What changed in this filing

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Item 1A. Risk Factors

2024-03-25 compared with 2023-03-27 · 140 added, 135 removed, 467 unchanged (37% of the section changed)

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The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements.

Furthermore, the COVID-19 pandemic (including federal, state and local governmental responses, broad economic impacts and market disruptions) has heightened risks discussed in the risk factors described in this Annual Report on Form 10-K.

Risk Factors Relating to Our Wholesale Operations

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License agreements also may restrict our ability to enter into other license agreements for competing products or acquire businesses that produce competing products without the consent of the licensor.

If we do not satisfy any of the material requirements of a license agreement or receive approval with respect to a restricted transaction, a licensor will usually have the right to terminate our license.

If we do not satisfy any of the material requirements of a license agreement or receive approval with respect to a restricted transaction, a licensor may have the right to terminate our license.

Even if a licensor does not terminate our license, the failure to achieve net sales sufficient to cover our required minimum royalty payments could have a material adverse effect on our results of operations.

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Any adverse change in our relationship with PVH Corp.

and its Calvin Klein or Tommy Hilfiger brands, or inability to renew the license agreements for these brands, would have a material adverse effect on our results of operations.

and its Calvin Klein or Tommy Hilfiger brands, including as a result of the limited extension period of our license agreements for these brands, could have a material adverse effect on our results of operations.

As of January 31, 2024, we have license agreements relating to a variety of products sold under the Calvin Klein and Tommy Hilfiger brands, both of which are owned by PVH.

Net sales of products under the Calvin Klein and Tommy Hilfiger brands constituted approximately 41.0% of our net sales in fiscal 2024 and approximately 48.0% of our net sales in fiscal 2023.

On November 30, 2022, we announced the extension of licenses for Calvin Klein and Tommy Hilfiger products.

In November 2022, we announced the extension of licenses for Calvin Klein and Tommy Hilfiger products.

The amendments to the license agreements for Calvin Klein and Tommy Hilfiger products provide for staggered extensions by category that expire beginning December 31, 2024 and continuing through December 31, 2027.

See the table in “Wholesale Operations-Licensed Products” above for information with respect to the new extension term, any potential renewal term or the existing current term for the Calvin Klein and Tommy Hilfiger license agreements.

In addition, the license for Tommy Jeans expired on January 31, 2023.

See the table in “Wholesale Operations-Licensed Products” above for information with respect to the current terms of these agreements.

PVH, the owner of these two brands, has indicated that it intends to produce these Calvin Klein and Tommy Hilfiger products itself once these license agreements expire.

Unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the inability to renew the Calvin Klein and Tommy Hilfiger license agreements would cause a significant decrease in our net sales and have a material adverse effect on our results of operations.

Unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the limited extension period of the amended Calvin Klein and Tommy Hilfiger license agreements could cause a significant decrease in our net sales and have a material adverse effect on our results of operations.

Our success is dependent on the strategies and reputation of our licensors.

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In addition to granting us a license to produce and sell products, our licensors typically produce and sell their own products and may also grant licenses to third parties to produce and sell products.

If any of our licensors decides to “reposition” its products under the brands we license from them, introduce similar products under similar brand names or otherwise change the parameters of design, pricing, distribution, target market or competitive set, we could experience a significant downturn in that brand’s business, adversely affecting our

sales and profitability.

Further, we are unable to control the quality of the products produced by our licensors and their other licensees.

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The growth of our proprietary brands, their favorable images and our customers’ connection to our brands has contributed to our success.

Our proprietary brands include DKNY, Donna Karan, Karl Lagerfeld, G.H.

Bass, Vilebrequin, Sonia Rykiel, Andrew Marc and Wilsons Leather, among others.

Our proprietary brands include DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, G.H.

Bass, Vilebrequin, Sonia Rykiel, Andrew Marc and Wilsons Leather.

In addition, brand value is based in part on consumer perceptions of a variety of qualities, including merchandise quality and corporate integrity.

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group accounting for approximately 19.2% of our net sales in fiscal 2024, 21.6% of our net sales in fiscal 2023 and 23.9% of our net sales in fiscal 2022.

In addition, TJX Companies accounted for approximately 15.4% of our net sales in fiscal 2023, 14.8% of our net sales in fiscal 2022 and 12.9% of our net sales in fiscal 2021.

TJX Companies accounted for approximately 13.6% of our net sales in fiscal 2024, 15.4% of our net sales in fiscal 2023 and 14.8% of our net sales in fiscal 2022.

In addition, sales to Ross Stores accounted for an aggregate of 10.1% of our net sales in fiscal 2024, 9.2% of our net sales in fiscal 2023 and 12.7% of our net sales in fiscal 2022.

We expect that these customers will continue to provide a significant percentage of our sales.

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Our retail operations segment reported an operating loss of $30.5 million in fiscal 2024, $33.6 million in fiscal 2023 and $24.8 million in fiscal 2022.

Our ongoing plan for our retail operations focuses on the operations and growth of our DKNY and Karl Lagerfeld Paris stores, as well as operating our digital business.

Our ongoing plan for our retail operations focuses on the operations of our Karl Lagerfeld Paris and DKNY stores, as well as operating our digital business.

If we are not successful in implementing and managing our plans with respect to operating our retail business, we may not be able to achieve operating enhancements, sales growth and/or cost reductions or may continue to report operating losses in our retail operations segment, which could adversely impact our business, results of operations and financial condition.

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A reduction in the volume of outlet mall traffic could adversely affect our retail sales.

Substantially all of the stores in our retail operations segment are operated as outlet stores and located in larger outlet centers, many of which are located in, or near, vacation destinations or away from large population centers where department stores and other traditional retailers are concentrated.

Substantially all of the stores in our retail operations segment are operated as outlet stores and located in larger premium outlet centers, many of which are located in, or near, vacation destinations or away from large population centers where department stores and other traditional retailers are concentrated.

Economic uncertainty, increased fuel prices, travel concerns and other circumstances, which would lead to decreased travel, could have a material adverse effect on sales at our outlet stores.

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● a downturn in foreign shoppers in the United States;

● the amount of advertising and promotional dollars spent on attracting consumers to outlet malls.

● the amount of advertising and promotional dollars spent on attracting consumers to outlet centers.

Sales at our outlet stores are derived, in part, from the volume of traffic at the malls where our stores are located.

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We are investing in our digital business and seeking to increase the amount of business derived from our digital operations.

The successful operation and expansion of our digital business, as well as our ability to provide a positive shopping experience that will generate orders and drive subsequent visits, depends on operating an appealing digital platform and

providing an efficient and uninterrupted operation of our order-taking and fulfillment operations.

Risks associated with our digital business include:

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The continued growth of our business, including as a result of acquisitions, depends on our access to sufficient funds to support our growth.

Our primary source of working capital to support the growth of our operations is our ABL Credit Agreement which extends to August 2025.

Our primary source of working capital to support the growth of our operations is our ABL Credit Agreement which matures in August 2025.

Our growth is dependent on our ability to continue to be able to extend and, if necessary, increase this credit facility.

We also issued Senior Secured Notes in fiscal 2021.

While we were able to refinance our debt in fiscal 2021, we cannot be sure we will be able to continue to secure alternative financing on satisfactory terms or at all.

The loss of the use of our credit facility or the inability to replace this facility or the Senior Secured Notes when each expires or matures would materially impair our ability to operate our business.

We issued Senior Secured Notes in fiscal 2021 that are also due in August 2025.

During the next year we will need to replace, refinance or extend the ABL Credit Agreement and the Senior Secured Notes and cannot be sure we will be able to secure alternative financing on satisfactory terms or at all.

The loss of the use of our

credit facility or the inability to replace this facility or the Senior Secured Notes when each expires or matures would materially impair our ability to operate our business.

Our business is highly seasonal.

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Historically, our wholesale business has been dependent on our sales during the third and fourth quarters.

Net sales during the third and fourth quarters accounted for approximately

60% of our net sales in fiscal 2023, 64% of our net sales in fiscal 2022 and 66% of our net sales in fiscal 2021.

Net sales during the third and fourth quarters accounted for approximately 59% of our net sales in fiscal 2024, 60% of our net sales in fiscal 2023 and 64% of our net sales in fiscal 2022.

We are highly dependent on our results of operations during the second half of our fiscal year.

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Our quarterly results of operations for our retail business also may fluctuate based upon such factors as the timing of certain holiday seasons, the number and timing of new store openings, the acceptability of seasonal merchandise offerings, the timing and level of markdowns, store closings and remodels, competitive factors, weather and general economic conditions.

The second half of the year is expected to continue to have a disproportionate effect on our annual results of operations for the foreseeable future.

The second half of our fiscal year is expected to continue to have a disproportionate effect on our annual results of operations for the foreseeable future.

Extreme or unseasonable weather conditions could adversely affect our business.

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Supply chain disruptions have adversely affected, and could continue to adversely affect, our ability to import our products in a timely manner and our freight costs.

There were numerous factors disrupting the shipping industry during fiscal 2023 that negatively affected transit times from our overseas suppliers.

There were numerous factors disrupting the shipping industry during fiscal 2022 and 2023 that negatively affected transit times from our overseas suppliers.

These disruptions also affected our ability to import our product in a manner that allowed for timely delivery to our customers.

As a result of supply chain disruptions, we accelerated production schedules to allow for more lead time and to accommodate the anticipated extended transit times from our overseas suppliers in an effort to import our product in a manner that allowed for timely delivery to our customers.

As a result, our inventory levels are higher than in prior years.

Elevated inventory levels and lack of additional space in our distribution centers contributed to us incurring significant demurrage charges in our third fiscal quarter.

Demurrage charges are charges paid to steamship carriers for freight remaining in the terminal for longer periods than initially agreed upon.

These charges had a significant impact on our results of operations in our third fiscal quarter, and to a lesser extent, in our fourth fiscal quarter.

We expect that our inventory levels will be higher than normal through at least the first half of fiscal 2024.

As a result, we expect our warehouse operations may be less efficient, and we expect to incur additional labor and storage costs related to our inventory levels in the first half of fiscal 2024.

If we are unable to mitigate these supply chain disruptions, our ability to meet customer expectations, manage inventory and complete sales could be materially adversely affected.

Because of supply chain disruptions in fiscal 2023, we accelerated production schedules to allow for more lead time and to accommodate the anticipated extended transit times from our overseas suppliers in an effort to import our product in a manner that allowed for timely delivery to our customers.

As a result, our inventory levels were higher than usual in fiscal 2023.

Elevated inventory levels and disruptions in the shipping industry contributed to us incurring significant demurrage charges in fiscal 2023.

We implemented measures to reduce the risk of incurring these charges in fiscal 2024, including reducing product buys to account for current inventory levels and adjusting our production schedules to receive inventory closer to the need for delivery.

We experienced inventory levels that were higher than normal through the first half of fiscal 2024.

As a result, our warehouse operations were less efficient and we continued to incur additional labor and storage costs related to our inventory in the first half of fiscal 2024.

Our inventory levels returned to a more normalized level in the third and fourth quarters of fiscal 2024.

In fiscal 2024, the Panama Canal experienced severe drought conditions which forced the canal to reduce the number of vessels transiting through it on a daily basis by approximately one-third.

In addition, conflicts in the Middle East have caused major disruptions to global supply chains by impacting critical shipping routes through the Suez Canal and Red Sea for cargo, adding time and cost to shipments.

Transit times have increased to destinations on the east coast of the United States and Europe, which may result in result in increased transportation costs.

If we are unable to mitigate these challenges as well as potential future supply chain disruptions, our ability to meet customer expectations, manage inventory and complete sales could be materially adversely affected.

In addition, if we are unable to offset higher warehousing costs through product price increases or other measures, our results of operations may be adversely affected.

The need of retailers to rationalize excess inventory could lead to discounts or excess promotional activities, which could adversely affect our results of operations.

In certain circumstances, such as in response to supply chain disruptions, companies in the apparel and retail industries that rely on the importation of merchandise may choose to accelerate their production schedule in order to meet expected customer demand, which can lead to higher inventory levels.

Higher marketplace inventories and a rapidly changing economic environment have caused retailers to rationalize their inventory levels.

As a result, retailers have increased promotional activity to reduce their inventory.

While we have planned for a certain amount of promotional activity, additional promotional activity in excess of what we have planned for could have an adverse effect on our results of operations.

Fluctuations in the price, availability and quality of materials used in our products could have a material adverse effect on our cost of goods sold and our ability to meet our customers’ demands.

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Bass, Andrew Marc, Wilsons Leather and Sonia Rykiel businesses.

In addition, the laws of certain foreign countries may not protect proprietary rights to the same extent as the laws of the United States.

In addition, the laws of certain foreign countries may not protect proprietary

rights to the same extent as the laws of the United States.

Enforcing rights to our intellectual property may be difficult and expensive, and we may not be successful in combating counterfeit products and stopping infringement of our intellectual property rights, which could make it easier for competitors to capture market share.

Counterfeit products may reduce our net sales and may also damage our brands due to their lower quality.

If we are unable to protect, maintain or enforce our

intellectual property rights against third parties, our business, financial condition and results of operations may be materially adversely affected.

If we are unable to protect, maintain or enforce our intellectual property rights against third parties, our business, financial condition and results of operations may be materially adversely affected.

Furthermore, we cannot be certain that the conduct of our business does not and will not infringe, misappropriate or otherwise conflict with the intellectual property rights of others, and our efforts to enforce our trademark and other intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our trademark and other intellectual property rights.

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We have experienced increased costs in many aspects of our business, including our product costs and freight.

During fiscal 2023, we have implemented price increases on many of our products.

Our price increases were an effort to mitigate the effect of higher costs, although, the impact of price increases on consumer demand and on our business and results of operations is uncertain.

We expect inflationary pressures to continue to impact our business throughout fiscal 2024.

Recent historic high rates of inflation, including increased fuel and food prices, have led to a softening of consumer demand and increased promotional activity

in our categories and may lead to further challenges to grow our sales.

Ongoing inflation may also negatively impact our cost structure and labor costs in the future.

The Federal Reserve raised interest rates multiple times in fiscal 2023 in response to concerns about inflation and it is expected to continue to raise interest rates in fiscal 2024.

During fiscal 2023, we implemented price increases on many of our products in an effort to mitigate the effect of higher costs.

In fiscal 2023, the historic high rates of inflation,

including increased fuel and food prices, led to a softening of consumer demand and increased promotional activity in our categories, which continued into fiscal 2024.

Continued high rates of inflation in the future could result in a reduction of consumer demand and increased promotional activity, as well as increases in our operating costs.

The Federal Reserve raised interest rates several times in fiscal 2024 in response to concerns about inflation.

It is unclear whether the Federal Reserve will reduce interest rates or maintain the current high rates in fiscal 2025.

Higher interest rates may increase the costs of our borrowing under our revolving credit facility, may increase economic uncertainty and may negatively affect consumer spending.

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Purchases of outerwear, sportswear, swimwear, footwear and other apparel and accessories tend to decline during recessionary periods and may decline for a variety of other reasons, including changes in fashion trends and the introduction of new products or pricing changes by our competitors.

Retailers have also responded to the shift in the types of apparel purchased by consumers based on their adjusted lifestyle needs resulting from changes to the work environment and leisure activities caused by the COVID-19 pandemic.

Uncertainties regarding future economic prospects, including as a result of concerns with respect to the possibility of a recession, the increase in interest rates or the COVID-19 pandemic, may affect consumer-spending habits and could have an adverse effect on our results of operations.

Uncertainties regarding future economic prospects, including as a result of concerns with respect to the possibility of a recession, the increase in interest rates or inflation, may affect consumer-spending habits and could have an adverse effect on our results of operations.

Weak economic conditions have had a material adverse effect on our results of operations at times in the past and could have a material adverse effect on our results of operations in the future as well.

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Continued consolidation in the retail industry, as well as store closing or retailers ceasing to do business, could negatively impact our business.

Various customers of ours, including Macy’s and Kohl’s, have reduced their store count and others have filed for bankruptcy.

Various customers of ours, including Macy’s and Kohl’s, have reduced their store footprint and others have filed for bankruptcy.

Macy’s also recently announced that it planned to close an additional 150 stores over the next three years.

Store closings could adversely affect our business and results of operations.

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These types of decisions by our key customers could adversely affect our business.

The effects of war, including the war in Ukraine, acts of terrorism, natural disasters or public health crises could adversely affect our business and results of operations.

The current war in Ukraine and the continued threat of terrorism, heightened security measures and military action in response to acts of terrorism or civil unrest has, at times, disrupted commerce and intensified concerns regarding the United

States and world economies.

The effects of war, including wars in Ukraine and the Middle East, acts of terrorism, natural disasters or public health crises could adversely affect our business and results of operations.

The current wars in Ukraine and the Middle East and the continued threat of terrorism, heightened security measures and military action in response to acts of terrorism or civil unrest has, at times, disrupted commerce and intensified concerns regarding the United States and world economies.

The imposition of additional sanctions by the United States and/or foreign governments, as well as the sanctions already in place, could lead to restrictions related to sales and our supply chain for which the financial impact is uncertain.

In addition, the war has also led to, and may lead to further, broader unfavorable macroeconomic implications, including unfavorable foreign exchange rates, increases in fuel prices, food shortages, a weakening of the European economy, lower consumer demand and volatility in financial markets.

These implications of the war in Ukraine could have a material adverse effect on our business and our results of operations.

In addition, the continuation or escalation of these wars, including the potential for additional countries to declare ware against each other, may lead to further, broader unfavorable macroeconomic implications, including unfavorable foreign exchange rates, increases in fuel prices, food shortages, a weakening of the worldwide economy, lower consumer demand and volatility in financial markets.

These implications of the wars in Ukraine and the Middle East could have a material adverse effect on our business and our results of operations.

Any other acts of terrorism or new or extended hostilities may disrupt commerce and undermine consumer confidence, which could negatively impact our sales and results of operations.

Similarly, the occurrence of one or more natural disasters, such as hurricanes, fires, floods or earthquakes, or public health crises, such as the COVID-19 pandemic, could result in the closure of one or more of our distribution centers, our corporate headquarters or a significant number of stores or impact one or more of our key suppliers.

Similarly, the occurrence of one or more natural disasters, such as hurricanes, fires, floods or earthquakes, or public health crises, such as COVID-19, could result in the closure of one or more of our distribution centers, our corporate headquarters or a significant number of stores or impact one or more of our key suppliers.

These types of events could result in additional increases in energy prices or shortages, the temporary or long-term disruption in the supply of product, disruption in the transport of product from overseas, delay in the delivery of product to our factories, our customers or our stores and disruption in our information and communication systems.

Accordingly, these types of events could have a material adverse effect on our business and our results of operations.

Risks Related to the COVID-19 Pandemic

The global health crisis caused by the COVID-19 pandemic has had, and the current and uncertain future outlook of the outbreak may continue to have, a significant adverse effect on our business, financial condition and results of operations.

The COVID-19 pandemic has affected businesses around the world since our first quarter of fiscal 2021.

Federal, state and local governments in the United States and around the world, as well as private entities, mandated various restrictions, including closing of retail stores and restaurants, travel restrictions, restrictions on public gatherings, stay at home orders and advisories, and quarantining of people who may have been exposed to the virus.

The response to the COVID-19 pandemic negatively affected the global economy, disrupted global supply chains and created significant disruption of the financial and retail markets, including a disruption in consumer demand for apparel and accessories.

The continued impact of the COVID-19 pandemic on our business operations remains uncertain and cannot be predicted.

During fiscal 2022 and 2023, there were periodic incidents of a resurgence in the number of cases of COVID-19 and its variants in the U.S.

and certain other parts of the world, which caused business disruptions for us and/or our wholesale customers, suppliers and vendors.

Even as government restrictions and company initiatives have been lifted or significantly reduced, consumer behavior, spending levels and/or shopping preferences, such as willingness to congregate in shopping centers or other populated locations, could be adversely affected.

The extent to which COVID-19 impacts our results in fiscal 2024 will depend on continued developments in the United States and around the world in the public and private responses to the pandemic.

New information may emerge concerning the severity of the outbreak and the spread of variants of the COVID-19 virus in locations that are important to our business.

Actions taken to contain COVID-19 or treat its impact may change or become more restrictive if additional waves of infections occur.

The impact of COVID-19 on our business and operating results could differ materially from our assumptions based on a number of factors largely outside of our control.

Risks Related to Our International Operations

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The failure of these manufacturers to meet required quality standards could damage our relationships with our customers.

In addition, the failure by these manufacturers to ship products to us in a timely manner could cause us to miss the delivery date requirements of our

In addition, the failure by these manufacturers to ship products to us in a timely manner could cause us to miss the delivery date requirements of our customers.

The failure to make timely deliveries could cause customers to cancel orders, refuse to accept delivery of products or demand reduced prices.

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We are also dependent on these manufacturers for compliance with our policies and the policies of our licensors and customers regarding labor practices employed by factories that manufacture product for us.

Any failure by these manufacturers to comply with required labor standards or any other divergence in their labor or other practices from those generally considered ethical in the United States and the potential negative publicity relating to any of these events, could result in a violation by us of our license agreements, and harm us and our reputation.

Any failure by these

manufacturers to comply with required labor standards or any other divergence in their labor or other practices from those generally considered ethical in the United States and the potential negative publicity relating to any of these events, could result in a violation by us of our license agreements, and harm us and our reputation.

In addition, a manufacturer’s failure to comply with safety or content regulations and standards could result in substantial liability and harm to our reputation.

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The United States’ Uyghur Forced Labor Prevention Act (“UFLPA”) empowers the United States Customs and Border Protection Agency (the “US CBP”) to withhold release of items produced in whole or in part in the XUAR or produced by companies included on a government-created UFLPA entity list, creating a presumption that such goods were produced using forced labor.

We have established controls designed to preclude sourcing any products or materials from the XUAR (either directly or indirectly through our suppliers), and we prohibit our vendors from doing business with facilities in the XUAR If any of the vendors from which we purchase goods is found to have dealings, directly or indirectly, with entities operating in the XUAR, our products or materials (including potentially non-cotton materials) could be held or delayed by the US CBP, which could cause delays, impact our inventory levels and adversely affect our ability to timely deliver our products to our customers.

If any of the vendors from which we purchase goods is found to have dealings, directly or indirectly, with entities operating in the XUAR, our products or materials (including potentially non-cotton materials) could be held or delayed by the US CBP, which could cause delays, impact our inventory levels and adversely affect our ability to timely deliver our products to our customers.

Our expansion into the European market exposes us to uncertain economic conditions in the Euro zone.

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We are attempting to expand our presence in the European markets, including for our DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin and Sonia Rykiel businesses.

The economy in Europe is uncertain and potentially adversely affected by the impacts of the war in Ukraine and the COVID-19 pandemic.

The economy in Europe is uncertain and potentially adversely affected by the wars in Ukraine and the Middle East.

Financial instability in Europe could adversely affect our European operations and, in turn, could have a material adverse effect on us.

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We are subject to numerous risks associated with international operations.

Our ability to capitalize on the potential of our international operations, including to realize the benefits of our DKNY, Donna Karan, Vilebrequin and Sonia Rykiel businesses, as well as of the recently acquired Karl Lagerfeld brand, and successfully expand into international markets, is subject to risks associated with international operations.

Our ability to capitalize on the potential of our international operations, including to realize the benefits of our DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin and Sonia Rykiel businesses and successfully expand into international markets, is subject to risks associated with international operations.

These include:

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Changes in regulatory, geopolitical, social or economic policies and other factors may have a material adverse effect on our international business in the future or may require us to exit a particular market or significantly modify our current business practices.

The national security law adopted in Hong Kong may result in disruptions to our business operations in Hong Kong and additional tariffs and trade restrictions.

The national security law implemented in Hong Kong may result in disruptions to our business operations in Hong Kong and additional tariffs and trade restrictions.

In June 2020, a new security law was put into effect that changes the way Hong Kong has been governed since the territory was handed over by England to China in 1997.

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This may result in disruption to our offices and employees located in Hong Kong, as well as the shipment of our products from Hong Kong.

The potential disruption to our business operations in Hong Kong and additional tariffs and trade restrictions could have an adverse impact on our results of operations.

The potential disruption to our business operations in Hong Kong and additional tariffs and trade restrictions resulting from this security law, as well as any future additional security laws, could have an adverse impact on our results of operations.

To date, no such disruptions have occurred.

In March 2024, a new security law was adopted by Hong Kong.

In March 2024, a new, more restrictive security law was adopted by Hong Kong.

The Company is not yet able to determine the effect, if any, this new security law may have on its business or results of operations.

Risks Related to Cybersecurity, Data Privacy and Information Technology

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state privacy landscape continues to evolve.

Non-compliance with these laws could result in penalties or significant legal liability.

Non-compliance with these laws could result in penalties or

significant legal liability.

Although we make reasonable efforts to comply with all applicable laws and regulations, there can be no assurance that we will not be subject to regulatory action, including fines, in the event of non-compliance.

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Failure to comply with the Standard or Card Rules could result in losing certification under the PCI standards and an inability to process payments.

If we do not successfully upgrade, maintain and secure our information systems to support the needs of our organization, this could have an adverse impact on the operation of our business.

Our systems, and those of our third-party vendors, containing personal information and payment data of our customers, employees, and other third parties could be breached, which could subject us to adverse publicity, costly government enforcement actions or private litigation, and expenses .

We rely heavily on information systems to manage operations, including a full range of financial, sourcing, retail and merchandising systems, and regularly make investments to upgrade, enhance or replace these systems.

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Increased cyber-security threats pose a potential risk to the security and viability of our information technology systems, as well as the confidentiality, integrity and availability of the data stored on those systems.

If our information technology systems suffer severe damage, disruption or shutdown, by unintentional or malicious actions of employees and contractors or by cyber-attacks, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions, reputational damage, transaction errors, processing inefficiencies, increased overhead costs, excess inventory, product shortages and a loss of important information, causing our business, financial condition and results of operations to be adversely affected.

Any disruptions affecting our information systems, or any delays or difficulties in transitioning to new systems or in integrating them with current systems, could have a material adverse impact on the operation of our business.

We have outsourced elements of our IT systems, including to cloud-based solution vendors, and use third-party vendors in other aspects of our operations and, as a result, a number of third-party vendors may or could have access to confidential information.

Our third-party vendors have experienced service interruptions and cyber-attacks in the past, and we expect they will continue.

adversely affected.

Any disruptions affecting our information systems could have a material adverse impact on the operation of our business.

We could also be required to spend significant financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and information systems.

In addition, our ability to continue to operate our business without significant interruption in the event of a disaster or other disruption depends in part on the ability of our information systems to operate in accordance with our disaster recovery and business continuity plans.

Cyber criminals are constantly devising schemes to circumvent information technology security safeguards and other retailers have suffered serious data security breaches.

The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased.

We may not be able to anticipate all types of security threats, and we may not be able to implement preventive measures effective against all such security threats.

The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations, or hostile foreign governments or agencies.

It is possible that we or our third-party vendors may experience cybersecurity and other breach incidents that remain undetected for an extended period.

Even when a security breach is detected, the full extent of the breach may not be determined immediately.

The costs to us to mitigate network security issues, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant.

We regularly implement business process improvement and information technology initiatives intended to optimize our operational and financial performance.

Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources.

We may also experience difficulties in implementing or operating our new or upgraded business processes or information technology systems, including, but not limited to, ineffective or inefficient operations, significant system failures, system outages, delayed implementation and loss of system availability, which could lead to increased implementation and/or operational costs, loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales and/or profits.

While we devote significant resources to network security, backup and disaster recovery, enhanced training and other security measures to protect our systems and data, security measures cannot provide absolute security or guarantee that we will be successful in preventing or responding to every breach or disruption on a timely basis.

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Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations and the services we provide to customers and damage our reputation, which could adversely affect our business, revenues and competitive position.

In addition to taking the necessary precautions ourselves, we require that third-party service providers implement reasonable security measures to protect our customers’ identity and privacy.

We are also reliant on the security practices of our third-party service providers.

We require that third-party service providers implement reasonable security measures to protect our customers’ identity and privacy.

We do not, however, control these third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future.

The services provided by these third parties have been, and will likely continue to be, subject to the same risk of outages, other failures and security breaches that we are subject to.

If these third parties fail to adhere to adequate security practices, or experience a breach of their systems, the data of our employees and customers may be improperly accessed, used or disclosed.

Any loss or interruption to our systems or the services provided by third parties, and the other risks from cybersecurity threats, could adversely affect our business, financial condition, or results of operations.

Although the aggregate impact of cybersecurity breaches has not been material to date, we have been subject to cybersecurity incidents in the past, including within the last three years, and expect them to continue as cybersecurity threats evolve in sophistication.

We cannot provide any assurances that such events will not occur and impacts therefrom will not be material in the future.

Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data.

Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations.

As with many technological innovations, artificial intelligence presents risks and challenges that could impact our business.

We may adopt and integrate generative artificial intelligence tools into our systems for specific use cases reviewed by legal and information security.

Our vendors may incorporate generative artificial intelligence tools into their offerings without disclosing this use to us, and the providers of these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience.

If we, our vendors, or our third-party partners experience an actual or perceived breach of privacy or security incident because of the use of generative artificial intelligence, we may lose valuable intellectual property and confidential information and our reputation and the public perception of the effectiveness of our security measures could be harmed.

Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual property.

Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business.

Legal and Regulatory Risks

Tariffs that have been, and might be, imposed by the United States government or a resulting trade war could have a material adverse effect on our results of operations.

Legislation that would restrict the importation or increase the cost of textiles and apparel produced abroad has been periodically introduced in Congress.

The enactment of new legislation or international trade regulation, or executive action affecting international textile or trade agreements, could adversely affect our business.

International trade agreements that can provide for tariffs and/or quotas can increase the cost and limit the amount of product that can be imported.

We cannot predict whether quotas, duties, taxes, or other similar restrictions will be imposed in the U.S., the European Union, Asia, or other countries upon the import or export of our products in the future, or what effect any of these actions would have, if any, on our business, results of operations, and financial condition.

Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors may have a material adverse effect on our business in the future, or may require us to exit a particular market or significantly modify our current business practices.

The apparel and accessories industry has been impacted by Section 301 tariffs imposed by the United States government on goods imported from China.

Tariffs on handbags and leather outerwear imported from China were effective beginning in September 2018.

These tariffs initially increased existing duties by 10% of the merchandise cost to us.

The level of tariffs on these product categories was later increased to 25% beginning May 10, 2019.

Section 301 tariffs were set to expire in July and August of 2022, but were extended through September 30, 2023.

In May 2022, the Special Trade Representative invited public comments as to the effects of the tariffs and exclusions on different industries.

The government closed its most recent round of comments in January 2023 and is evaluating whether additional comments are necessary.

While the government considers these comments, it is not known which duties will or will not be continued, whether new products will be added to the scope of the tariffs, or whether duties will fluctuate in amount.

On August 1, 2019, the United States government announced new 10% tariffs that cover the remaining estimated $300 billion of inbound trade from China, including most of our apparel products.

On August 23, 2019, the United States government announced that the new tariffs would increase from 10% to 15%.

A portion of the new 15% tariffs went into effect on September 1, 2019.

Some of the additional tariffs on certain categories of products were delayed until December 15, 2019, but have not yet gone into effect as the United States and China entered into a “phase one” trade agreement in January 2020 .

It is difficult to accurately estimate the impact on our business from these tariff actions or similar actions or when any additional tariffs may become effective.

For fiscal 2023, approximately 37.6% of the products that we sold were manufactured in China.

For fiscal 2022, approximately 34.2% of the products that we sold were manufactured in China.

Following accusations against China that it employed forced labor in manufacturing processes within the country, a bill was introduced in January 2023 to strip China of its permanent Most Favored Nation status, effectively requiring China to re-secure its position by annually applying for presidential approval as a member country.

Because Most Favored Nation status grants special treatment among member counties with respect to tariffs, if this bill were to pass it would substantially increase tariffs between the United States and China.

and China are not able to resolve their differences, additional tariffs or quotas may be put in place and additional products may become subject to tariffs.

Tariffs or quotas on additional products imported by us from China would increase our costs, could require us to increase prices to our customers and would cause us to seek price concessions from our vendors.

If we are unable to increase prices to offset an increase in tariffs, this would result in our realizing lower gross margins on the products sold by us and will negatively impact our operating results.

We have reduced our reliance on China by moving production to other countries, including Vietnam and Indonesia.

We will continue to explore alternative production partners to further diversify our sourcing network and to reduce our reliance on any one particular country.

These efforts may not enable us to offset the adverse effects of any increases in tariffs.

Changes in trade policies and tariffs imposed by the United States government and the governments of other nations could have a material adverse effect on our business and results of operations.

Changes in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business could adversely affect our business.

presidential administrations have instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S.

and other countries where we conduct our business.

It may be time-consuming and expensive for us to alter our business operations in order to adapt to or comply with any such changes.

In addition, changes or proposed changes in the trade policies of the U.S.

or other countries may result in restrictions and economic disincentives to international trade.

Tariffs and other changes in U.S.

trade policy have in the past and could in the future trigger retaliatory actions by affected countries.

Certain foreign governments have instituted or are considering imposing retaliatory measures on certain U.S.

Further, any emerging protectionist or nationalist trends either in the U.S.

or in other countries could affect the trade environment.

The Company, similar to other companies that conduct their business internationally, does a significant amount of business that would be impacted by changes to the trade policies of the U.S.

and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions).

Such changes have the potential to adversely impact the U.S.

economy or certain sectors thereof or the economy of another country in which we conduct operations.

They could also adversely affect our industry and the

global demand for our products, and as a result, our business, financial condition and results of operations could be adversely affected.

Changes in tax legislation or exposure to additional tax liabilities could impact our business.

The change in the U.S.

presidency and control of Congress last year could result in changes to U.S.

tax laws that would have a negative impact on our results of operations.

Changes to U.S.

and international tax laws could have a negative impact on our results of operations.

Although we believe our income tax estimates are reasonable, the ultimate outcomes may have a negative impact on our results of operations.

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Furthermore, tax authorities may choose to examine or investigate our tax reporting or tax liability, including an examination of our existing transfer pricing policies.

Adverse outcomes from examinations may lead to adjustments to our income tax liabilities or provisions for uncertain tax position reserves.

Adverse outcomes from examinations may lead to adjustments to our income tax liabilities or provisions for uncertain tax positions.

In December 2022, the Council of the European Union (“EU”) announced that EU member states reached an agreement to implement the minimum tax component of the Organization for Economic Co-operation and Development’s international tax reform initiative, known as Pillar Two.

The Pillar Two Model Rules provide for a global minimum tax of 15% for multinational enterprise groups, and is expected to be effective for our fiscal year ending January 31, 2025.

While the Company does not expect these rules to have a material impact on its effective tax rate or financial results, the Company continues to monitor evolving tax legislation in the jurisdictions in which it operates.

A material change in tax laws or policies, or their interpretation, related to the Pillar Two Model Rules could result in a higher effective tax rate and have an adverse effect on our financial condition, results of operations, and cash flows.

We are required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth, property, and goods and services taxes, in both the United States and various other jurisdictions.

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● changes in tariff and trade policies;

● actual or perceived adverse effects from the COVID-19 pandemic;

● general conditions in our industry;

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Our financial results are subject to numerous risks and uncertainties, including those identified throughout this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K and in the documents incorporated by reference in this Annual Report.

If our actual financial results are worse than our financial forecasts or forecasts provided by outside investment analysts, or others, the price of our common stock may decline.

If our actual financial results are worse than our financial forecasts or forecasts provided by outside investment analysts, or others, the price of our common stock

Investors who rely on these predictions when making investment decisions with respect to our securities do so at their own risk.

We take no responsibility for any losses suffered as a result of such changes in our stock price.

not have any responsibility to provide financial forecasts going forward or to update any of our forward-looking statements at such times or otherwise.

We recorded significant charges for the impairment of goodwill during the fourth quarter of fiscal 2023 which caused us to report a net loss for fiscal 2023.

We do not have any responsibility to provide financial forecasts going forward or to update any of our forward-looking statements at such times or otherwise.

We recorded significant charges for the impairment of goodwill during the fourth quarter of fiscal 2023 which caused us to report a net loss for fiscal 2023 and we recorded charges for the impairment of trademarks during the fourth quarter of fiscal 2024.

If our trademarks and other intangibles become impaired, we may be required to record additional charges to earnings.

As of January 31, 2024, we had trademarks and other intangibles in an aggregate amount of $662.0 million, or approximately 25% of our total assets and approximately 43% of our stockholders’ equity.

Approximately $395.5 million of our trademarks and other intangibles was recorded in connection with our acquisition of DKNY and Donna Karan and approximately $182.6 million of our trademarks and other intangibles was recorded in connection with our recent acquisition of Karl Lagerfeld.

Approximately $393.2 million of our trademarks and other intangibles was recorded in connection with our acquisition of DKNY and Donna Karan and approximately $188.2 million of our trademarks and other intangibles was recorded in connection with our acquisition of Karl Lagerfeld.

Under accounting principles generally accepted in the United States (“GAAP”), we review our goodwill and other indefinite life intangibles for impairment annually as of January 31 of each fiscal year and when events or changes in circumstances warrant.

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As of January 31, 2023, we were required to record a $347.2 million charge to earnings in our financial statements as our goodwill was determined to be fully impaired as a result of our decline in market capitalization.

We may be required to record additional significant charges to earnings in our financial statements during a period in which an impairment of our trademarks and other intangible assets is determined to exist which could negatively affect the market price of our securities.

As of January 31, 2024, we were required to record a $5.9 million charge to earnings in our financial statements as our Sonia Rykiel trademark was determined to be partially impaired as a result of the performance of the brand.

Risks Related to Our Indebtedness

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We have issued $400 million of Senior Secured Notes and are party to the ABL Credit Agreement that provides for borrowings of up to $650 million, subject to borrowing base availability.

In addition, we also incurred $125.0 million of debt pursuant to the LVMH Note that constituted a portion of the purchase price for the acquisition of DKNY and Donna Karan.

In fiscal 2024, we repaid $125.0 million of debt pursuant to the note issued to LVMH Moet Hennessy Louis Vuitton Inc.

(the “LVMH Note”) that constituted a portion of the purchase price for the acquisition of DKNY and Donna Karan.

Our significant amount of debt and our debt service obligations could limit our ability to satisfy our obligations, limit our ability to operate our business and impair our competitive position.

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the level of our cash flows, which will be impacted by retailer and consumer acceptance of our products and the level of consumer discretionary spending;

maintenance of financial covenants included in our ABL Credit Agreement, interest rate fluctuations and the adverse impact of the COVID-19 pandemic on the U.S.

and world-wide economies and on our business.

Interest rates increased in fiscal 2023 and are expected to increase in fiscal 2024.

We cannot predict the future level of interest rates or the effect of any increase in interest rates on the availability or aggregate cost of our borrowings.

maintenance of financial covenants included in our ABL Credit Agreement and interest rate fluctuations.

Interest rates increased in fiscal 2024 and while interest rates many not increase further in fiscal 2025, it is unclear whether the Federal Reserve will reduce interest rates or maintain the current high rates in fiscal 2025.

We cannot predict the future level of interest rates or the effect of interest rates on the availability or aggregate cost of our borrowings.

Higher interest rates increase the cost of our borrowings under our revolving credit facility, may increase economic uncertainty and may negatively affect consumer spending.

Volatility in interest rates may adversely affect our business or our customers.

If interest rates continue to increase, our capacity to obtain necessary liquidity may be negatively impacted.

If interest rates continue to increase or are maintained at their current high level, our capacity to obtain necessary liquidity may be negatively impacted.

We cannot be certain that any additional required financing, whether debt or equity, will be available in amounts needed or on terms acceptable to us, if at all.

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The economic environment has at times resulted in lower consumer confidence and lower retail sales.

Adverse developments in the economy, including as a result of the COVID-19 outbreak, could lead to reduced consumer spending which could adversely impact our net sales and cash flow, which could affect our compliance with our financial covenants.

Adverse developments in the economy could lead to reduced consumer spending which could adversely impact our net sales and cash flow, which could affect our compliance with our financial covenants.

A violation of our covenants could limit access to our credit facilities.

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These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.

If our operating results and available cash are insufficient to meet our debt service obligations, we could face

substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.

We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due.

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The borrowings under the ABL Credit Agreement will be at variable rates of interest and expose us to interest rate risk.

Interest rates increased in fiscal 2023 and are expected to continue to increase in fiscal 2024.

Interest rates increased in fiscal 2024 and while interest rates may not increase further in fiscal 2025, it is unclear whether the Federal Reserve will reduce interest rates or maintain the current high rates in fiscal 2025.

As a result, our debt service obligations on our variable rate indebtedness increased.

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Assuming all revolving loans were fully drawn under the ABL Credit Agreement, each one percentage point change in interest rates would result in a $6.5 million change in annual cash interest expense under the ABL Credit Agreement.

Financing extended to us under the ABL Credit Agreement is made at variable rates that use LIBOR or an alternate base rate (as determined by that Agreement) as a benchmark for establishing the interest rate.

LIBOR quotations will cease as of June 30, 2023.

We are in the process of transitioning the reference rate used in our ABL Credit Agreement from LIBOR to the Secured Overnight Financing Rate.

We expect this transition to be completed prior to the date LIBOR quotations cease.

The consequences of the change in the reference rate cannot be entirely predicted and could have an adverse impact on the market value for or value of LIBOR-linked securities, loans, and other financial obligations or extensions of credit to us.

Financing extended to us under the ABL Credit Agreement was made at variable rates that use LIBOR or an alternate base rate (as determined by that Agreement) as a benchmark for establishing the interest rate.

In April 2023, the Company amended the ABL Credit Agreement to replace LIBOR with the Adjusted Term Secured Overnight Financing Rate (“SOFR”) as a successor rate.

Changes in market interest rates may influence our financing costs and could reduce our earnings and cash flows.

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In addition, downgrading the credit rating of our debt securities or placing us on a watch list for possible future downgrading would likely have an adverse effect on the market price of our Common Stock.

UNRESOLVED STAFF COMMENTS.

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-K

Item 1A. Risk Factors