What changed in this filing

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Item 1A. Risk Factors

2025-03-24 compared with 2024-03-25 · 160 added, 169 removed, 438 unchanged (43% of the section changed)

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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 may 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 and seek damages.

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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The failure to maintain or renew our material license agreements could cause us to lose significant revenue and have a material adverse effect on our results of operations.

Any adverse change in our relationship with PVH Corp.

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.

Any adverse change in our relationship with PVH 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.

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 34.0% of our net sales in fiscal 2025 and approximately 41.0% of our net sales in fiscal 2024.

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.

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.

The licenses for Calvin Klein and Tommy Hilfiger products expire on a staggered basis beginning on December 31, 2024 and continuing through December 31, 2027.

The licenses for Calvin Klein (Women’s better sportswear) and Calvin Klein Jeans (Women’s jeanswear) expired on December 31, 2024.

See the table in “Complementary Portfolio of Licensed Brands” above for information with respect to the current terms of the remaining agreements.

PVH has indicated publicly that it will 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 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.

As we manage the partnership with PVH through this transition and expiration of the licenses, any adverse change in our relationship could 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 entering into these license agreements, we plan our products to be targeted towards different market segments based on consumer demographics, design, suggested pricing and channel of distribution.

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.

In addition to granting us licenses 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.

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Social media influencers or other endorsers of our products could engage in behavior that reflects poorly on our brands and may be attributed to us or otherwise adversely affect us.

In addition, as certain of our brands may be personally associated with designers, our sales of those products could be materially and adversely affected if any of those individuals’ images, reputations or popularity were to be negatively impacted.

Any harm to our brands or reputation could adversely affect our business, results of operations or financial condition.

Use of social media and influencers may adversely affect our reputation or subject our proprietary brands to fines or other penalties.

Our proprietary brands use third-party social media platforms as, among other things, marketing tools.

We also maintain relationships with social media influencers and engage in collaborations.

If we are unable to cost-effectively use social media platforms as marketing tools or if the social media platforms we use change their policies or algorithms, we may not be able to fully optimize such platforms, and our ability to maintain and acquire consumers and our financial condition may suffer.

Our relationships with influencers may not have the desired effect, and information posted on social media platforms may be adverse to our reputation or business.

Additionally, as laws and regulations and public opinion rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees, our network of social media influencers, our sponsors or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices or otherwise could subject us to regulatory investigations, class action lawsuits, liability, fines or other penalties and have an adverse effect on our business, financial condition, results of operations and prospects.

If our customers change their buying patterns, request additional allowances, develop their own private label brands or enter into agreements with national brand manufacturers to sell their products on an exclusive basis, our sales to these customers could be materially adversely affected.

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To the extent that any of our key customers reduces the number of its vendors and, as a result, reduces or eliminates purchases from us, there could be a material adverse effect on us.

We have significant customer concentration, and the loss of one of our large customers could adversely affect our business.

Our ten largest customers, all of which are department or discount store groups, accounted for approximately 70.1% of our net sales in fiscal 2024, 74.2% of our net sales in fiscal 2023 and 78.0% of our net sales in fiscal 2022, with the Macy’s Inc.

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.

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 have significant customer concentration, and a reduction in purchases or the loss of one of our large customers could adversely affect our business.

Our ten largest customers, all of which are department stores or off price accounts, accounted for approximately 69.6% of our net sales in fiscal 2025, with the Macy’s Inc.

group accounting for approximately 18.0% of our net sales in fiscal 2025.

TJX Companies accounted for approximately 13.2% of our net sales in fiscal 2025.

In addition, sales to Ross Stores accounted for an aggregate of 12.6% of our net sales in fiscal 2025.

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

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Risks Relating to Our Retail Operations

Our retail operations may continue to incur losses if the revisions to our retail operations do not significantly improve the results of operations of our retail business.

Our retail operations may continue to incur losses if our retail turnaround strategy does not significantly improve the results of operations of our retail business.

Our retail operations segment reported an operating loss of $14.0 million in fiscal 2025, $30.5 million in fiscal 2024 and $33.6 million in fiscal 2023.

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.

If we are not successful in implementing and managing our turnaround strategy 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.

Leasing of significant amounts of real estate exposes us to possible liabilities and losses.

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The unexpected loss of services of one or more of these individuals or the inability to attract key personnel could also adversely affect us.

We have expanded our business through acquisitions that could result in diversion of resources, an inability to integrate acquired operations and extra expenses.

We have expanded our business through acquisitions and investments that could result in diversion of resources, an inability to integrate acquired operations and extra expenses.

This could disrupt our business and adversely affect our financial condition.

Part of our growth strategy is to pursue acquisitions.

Our most recent acquisition resulted in our owning all of the interests in the parent company of Karl Lagerfeld.

Our most recent material acquisition resulted in our owning all of the interests in the parent company of Karl Lagerfeld.

The negotiation of potential acquisitions, as well as the integration of acquired businesses, could divert our management’s time and resources.

Acquired businesses may not be successfully integrated with our operations.

Acquired businesses may not be successfully integrated with our operations or internal control environment.

We may not realize the intended benefits of an acquisition or an acquisition may fail to generate expected financial results.

We also might not be successful in identifying or negotiating suitable acquisitions, which could negatively impact our growth strategy.

If acquisitions disrupt our operations, our business may suffer.

If acquisitions disrupt our operations or our internal control environment our business may suffer.

We have also expanded our business through minority investments accounted for under both the cost and equity methods of accounting.

Our most recent material minority investment was in AWWG, which we account for as an equity method investment as of January 31, 2025.

Our minority investments may fail to generate expected financial results which may adversely impact our results of operations through the recognition of our equity in losses incurred by our equity method investees or impairment charges.

In addition, the process of integrating our existing operations with acquired entities that could potentially have material weaknesses and/or significant deficiencies in their internal control environment may result in unforeseen operating difficulties and may require significant financial resources to remedy any such weaknesses or deficiencies.

For example, within the Karl Lagerfeld subsidiary, we identified a material weakness in the operating effectiveness of controls related to information technology general controls over business applications that support our financial reporting processes.

Although we concluded that this material weakness did not result in any material misstatements in our financial statements or disclosures, similar material weaknesses and significant deficiencies may be costly for us to remedy and result in material misstatements in our financial statements or disclosure.

We may need additional financing to continue to grow.

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 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 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 primary source of working capital to support the growth of our operations is our ABL Credit Agreement, which was amended and restated in June 2024 to, among other things, extend its maturity date from August 2025 to June 2029.

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

The loss of the use of our credit facility or the inability to replace this facility when it expires would materially impair our ability to operate our business.

In addition, we may in the future need alternative financing beyond our existing credit facility.

We cannot be sure we will be able to secure any such alternative financing on satisfactory terms or at all.

Our business is highly seasonal.

Retail sales of apparel have traditionally been seasonal in nature.

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 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.

Historically, our wholesale business has been dependent on our sales during the third and fourth quarters due to the anticipation of the holiday shopping season for our retail customers.

Net sales during the third and fourth quarters accounted for approximately 61% of our net sales in fiscal 2025.

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

Any difficulties we may encounter during this period as a result of weather or disruption of manufacturing or transportation of our products will have a magnified effect on our results of operations for the year.

Any difficulties we may encounter during this period as a result of weather or disruption of manufacturing or transportation of our products will

have a magnified effect on our results of operations for the year.

In addition, because of the large amount of outerwear we sell at both wholesale and retail, unusually warm weather conditions during the peak fall and winter outerwear selling season, including as a result of any change in historical climate patterns, could have a material adverse effect on our results of operations.

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Substantially all of our products are distributed from a few key locations.

Therefore, our operations could be interrupted by travel restrictions, earthquakes, floods , fires or other natural disasters near our distribution centers.

Therefore, our operations could be interrupted by travel restrictions, earthquakes, floods , fires, public health crises or other natural disasters affecting our distribution centers.

Our business interruption insurance may not adequately protect us from the adverse effects that could be caused by significant disruptions affecting our distribution facilities.

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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 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.

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 the past, supply chain disruptions have adversely affected our ability to import our product in a timely manner that allowed for timely delivery to our customers, caused elevated inventory levels and resulted in us incurring significant demurrage, labor and storage costs.

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.

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

In the first half of fiscal 2025, as the conditions at the Panama Canal started improving, port congestion and capacity shortages in Asia began to disrupt container shipping.

Transit times and transportation costs have increased to destinations on the East Coast of the United States and Europe.

In the second half of fiscal 2025, the global supply chain was also negatively impacted by recent and threatened port strikes on the East Coast of the United States, Gulf Coast and in Canada, as a result of which we have experienced some shipping delays, impacting the timing of inventory receipts.

Additional tariffs on Chinese imports have increased costs for importers, which has impacted demand and has affected ocean container

shipping due to limited alternatives for moving goods.

Our shipping costs to North America and Europe also continued to increase in the second half of fiscal 2025.

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.

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

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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If we inadequately protect, maintain and enforce our trademark and other intellectual property rights, or infringe the intellectual property rights of third parties, our business could be harmed.

We believe that our trademarks and other proprietary rights are important to our success and our competitive position.

Our trademarks and other proprietary rights are important to our success and our competitive position.

We may, however, experience conflict with various third parties who acquire or claim ownership rights in certain trademarks.

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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.

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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.

Any action to prosecute, enforce or defend any intellectual property claim, regardless of merit or resolution, could be costly and may divert the efforts and attention of our management and technical personnel.

Any action to prosecute, enforce or defend any

intellectual property claim, regardless of merit or resolution, could be costly and may divert the efforts and attention of our management and technical personnel.

We may not prevail in such proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation.

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If we are unsuccessful in protecting and enforcing our intellectual property rights, our brands, business, financial condition and results of operations may be materially adversely affected.

We are subject to the risk that our licensees may not generate expected sales or maintain the value of our brands.

We are subject to the risk that our partners may not generate expected sales or maintain the value of our brands.

We currently license, and expect to continue licensing, certain of our proprietary rights, such as trademarks, to third parties.

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We also rely on our licensees to help preserve the value of our brand.

We also engage distributors and agents to market our products and operate stores in certain regions.

Although we attempt to protect our brand through approval rights over the design, production processes, quality, packaging, merchandising, distribution, advertising and promotion of our licensed products, we cannot completely control the use of our licensed brand by our licensees.

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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 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.

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

If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms.

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

In recent years, the 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.

Continued high rates of inflation, including as a result of tariffs, 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 increased interest rates several times in fiscal 2024 in response to concerns about inflation, and began to decrease interest rates in fiscal 2025.

It is unclear whether the Federal Reserve will reduce, increase or maintain the current rates in the future.

Higher interest rates may increase the cost of our borrowing 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 the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, or at all.

The cyclical nature of the apparel industry and uncertainty over future economic prospects and consumer spending could have a material adverse effect on our results of operations.

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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 COVID-19.

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.

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Sales of our products are affected by a number of competitive factors including style, price, quality, brand recognition and reputation, product appeal and general fashion trends.

In addition, we compete with other companies in the apparel industry on the basis of investments in technology and adapting to changes in technology, including the successful use of data analytics.

If major department, mass merchant and specialty store chains consolidate, continue to close stores or cease to do business, our business could be negatively affected.

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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 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.

Various customers of ours, including Macy’s and Kohl’s, have reduced their store footprint and others have filed for bankruptcy in recent years, including the recent bankruptcy filing by Hudson’s Bay Company.

Macy’s also continues to confirm its planned closure of 150 stores through 2027.

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 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 effects of war, conflicts 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 conflicts 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 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.

In addition, the continuation or escalation of these wars, including the potential for additional countries to declare war 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 conflicts 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 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.

Similarly, the occurrence of one or more natural disasters, such as hurricanes, fires, floods or earthquakes, or public health crises, 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.

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Because our products are produced abroad, most significantly in China and Vietnam, political or economic instability in China, Vietnam or elsewhere could cause substantial disruption in the business of our foreign manufacturers.

Products sourced from China represented approximately 34.2% of our inventory purchased in fiscal 2024, 37.6% of our inventory purchased in fiscal 2023 and 34.2% of our inventory purchased in fiscal 2022.

Products sourced from Vietnam represented approximately 35.7% of our inventory purchased in fiscal 2024, 31.4% of our inventory purchased in fiscal 2023 and 32.2% of our inventory purchased in fiscal 2022.

In February 2025, the current administration imposed an additional 10% tariff on imports from China beyond the previous 25% tariff that was already in place.

In March 2025, the current administration announced plans to impose an additional 10% tariff on certain products imported from China.

The current administration has also indicated the potential for additional increases to tariffs on imports into the United States for China as well as other countries.

Products sourced from China represented approximately 33.2% of our inventory purchased in fiscal 2025.

Products sourced from Vietnam represented approximately 35.2% of our inventory purchased in fiscal 2025.

Additional tariffs imposed on products imported by us from China and potentially other countries in our supply chain would increase our costs, require us to increase prices to our customers or, if we are unable to do so, result in lower gross margins on the products sold by us.

While we source our products from many different manufacturers, we rely on a few manufacturers for a significant amount of our products.

In fiscal 2024, we sourced 28.3% and 22.8% of our purchases from two different vendors in Vietnam and in fiscal 2023, we sourced 25.7% and 15.2% of our purchases from two different vendors in Vietnam.

In fiscal 2024, we sourced 13.6% of our purchases from one vendor in China and in fiscal 2023, we sourced 18.8% of our purchases from one vendor in China.

In fiscal 2025, we sourced 21.7% and 18.0% of our purchases from two different vendors in Vietnam.

In fiscal 2025, we sourced 14.7% of our purchases from one vendor in China.

The loss of key vendors or a disruption in receipt of products from key vendors could adversely affect our ability to deliver goods to our customers on time and in the requested quantities.

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.

China’s Xinjiang Uyghur Autonomous Region (the “XUAR”) is a significant source of cotton and textiles for the global apparel supply chain.

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.

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.

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

Demand for our products depends in part on the general economic conditions affecting the countries in which we do business.

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 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.

We have foreign currency exposures relating to buying and selling in currencies other than the U.S.

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● changes in diplomatic and trade relationships;

● general and economic fluctuations in specific countries or markets.

● general and economic fluctuations in specific countries or markets, particularly uncertain economic conditions in the Euro zone.

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 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.

This law increases the power of the central government in Beijing over Hong Kong, limits the civil liberties of residents of Hong Kong and could restrict their ability to conduct business in the same way as in the past on a go forward basis.

State Department has announced the U.S.

would no longer consider Hong Kong to have significant autonomy from China which could end some or all of the U.S.

government’s special trade and economic relations with Hong Kong.

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 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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There are numerous laws and regulations regarding privacy and the storage, sharing, use, processing, transfer, disclosure and protection of personal data, the scope of which is changing, subject to differing interpretations, and may be inconsistent between states within a country or between countries.

For example, the European Union General Data Protection Regulation (“GDPR”) has caused significantly greater compliance burdens and costs for companies with users and operations in the European Union (“EU”) and European Economic Area (“EEA”).

For example, the European Union General Data Protection Regulation (“GDPR”) creates significantly greater compliance burdens and costs for companies with users and operations in the European Economic Area (“EEA”).

Under GDPR, fines of up to 20 million Euros or 4% of a company’s annual global revenues, whichever is greater, can be imposed for violations.

The California Privacy Rights Act (“CPRA”) and the California Consumer Privacy Act (“CCPA”) regulate how we may collect, use, and process personal data of California residents, and provide California residents with certain rights regarding their personal data.

To comply with the CPRA and CCPA, we updated our data processing practices and policies.

However, these laws may require that we further modify our data processing practices and policies and incur substantial compliance-related costs and expenses.

Other states have enacted similar data privacy laws and additional states may do so in the future as the U.S.

state privacy landscape continues to evolve.

Non-compliance with these laws could result in penalties or

significant legal liability.

In the United States, the California Consumer Privacy Act (“CCPA”) regulates how we may collect, use, and process personal data of California residents, and provides California residents with certain rights regarding their personal data.

Several other states have enacted comprehensive privacy legislation similar to the CCPA.

To comply with the U.S.

state laws that are applicable to us, we have updated our data processing practices and policies.

However, further modifications to our data processing practices and policies may be required as the U.S.

state and federal regulatory landscape continues to evolve, which may require us to incur substantial compliance-related costs and expenses.

Non-compliance with privacy laws and regulations 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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Further, changes in technology and processing procedures may result in changes to the Card Rules.

Such changes may require us to make significant investments in operating systems and technology that may impact our business.

may require us to make significant investments in operating systems and technology that may impact our business.

Failure to keep up with changes in technology could result in the loss of business.

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The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies and the loss of sales and customers, which may have a material adverse effect on our business, financial condition and results of operations to suffer.

Despite our preventative efforts, our systems are vulnerable from time to time to damage or interruption from, among other things, security breaches, cyber-attacks, computer viruses, ransomware, power outages, fire, natural disasters, systems failures and other technical malfunctions.

Despite our preventative efforts (including those described in “Cybersecurity”), our systems are vulnerable from time to time to damage or interruption from, among other things, security breaches, cyber-attacks, computer viruses, ransomware, power outages, fire, natural disasters, systems failures and other technical malfunctions.

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.

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

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 could have a material adverse impact on the operation of our business.

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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.

Cyber criminals are constantly devising new, sophisticated schemes to circumvent information technology security safeguards, including through the use of artificial intelligence, 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.

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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.

While we have not currently adopted and integrated generative artificial intelligence tools in our business operations, we may do so in the future 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.

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.

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and other countries where we conduct our business.

For example, the current administration has imposed tariffs on imports from China and has announced plans to impose broad-based tariffs on imports from many other countries, including Canada, Mexico and countries in the European Union.

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.

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

For example, China has recently implemented tariffs on imports from the United States, in light of the newly imposed tariffs on Chinese goods by the current administration.

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.

G-III, 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).

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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.

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.

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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.

Our domestic and international tax liabilities are dependent on the allocation of revenue and expenses in various jurisdictions.

Significant judgment is required in determining our global provision for income taxes.

Changes in the U.S.

federal, state, and international tax legislations can have an adverse impact on our income tax liabilities and effective tax rate.

We operate in many different countries and the tax rates vary by jurisdiction.

We may pay additional taxes if tax rates increase in the jurisdictions in which we operate, or laws, regulations or treaties in the jurisdictions in which we operate are modified.

Tax returns that we file are also subject to audit by various federal, state and international tax regimes, the resolution of which may also result in us paying more taxes than we had reserved for.

We also have many transactions between our subsidiaries.

We believe these transactions are at arms-length and that we have the proper transfer pricing documentation in place, but our transfer pricing could be challenged by tax authorities resulting in additional tax liabilities.

Our future effective tax rate could be adversely affected by a variety of factors, including changes in our business operations, changes in tax laws or rulings, or developments in government tax examinations.

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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.

The Pillar Two Model Rules provide for a global minimum tax of 15% for multinational enterprise groups, and is effective for fiscal 2025.

While the rules did not have a material impact on our effective tax rate or financial results for fiscal 2025, we continue to monitor our operations and evolving tax

legislation in the jurisdictions in which we operate.

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.

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We are subject to significant corporate regulation as a public company and failure to comply with applicable regulations could subject us to liability or negatively affect the market price of our securities.

As a publicly traded company, we are subject to a significant body of regulation, including the reporting requirements of the Exchange Act, the listing requirements of the Nasdaq Global Select Market, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The Securities and Exchange Commission and Nasdaq regularly propose and adopt new regulatory requirements.

As a publicly traded company, we are subject to a significant body of regulation, including the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the listing requirements of the Nasdaq Global Select Market, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The SEC and Nasdaq regularly propose and adopt new regulatory requirements.

The internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act may not prevent or detect misstatements because of certain of its limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.

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If we fail to comply with any of these regulations, we could be subject to a range of regulatory actions, fines or other sanctions or litigation.

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.

State Department has announced the U.S.

would no longer consider Hong Kong to have significant autonomy from China which could end some or all of the U.S.

government’s special trade and economic relations with Hong Kong.

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.

In March 2024, Hong Kong passed additional national security legislation.

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

Other Risks Relating to Ownership of Our Common Stock

The increased focus by stakeholders on corporate responsibility issues, including those associated with environmental, social and governance issues, as well as matters of significance related to sustainability, could result in additional costs or risks and adversely impact our reputation.

There is an increased focus from our stakeholders, including consumers, employees and institutional investors, on corporate social responsibility matters, which we refer to as CSR, associated with environmental, social and governance issues and sustainability practices.

Although we have disclosed our corporate social responsibility strategy and increased focus on these issues, there can be no assurance that our stakeholders will agree with our strategy or that we will be successful in achieving our goals.

If our CSR practices do not meet investor or other industry stakeholder expectations and standards, which continue to evolve, our brands, reputation and customer and employee retention may be negatively impacted.

It is possible that stakeholders may not be satisfied with our CSR practices or the speed of adoption.

We could also incur additional costs and require additional resources to monitor, report and comply with our CSR practices.

In addition, our failure, or perceived failure, to meet the standards included in any sustainability disclosure could negatively impact our reputation, employee retention and the willingness of our customers and suppliers to do business with us.

Our processes and controls for reporting CSR and sustainability matters across our operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting related metrics, including related disclosures that may be required by the SEC, European and other regulators., Such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

New government regulations could also result in new or more stringent forms of oversight and expanded mandatory and voluntary reporting, diligence, and disclosure.

Failure to comply with governmental regulations, implement our strategy or achieve our goals could damage our reputation, causing our investors or consumers to lose confidence in us and our brands, and negatively impact our operations.

The price of our common stock has fluctuated significantly and could continue to fluctuate significantly.

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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

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.

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

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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.

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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.

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.

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.

As of January 31, 2025, we were recorded a $7.4 million charge to earnings in our financial statements as our Sonia Rykiel trademark was determined to be fully impaired as a result of the performance of the brand.

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 our results of operations and the market price of our securities.

The focus by stakeholders on corporate responsibility issues, including those associated with environmental, social and governance issues, as well as matters of significance related to sustainability, could result in additional costs or risks and adversely impact our reputation.

There is a focus from our stakeholders, including consumers, employees and institutional investors, on corporate social responsibility matters, which we refer to as CSR, associated with environmental, social and governance issues and sustainability practices.

It is possible that stakeholders may not be satisfied with our CSR practices or the speed of adoption.

We could also incur additional costs and require additional resources to monitor, report and comply with our CSR practices.

Such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

New government regulations could also result in new or more stringent forms of oversight and expanded mandatory and voluntary reporting, diligence, and disclosure.

Failure to comply with governmental regulations, implement our strategy or achieve our goals could result in penalties and/or damage our reputation, causing our investors or consumers to lose confidence in us and our brands, and negatively impact our operations.

Risks Related to Our Indebtedness

We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business.

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.

Our indebtedness could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business.

In fiscal 2025, we amended and restated our ABL Credit Agreement that provides for borrowings of up to $700.0 million, subject to borrowing base availability.

In fiscal 2025, we used cash on hand and borrowings from our revolving credit facility to voluntarily redeem the entire $400.0 million principal amount of our Senior Secured Notes.

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.

Any debt we incur in the future could limit our ability to satisfy our obligations, limit our ability to operate our business and impair our competitive position.

For example, it could:

● make it more difficult for us to satisfy our obligations under the Senior Secured Notes and the ABL Credit Agreement;

● make it more difficult for us to satisfy our obligations under the ABL Credit Agreement;

● increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings are and will continue to be at variable rates of interest;

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● increase our cost of borrowing.

Despite our substantial indebtedness, we may still be able to incur significantly more debt.

This could intensify the risks described above.

We and our subsidiaries may be able to incur substantial indebtedness in the future.

Although the ABL Credit Agreement and the indenture that governs the Senior Secured Notes contain restrictions on our and our subsidiaries’ ability to incur additional indebtedness, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial.

The covenants under any future debt instruments could also allow us to incur a significant amount of additional indebtedness.

In addition to any amounts that might be available to us for borrowing under the ABL Credit Agreement, subject to certain conditions, we will have the right to request an increase of aggregate commitments under the ABL Credit Agreement by an aggregate amount of up to $100.0 million by obtaining additional commitments either from one or more of the lenders under the ABL Credit Agreement or other lending institutions.

The more leveraged we become, the more we will be exposed to certain risks described above under “—We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business.”

The ABL Credit Agreement and the indenture that governs the Senior Secured Notes impose significant operating and financial restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long term interests and may limit our ability to make payments under the Notes or the ABL Credit Agreement or satisfy our other obligations.

The ABL Credit Agreement and the indenture that governs the Senior Secured Notes impose significant operating and financial restrictions on us.

The ABL Credit Agreement imposes significant operating and financial restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long term interests and may limit our ability to make payments under the ABL Credit Agreement or satisfy our other obligations.

The ABL Credit Agreement imposes significant operating and financial restrictions on us.

These restrictions limit our ability, among other things, to:

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● unable to compete effectively or to take advantage of new business opportunities.

A breach of the covenants under the indenture or the ABL Credit Agreement could result in an event of default under the applicable indebtedness.

A breach of the covenants under the ABL Credit Agreement could result in an event of default under the applicable indebtedness.

Such a default, if not cured or waived, may allow creditors to accelerate the related debt and may result in the acceleration of any other debt that is subject to an applicable cross-acceleration or cross-default provision.

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Furthermore, if we were unable to repay the amounts due and payable under the ABL Credit Agreement, those lenders could proceed against the collateral securing such indebtedness.

In the event our lenders or holders of the Senior Secured Notes accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

Our ability to continue to have the necessary liquidity to operate our business may be adversely impacted by a number of factors, including uncertain conditions in the credit and financial markets, which could limit the availability and increase the cost of financing.

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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.

Interest rates increased in fiscal 2024 and began to decrease in fiscal 2025.

It is unclear whether the Federal Reserve will increase, reduce or maintain the current interest rates in fiscal 2026.

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

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Should such restrictions on our credit facilities and these factors occur, they could have a material adverse effect on our business and results of operations.

We may not be able to generate sufficient cash to service all of our indebtedness, including under the Senior Secured Notes or the ABL Credit Agreement, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

We may not be able to generate sufficient cash to service all of our indebtedness, including the ABL Credit Agreement, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.

We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including under the Senior Secured Notes or the ABL Credit Agreement.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness.

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.

Any future refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations.

Additionally, the ABL Credit Agreement and the indenture that will govern the Senior Secured Notes will limit the use of the proceeds from any disposition of our assets.

As a result, the ABL Credit Agreement and the indenture may prevent us from using the proceeds from such dispositions to satisfy our debt service obligations.

Additionally, the ABL Credit Agreement will limit the use of the proceeds from any disposition of our assets.

As a result, the ABL Credit Agreement may prevent us from using the proceeds from such dispositions to satisfy our debt service obligations.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

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 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.

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

Our debt service obligations on our variable rate indebtedness have increased in the past, when the Federal Reserve raised interest rates several times in fiscal 2024 in response to concerns about inflation.

Our net income and cash flows, including cash available for servicing our indebtedness decreased due to the increase in our debt service obligations.

Assuming all revolving loans were fully drawn under the ABL Credit Agreement, each one percentage point change in interest rates would result in a $7.0 million change in annual cash interest expense under the ABL Credit Agreement.

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.

We may not be able to repurchase the Senior Secured Notes upon a change of control or pursuant to an asset sale offer.

Upon the occurrence of a change of control, as defined in the indenture that governs the Senior Secured Notes, the holders of the Notes will have the right to require us to offer to purchase all of the Notes then outstanding at a price equal to 101% of their principal amount plus accrued and unpaid interest.

In addition, our future indebtedness may require that such indebtedness be similarly repurchased upon a change of control.

In order to obtain sufficient funds to pay the purchase price of the outstanding Notes, we expect that we would have to refinance the Notes.

We may not be able to refinance the Notes on reasonable terms, if at all.

Our failure to offer to purchase all outstanding Notes or to purchase all validly tendered Notes would be an event of default under the indenture.

Such an event of default may cause the acceleration of our other debt.

Our other debt also may contain restrictions on repayment requirements with respect to specified events or transactions that constitute a change of control under the indenture.

In addition, in certain circumstances specified in the indenture, we will be required to commence an asset sale offer, as defined in the indenture, pursuant to which we will be obligated to purchase certain Notes at a price equal to 100% of their principal amount plus accrued and unpaid interest with the proceeds we receive from certain asset sales.

Our other debt may contain restrictions that would limit or prohibit us from completing any such asset sale offer.

In particular, the ABL Credit Agreement contains provisions that require us, upon the sale of certain assets, to apply all of the proceeds from such asset sale to the prepayment of amounts due under that Agreement.

The mandatory prepayment obligations under the ABL Credit Agreement will be effectively senior to our obligations to make an asset sale offer with respect to the Notes under the terms of the indenture.

Our credit rating and ability to access well-functioning capital markets are important to our ability to secure future debt financing on acceptable terms.

Our credit ratings may not reflect all risks associated with the Senior Secured Notes or our other indebtedness.

Our credit ratings may not reflect all risks associated with our indebtedness.

Our access to the debt markets and the terms of such access depend on multiple factors including the condition of the debt capital markets, our operating performance and our credit ratings.

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What changed 10-K

Item 1A. Risk Factors