, for a given day, the greatest of (i) the “prime rate” in effect on such day, (ii) the NYFRB Rate (as defined in the amendment) in effect on such day plus 0.5 % and (iii) the Adjusted Term SOFR (defined as an interest rate per annum equal to the Term SOFR for such interest period plus 0.10 %) for a one-month interest period as published two business days prior to such day plus 1 %) plus an applicable spread or the Adjusted Term SOFR Rate plus an applicable spread. The Company applied certain provisions and practical expedients of ASC 848 – Reference Rate Reform related to the transition from LIBOR to SOFR. ​ The revolving credit facility contains covenants that, among other things, restrict the Company’s ability to, subject to specified exceptions, incur additional debt; incur liens; sell or dispose of certain assets; merge with other companies; liquidate or dissolve the Company; acquire other companies; make loans, advances, or guarantees; and make certain investments. In certain circumstances, the revolving credit facility also requires 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 April 30, 2023, the Company was in compliance with these covenants. ​ As of April 30, 2023, 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 April 30, 2023, there were outstanding trade and standby letters of credit amounting to $ 7.8 million and $ 2.9 million, respectively. ​ 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 of 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 amortized ratably over the term of the ABL Credit Agreement. ​ LVMH Note ​ As a portion of the consideration for the acquisition of Donna Karan International (“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. The LVMH Note is classified in current portion of notes payable in the Company’s condensed consolidated balance sheet as of April 30, 2023. ​ ASC 820 requires the LVMH Note to be recorded at fair value at issuance. As a result, the Company recorded a $ 40.0 million debt discount upon issuance of the LVMH Note. This discount is being amortized as interest expense using the effective interest method over the term of the LVMH Note. ​ Unsecured Loans ​ Several of the Company’s foreign entities borrow funds under various unsecured loans of which a portion is to provide funding for operations in the normal course of business while other loans are European state backed loans as part of COVID-19 relief programs. In the aggregate, the Company is currently required to make quarterly installment payments of principal in the amount of € 0.6 million under these loans. Interest on the outstanding principal amount of the unsecured loans accrues at a fixed rate equal to 0 % to 5.0 % per annum, payable on either a quarterly or monthly basis. As of April 30, 2023, the Company had an aggregate outstanding balance of € 10.3 million ($ 11.2 million) under these unsecured loans. ​ Overdraft Facilities ​ During fiscal 2021, T.R.B International SA (“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 16 Table of Contents varying interest rates of 0 % to 0.5 %. As of April 30, 2023, TRB had an aggregate of € 3.8 million ($ 4.1 million) drawn under these facilities. ​ Foreign Credit Facility ​ KLH has a credit agreement with ABN AMRO Bank N.V. with a credit limit of € 15.0 million which is secured by specified assets of KLH. Borrowings bear interest at the Euro Interbank Offered Rate (“EURIBOR”) plus a margin of 1.7 %. As of April 30, 2023, KLH had € 7.8 million ($ 8.5 million) of borrowings outstanding under this credit facility. ​ 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 and Karl Lagerfeld businesses, other than sales of product under the Karl Lagerfeld Paris brand from our retail stores and digital outlets. 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, Karl Lagerfeld, G.H. Bass, Andrew Marc, Vilebrequin and Sonia Rykiel trademarks owned by the Company. As of April 30, 2023, 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. Retail stores primarily consist of DKNY and Karl Lagerfeld Paris 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 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 $ 4.1 million, $ 3.6 million and $ 5.1 million at April 30, 2023, April 30, 2022 and January 31, 2023, respectively. The Company recognized $ 3.6 million in revenue for the three months ended April 30, 2023 related to contract liabilities that existed at January 31, 2023. The Company recognized $ 3.7 million in revenue for the three months ended April 30, 2022 related to contract liabilities that existed at January 31, 2022. There were no contract assets recorded as of April 30, 2023, April 30, 2022 and January 31, 2023. Substantially all of the advance payments from licensees as of April 30, 2023 are expected to be recognized as revenue within the next twelve months. ​ 17 Table of Contents 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 and Karl Lagerfeld businesses, other than sales of the Karl Lagerfeld Paris brand from retail stores and digital outlets. Wholesale revenues also include revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. Bass, Andrew Marc and Sonia Rykiel. The retail operations segment consists primarily of direct sales to consumers through Company-operated stores, which consists primarily 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. Substantially all DKNY and Karl Lagerfeld Paris stores are operated as outlet stores. ​ The following segment information is presented for the three month periods indicated below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended April 30, 2023 ​ Wholesale Retail Elimination (1) Total ​ ​ (In thousands) Net sales ​ $ 586,903 ​ $ 30,217 ​ $ ( 10,531 ) ​ $ 606,589 Cost of goods sold ​ ​ 352,470 ​ ​ 14,849 ​ ​ ( 10,531 ) ​ ​ 356,788 Gross profit ​ ​ 234,433 ​ ​ 15,368 ​ ​ — ​ ​ 249,801 Selling, general and administrative expenses ​ ​ 204,089 ​ ​ 23,872 ​ ​ — ​ ​ 227,961 Depreciation and amortization ​ ​ 5,745 ​ ​ 831 ​ ​ — ​ ​ 6,576 Operating profit (loss) ​ $ 24,599 ​ $ ( 9,335 ) ​ $ — ​ $ 15,264 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended April 30, 2022 ​ Wholesale Retail Elimination (1) Total ​ ​ (In thousands) Net sales ​ $ 680,904 ​ $ 27,885 ​ $ ( 20,032 ) ​ $ 688,757 Cost of goods sold ​ ​ 448,769 ​ ​ 13,981 ​ ​ ( 20,032 ) ​ ​ 442,718 Gross profit ​ ​ 232,135 ​ ​ 13,904 ​ ​ — ​ ​ 246,039 Selling, general and administrative expenses ​ ​ 161,808 ​ ​ 23,599 ​ ​ — ​ ​ 185,407 Depreciation and amortization ​ ​ 5,414 ​ ​ 681 ​ ​ — ​ ​ 6,095 Operating profit (loss) ​ $ 64,913 ​ $ ( 10,376 ) ​ $ — ​ $ 54,537 ​ (1) Represents intersegment sales to the Company’s retail operations segment. ​ The total net sales by licensed and proprietary product sales for each of the Company’s reportable segments are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ April 30, 2023 April 30, 2022 ​ ​ (In thousands) Licensed brands ​ $ 298,005 ​ $ 459,984 Proprietary brands ​ ​ 288,898 ​ ​ 220,920 Wholesale net sales (1) ​ $ 586,903 ​ $ 680,904 ​ ​ ​ ​ ​ ​ ​ Licensed brands ​ $ — ​ $ 13,928 Proprietary brands ​ ​ 30,217 ​ ​ 13,957 Retail net sales ​ $ 30,217 ​ $ 27,885 ​ (1) The Company acquired the remaining interests in KLH (the Karl Lagerfeld branded product) that it did not already own as of May 31, 2022. Net sales of Karl Lagerfeld product were included in licensed brand net sales of the wholesale operations segment through May 31, 2022. Subsequent to May 31, 2022, net sales of Karl Lagerfeld product are included in proprietary brands net sales of the wholesale operations segment . 18 Table of Contents NOTE 11 – STOCKHOLDERS’ EQUITY ​ For the three months ended April 30, 2023, the Company issued no shares of common stock and utilized 2,001 shares of treasury stock in connection with the vesting of equity awards. For the three months ended April 30, 2022, the Company issued no shares of common stock and utilized 271,536 shares of treasury stock in connection with the vesting of equity awards. ​ NOTE 12 – CANADIAN CUSTOMS DUTY EXAMINATION ​ In accordance with a favorable ruling by the Canadian International Trade Tribunal, in fiscal 2023, G-III Canada received a refund from the Canada Border Service Agency (“CBSA”) of CAD $ 1.5 million ( $ 1.1 million), including interest and net of a dutiable design assist, for amounts paid by G-III Canada to the CBSA between February 1, 2014 and January 31, 2018. G-III Canada has filed adjustment requests with the CBSA for the period from February 1, 2018 to January 31, 2022 to amend declared dutiable values. These amendments are expected to result in a refund of duty and interest from the CBSA of approximately CAD $ 13.3 million ( $ 9.8 million) plus related interest. These amounts are recorded within other assets, net on the condensed consolidated balance sheets. ​ NOTE 13 – RECENT ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS ​ Recently Adopted Accounting Guidance ​ There was no accounting guidance adopted during the three months ended April 30, 2023. ​ 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 consolidated financial statements. ​ NOTE 14 – SUBSEQUENT EVENTS ​ In May 2023, the Company entered into a global twenty-five year master license agreement with Xcel Brands to design and produce all categories of men’s and women’s product for the Halston brand. The agreement provides for an initial term of five years , followed by a twenty-year period, as well as a purchase option at the end of the twenty-five year term. First deliveries of Halston product are expected to begin in the fall of 2024. The product will be distributed globally through better department stores and digital channels. ​ 19 Table of Contents