What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-06-06 compared with 2023-12-06 · 165 added, 209 removed, 157 unchanged (70% of the section changed)

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For example, our fiscal year ending January 31, 2025 is referred to as “fiscal 2025.”

KLH, Vilebrequin, Fabco and Sonia Rykiel report results on a calendar year basis rather than on the January 31 fiscal year basis used by G-III.

Accordingly, the results of KLH, Vilebrequin, Fabco and Sonia Rykiel are included in the financial statements for the quarter ended or ending closest to G-III’s fiscal quarter end.

For example, with respect to our 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.

We accounted for our investment in each of KLH and KLNA using the equity method of accounting through May 30, 2022.

Effective May 31, 2022, KLH is accounted for as our consolidated wholly-owned subsidiary and KLNA is an indirect wholly-owned subsidiary of ours.

KLH, Vilebrequin, Sonia Rykiel and Fabco report results on a calendar year basis rather than on the January 31 fiscal year basis used by G-III.

Accordingly, the results of KLH, Vilebrequin, Sonia Rykiel and Fabco are included in the financial statements for the quarter ended or ending closest to G-III’s fiscal quarter end.

For example, with respect to our results for the three-month period ended April 30, 2024, the results of KLH, Vilebrequin, Sonia Rykiel and Fabco are included for the three-month period ended March 31, 2024.

Our retail operations segment uses a 52/53-week fiscal year.

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.

For fiscal 2025 and 2024, the three-month periods for the retail operations segment were each 13-week periods and ended on May 4, 2024 and April 29, 2023, respectively.

Various statements contained in this Form 10-Q, in future filings by us with the SEC, in our press releases and in oral statements made from time to time by us or on our behalf constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

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● our dependence on the strategies and reputation of our licensors;

● risks relating to our wholesale operations including, among others, maintaining the image of our proprietary brands, business practices of our customers that could adversely affect us and retail customer concentration;

● risks relating to our wholesale operations including, among others, maintaining the image of our proprietary brands and business practices of our customers that could adversely affect us;

● our significant customer concentration, and the risk that the loss of one of our largest customers could adversely affect our business;

● risks relating to our retail operations segment;

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

● the global health crisis caused by COVID-19 has had, and the current and uncertain future outlook with respect to COVID-19 and its variants will likely continue to have, adverse effects on our business, financial condition and results of operations;

● our dependence on foreign manufacturers;

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● the need to successfully upgrade, maintain and secure our information systems;

● increased exposure to consumer privacy, cybersecurity and fraud concerns, including as a result of the remote working environment;

● increased exposure to consumer privacy, cybersecurity and fraud concerns, including as a result of a remote working environment;

● possible adverse effects of data security or privacy breaches;

● the impact on our business of the imposition of tariffs by the United States government and the escalation of trade tensions between countries;

● changes in tax legislation or exposure to additional tax liabilities could impact our business;

● changes in tax legislation or exposure to additional tax liabilities that could impact our business;

● the effect of regulations applicable to us as a U.S.

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● fluctuations in the price of our common stock;

● impairment of our trademarks or other intangibles may require us to record charges against earnings as was the case in the fourth quarter of fiscal 2023;

● impairment of our trademarks or other intangibles may require us to record charges against earnings;

● risks related to our indebtedness.

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G-III designs, sources and markets an extensive range of apparel, including outerwear, dresses, sportswear, swimwear, women’s suits and women’s performance wear, as well as women’s handbags, footwear, small leather goods, cold weather accessories and luggage.

G-III has a substantial portfolio of more than 30 licensed and proprietary brands, anchored by our global power brands:

DKNY, Donna Karan, Karl Lagerfeld, Calvin Klein and Tommy Hilfiger.

We are not only licensees, but also brand owners, and we distribute our products through multiple channels.

G-III has a substantial portfolio of more than 30 licensed and proprietary brands, anchored by our key brands:

DKNY, Donna Karan, Karl Lagerfeld, Nautica and Halston, as well as other major brands that currently drive our business, including Calvin Klein and Tommy Hilfiger.

We distribute our products through multiple channels and in markets located in a variety of geographies.

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

Bass, Eliza J, Jessica Howard, Andrew Marc, Marc New York, Wilsons Leather and Sonia Rykiel.

We have an extensive portfolio of well-known licensed brands, including Calvin Klein, Tommy Hilfiger, Nautica, Halston, Levi’s, Guess?, Kenneth Cole, Cole Haan, Vince Camuto, Dockers and Champion.

We have an extensive portfolio of well-known licensed brands, including Calvin Klein, Tommy Hilfiger, Nautica, Halston, Levi’s, Kenneth Cole, Cole Haan, Vince Camuto, Dockers and Champion.

Through our team sports business, we have licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League and over 150 U.S.

colleges and universities.

We also source and sell products to major retailers under their private retail labels.

We also source and sell products to major retailers for their own private label programs.

Our products are sold through a cross section of leading retailers such as Macy’s, including its Bloomingdale’s division, Dillard’s, Hudson’s Bay Company, including its Saks Fifth Avenue division, Nordstrom, Kohl’s, TJX Companies, Ross Stores, Burlington and Costco.

We also sell our products using digital channels through retail partners such as macys.com, nordstrom.com and dillards.com, each of which has a substantial online business.

We also sell our products using digital channels through retail partners such as macys.com, nordstrom.com and dillards.com, each of which operates significant digital businesses.

In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos.

We also distribute apparel and other products directly to consumers through our own DKNY, Karl Lagerfeld, Karl Lagerfeld Paris and Vilebrequin retail stores, as well as through our digital channels for the DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H.

Bass, Wilsons Leather and Sonia Rykiel businesses.

We also distribute apparel and other products directly to consumers through our own DKNY, Karl Lagerfeld, Karl Lagerfeld Paris and Vilebrequin retail stores, as well as through our digital sites for our DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H.

Bass, Wilsons Leather and Sonia Rykiel brands.

We operate in fashion markets that are intensely competitive.

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Although our portfolio of brands is aimed at diversifying our risks in this regard, misjudging shifts in consumer preferences could have a negative effect on our business.

Our success in the future will depend on our ability to design products that are accepted in the marketplace, source the manufacture of our products on a competitive basis, and continue to diversify our product portfolio and the markets we serve.

Our continued success depends on our ability to design products that are accepted in the marketplace, source the manufacture of our products on a competitive basis and continue to diversify our product portfolio and the markets we serve.

We believe that consumers prefer to buy brands they know, and we have continually sought to increase the portfolio of name brands we can offer through different tiers of retail distribution, for a wide array of products at a variety of price points.

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We initially repositioned and relaunched DKNY and we have successfully grown the brand.

We are now focused on the repositioning and expansion of the Donna Karan brand for Spring 2024.

The new Donna Karan will be a modern system of dressing created to appeal to a woman’s senses on every level, addressing her full lifestyle needs.

Our Donna Karan product is expected to be distributed in North America and internationally through our diversified distribution network, including better department stores, digital channels and our own Donna Karan website.

In February 2024, we relaunched the Donna Karan brand with new designs supported by a powerful ad campaign and an updated digital experience.

Our new Donna Karan product is currently being distributed in the United States through our diversified distribution network, including better department stores, digital channels and our own Donna Karan website.

We intend to continue to focus on several initiatives to continue the momentum and invest in marketing to further drive awareness of the Donna Karan brand, as well as to expand the brand into complementary categories through licensing.

Donna Karan is widely considered to be a top fashion brand and is recognized as one of the most famous designer names in American fashion.

We believe that the strength of the Donna Karan brand, along with our success with the DKNY brand, demonstrates the potential for our new Donna Karan products.

Investment in AWWG

In May 2024, we acquired a 12% minority interest in AWWG Investments B.V.

(“AWWG”) for €50 million ($53.6 million).

AWWG is a global fashion group and premier platform for international brands.

AWWG owns a portfolio of brands including Hackett, Pepe Jeans and Façonnable and manages the Iberian business for PVH Corp.

We intend to leverage AWWG’s expertise with AWWG becoming the agent for Karl Lagerfeld, DKNY and Donna Karan in Spain and Portugal.

This investment is intended to accelerate several of our priorities including expanding our international business and identifying opportunities for growth of our owned brands.

License Agreement for Nautica Brand

In March 2023, we entered into a long-term license with Authentic Brands Group for the Nautica brand in North America.

We plan to produce products under the Nautica brand across a number of categories starting with a full women’s jeanswear collection and then expanding in a phased approach into additional categories including sportswear, suit separates and dresses.

The new five-year license agreement, effective beginning in January 2024, includes three extensions, for five years each.

First deliveries are expected to begin in January 2024.

The product is expected to be distributed in North America through our diversified distribution network, including better department stores, digital channels and Nautica’s stores and website, as well as in franchised stores globally.

We believe that significant opportunity exists in the better women’s apparel space in categories where we have strong expertise.

The Nautica brand joins our portfolio of some of the largest American brands in the world.

License Agreement for Halston Brand

In May 2023, we entered into a global twenty-five year master license with Xcel Brands, Inc.

to design and produce all categories of men’s and women’s product for the Halston brand.

The agreement provides for an initial term of five years, followed by a twenty-year period, as well as a purchase option at the end of the twenty-five year term.

First deliveries of Halston product are expected to begin in the fall of 2024.

Our Halston product is expected to be distributed globally through our diversified distribution network, including better department stores and digital channels.

We believe that significant opportunity exists in the better women’s apparel space where G-III has significant expertise.

The Halston brand joins G-III’s portfolio of some of the largest American brands in the world.

License Agreement for Champion Brand

In September 2023, we entered into a license with HanesBrands Inc.

to design and produce a men’s and women’s outerwear collection for their Champion brand in North America.

The agreement provides for an initial term of five years, effective beginning in January 2024, with a five year renewal option based on achieving sales targets.

First deliveries of Champion product are expected for the Fall 2024 season.

Our Champion product is expected to be distributed in North America through our diversified distribution network, including better department stores and digital channels.

Our collections will feature quality heritage pieces that complement and enhance Champion’s principles.

We believe this license aligns with G-III’s core competencies in outerwear and will fit seamlessly into our well-developed outerwear divisions.

In March 2023, we entered into a long-term license with Authentic Brands Group for women’s apparel under the Nautica brand in North America.

We currently produce a full women’s jeanswear line under the Nautica brand and plan to expand in a phased approach into additional categories including sportswear, suit separates and dresses.

This five-year license agreement, effective as of January 2024, includes three extensions for five years each.

First deliveries began in January 2024.

Our Nautica product is distributed in North America through our diversified distribution network, including better department stores, digital channels and Nautica’s stores and website, as well as in franchised stores globally.

We believe that significant opportunity exists for Nautica in the better women’s apparel space in categories where we have significant expertise.

Third Amended and Restated ABL Credit Agreement

On June 4, 2024, our subsidiaries, G-III Leather Fashions, Inc., Riviera Sun, Inc., AM Retail Group, Inc.

and The Donna Karan Company Store LLC (collectively, the “Borrowers”), entered into the third amended and restated credit agreement (the “Third ABL Credit Agreement”) with the lenders named therein and with JPMorgan Chase Bank, N.A., as administrative agent.

The Third ABL Credit Agreement is a five-year senior secured asset-based revolving credit facility providing for borrowings in an aggregate principal amount of up to $700 million.

We and certain of our wholly-owned domestic subsidiaries, as well as G-III Apparel Canada ULC (collectively, the “Guarantors”), are guarantors under the Third ABL Credit Agreement.

The Third ABL Credit Agreement amends and restates the Second Amended Credit Agreement, dated as of August 7, 2020 (as amended, supplemented or otherwise modified from time to time prior to June 4, 2024, the “Second Credit

Agreement”), by and among the Borrowers and the Guarantors, the lenders from time-to-time party thereto, and JPMorgan Chase Bank, N.A., in its capacity as the administrative agent thereunder.

The Second Credit Agreement provided for borrowings of up to $650 million and was due to expire on August 7, 2025.

The Third ABL Credit Agreement extends the maturity date to June 2029, subject to a springing maturity date as defined within the credit agreement.

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

Borrowings bear interest, at the Borrowers’ option, at Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.50% to 2.00%, or the alternate base rate plus a margin of 0.50% to 1.00% (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A.

from time to time, (ii) the federal funds rate plus 0.5% and (iii) SOFR for a borrowing with an interest period of one month plus 1.00%), with the applicable margin determined based on the Borrowers’ average daily availability under the Third ABL Credit Agreement.

The Third ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors.

We report based on two segments:

wholesale operations and retail operations.

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

Wholesale revenues also include revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Karl Lagerfeld, G.H.

Wholesale revenues also include royalty revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Karl Lagerfeld, G.H.

Bass, Andrew Marc, Vilebrequin and Sonia Rykiel.

Our retail operations segment consists primarily of direct sales to consumers through our company-operated stores and product sales through our digital channels for the DKNY, Donna Karan, Karl Lagerfeld Paris, G.H.

Bass and Wilsons Leather businesses.

Our retail operations segment consists primarily of direct sales to consumers through our company-operated stores and product sales through our digital sites for the DKNY, Donna Karan, Karl Lagerfeld Paris, G.H.

Bass and Wilsons Leather brands.

Our company-operated stores primarily consist of DKNY and Karl Lagerfeld Paris retail stores, substantially all of which are operated as outlet stores.

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Our digital business consists of our own web platforms at www.dkny.com, www.donnakaran.com, www.ghbass.com, www.vilebrequin.com, www.wilsonsleather.com, www.soniarykiel.com, www.karllagerfeldparis.com and www.karl.com.

In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos and have made minority investments in two e-commerce retailers.

In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos.

A number of retailers have experienced financial difficulties, which in some cases have resulted in bankruptcies, liquidations and/or store closings.

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We attempt to mitigate credit risk from our customers by closely monitoring accounts receivable balances and shipping levels, as well as the ongoing financial performance and credit standing of customers.

Retailers are seeking to differentiate their offerings by devoting more resources to the development of exclusive products, whether by focusing on their own private label products or on products produced exclusively for a retailer by a national brand manufacturer.

brand manufacturer.

Exclusive brands are only made available to a specific retailer.

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We have attempted to respond to general trends in our industry by continuing to focus on selling products with recognized brand equity, by attention to design, quality and value and by improving our sourcing capabilities.

We have also responded with the strategic acquisitions made by us, such as our purchase of the interests not previously owned by us that resulted in Karl Lagerfeld becoming our wholly-owned subsidiary, and new license agreements entered into by us, such as our recent license agreements for the Nautica, Halston and Champion brands, that added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines and expanding distribution channels.

Our actions added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines and expanding distribution channels.

We believe that our broad distribution capabilities help us to respond to the various shifts by consumers between distribution channels and that our operational capabilities will enable us to continue to be a vendor of choice for our retail partners.

Tax Laws and Regulations

On December 12, 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.

We are in the process of evaluating the impact of Pillar Two, if any, on our tax rate and financial results.

We will continue to monitor the developing laws as further information becomes available.

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 effective for fiscal 2025.

While we do not expect these rules to have a material impact on our effective tax rate or financial results, we will continue to monitor evolving tax legislation in the jurisdictions in which we operate.

Inflation and Interest Rates

Inflationary pressures have impacted the entire economy, including our industry.

Recent high rates of inflation, including increased fuel and food prices, have led to a softening of consumer demand and increased promotional activity in the apparel categories we sell and may lead to further challenges to increase 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, as well as thus far in fiscal 2024, in response to concerns about inflation and may continue to do so in the future.

Recent high rates of inflation, including increased fuel and food prices, have led to a softening of consumer demand and increased promotional activity in the apparel categories we sell.

Ongoing inflation may lead to further challenges to increase our sales and may also negatively impact our cost structure and labor costs in the future.

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, maintain the current high rates or even raise interest rates in fiscal 2025.

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

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Volatility in the global foreign currency exchange rates may have a negative impact on the reported results of certain of our non-United States subsidiaries in the future, when translated to the U.S.

In fiscal 2022 and 2023, there were numerous factors disrupting the shipping industry that negatively affected transit times from our overseas suppliers, as well as our ability to ensure that we were able to import our product in a manner that allows for timely delivery to our customers.

More recently, shipping costs and transit times have returned to levels comparable to, and in some cases lower than, pre-pandemic time periods.

We continue to monitor the transportation market for circumstances that may cause delays and negatively impact our ability to deliver product to our retail partners in a timely manner.

As a result 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 allows 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 ensure that we did not incur these charges in our current fiscal year, 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 quarter of fiscal 2024 and we expect this to continue into the fourth quarter of fiscal 2024.

Our warehouse capacity has been, and we expect it to continue to be, sufficient for our needs which is expected to bring these costs in line with historical norms.

As a result, our warehousing and distribution costs have been reduced for the third quarter of fiscal 2024 and we expect reduced costs to continue through the fourth quarter of fiscal 2024.

We have secured all required space with two of our long-term steamship carrier partners, including the space needed for our peak period and beyond.

We continue to monitor supply chain challenges, most recently the developing situation with the Panama Canal, and will divert or adjust routes accordingly to ensure delivery of our product.

Impact of COVID-19

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

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

New information may emerge concerning the severity 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 its variants, or treat their impact, may change or become more restrictive if additional waves of infections occur.

We continue to monitor the latest developments regarding the impacts of COVID-19 and have incorporated certain assumptions regarding the duration, severity and global macroeconomic impact of the pandemic into our financial outlook.

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.

While the conditions at the Panama Canal are improving, port congestion and capacity shortages in Asia are beginning to disrupt container shipping and impact our supply chain in fiscal 2025.

Transit times have increased to destinations on the east coast of the United States and Europe.

These delays have not as yet resulted in a significant loss of customer sales.

We have not yet experienced significant increases in transportation costs to North America, but have experienced increased transportation costs for shipments to Europe.

We anticipate moderate increases in our shipping costs in North America and Europe in fiscal 2025.

We continue to monitor supply chain challenges and coordinate with our partners to divert or adjust routes accordingly to ensure delivery of our product.

International Conflicts

We are monitoring the direct and indirect impacts from the military conflicts between Russia and Ukraine and Israel and Hamas.

We are monitoring the direct and indirect impacts from the military conflicts between Russia and Ukraine and between Israel and Hamas, as well as other confrontations in the Middle East related to the Israel and Hamas conflict.

These international conflicts and the continued threat of terrorism, heightened security measures and military action in response to acts of terrorism or civil unrest have disrupted commerce and intensified concerns regarding the United States and world economies.

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Results of Operations

Three months ended October 31, 2023 compared to three months ended October 31, 2022

Net sales for the three months ended October 31, 2023 decreased to $1.07 billion from $1.08 billion in the same period last year.

Three months ended April 30, 2024 compared to three months ended April 30, 2023

Net sales for the three months ended April 30, 2024 increased to $609.7 million from $606.6 million in the same period last year.

Net sales of our segments are reported before intercompany eliminations.

Net sales of our wholesale operations segment decreased to $1.05 billion for the three months ended October 31, 2023 from $1.07 billion in the comparable period last year.

This decrease was primarily the result of a decrease in net sales of Calvin Klein and Tommy Hilfiger licensed products.

This decrease was partially offset by an increase in net sales of our DKNY and Karl Lagerfeld products.

The increase in sales of DKNY products was primarily related to handbags and women’s outerwear.

Net sales of our retail operations segment increased to $32.7 million for the three months ended October 31, 2023 from $28.8 million in the same period last year.

The number of retail stores operated by us increased from 60 at October 31,

2022 to 62 at October 31, 2023.

The increase in sales in our retail operations segment was primarily the result of increased sales at our Karl Lagerfeld Paris stores.

Gross profit was $433.4 million, or 40.6% of net sales, for the three months ended October 31, 2023, compared to $344.6 million, or 32.0% of net sales, in the same period last year.

The gross profit percentage in our wholesale operations segment was 39.6% in the three months ended October 31, 2023 compared to 30.7% in the same period last year.

The gross profit percentage in the prior year period was negatively impacted by $26.7 million in demurrage charges incurred due to our inability to pick up freight from port terminals in a timely manner.

The gross profit percentage in the current year period was positively impacted by lower freight costs compared to the same period last year.

The gross profit percentage in our retail operations segment was 49.1% for the three months ended October 31, 2023 compared to 54.9% for the same period last year.

Net sales of our wholesale operations segment increased to $597.8 million for the three months ended April 30, 2024 from $586.9 million in the comparable period last year.

This increase was primarily the result of an increase in net sales of our Karl Lagerfeld and DKNY products.

In addition, the relaunched Donna Karan products started shipping during the current year period which contributed to the increase in net sales.

The increase in sales of Karl Lagerfeld products was primarily related to sportswear and handbags and the increase in sales of DKNY products was primarily related to sportswear.

These increases were partially offset by a decrease in net sales of Calvin Klein and Tommy Hilfiger licensed products.

Net sales of our retail operations segment were $30.5 million for the three months ended April 30, 2024 compared to $30.2 million in the same period last year.

The number of retail stores operated by us decreased from 61 at April 30, 2023 to 52 at April 30, 2024.

The increase in sales in our retail operations segment was the result of increased sales at our Karl Lagerfeld Paris stores, partially offset by decreased sales at our DKNY stores.

Gross profit was $258.9 million, or 42.5% of net sales, for the three months ended April 30, 2024, compared to $249.8 million, or 41.2% of net sales, in the same period last year.

The gross profit percentage in our wholesale operations segment was 40.9% in the three months ended April 30, 2024 compared to 39.9% in the same period last year.

The gross profit percentage in the current year period was positively impacted by a shift in sales to product related to our owned brands which have no royalty costs, as well as a more favorable product mix.

The gross profit percentage in our retail operations segment was 47.0% for the three months ended April 30, 2024 compared to 50.9% for the same period last year.

The gross profit percentage in the current year period was negatively impacted by an increase in promotional activity.

Selling, general and administrative expenses decreased to $236.3 million in the three months ended October 31, 2023 from $239.9 million in the same period last year.

The decrease in expenses was primarily due to a decrease of $9.0 million in third-party warehouse and facility expenses primarily related to lower inventory levels during the period.

This decrease was partially offset by an increase of $5.1 million in compensation expense, primarily as a result of increases in salaries.

Depreciation and amortization was $6.6 million for the three months ended October 31, 2023 compared to $7.3 million in the same period last year.

This decrease primarily results from lower depreciation and amortization as a result of a reduction in capital expenditures in recent years.

Other loss was $3.1 million in the three months ended October 31, 2023 compared to $2.8 million in the same period last year.

We recorded $2.7 million in losses from unconsolidated affiliates during the three months ended October 31, 2023 compared to $0.2 million in losses from unconsolidated affiliates in the same period last year.

Other loss in the current period also consisted of $0.4 million of foreign currency losses compared to $4.0 million of foreign currency losses during the same period last year.

Interest and financing charges, net, for the three months ended October 31, 2023 were $11.0 million compared to $16.1 million in the same period last year.

The decrease in interest and financing charges was primarily due to a decrease of $2.5 million in interest charges as a result of lower average borrowings under our revolving credit facility in the current year period and a decrease of $1.1 million in interest charges related to the LVMH Note as a result of the repayment of $75 million in principal of this Note on June 1, 2023.

Income tax expense was $48.8 million for the three months ended October 31, 2023 compared to $17.5 million for the same period last year.

Selling, general and administrative expenses increased to $236.6 million in the three months ended April 30, 2024 from $228.0 million in the same period last year.

The increase in expenses was primarily due to an increase of $10.6 million in advertising expenses, primarily related to the relaunch of the Donna Karan brand and higher spending on the DKNY brand, as well as an increase of $2.8 million in compensation expenses, primarily due to an increase in salaries.

These increases were partially offset by a decrease of $5.5 million in third-party warehouse and facility expenses associated with carrying lower levels of inventory.

Depreciation and amortization was $8.8 million for the three months ended April 30, 2024 compared to $6.6 million in the same period last year.

This increase primarily results from higher depreciation and amortization related to information technology expenditures and fixturing costs at department stores.

Other loss was $0.2 million in the three months ended April 30, 2024 compared to other income of $1.0 million in the same period last year.

Other loss in the current period was impacted by $0.9 million of losses from unconsolidated affiliates during the current year period compared to $0.5 million of such losses in the same period last year.

Additionally, other loss in the current period was impacted by $0.6 million of foreign currency income during the current year period compared to $0.4 million of such income in the same period last year.

Interest and financing charges, net, for the three months ended April 30, 2024 were $5.4 million compared to $12.2 million in the same period last year.

The decrease in interest and financing charges was primarily due to a $4.3 million increase in investment income from having a larger cash position in fiscal 2025 compared to fiscal 2024 and a decrease of $2.4 million in interest charges related to the LVMH Note as a result of the repayment of $125 million in principal of this Note in fiscal 2024.

Income tax expense was $2.3 million for the three months ended April 30, 2024 compared to $0.9 million for the same period last year.

Our effective tax rate increased to 29.3% in the current year’s quarter from 23.1% in last year’s comparable quarter.

The lower effective tax rate in the prior year period was due the exclusion of the gain recognized as a result of the remeasurement of the fair value of our previously held 19% investment in KLH and 49% interest in KLNA from taxable income.

Nine months ended October 31, 2023 compared to nine months ended October 31, 2022

Net sales for the nine months ended October 31, 2023 decreased to $2.33 billion from $2.37 billion in the same period last year.

Net sales of our segments are reported before intercompany eliminations.

Net sales of our wholesale operations segment decreased to $2.28 billion for the nine months ended October 31, 2023 from $2.34 billion in the comparable period last year.

This decrease was primarily the result of a decrease in net sales of Calvin Klein and Tommy Hilfiger licensed products.

This decrease was partially offset by the addition of $110.2 million in net sales due to the inclusion of the results of the acquired Karl Lagerfeld business for all of the current period compared to only four months in the same period last year.

Net sales of our retail operations segment increased to $97.3 million for the nine months ended October 31, 2023 from $87.8 million in the same period last year.

The number of retail stores operated by us increased from 60 at October 31, 2022 to 62 at October 31, 2023.

The increase in sales in our retail operations segment was primarily the result of increased sales at our Karl Lagerfeld Paris stores.

Gross profit was $959.9 million, or 41.1% of net sales, for the nine months ended October 31, 2023, compared to $819.6 million, or 34.5% of net sales, in the same period last year.

The gross profit percentage in our wholesale operations segment was 40.0% in the nine months ended October 31, 2023 compared to 33.0% in the same period last year.

The gross profit percentage in the prior year period was negatively impacted by $30.8 million in demurrage charges incurred due to our inability to pick up freight from port terminals in a timely manner.

The gross profit percentage in the current year period was positively impacted by lower freight costs and slightly higher prices to our customers compared to the same period last year.

The gross profit percentage in our retail operations segment was 50.2% for the nine months ended October 31, 2023 compared to 52.1% for the same period last year.

The gross profit percentage in the current year period was negatively impacted by an increase in promotional activity.

Selling, general and administrative expenses increased to $703.5 million in the nine months ended October 31, 2023 from $616.4 million in the same period last year.

We recognized an additional $72.8 million of expenses due to the inclusion of the results of KLH for the current period ended October 31, 2023 as compared to only four months in the same period last year.

The remainder of the increase in expenses was primarily due to an increase of $16.7 million in compensation expense, primarily from an increase in salaries and bonus expense accruals.

This increase was partially offset by reduced royalty advertising expenses which decreased due to lower net sales of licensed product.

Depreciation and amortization was $19.1 million for the nine months ended October 31, 2023 compared to $20.0 million in the same period last year.

This decrease primarily results from lower depreciation and amortization as a result of a reduction in capital expenditures in recent years, partially offset by an increase of $2.4 million of depreciation and amortization expense due to the inclusion of the results of KLH for all of the current period compared to four months in the same period last year.

Other loss was $2.0 million in the nine months ended October 31, 2023 compared to other income of $24.8 million for the same period last year.

Other income in the prior year period consisted of a gain of $30.9 million during the nine months ended October 31, 2022 as a result of the remeasurement of our previously held 19% investment in KLH and 49% investment in KLNA as of the effective date of the acquisition by us of the interests in KLH that we did not previously own.

Other loss in the current period consisted of $0.7 million of foreign currency income during the nine months ended October 31, 2023 compared to $9.4 million of foreign currency losses during the same period last year.

Additionally, we recorded $3.7 million in losses from unconsolidated affiliates during the nine months ended October 31, 2023 compared to $0.8 million in income from unconsolidated affiliates in the same period last year.

Interest and financing charges, net, for the nine months ended October 31, 2023 were $32.7 million compared to $40.8 million in the same period last year.

The decrease in interest and financing charges was primarily due to a $3.0 million increase in investment income from having a larger cash position in the current year compared to the prior year and a decrease of $2.2 million in interest charges due to lower average borrowings under our revolving credit facility in the current year period.

In addition, there was a decrease of $1.6 million in interest charges related to the LVMH Note as a result of the repayment of $75 million in principal of this Note on June 1, 2023.

Income tax expense was $55.7 million for the nine months ended October 31, 2023 compared to $39.5 million for the same period last year.

Our effective tax rate increased to 27.5% in the current year’s period from 23.6% in last year’s comparable period.

The lower effective tax rate in the prior year period was due to the exclusion of the gain recognized as a result of the remeasurement of the fair value of our previously held 19% investment in KLH and 49% interest in KLNA from taxable income.

The lower effective tax rate in the prior year period was due to discrete items in the quarter.

Liquidity and Capital Resources

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We rely on our cash flows generated from operations, cash and cash equivalents and the borrowing capacity under our revolving credit facility to meet the cash requirements of our business.

The cash requirements of our business are primarily related to the seasonal buildup in inventories, compensation paid to employees, payments to vendors in the normal course of business, capital expenditures, interest payments on debt obligations and income tax payments.

A principal payment of $75 million was made on June 1, 2023 with respect to the LVMH Note.

The remaining principal amount of $50 million under the LVMH Note was paid on December 1, 2023.

We have also used cash to repurchase our shares.

As of October 31, 2023, we had cash and cash equivalents of $197.4 million and availability under our revolving credit facility of approximately $645 million.

As of October 31, 2023, we were in compliance with all covenants under our senior secured notes and revolving credit facility.

The cash requirements of our business are primarily related to the seasonal buildup in inventories, compensation paid to employees, occupancy, payments to vendors in the normal course of business, capital expenditures, interest payments on debt obligations and income tax payments.

We have also used cash to repurchase our shares and make minority investments.

As of April 30, 2024, we had cash and cash equivalents of $508.4 million and availability under our revolving credit facility in excess of $480 million.

As of April 30, 2024, we were in compliance with all covenants under our senior secured notes and revolving credit facility.

In May 2024, we used $53.6 million of our cash to acquire the minority interest in AWWG.

Senior Secured Notes

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Bank, National Association, as trustee and collateral agent (the “Collateral Agent”).

The net proceeds of the Notes were used (i) to repay the $300 million that was outstanding under our prior term loan facility due 2022 (the “Term Loan”), (ii) to pay related fees and expenses and (iii) for general corporate purposes.

The net proceeds of the Notes were used (i) to repay the $300 million that was outstanding under our prior term loan facility that was due in 2022 (the “Term Loan”), (ii) to pay related fees and expenses and (iii) for general corporate purposes.

The Notes bear interest at a rate of 7.875% per year payable semi-annually in arrears on February 15 and August 15 of each year.

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In August 2020, our subsidiaries, G-III Leather Fashions, Inc., Riviera Sun, Inc., CK Outerwear, LLC, AM Retail Group, Inc.

and The Donna Karan Company Store LLC (collectively, the “Borrowers”), entered into the second amended and restated credit agreement (the “ABL Credit Agreement”) with the Lenders named therein and with JPMorgan Chase Bank, N.A., as Administrative Agent.

The ABL Credit Agreement is a five year senior secured credit facility that provides for borrowings in the aggregate principal amount of up to $650 million.

We and certain of our subsidiaries (the “Guarantors”), are Loan Guarantors under the ABL Credit Agreement.

The ABL Credit Agreement refinanced, amended and restated the Amended Credit Agreement, dated as of December 1, 2016 (as amended, supplemented or otherwise modified from time to time prior to August 7, 2020, the “Prior Credit Agreement”).

The Prior Credit Agreement provided for borrowings of up to $650 million.

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

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

and The Donna Karan Company Store LLC (collectively, the “Borrowers”), entered into the second amended and restated credit agreement (the “Second ABL Credit Agreement”) with the Lenders named therein and with JPMorgan Chase Bank, N.A., as Administrative Agent.

The Second ABL Credit Agreement is a five year senior secured credit facility subject to a springing maturity date if, subject to certain conditions, the Notes are not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder.

The Second ABL Credit Agreement provides for borrowings in the aggregate principal amount of up to $650 million.

We and certain of our subsidiaries (the “Guarantors”), are Loan Guarantors under the Second ABL Credit Agreement.

The Second ABL Credit Agreement refinanced, amended and restated the Amended Credit Agreement, dated as of December 1, 2016 (as amended, supplemented or otherwise modified from time to time prior to August 7, 2020, the “Prior Credit Agreement”).

The Prior Credit Agreement provided for borrowings of up to $650 million and was due to expire in December 2021.

The Second ABL Credit Agreement extended the maturity date to August 2025, subject to a springing maturity date if, subject to certain conditions, the Notes are not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder.

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

Borrowings originally bore interest, at the Borrowers’ option, at LIBOR plus a margin of 1.75% to 2.25% or an alternate base rate margin of 0.75% to 1.25% (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A.

from time to time, (ii) the federal funds rate plus 0.5% and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 1.00%, with the applicable margin determined based on Borrowers’ availability under the ABL Credit Agreement.

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

All other material terms and conditions of the ABL Credit Agreement were unchanged.

Borrowings under the amended ABL Credit Agreement now bear interest, at the Borrower’s option, at the alternate base rate (defined as, for a given day, the greatest of (i) the “prime rate” in effect on such day, (ii) the NYFRB Rate (as defined in the amendment) in effect on such day plus 0.5% and (iii) the Adjusted Term SOFR (defined as an interest rate per annum equal to the Term SOFR for such interest period plus 0.10%) for a one-month interest period as published two business days prior to such day plus 1%) plus an applicable spread or the Adjusted Term SOFR Rate plus an applicable spread.

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

All other material terms and conditions of the Second ABL Credit Agreement were unchanged.

Borrowings under the amended Second ABL Credit Agreement now bear interest, at the Borrower’s option, at the alternate base rate (defined as, for a given day, the greatest of (i) the “prime rate” in effect on such day, (ii) the NYFRB Rate (as defined in the amendment) in effect on such day plus 0.5% and (iii) the Adjusted Term SOFR (defined as an interest rate per annum equal to the Term SOFR for such interest period plus 0.10%) for a one-month interest period as published two business days prior to such

day plus 1%) plus an applicable spread or the Adjusted Term SOFR Rate plus an applicable spread.

We applied certain provisions and practical expedients of ASC 848 – Reference Rate Reform related to the transition from LIBOR to SOFR.

We do not expect a material change to our interest expense or results of operations as a result of transitioning the reference rate used in our ABL Credit Agreement from LIBOR to SOFR.

The ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors.

In addition to paying interest on any outstanding borrowings under the ABL Credit Agreement, we are required to pay a commitment fee to the lenders under the credit agreement with respect to the unutilized commitments.

There was not a material change to our interest expense or results of operations as a result of transitioning the reference rate used in our Second ABL Credit Agreement from LIBOR to SOFR.

The Second ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors.

In addition to paying interest on any outstanding borrowings under the Second ABL Credit Agreement, we are required to pay a commitment fee to the lenders under the credit agreement with respect to the unutilized commitments.

The commitment fee accrues at a tiered rate equal to 0.50% per annum on the average daily amount of the available commitments when the average usage is less than 50% of the total available commitments and decreases to 0.35% per annum on the average daily amount of the available commitments when the average usage is greater than or equal to 50% of the total available commitments.

The revolving credit facility contains covenants that, among other things, restrict our ability to, subject to specified exceptions, incur additional debt;

The Second ABL Credit Agreement contains covenants that, among other things, restrict our ability to, subject to specified exceptions, incur additional debt;

sell or dispose of certain assets;

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In certain circumstances, the revolving credit facility also requires us 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.

As of October 31, 2023, we were in compliance with these covenants.

As of October 31, 2023, we had no borrowings outstanding under the ABL Credit Agreement.

The ABL Credit Agreement also includes amounts available for letters of credit.

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, we had $3.3 million of unamortized debt issuance costs remaining from the Prior Credit Agreement.

We extinguished and charged to interest expense $0.4 million of the prior debt issuance costs and incurred new debt issuance costs totaling $5.1 million related to the ABL Credit Agreement.

We have recorded $8.0 million of debt issuance costs related to our ABL Credit Agreement.

As permitted under ASC 835, the debt issuance costs have been deferred and are presented as an asset which is amortized ratably over the term of the ABL Credit Agreement.

We issued to LVMH, as a portion of the consideration for the acquisition of DKI, a junior lien secured promissory note in favor of LVMH in the principal amount of $125 million (the “LVMH Note”) that bears interest at the rate of 2% per year.

$75 million of the principal amount of the LVMH Note was repaid on June 1, 2023 and the remaining $50 million of such principal amount was paid on December 1, 2023.

The LVMH Note is classified in current portion of notes payable in our Company’s condensed consolidated balance sheet 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 our condensed consolidated balance sheet as of October 31, 2022.

As of April 30, 2024, we were in compliance with these covenants.

As of April 30, 2024, we had no borrowings outstanding under the Second ABL Credit Agreement.

The Second ABL Credit Agreement also includes amounts available for letters of credit.

As of April 30, 2024, there were outstanding trade and standby letters of credit amounting to $4.8 million and $2.9 million, respectively.

We have incurred a total of $8.0 million of debt issuance costs related to our Second ABL Credit Agreement.

As permitted under ASC 835, the debt issuance costs have been deferred and are presented as an asset which is amortized ratably over the term of the Second ABL Credit Agreement.

In June 2024, we entered into the third amended and restated credit agreement that provides for borrowings in the aggregate principal amount of up to $700 million and extends the maturity date to June 2029, subject to certain conditions.

See “Recent Developments – Third Amended and Restated Credit Agreement” for more information.

$75 million of the principal amount of the LVMH Note was paid on June 1, 2023 and the remaining $50 million of such principal amount was paid on December 1, 2023.

Based on an independent valuation, it was determined that the LVMH Note should be treated as having been issued at a discount of $40 million in accordance with ASC 820 — Fair Value Measurements .

This discount is being amortized as interest expense using the effective interest method over the term of the LVMH Note.

In connection with the issuance of the LVMH Note, LVMH entered into (i) a subordination agreement providing that our obligations under the LVMH Note are subordinate and junior to our obligations under the revolving credit facility and Term Loan and (ii) a pledge and security agreement with us and our subsidiary, G-III Leather, pursuant to which we and G-III Leather granted to LVMH a security interest in specified collateral to secure our payment and performance of our obligations under the LVMH Note that is subordinate and junior to the security interest granted by us with respect to our obligations under the revolving credit facility and Term Loan.

This discount was amortized as interest expense using the effective interest method over the term of the LVMH Note.

Unsecured Loans

Several of our foreign entities borrow funds under various unsecured loans of which a portion is to provide funding for operations in the normal course of business while other loans are European state backed loans as part of COVID-19 relief programs.

In the aggregate, we are currently required to make quarterly installment payments of principal in the amount of €0.6 million under these unsecured loans.

In the aggregate, we are currently required to make quarterly installment payments of principal in the amount of €0.6 million.

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

As of April 30, 2024, the Company had an aggregate outstanding balance of €7.9 million ($8.5 million) under these various unsecured loans.

Overdraft Facilities

During fiscal 2021, TRB entered into several overdraft facilities that allow for applicable bank accounts to be in a negative position up to a certain maximum overdraft.

TRB entered into an uncommitted overdraft facility with HSBC Bank allowing for a maximum overdraft of €5 million.

Interest on drawn balances accrues at a fixed rate equal to the Euro Interbank Offered Rate (“EURIBOR”) plus a margin of 1.75% per annum, payable quarterly.

The facility may be cancelled at any time by TRB or HSBC Bank.

As part of a COVID-19 relief program, TRB and its subsidiaries have also entered into several state backed overdraft facilities with UBS Bank in Switzerland for an aggregate of CHF 4.7 million at varying interest rates of 0% to 0.5%.

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

During fiscal 2021 and 2025, certain of the Company’s foreign entities entered into overdraft facilities that allow for applicable bank accounts to be in a negative position up to a certain maximum overdraft.

These uncommitted overdraft facilities with HSBC Bank allow for an aggregate maximum overdraft of €10 million.

Interest on drawn balances accrues at a rate equal to the Euro Interbank Offered Rate plus a margin of 1.75% per annum, payable quarterly.

The facility may be cancelled at any time by the Company or HSBC Bank.

As part of a COVID-19 relief program, certain of the Company’s foreign entities 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 April 30, 2024, the Company had an aggregate of €6.4 million ($6.9 million) drawn under these various facilities.

Foreign Credit Facility

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with a credit limit of €15.0 million which is secured by specified assets of KLH.

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

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

Borrowings bear interest at the Euro Interbank Offered Rate plus a margin of 1.7%.

As of April 30, 2024, KLH had €12.1 million ($13.0 million) of borrowings outstanding under this credit facility.

Outstanding Borrowings

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The primary sources to meet our operating cash requirements have been borrowings under this credit facility and cash generated from operations.

We had no borrowings outstanding under our revolving credit facility at October 31, 2023 and $340.2 million outstanding at October 31, 2022, respectively.

We had $400 million in borrowings outstanding under the Notes at October 31, 2023 and October 31, 2022, respectively.

Our contingent liability under open letters of credit was approximately $4.9 million and $9.9 million at October 31, 2023 and 2022, respectively.

In addition to the amounts outstanding under these two loan agreements, at October 31, 2023 and 2022, we had $50 million and $125 million of face value principal amount outstanding under the LVMH Note, respectively.

As of October 31, 2023 and 2022, we had an aggregate of €8.6 million ($9.1 million) and €10.7 million ($10.4 million) outstanding under the Company’s various unsecured loans.

As of October 31, 2023 and 2022, we had €1.8 million ($1.9 million) and €3.7 million ($3.7 million) outstanding under our various overdraft facilities.

As of October 31, 2023 and 2022, we had €3.9 million ($4.2 million) and €10.6 million ($10.4 million) outstanding under KLH’s foreign credit facility.

We had no borrowings outstanding under our Second ABL Credit Agreement at April 30, 2024 and 2023, respectively.

We had $400 million in borrowings outstanding under the Notes at April 30, 2024 and 2023, respectively.

Our contingent liability under open letters of credit was approximately $7.6 million and $10.7 million at April 30, 2024 and 2023, respectively.

At April 30, 2023, we had $125.0 million of face value principal amount outstanding under the LVMH Note.

The amount outstanding under the LVMH Note was repaid during fiscal 2024.

We had an aggregate of €7.9 million ($8.5 million) and €10.3 million ($11.2 million) outstanding under the Company’s various unsecured loans as of April 30, 2024 and 2023, respectively.

We had €6.4 million ($6.9 million) and €3.8 million ($4.1 million) outstanding under our various overdraft facilities as of April 30, 2024 and 2023, respectively.

We had €12.1 million ($13.0 million) and €7.8 million ($8.5 million) outstanding under KLH’s foreign credit facility as of April 30, 2024 and 2023, respectively.

Share Repurchase Program

In August 2023, our Board of Directors authorized an increase in the number of shares covered by our share repurchase program to an aggregate amount of 10,000,000 shares.

Prior to this increase, we had 6,813,851 authorized shares under this program.

Pursuant to this program, during the nine months ended October 31, 2023, we acquired 1,598,568 of our shares of common stock for an aggregate purchase price of $26.1 million.

Pursuant to this program, during the three months ended April 30, 2024, we acquired 1,029,504 of our shares of common stock for an aggregate purchase price of $28.4 million.

The timing and actual number of shares repurchased, if any, will depend on a number of factors, including market conditions and prevailing stock prices, and are subject to compliance with certain covenants contained in our loan agreement.

Share repurchases may take place on the open market, in privately negotiated transactions or by other means, and would be made in accordance with applicable securities laws.

As of October 31, 2023, we had remaining 10,000,000 shares authorized for purchase under this program.

As of December 4, 2023, we had 45,727,662 shares of common stock outstanding.

As of April 30, 2024, we had remaining 8,970,496 shares that are authorized for purchase under this program.

As of June 3, 2024, we had 44,987,939 shares of common stock outstanding.

Cash from Operating Activities

We generated $226.3 million in cash from operating activities during the nine months ended October 31, 2023, primarily as a result of our net income of $147.3 million, a decrease of $117.8 million in inventories and increases of $47.1 million in accounts payable and accrued expenses and $18.2 million in customer refund liabilities.

We generated $45.5 million in cash from operating activities during the three months ended April 30, 2024, primarily as a result of our net income of $5.8 million and decreases of $89.2 million in accounts receivable and $40.8 million in inventories.

We also generated cash from operating activities as a result of non-cash charges relating primarily to depreciation and amortization of $8.8 million and share-based compensation of $6.6 million.

These items were offset, in part, by an increase of $188.3 million in accounts receivable.

The changes in operating cash flow items are consistent with our seasonal pattern with the exception of the decrease in inventory which resulted from our inventory returning to a more normalized level after experiencing a period of elevated inventory levels in fiscal 2023 due to supply chain disruptions.

Our accounts receivable and customer refund liabilities increased because we experience higher sales levels in our third and fourth quarters.

These items were offset, in part, by decreases of $54.2 million in accounts payable and accrued expenses and $24.2 million in customer refund liabilities.

The changes in operating cash flow items are consistent with our seasonal pattern.

Our accounts receivable, inventory and customer refund liabilities decreased because we experience lower sales levels in our first and second quarters than in our third and fourth quarters.

The decrease in accounts payable and accrued expenses is primarily attributable to vendor payments related to inventory purchases and the payment of year-end bonuses in our first fiscal quarter.

Cash from Investing Activities

We used $19.3 million of cash in investing activities during the nine months ended October 31, 2023.

We had $15.7 million in capital expenditures primarily related to infrastructure and information technology expenditures and additional fixturing costs at department stores.

In addition, we used $3.6 million for an investment in the equity of a private company.

We used $14.8 million of cash in investing activities during the three months ended April 30, 2024.

We had $12.7 million in capital expenditures primarily related to information technology expenditures and fixturing costs at department stores.

Cash from Financing Activities

Net cash used by financing activities was $199.1 million during nine months ended October 31, 2023 primarily as a result of repayments of borrowings of $112.8 million under our ABL Credit Agreement, partially offset by borrowings of $32.7 million under that Agreement, as well as the $75.0 million principal repayment of the LVMH Note.

In addition, we used $26.1 million of cash to repurchase 1,598,568 shares of our common stock under our share repurchase program and $10.8 million for taxes paid in connection with net share settlements of stock grants that vested.

Net cash used by financing activities was $27.3 million during three months ended April 30, 2024 primarily as a result of $28.4 million of cash used to repurchase 1,029,504 shares of our common stock under our share repurchase program and $7.5 million for taxes paid in connection with net share settlements of stock grants that vested.

These items were offset, in part, by net borrowings of $8.6 million under our various foreign facilities.

Critical Accounting Policies

Our discussion of results of operations and financial condition relies on our consolidated financial statements that are prepared based on certain critical accounting policies that require management to make judgments and estimates that are

subject to varying degrees of uncertainty.

We believe that investors need to be aware of these policies and how they impact our financial statements as a whole, as well as our related discussion and analysis presented herein.

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The accounting policies and related estimates described in our Annual Report on Form 10-K for the year ended January 31, 2024 are those that depend most heavily on these judgments and estimates.

As of October 31, 2023, there have been no material changes to our critical accounting policies.

As of April 30, 2024, there have been no material changes to our critical accounting policies.

Quantitative and Qualitative Disclosures About Market Risk.

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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 2. Management’s Discussion and Analysis