What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-12-06 compared with 2023-09-07 · 109 added, 106 removed, 507 unchanged (30% of the section changed)

49 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

(In thousands, except per share amounts)

2 unchanged sentences

Depreciation and amortization

Asset impairments and gain on lease terminations

Operating profit

Other (loss) income

Interest and financing charges, net

8 unchanged sentences

Weighted average number of shares outstanding

Other comprehensive income (loss):

Other comprehensive loss:

Foreign currency translation adjustments

Other comprehensive income (loss)

Other comprehensive loss

Comprehensive income

9 unchanged sentences

(In thousands)

Balance as of April 30, 2023

Balance as of July 31, 2023

Equity awards vested, net

1 unchanged sentence

Taxes paid for net share settlements

Other comprehensive income, net

Repurchases of common stock

Other comprehensive loss, net

Net income attributable to G-III Apparel Group, Ltd.

Balance as of October 31, 2023

Balance as of July 31, 2022

Balance as of April 30, 2022

Equity awards vested, net

Share-based compensation expense

Taxes paid for net share settlements

Other comprehensive income, net

Repurchases of common stock

Other comprehensive loss, net

Net income attributable to G-III Apparel Group, Ltd.

Balance as of July 31, 2022

Balance as of October 31, 2022

Balance as of January 31, 2023

2 unchanged sentences

Taxes paid for net share settlements

Other comprehensive income, net

Other comprehensive loss, net

Repurchases of common stock

Net income attributable to G-III Apparel Group, Ltd.

Balance as of July 31, 2023

Balance as of October 31, 2023

Balance as of January 31, 2022

5 unchanged sentences

Net income attributable to G-III Apparel Group, Ltd.

Balance as of July 31, 2022

Balance as of October 31, 2022

The accompanying notes are an integral part of these statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended July 31,

Nine Months Ended October 31,

(Unaudited, in thousands)

5 unchanged sentences

Non-cash operating lease costs

Gain on lease terminations

Asset impairment

Equity gain (loss) in unconsolidated affiliates

18 unchanged sentences

Investment in equity securities

Sale of equity securities

Capital expenditures

Acquisition of KLH, net of cash acquired

Acquisition of other foreign business, net of cash required

Net cash used in investing activities

39 unchanged sentences

Accordingly, the results of KLH, Vilebrequin, 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 six-month period ended July 31, 2023, the results of KLH, Vilebrequin, Fabco and Sonia Rykiel are included for the six-month period ended June 30, 2023.

For the year ended January 31, 2023, the results of KLH, which includes KLNA, are included for the period from June 1, 2022 through December 31, 2022.

For example, with respect to the Company’s results for the nine-month period ended October 31, 2023, the results of KLH, Vilebrequin, Fabco and Sonia Rykiel are included for the nine-month period ended September 30, 2023.

For the year ended January 31, 2023, the results of KLH, which includes KLNA, are included for the period from May 31, 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 January 1, 2022 through May 30, 2022.

The Company’s retail operations segment reports on a 52/53 week fiscal year.

For fiscal 2024 and 2023, the three and six-month periods for the retail operations segment were each 13-week and 26-week periods, respectively, and ended on July 29, 2023 and July 30, 2022, respectively.

The results for the three and six months ended July 31, 2023 are not necessarily indicative of the results expected for the entire fiscal year, given the seasonal nature of the Company’s business.

For fiscal 2024 and 2023, the three and nine-month periods for the retail operations segment were each 13-week and 39-week periods, respectively, and ended on October 28, 2023 and October 29, 2022, respectively.

The results for the three and nine months ended October 31, 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.

8 unchanged sentences

The Company considers its trade receivables to consist of two portfolio segments:

wholesale and retail trade

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, 2023, July 31, 2022 and January 31, 2023 were:

July 31, 2023

The Company’s accounts receivable and allowance for doubtful accounts as of October 31, 2023, October 31, 2022 and January 31, 2023 were:

October 31, 2023

(In thousands)

2 unchanged sentences

Accounts receivable, net

July 31, 2022

October 31, 2022

(In thousands)

18 unchanged sentences

Accounts written off as uncollectible

Balance as of July 31, 2023

Balance as of October 31, 2023

Balance as of January 31, 2022

1 unchanged sentence

Accounts written off as uncollectible

Balance as of July 31, 2022

Balance as of October 31, 2022

Balance as of January 31, 2022

6 unchanged sentences

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 $ 8.5 million, $ 9.3 million and $ 19.2 million as of July 31, 2023, July 31, 2022 and January 31, 2023, respectively.

The inventory return asset, which consists of the amount of goods that are anticipated to be returned by customers, was $ 15.6 million, $ 17.1 million and $ 19.2 million as of October 31, 2023, October 31, 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 $ 7.9 million, $ 5.7 million and $ 6.6 million at July 31, 2023, July 31, 2022 and January 31, 2023, respectively.

Inventory held on consignment by the Company’s customers totaled $ 7.9 million, $ 6.5 million and $ 6.6 million at October 31, 2023, October 31, 2022 and January 31, 2023, respectively.

The Company reflects this inventory on its condensed consolidated balance sheets.

20 unchanged sentences

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 July 31, 2023.

The carrying amount of the Company’s variable rate debt approximates the fair value, as interest rates change with the market rates.

The fair value of the Company’s secured notes is based on their current market price as of October 31, 2023.

The carrying amount of the Company’s variable rate debt approximates the fair value, as interest rates change with 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.

2 unchanged sentences

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 Company repaid $ 75.0 million of the principal amount of the LVMH Note on June 1, 2023.

The Company repaid $ 75.0 million of the principal amount of the LVMH Note on June 1, 2023 and the remaining $ 50.0 million of such principal amount on December 1, 2023.

The fair value of the LVMH Note was considered a Level 3 valuation in the fair value hierarchy.

17 unchanged sentences

The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company’s operating lease assets and liabilities as of July 31, 2023, July 31, 2022 and January 31, 2023 consist of the following:

The Company’s operating lease assets and liabilities as of October 31, 2023, October 31, 2022 and January 31, 2023 consist of the following:

Classification

July 31, 2023

July 31, 2022

October 31, 2023

October 31, 2022

January 31, 2023

6 unchanged sentences

Total lease liabilities

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 $ 18.3 million and $ 36.9 million during the three and six months ended July 31, 2023.

The Company recorded lease costs of $ 14.9 million and $ 29.0 million during the three and six months ended July 31, 2022.

The Company recorded lease costs of $ 18.1 million and $ 55.1 million during the three and nine months ended October 31, 2023.

The Company recorded lease costs of $ 17.1 million and $ 46.1 million during the three and nine months ended October 31, 2022.

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 $ 5.5 million and $ 11.5 million for the three and six months ended July 31, 2023.

The Company recorded variable lease costs and short-term lease costs of $ 5.5 million and $ 10.6 million for the three and six months ended July 31, 2022.

The Company recorded variable lease costs and short-term lease costs of $ 6.7 million and $ 18.1 million for the three and nine months ended October 31, 2023.

The Company recorded variable lease costs and short-term lease costs of $ 6.1 million and $ 16.7 million for the three and nine months ended October 31, 2022.

Short-term lease costs are immaterial.

As of July 31, 2023, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2028 and thereafter are as follows:

As of October 31, 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,

2 unchanged sentences

Present value of lease liabilities

As of July 31, 2023, there are no material leases that are legally binding but have not yet commenced.

As of July 31, 2023, the weighted average remaining lease term related to operating leases is 5.1 years.

As of October 31, 2023, there are no material leases that are legally binding but have not yet commenced.

As of October 31, 2023, the weighted average remaining lease term related to operating leases is 5.0 years.

The weighted average discount rate related to operating leases is 8.5 %.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 39.3 million and $ 30.0 million during the six months ended July 31, 2023 and 2022, respectively.

Right-of-use assets obtained in exchange for lease obligations were $ 18.1 million and $ 69.9 million during the six months ended July 31, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 53.2 million and $ 47.6 million during the nine months ended October 31, 2023 and 2022, respectively.

Right-of-use assets obtained in exchange for lease obligations were $ 26.8 million and $ 96.7 million during the nine months ended October 31, 2023 and 2022, respectively.

NOTE 6 – KARL LAGERFELD ACQUISITION

consideration of € 193.4 million (approximately $ 207.6 million) in cash, after taking into account certain adjustments.

On April 29, 2022, the Company entered into a share purchase agreement (the “Purchase Agreement”) pursuant to which the Company agreed to acquire 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.

38 unchanged sentences

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 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 recorded an

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.

In fiscal 2023, as a result of the Company’s annual impairment test, the Company recorded a $ 347.2 million non-cash impairment charge to fully impair the carrying value of its goodwill.

This charge included all of the $ 84.3 million of goodwill previously recognized in connection with the acquisition of KLH.

The Company made 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.

8 unchanged sentences

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 fair value of assets acquired and liabilities assumed have been finalized as of May 31, 2023.

The fair value of assets acquired and liabilities assumed were finalized as of May 31, 2023.

NOTE 7 – NET INCOME PER COMMON SHARE

1 unchanged sentence

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 106,000 and 312,500 shares of common stock have been excluded from the diluted net income per share calculation for the three and six months ended July 31, 2023.

Approximately 301,300 and 205,400 shares of common stock have been excluded from the diluted net income per share calculation for the three and six months ended July 31, 2022.

Approximately 8,200 and 59,200 shares of common stock have been excluded from the diluted net income per share calculation for the three and nine months ended October 31, 2023.

Approximately 310,600 and 258,600 shares of common stock have been excluded from the diluted net income per share calculation for the three and nine months ended October 31, 2022.

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 July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

(In thousands, except share and per share amounts)

10 unchanged sentences

Long-term debt consists of the following:

July 31, 2023

July 31, 2022

October 31, 2023

October 31, 2022

January 31, 2023

8 unchanged sentences

Current portion of long-term debt

(1) Does not include debt issuance costs, net of amortization, totaling $ 3.2 million, $ 4.8 million and $ 4.0 million as of July 31, 2023, July 31, 2022 and January 31, 2023, respectively, related to the revolving credit facility.

(1) Does not include debt issuance costs, net of amortization, totaling $ 2.8 million, $ 4.4 million and $ 4.0 million as of October 31, 2023, October 31, 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”).

In August 2020, the Company completed a private debt offering of $ 400 million aggregate principal amount of its 7.875 % Senior Secured Notes due August 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.

7 unchanged sentences

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.

7 unchanged sentences

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 ABL Credit Agreement is a five year senior secured credit facility that 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.

1 unchanged sentence

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.

The ABL Credit Agreement extended the maturity date of this facility from December 2021 to August 2025.

Amounts available under the ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the ABL Credit Agreement.

7 unchanged sentences

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 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 to, subject to specified exceptions, incur additional debt;

6 unchanged sentences

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, 2023, the Company was in compliance with these covenants.

As of July 31, 2023, the Company had no borrowings outstanding under the ABL Credit Agreement.

As of October 31, 2023, the Company was in compliance with these covenants.

As of October 31, 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 July 31, 2023, there were outstanding trade and standby letters of credit amounting to $ 3.7 million and $ 2.9 million, respectively.

As of October 31, 2023, there were outstanding trade and standby letters of credit amounting to $ 2.0 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.

3 unchanged sentences

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 was repaid 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 sheets as of July 31, 2023 and January 31, 2023.

$ 75.0 million of the LVMH Note is classified in current portion of notes payable in the Company’s condensed consolidated balance sheet as of July 31, 2022.

$ 75.0 million of the principal amount of the LVMH Note was repaid on June 1, 2023 and the remaining $ 50.0 million of such principal amount was paid on December 1, 2023 .

The LVMH Note is classified in current portion of notes payable in the Company’s condensed consolidated balance sheets as of October 31, 2023 and January 31, 2023.

$ 75.0 million of the LVMH Note is classified in current portion of notes payable in the Company’s condensed consolidated balance sheet as of October 31, 2022.

ASC 820 requires the LVMH Note to be recorded at fair value at issuance.

5 unchanged sentences

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 July 31, 2023, the Company had an aggregate outstanding balance of € 9.1 million ($ 9.9 million) under these unsecured loans.

As of October 31, 2023, the Company had an aggregate outstanding balance of € 8.6 million ($ 9.1 million) under these unsecured loans.

Overdraft Facilities

3 unchanged sentences

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, 2023, TRB had an aggregate of € 2.0 million ($ 2.2 million) drawn under these facilities.

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 October 31, 2023, TRB had an aggregate of € 1.8 million ($ 1.9 million) drawn under these facilities.

Foreign Credit Facility

2 unchanged sentences

Borrowings bear interest at the EURIBOR plus a margin of 1.7 %.

As of July 31, 2023, KLH had € 7.5 million ($ 8.2 million) of borrowings outstanding under this credit facility.

As of October 31, 2023, KLH had € 3.9 million ($ 4.2 million) of borrowings outstanding under this credit facility.

NOTE 9 – REVENUE RECOGNITION

5 unchanged sentences

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, including from retail stores operated by Vilebrequin and Karl Lagerfeld, other than sales of product under the Karl Lagerfeld Paris brand from the Company’s retail stores and digital outlets.

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, including from retail stores operated by Vilebrequin and Karl Lagerfeld, other than sales of product under the Karl Lagerfeld Paris brand generated by the Company’s retail stores and digital outlets.

Wholesale revenues from sales of products are recognized when control transfers to the customer.

3 unchanged sentences

Bass, Andrew Marc, Vilebrequin and Sonia Rykiel trademarks owned by the Company.

As of July 31, 2023, revenues from license agreements represented an insignificant portion of wholesale revenues.

Retail Operations Segment.

9 unchanged sentences

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 $ 4.6 million, $ 4.0 million and $ 5.1 million at July 31, 2023, July 31, 2022 and January 31, 2023, respectively.

The Company recognized $ 2.8 million in revenue for the three months ended July 31, 2023 related to contract liabilities that existed at April 30, 2023.

The Company recognized $ 4.2 million in revenue for the six months ended July 31, 2023 related to contract liabilities that existed at January 31, 2023.

There were no contract assets recorded as of July 31, 2023, July 31, 2022 and January 31, 2023.

Substantially all of the advance payments from licensees as of July 31, 2023 are expected to be recognized as revenue within the next twelve months.

Total contract liabilities were $ 3.3 million, $ 3.3 million and $ 5.1 million at October 31, 2023, October 31, 2022 and January 31, 2023, respectively.

The Company recognized $ 3.1 million in revenue for the three months ended October 31, 2023 related to contract liabilities that existed at July 31, 2023.

The Company recognized $ 4.3 million in revenue for the nine months ended October 31, 2023 related to contract liabilities that existed at January 31, 2023.

There were no contract assets recorded as of October 31, 2023, October 31, 2022 and January 31, 2023.

Substantially all of the advance payments from licensees as of October 31, 2023 are expected to be recognized as revenue within the next twelve months.

NOTE 10 – SEGMENTS

2 unchanged sentences

wholesale operations and retail operations.

The wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, including from retail stores operated by Vilebrequin and Karl Lagerfeld, other than sales of product under the Karl Lagerfeld Paris brand from the Company’s retail stores and digital outlets.

The wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, including from retail stores operated by Vilebrequin and Karl Lagerfeld, other than sales of product under the Karl Lagerfeld Paris brand generated by the Company’s retail stores and digital outlets.

Wholesale revenues also include revenues from license agreements related to the DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H.

3 unchanged sentences

Substantially all DKNY and Karl Lagerfeld Paris stores are operated as outlet stores.

The following segment information is presented for the three and six month periods indicated below:

Three Months Ended July 31, 2023

The following segment information is presented for the three and nine month periods indicated below:

Three Months Ended October 31, 2023

Elimination (1)

3 unchanged sentences

Depreciation and amortization

Asset impairments and gain on lease terminations

Operating profit (loss)

Three Months Ended July 31, 2022

Three Months Ended October 31, 2022

Elimination (1)

3 unchanged sentences

Depreciation and amortization

Asset impairment, net of gain on lease terminations

Operating profit (loss)

Six Months Ended July 31, 2023

Nine Months Ended October 31, 2023

Elimination (1)

3 unchanged sentences

Depreciation and amortization

Asset impairment, net of gain on lease terminations

Operating profit (loss)

Six Months Ended July 31, 2022

Nine Months Ended October 31, 2022

Elimination (1)

3 unchanged sentences

Depreciation and amortization

Asset impairment, net of gain on lease terminations

Operating profit (loss)

2 unchanged sentences

Three Months Ended

Six Months Ended

July 31, 2023

July 31, 2022

July 31, 2023

July 31, 2022

Nine Months Ended

October 31, 2023

October 31, 2022

October 31, 2023

October 31, 2022

(In thousands)

5 unchanged sentences

Retail net sales

(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.

(1) As of May 31, 2022, the Company acquired the remaining interests in KLH (Karl Lagerfeld branded product) that it did not already own.

Net sales of Karl Lagerfeld product were included in licensed brands net sales of the wholesale operations segment through May 31, 2022.

1 unchanged sentence

NOTE 11 – STOCKHOLDERS’ EQUITY

For the three months ended July 31, 2023, the Company issued no shares of common stock and utilized 601,970 shares of treasury stock in connection with the vesting of equity awards.

For the three months ended July 31, 2022, the Company issued no shares of common stock and utilized 111,583 shares of treasury stock in connection with the vesting of equity awards.

For the six months ended July 31, 2023, the Company issued no shares of common stock and utilized 603,971 shares of treasury stock in connection with the vesting of equity awards.

For the six months ended July 31, 2022, the Company issued no shares of common stock and utilized 383,119 shares of treasury stock in connection with the vesting of equity awards.

For the three months ended October 31, 2023, the Company issued no shares of common stock and utilized 4,354 shares of treasury stock in connection with the vesting of equity awards.

For the three months ended October 31, 2022, the Company issued no shares of common stock and utilized 2,366 shares of treasury stock in connection with the vesting of equity awards.

For the nine months ended October 31, 2023, the Company issued no shares of common stock and utilized 608,325 shares of treasury stock in connection with the vesting of equity awards.

For the nine months ended October 31, 2022, the Company issued no shares of common stock and utilized 385,485 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.

In accordance with a favorable ruling by the Canadian International Trade Tribunal, in fiscal 2023 and fiscal 2024, G-III Canada received refunds from the Canada Border Service Agency (“CBSA”) in the aggregate amount of CAD $ 2.7 million ( $ 2.0 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 $ 13.5 million ( $ 10.2 million) plus related interest.

These amounts are recorded within other assets, net on the condensed consolidated balance sheets.

NOTE 13 – RELATED PARTY TRANSACTION

In June 2023, the Company entered into a stock sale and purchase agreement (the “Agreement”) with Sammy Aaron, the Company’s Vice Chairman and President and a Director of the Company.

Pursuant to the Agreement, the Company purchased from Mr.

Aaron 208,943 shares of its common stock for $ 4.1 million at a price equal to the closing price of the Company’s shares on the date of the Agreement.

These amendments are expected to result in an additional refund of duty and interest, net of refunds already received, from the CBSA of approximately CAD $ 12.4 million ( $ 8.9 million) plus related interest.

These amounts are recorded within other assets, net in 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 July 31, 2023.

There was no accounting guidance adopted during the three months ended October 31, 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 15 – SUBSEQUENT EVENTS

NOTE 14 – RELATED PARTY TRANSACTION

In June 2023, the Company entered into a stock sale and purchase agreement (the “Agreement”) with Sammy Aaron, the Company’s Vice Chairman and President and a Director of the Company.

Pursuant to the Agreement, the Company purchased from Mr.

Aaron 208,943 shares of its common stock for $ 4.1 million at a price equal to the closing price of the Company’s shares on the date of the Agreement.

NOTE 15 – EMPLOYMENT AGREEMENTS

On August 9, 2023, the Company entered into a new employment agreement with Morris Goldfarb, its Chairman and Chief Executive Officer.

5 unchanged sentences

Aaron’s annual cash incentive that are designed to align with current market practice and to reduce the size of the annual cash incentive, (ii) changed the mix of annual cash compensation and annual equity grants in a manner that increases the weighting of equity compared to cash and encourages long-term performance and shareholder value creation and (iii) in recognition of the significant reduction in the annual cash incentive agreed to by Mr.

Aaron, provides for a special bonus of $ 2,000,000 and a retention bonus of $ 1,000,000 .

Aaron, provides for a special bonus of $ 2,000,000 that was paid shortly after the new employment agreement was entered into and a retention bonus of $ 1,000,000 payable if, as of January 31, 2025, the Company has not terminated the employment agreement for “cause” or he has not terminated the employment agreement without “cause” or without “Good Reason” (each of the terms as defined in the employment agreement).

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

What changed 10-Q

Item 1. Financial Statements