What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-10 compared with 2025-03-11 · 238 added, 107 removed, 174 unchanged (66% of the section changed)

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We produce and distribute fragrance products through our European based operations primarily under license agreements with brand owners, and European based fragrance product sales represented approximately 68%, 65 % and 65 % of net sales for 2025 , 2024 and 2023 , respectively.

We have built a portfolio of prestige brands, which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Moncler, Montblanc, Rochas and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world.

Our exclusive and worldwide license for the production and distribution of Lacoste brand perfumes and cosmetics became effective in January 2024.

We have built a portfolio of prestige brands, which include Boucheron, Coach, Goutal, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Longchamp, Moncler, Montblanc, Rochas, Solférino and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world.

Through our United States based operations, we also produce and distribute fragrances and fragrance related products.

United States based operations represented 32%, 35 % and 35 % of net sales in 2025 , 2024 and 2023 , respectively.

These fragrance products are sold primarily pursuant to license or other agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan/DKNY, Emanual Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta, and Roberto Cavalli brands.

These fragrance products are sold primarily pursuant to license or other agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan/DKNY, Emanuel Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta, and Roberto Cavalli brands.

Substantially all of our prestige fragrance brands are licensed from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses.

With respect to the Company’s largest brands, we license the Jimmy Choo, Montblanc, Coach, GUESS, Donna Karan/DKNY, Lacoste and Ferragamo brand names.

With respect to the Company’s largest brands, we license the Jimmy Choo, Coach, Montblanc, GUESS, Lacoste, Donna Karan/DKNY and Ferragamo brand names.

This diversified portfolio of top brands represented 77 %, 76 % and 73 % of total sales in 2025 , 2024 , and 2023 , respectively.

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First, we grow by adding new brands to our portfolio, through new licenses or other arrangements, or outright acquisitions of brands.

Second, we grow through the introduction of new products and by supporting new and established products through advertising, merchandising and sampling, as well as by phasing out underperforming products, so we can devote greater resources to those products with greater potential.

Second, we grow through the introduction of new products and by supporting new and established products through advertising, merchandising and sampling, as well as phasing out underperforming products, so we can devote greater resources to those products with greater potential.

The economics of developing, producing, launching and supporting products influence our sales and operating performance each year.

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As part of our strategy, we plan to continue to make investments behind fast-growing markets and channels to grow market share.

Our reported net sales are impacted by changes in foreign currency exchange rates as greater than 50 % of net sales of our European based operations are denominated in U.S.

Our reported net sales are impacted by changes in foreign currency exchange rates as approximately 50 % of net sales of our European based operations are denominated in U.S.

dollars, while almost all costs of our European based operations are incurred in euro.

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We believe that the assumptions we have made in projecting future cash flows for the evaluations described above are reasonable.

In determining the useful life of our Lanvin brand names and trademarks, we applied the provisions of ASC topic 350-30-35- 3 .

The only factor that prevented us from determining that the Lanvin brand names and trademarks were indefinite lived intangible assets was Item c.

“Any legal, regulatory, or contractual provisions that may limit the useful life.” The existence of a repurchase option, originally in 2025 and amended to 2027, may limit the useful life of the Lanvin brand names and trademarks to the Company.

However, this limitation would only take effect if the repurchase option were to be exercised and the repurchase price was paid.

If the repurchase option is not exercised, then the Lanvin brand names and trademarks are expected to continue to contribute directly to the future cash flows of our Company and their useful life would be considered to be indefinite.

With respect to the application of ASC topic 350-30-35- 8 , the Lanvin brand names and trademarks would only have a finite life to our Company if the repurchase option were exercised, and in applying ASC topic 350-30-35- 8 , we assumed that the repurchase option is exercised.

When exercised, Lanvin has an obligation to pay the exercise price and the Company would be required to convey the Lanvin brand names and trademarks back to Lanvin.

The exercise price to be received (residual value) is well in excess of the carrying value of the Lanvin brand names and trademarks, therefore no amortization is required.

In evaluating whether the Lanvin brand names and trademarks are definite or indefinite-lived, we applied the provisions of ASC topic 350-30-35- 3 and concluded that the contraction provisions related to the repurchase option, originally exercisable in 2025 and amended to 2027, constrain the useful life of the Lanvin brand names and trademarks to the Company.

Thus, the asset cannot be considered indefinite-lived.

If exercised, Lanvin will have an obligation to pay the exercise price and the Company will be required to convey the Lanvin brand names and trademarks back to Lanvin.

Although considered finite-lived due to the contractual provisions, in accordance with ASC topic 350-30-35-8, the asset is not being amortized as the exercise price (residual value) of the intangible asset exceeds its carrying value.

If the repurchase option expires and is not exercised, then the Lanvin brand names and trademarks would be expected to contribute directly to the future cash flows of our Company and the useful life would be considered to be indefinite at such time .

Quantitative Analysis

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na - not applicable

Net sales in 2024 increased 10 % compared to 2023 .

At comparable foreign currency exchange rates, net sales also increased 10 % in 2024 , as compared to 2023 , of which 9 % is related to new brands.

The average dollar/euro exchange rate for 2024 was 1.08 , in line with 2023 .

For European based operations, sales grew by 10 % for the full year 2024 driven by the strong performance of Jimmy Choo, the addition of Lacoste, and solid execution of some of our smaller brands.

Our largest brand, Jimmy Choo, increased 2024 sales by 7% as compared to 2023 , attributable to the ongoing success of the I Want Choo franchise, while our second and third largest brands, Montblanc and Coach, were broadly flat against a high base period in 2023 where sales grew by 15 % and 25 %, respectively.

Lacoste, our newest brand for European based operations, exceeded the Company's expectations in its first year, achieving $ 85 million in net sales in 2024 thanks to the solid performance of the L.

12.12 lines and the successful launch of the Lacoste Original line.

There were also gains made by our mid-sized brands, including Karl Lagerfeld, Moncler, Van Cleef & Arpels and Rochas.

For United States based operations, sales grew by 12 % in 2024 , due to the continued robust performance of legacy scents.

GUESS, our largest United States based brand, increased 2024 sales by 13%, due to the initial success of our new pillar, GUESS Iconic (women), extensions for Uomo Intenso (men), as well as a variety of multi-scent collections including Amore , Elements , and Sexy Skin Metallique .

For Donna Karan/DKNY, net sales increased by 9 % in 2024 compared to 2023 driven by the success of Donna Karan's four -scent Cashmere Collection , and the blockbuster launch of DKNY 24 / 7 .

Additionally, the brand exceeded $ 100 million in sales for the year.

Sales of Ferragamo were flat against a high base period in 2023 where sales grew by 21 %.

Roberto Cavalli, our newest brand for United States based operations, achieved net sales of $ 31 million in its first year under the Company's management.

We are confident in our future as 2025 has many exciting developments for the Company, including expansion of e-commerce channels and a strong pipeline of new launches across our prestige portfolio.

Lacoste Original and Jimmy Choo I Want Choo Le Parfum will continue their expansion in 2025 .

New launches are also planned for a new men's blockbuster for GUESS, Iconic , a new Ferragamo blockbuster, Fiamma , an MCM collection in the first quarter and a new Roberto Cavalli blockbuster in the second quarter.

Additionally, we have a slate of brand extensions and flankers for Montblanc Explorer , Jimmy Choo Man, Coach Woman and Man, Lacoste L.12.12 and Original, MCM Diamond, Ferragamo Men , and two new scents for the Donna Karan Cashmere Collection .

The upcoming year will also stand out for the creation of the proprietary brand Solférino , a collection of 10 niche fragrances developed by star perfumers and intended for the collector's fragrance market.

While the pace of growth in the market is starting to normalize closer to historical levels following massive growth seen over the past few years, the power of our diverse brand portfolio, in combination with our agile operating model, should help us gain market share.

Net sales in 2025 increased 2 % compared to 2024 on a reported basis.

On an organic basis, sales were also up 2% as compared to 2024 with foreign exchange gains of 2% offsetting the negative impacts of the Dunhill exit in 2024.

The average dollar/euro exchange rate for 2025 was 1.13, compared to 1.08 in 2024 .

For European based operations, sales grew by 7% for the full year 2025 on a reported basis and 4% on an organic basis, driven by sustained momentum from brands.

The success of the Jimmy Choo I Want Choo

women's franchise has continued to strengthen since its launch in 2021,

particularly in the United States, and, when combined with the strong

performance of the Jimmy Choo Man franchise, helped drive 6% growth of the brand in 2025 as compared to 2024.

Coach fragrance sales increased 15% for the full year,

reinforcing its timeless, multi-generational appeal thanks to the strength of

the brand’s long-established women's and men's lines, which was further boosted

by two new successful launches in the first half of 2025.

Montblanc brand finished the year on a high note, reflecting the success of the

new Montblanc Explorer Extreme line in the second half of 2025 and the strength

of the Montblanc Legend line.

This strong fourth quarter performance in

combination with favorable foreign exchange helped to offset the sales softness

we experienced in the first part of 2025, resulting in full year 2025 sales

that were broadly in line with 2024.

Lacoste fragrance sales grew 28%, reaching

$108 million and exceeding our initial expectations of $100 million after just

the second full year under our management.

Our recently launched and

proprietary brand Solférino is off to a good start in its first six months of

We remain on track to expand this artisanal fragrance house into an

additional 50 doors in the first half of 2026.

For United States based operations, sales declined 6% in 2025 on a reported basis.

Excluding the phase-out of Dunhill fragrances that was

completed in August 2024, full year 2025 United States based operations sales declined 3%.

fourth quarter finished on a high note with sales increasing 4% on a reported

basis and 2% on an organic basis.

As expected, fragrance sales of GUESS and

Donna Karan/DKNY each returned to growth in the fourth quarter, posting sales

increases of 7% and 8%, respectively.

The GUESS Iconic and Donna Karan Cashmere Mist franchises performed well, supported by the brands’ enduring

global popularity, especially during the holiday season.

For the full year,

GUESS sales were essentially stable and Donna Karan/DKNY declined by 4%, due

largely to the unfavorable base period in 2024 that included the launch of DKNY 24/7 .

Cavalli fragrance sales rose 33% in both the 2025 fourth quarter and full year,

underscoring the substantial brand elevation achieved during its second full

year under our management.

We executed a series of blockbuster and innovative

launches during 2025, including Roberto Cavalli Serpentine and Just Cavalli

Give Me Magic .

MCM fragrance sales rose 40% in the fourth quarter and 17% for

the full year driven by the continued performance of the MCM Collection launched in

While macroeconomic headwinds linger in certain key

markets and we continue to see trade destocking, we are encouraged by our

performance in 2025 as we have been able to maintain market share.

cautiously optimistic about 2026, where we will continue to execute on our strategy

of launching extensions on all our key brands, while preparing for what we

expect will be a more favorable operating environment in 2027 and beyond, as we

roll out major innovation on our new licenses and on some of our larger brands,

as well as potentially securing new brands and licenses.

While the pace of

growth in the market is starting to normalize closer to historical levels

following massive growth seen over the past few years, the power of our diverse

brand portfolio, in combination with our agile operating model, should help us

gain market share.

As in the past, we hope to benefit from our strong financial position to potentially acquire one or more brands, either on a proprietary basis or as a licensee.

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Central and South America

Our largest market, North America, achieved sales growth of 6 % in 2024 compared to 2023 , followed by Western Europe and Asia where sales grew by 21 % and 3 % in 2024 , respectively, compared to 2023 .

Middle East and Africa, Eastern Europe, and Central and South America also achieved top line growth of 5 %, 14 % and 17 % in 2024 , respectively, compared to 2023 .

Additionally, our travel retail business is continuing to strengthen.

Most of our regions grew in 2025.

Our largest market,

North America, achieved sales growth of 3% in 2025 compared to 2024 driven by sustained

market growth and strong performance of the Jimmy Choo, Coach and Donna

Karan/DKNY brands.

Western Europe grew sales 5% behind the continued success of

Lacoste and Cavalli, and the Montblanc Explorer Extreme launch as well as a

favorable exchange rate.

Asia Pacific sales declined 4% driven by distribution challenges

in South Korea and India which were partially offset by growth in Australia,

China and Japan.

We have addressed the distribution challenges in Korea through

the establishment of a new subsidiary.

Despite strong results on Cavalli and

GUESS , the Middle East and Africa declined 4% primarily due to the run-off of

the Dunhill license which was completed in August 2024.

Excluding the impact of

Dunhill, net sales in Middle East and Africa increased 4%.

Eastern Europe grew

2% reflecting more normalized sales levels despite the ongoing conflict in the region, and

Central and South America achieved top line growth of 11% in 2025 compared to

2024 fueled by the strength of Lacoste, Coach and GUESS fragrances.

Gross Profit Margin

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The Company’s gross margin percentage was 63.6 % in 2025 as compared to 63.9 % in 2024 and 63.7 % in 2023 .

The slight increase in gross margin percentage was driven by segment mix and the impact of certain one -time expenses related to inventory in 2023 .

Overall, tariffs resulted in $12.8 million in higher

costs in 2025 or 0.9% of sales.

We have been able to partially mitigate these

impacts through favorable segment and brand mix which each contributed 0.2% of margin expansion as well as

pricing, leaving us with a gross margin erosion of 0.3% of sales.

For European based operations, gross profit margin as a percentage of net sales was 66.1 %, 67.0 % and 67.2 % in 2025 , 2024 and 2023 , respectively.

European based operations were negatively impacted by brand and channel mix.

These negative impacts were partially offset by the positive impact of certain one -time expenses related to inventory in 2023 .

The bulk of the 0.9% erosion in gross margin

was driven by tariffs which represented $9 million in 2025.

For United States based operations, gross profit margin was 58.2 %, 57.9 % and 57.0 % in 2025 , 2024 and 2023 , respectively.

The year-over-year increase was driven by favorable brand and channel mix.

The year-over-year increase was driven by

favorable brand mix driven by the Dunhill discontinuation, channel mix, and

pricing actions which more than offset the negative $4.2 million impact of tariffs.

We expect tariffs will continue to represent a

significant headwind in 2026 as we annualize these tariffs for the full year.

We continue to actively work on cost saving programs and tariff

mitigating strategies to help limit these impacts.

We target that these

programs, in combination with the full year impacts of the price increases we

took in August 2025, will enable us to maintain our gross margins flat in 2026.

Costs relating to purchase with purchase and gift with purchase promotions are reflected in cost of sales, and aggregated $54.6 million, $ 61.5 million and $ 52.3 million in 2025 , 2024 and 2023 , respectively, and represented 3.7%, 4.2 % and 4.0 % of net sales, respectively.

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The Company’s selling, general and administrative expenses as a percentage of nets sales were 45.5 %, 44.7 % and 44.6 % in 2025 , 2024 and 2023 , respectively.

The percentage of net sales remained flat from the prior year as increased amortization cost from the addition of the Lacoste license, which represented $ 6 million for the year, were offset due to promotional and advertising activities by our European based operations growing slower than sales growth in 2024.

The percentage of net sales increased by 0.8% from the prior year driven by higher promotional and advertising activities which represent 0.5% of the increase, as well as unfavorable segment mix.

For European based operations, selling, general and administrative expenses increased 7 % and 9 % in 2025 and 2024 , respectively, as compared to the corresponding prior year period, and represented 46.7 %, 46.3 % and 47.1 % of net sales in 2025 , 2024 and 2023 , respectively.

The increases in expenses are in line with fluctuations in sales for European operations, primarily from increases in employee related costs due to a one-time severance payment of $2.2 million, and higher royalty costs offset by promotion and advertising expenditures growing slower than sales.

Furthermore, promotion and advertising activities originally planned for the third and fourth quarter were phased into 2025 resulting in a decrease in selling, general and administrative expenses as a percentage of net sales in 2024 as compared to 2023 .

For United States based operations, selling, general and administrative expenses increased 14 % and 35 % in 2024 and 2023 , respectively, as compared to the corresponding prior year period, and represented 40.5 %, 39.7 % and 39.1 % of net sales in 2024 , 2023 and 2022 , respectively.

The increases in selling, general and administrative expenses as a percentage of net sales were largely driven by continued investment in infrastructure and employee headcount to support the growth of the business as well as increased promotional and advertising spending.

The increases in selling, general and administrative expenses stem from a combination of higher promotion and advertising expenditures and the increased costs were broadly in line with fluctuations in sales on other selling, general and administrative cost buckets.

For United States based operations, selling, general and administrative expenses decreased 2 % in 2025 after increasing 14 % in 2024 , as compared to the corresponding prior year period, and represented 42.0 %, 40.5 % and 39.7 % of net sales in 2025 , 2024 and 2023 , respectively.

While we endeavored to generate efficiencies,

and were ultimately able to reduce costs overall, the increases in selling,

general and administrative expenses as a percentage of net sales

were largely driven by lower sales in 2025 with the discontinuation of

Dunhill in 2024, as we protected promotion and advertising investments and made

the choice not to reduce the infrastructure and employee headcount in light of

new licenses which will be joining our portfolio in future years.

Promotion and advertising included in selling, general and administrative expenses aggregated $ 294.7 million, $ 280.5 million and $ 261.3 million in 2025 , 2024 and 2023 , respectively.

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Promotion and advertising are integral parts of our industry, and we continue to invest heavily to support new product launches and to build brand awareness.

We believe that our promotion and advertising efforts have had a beneficial effect on sales.

Additionally, as 2024 saw a lighter innovation program than in prior years, the Company focused on increasing promotional and advertising spending to support the continued success of our existing brands and to support the initial launches of our new brands, Lacoste and Roberto Cavalli.

We also continue to develop and implement omnichannel concepts and compelling content to deliver an integrated consumer experience.

As noted above, some promotion and advertising expenses were phased into 2025 for European based operations in order to further strengthen our first half of 2025.

Long-term, we continue to anticipate that on a full year basis, promotion and advertising expenditures should aggregate approximately 21 % of net sales.

We believe that our promotion and advertising

efforts have had a beneficial effect on sales.

Additionally, as 2025 saw a

lighter innovation program than in prior years, the Company focused on

increasing promotional and advertising spending to protect sell-out and support

the continued success of our existing brands and fuel our new brands, Lacoste

and Roberto Cavalli.

We also invested disproportionally in the launch and brand building of our proprietary brand,

Long-term, we continue to anticipate that on a full

year basis, promotion and advertising expenditures should aggregate

approximately 21% of net sales.

In 2026, we expect we will continue to make

progress towards this goal as we ramp up investments to support the launches of

Goutal in 2026 and prepare for the launches of the new fragrances under our Longchamps license and Off-White trademark in 2027.

Royalty expense included in selling, general and administrative expenses aggregated $ 121.7 million, $ 117.8 million and $ 103.8 million in 2025 , 2024 and 2023 , respectively.

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The Company reviews intangible assets with indefinite lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

There was an impairment charge for trademarks with indefinite useful lives of $ 4.0 million and $ 6.8 million in 2024 and 2022 , respectively, relating to our Rochas fashion business and an impairment charge for trademarks with indefinite useful lives of $ 0.9 million in 2022 relating to our Intimate trademark.

There was no impairment charge for trademarks with indefinite useful lives in 2023.

There was an impairment charge for trademarks with indefinite useful lives of $4.0 million in 2024 , relating to our Rochas fashion business.

There were no impairment charges for trademarks with indefinite useful lives in 2025 and 2023.

Income from Operations

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Other Income and Expenses

Overall, other income and expense was a loss of $ 6.4 million, $ 1.8 million, and $ 0.1 million in 2024 , 2023 , and 2022 , respectively.

The main drivers of the change between 2024 and 2023 are discussed in more detail below.

These include an increase in interest expense on borrowings of $ 0.4 million, a gain on foreign currency of $ 0.5 million, a gain on interest income related to cash and cash equivalents and short-term investments of $ 0.5 million, and losses on marketable securities of $ 2.1 million of which $1.5 million is unrealized.

Additionally, there was a one -time gain of $ 3.1 million recognized in 2023 related to the sale of marketable securities.

Interest expense is primarily related to the financing of brand and licensing acquisitions and the financing of the headquarters of Interparfums SA.

The increase in interest expense in 2024 is related to increased borrowings during the year.

In December 2022 , to finance the acquisition of the Lacoste trademark, the Company entered into a $ 51.9 million (€ 50 million) four -year loan agreement.

The loan agreement bears interest at Euribor- 1 month rates plus a margin of 0.825 %.

This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2 % per annum.

Additionally, in April 2021, we completed the acquisition of the headquarters of Interparfums SA.

The acquisition was financed by a 10 -year approximately $ 124.7 million (€ 120 million) bank loan which bears interest at one -month Euribor plus 0.75 %.

Approximately $ 83.1 million (€ 80 million) of the variable rate debt was swapped for fixed interest rate debt with a maximum interest rate of 2 % per annum.

The swap effectively exchanges the variable interest rate to a fixed rate of approximately 1.1 %.

Additionally in July 2024, the Company entered into a $41.6 million (€ 40 million) three -year loan agreement that bears a fixed interest rate of 4.03 %.

The loan was used to improve our short-term cash position.

Long-term debt including current maturities aggregated $ 157.3 million, $ 157.5 million and $ 180.0 million as of December 31, 2024 , 2023 and 2022 , respectively.

We enter into foreign currency forward exchange contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency.

Greater than 50 % of net sales of our European based operations are denominated in U.S.

Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated income statements.

Such gains and losses were immaterial in each 2024 , 2023 , and 2022 .

Interest and investment income represents interest earned on cash and cash equivalents and short-term investments and realized and unrealized gains and losses on marketable securities.

Interest income was $ 4.4 million in 2024 compared to $ 3.9 million in 2023 .

As of December 31, 2024 , short-term investments also include approximately $ 7.7 million of marketable equity securities of other companies in the luxury goods sector.

In the first quarter of 2023 , the Company sold marketable securities which generated a gain of $ 3.1 million.

The Company purchased additional marketable securities throughout 2023 and 2024 , resulting in an losses of $ 2.1 million during 2024 , of which $1.5 million was unrealized.

Overall, other income and expense was a gain of $1.0

million in 2025 as compared to losses of $6.4 million, and

$1.8 million in 2024, and 2023, respectively.

The main drivers of the

change between 2025 and 2024 are discussed in more detail below.

These include a

one-time gain of $7.6 million related to a debt extinguishment, a hurt on

foreign currency of $3.7 million, a gain on interest income related to

cash and cash equivalents and short-term investments of $1.2 million, and a

reduction in interest expense on borrowings of $0.7 million.

Interest expense is primarily related to the financing

of brand and licensing acquisitions and the financing of the headquarters of

Interparfums SA.

The decrease in interest expense in 2025 is related to decreases in interest rates in 2025.

In December 2022, to finance the

acquisition of the Lacoste trademark, the Company entered into a $58.8 million

(€50 million) four-year loan agreement.

The loan agreement bears interest at

Euribor-1 month rates plus a margin of 0.825%.

This variable rate debt was

swapped for variable interest rate debt with a maximum rate of 2% per annum.

Additionally, in April 2021, we completed the acquisition of the headquarters

of Interparfums SA.

The acquisition was financed by a 10-year approximately

$141 million (€120 million) bank loan which bears interest at one-month

Euribor plus 0.75%.

Approximately $94 million (€80 million) of the variable

rate debt was swapped for fixed interest rate debt with a maximum interest rate

of 2% per annum.

The swap effectively exchanges the variable interest rate to a

fixed rate of approximately 1.1%.

In July 2024, the Company

entered into a $47 million (€40 million) three-year loan agreement that bears

a fixed interest rate of 4.03%.

Additionally in June 2025, the Company entered into a $23.5 million (€20 million) three-year loan agreement that bears a fixed interest rate of 3.0% and into a $35.3 million (€30 million) three-year loan agreement which bears interest at one-month Euribor plus 0.88%.

The three most recent loans were used to improve our short-term cash

Long-term debt including current maturities aggregated $176.0 million,

$157.3 million and $157.5 million as of December 31, 2025, 2024 and 2023,

respectively.

We enter into foreign currency forward exchange

contracts to manage exposure related to receivables from unaffiliated third

parties denominated in a foreign currency and occasionally to manage risks

related to future sales expected to be denominated in a foreign currency.

Approximately 50% of net sales of our European based operations are

denominated in U.S.

Gains and losses in derivatives designated as

hedges are accumulated in other comprehensive income and gains and losses in

derivatives not designated as hedges are included in (gain) loss on foreign

currency on the accompanying consolidated income statements.

Such gains and

losses were immaterial in each 2025, 2024, and 2023.

Interest and investment income represents interest

earned on cash and cash equivalents and short-term investments and realized and

unrealized gains and losses on marketable securities.

Interest income was

$5.8 million in 2025 compared to $4.6 million in 2024.

In December 2025, the Company entered into an

amendment with a Licensor that modifies some of the Company's obligations relative to an existing debt.

A gain of $7.6

million was recorded within other income and expense related to this debt

extinguishment.

Our consolidated effective tax rate was 23.3%, 24.2 % and 24.8 % in 2025 , 2024 and 2023 , respectively.

The effective tax rate for European based operations was 24.2%, 25.8 % and 27.3 % in 2025 , 2024 and 2023 , respectively.

Our effective tax rate in 2023 differs from the 25 % statutory rate due to a one -time tax assessment of € 2.8 million ($ 3.1 million) included in tax expense as the result of a tax audit conducted for the 2020 and 2021 tax years.

The lower effective tax rate in 2025 compared to 2024 resulted from a $3 million

favorable outcome in 2025 to our mutual agreement procedure between the French and

United States tax authorities in which we were able to reclaim the tax

assessment paid in France in 2023.

The gain was offset by a $1 million one-time

tax assessment in 2025 included in the tax expense as a result of a tax audit conducted

for the 2022 and 2023 tax years.

Our higher effective tax rate in 2023 was driven by a one-time tax assessment of € 2.8 million ($3.1 million)

included in tax expense as the result of a tax audit conducted for the 2020 and

2021 tax years, and which was recovered in 2025 as discussed above.

The effective tax rate for United States based operations was 21.5%, 20.4 % and 19.3 % in 2025 , 2024 and 2023 , respectively.

Our effective tax rate differs from the 21 % statutory rate in the United States as it is a blended rate across multiple jurisdictions, and takes into account benefits received from the exercise of stock options as well as deductions we are allowed for a portion of our foreign derived intangible income, slightly offset by state and local taxes.

Additionally, in the third quarter of 2022 , our United States based operations recognized a one -time tax benefit of $ 2.5 million associated with the 2021 Salvatore Ferragamo acquisition.

At the time of the acquisition, we had not recognized a deferred tax benefit as there were uncertainties concerning its potential recoverability;

however, as of September 30, 2022, recoverability was deemed likely.

Other than as discussed above, we did not experience any significant changes in tax rates, and none were expected in the jurisdictions where we operate.

Our effective tax rate differs from the 21% statutory

rate in the United States as it is a blended rate across multiple

jurisdictions, and takes into account benefits received from the exercise of

stock options, deductions we are allowed for a portion of our foreign

derived intangible income, and by state and local taxes.

Other than as discussed above, we did not experience any

significant changes in tax rates, and none were expected in the jurisdictions

where we operate.

The Company estimated the effect of its foreign derived intangible income (“FDII”) and recorded a tax benefit of $2.2 million, $ 2.4 million and $ 2.4 million as of December 31, 2025 , 2024 and 2023 , respectively.

7 unchanged sentences

Net income attributable to Interparfums, Inc.

was $ 164.4 million, $ 152.7 million and $ 120.9 million in 2024 , 2023 and 2022 , respectively.

steadily increased, and was $ 168.4 million, $ 164.4 million and $ 152.7 million in 2025 , 2024 and 2023 , respectively.

Net income attributable to European based operations was $ 143.9 million, $ 140.1 million and $ 124.0 million in 2025 , 2024 and 2023 , respectively, while net income attributable to United States based operations was $ 68.8 million, $ 68.9 million and $ 63.8 million in 2025 , 2024 and 2023 , respectively.

The significant fluctuations in net income for both European and United States based operations are directly related to the previous discussions relating to changes in sales, gross profit margins, selling, general and administrative expenses.

The noncontrolling interest arises from our 72 % owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28 % of Interparfums SA shares trade on the Euronext.

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The Company hopes to continue to benefit from its strong financial position to potentially acquire one or more brands, either on a proprietary basis or as a licensee.

In December 2024, our 72% owned French subsidiary, Interparfums SA, obtained all Off-White brand names and registered trademarks for Class 3 fragrance and cosmetic products, subject to an existing license that expires on December 31, 2025, when Interparfums SA will begin commercial use of the fragrance brands.

In January 2026, we entered into long-term global licensing agreements for the creation, development and distribution of fragrances and fragrance related products under the David Beckham and Nautica brands, effective April 1, 2028 and January 1, 2030, respectively.

In July 2025, our 72% owned French subsidiary, Interparfums SA, signed an exclusive fragrance license agreement with Longchamp running through December 31, 2036.

Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry.

The first launch is expected in 2027.

In June 2025, our 72 % owned French subsidiary, Interparfums SA, acquired all intellectual property rights relating to Maison Goutal held by Amorepacific Europe, which is operating the Goutal brand under an existing license agreement that expired on December 31, 2025 , when Interparfums SA began commercial use of the fragrance brand.

Additionally, in June 2025, we renewed the Coach license agreement for an additional five -year term, extending the license through June 30, 2031.

In December 2024, our 72% owned French subsidiary, Interparfums SA, acquired all Off-White brand names and registered trademarks for Class 3 fragrance and cosmetic products, subject to an existing license that expired on December 31, 2025, when Interparfums SA began commercial use of the fragrance brands.

Additionally in December 2024, we renewed the Van Cleef & Arpels license agreement for an additional nine-year term, beginning January 1, 2025.

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This new license took effect, and products started to ship in January 2024.

In September 2021, we entered into a long-term global licensing agreement for the creation, development and distribution of fragrances and fragrance related products under the Donna Karan and DKNY brands.

Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry.

With this agreement, we gained several well-established and valuable fragrance franchises, most notably Donna Karan Cashmere Mist and DKNY Be Delicious , as well as a significant loyal consumer base around the world.

The exclusive license became effective on July 1, 2022.

Cash provided by operating activities aggregated $ 214.9 million, $ 187.6 million, and $ 105.8 million in 2025 , 2024 and 2023 , respectively.

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While days sales outstanding was 73 days, up from 66 days and 62 days in 2024 and 2023 , respectively, driven by changes in our channel mix, we are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable.

From a cash flow perspective, inventory levels are up 5% in support of our overall sales growth.

Inventory days on hand increased slightly to 259 days in 2024 , as compared to 252 days in 2023 , and 227 days in 2022 , as we have built up inventory related to the inclusion of the Lacoste and Roberto Cavalli licenses, which require large inventory needs to support the launches of these brands.

Additionally, as we are working to manage down our inventory levels, we have seen increased conversion of raw materials into finished goods resulting in finished goods making up 63% of our inventory levels at December 31, 2024 as compared to 57% and 49% at December 31, 2023 and 2022, respectively.

From a cash flow perspective, inventory levels are down 15% and inventory days on hand decreased to 244 days in 2025 , as compared to 259 days in 2024 , and 252 days in 2023 .

These decreases are a direct result of the Company's efforts to manage down our inventory levels.

We have seen increased conversion of raw materials into finished goods in recent years resulting in finished goods making up 63% of our inventory levels at both December 31, 2025 and 2024 as compared to 57% at December 31, 2023.

Due to past supply constraints, we had strived to carry more inventory overall, source the same components from multiple suppliers and when possible, manufacture products closer to where they are sold.

These constraints have largely abated, and we are gradually reversing some of these previous interventions.

We are beginning to see the impacts of these recent inventory management efforts and will continue to work to optimize inventory levels.

We are seeing the impacts of these recent inventory management efforts and will continue to work to optimize inventory levels.

Cash flows used in investing activities in 2025 reflect the purchases and sales of short-term investments.

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At December 31, 2025 , approximately $2.4 million of certificates of deposit contain penalties where we would forfeit a portion of the interest earned in the event of early withdrawal.

Further, in December 2024 , the Company paid approximately $16 million for the purchase of the Off-White Trademark, with an additional $2 million payable over two years.

In March 2025, the Company paid approximately $19.7 million for the purchase of the Goutal trademark.

Additionally, during the second and third quarters the Company purchased approximately $18.2 million of additional property in Paris attached to its French headquarters.

Our business is not capital intensive as we do not own any manufacturing facilities.

On a full year basis, we typically spend approximately $5 million on tools and molds, depending on our new product development calendar.

On a full year basis, spend on tools and molds fluctuates depending on our new product development calendar and is typically not material.

Capital expenditures also include amounts for office fixtures, computer equipment and industrial equipment needed at our distribution centers.

Cash flows used in financing activities in 2024 reflect issuances and repayment of debt and payment of dividends to stockholders.

In July 2024, the Company entered into a $41.6 million (€ 40 million) three -year loan agreement that bears a fixed interest rate of 4.03 %.

Additionally, i n December 2022 , to finance Interparfums SA’s acquisition of the Lacoste trademark, Interparfums SA entered into an approximately $51.9 million (€ 50 million) four -year loan agreement.

The loan agreement bears interest at Euribor- 1 month rates plus a margin of 0.825 %.

This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2 % per annum.

Cash flows used in financing activities in 2025 predominately reflect issuances and repayment of debt and payment of dividends to stockholders.

In June 2025, the Company entered into a $23.5 million (€20 million) three-year loan agreement that bears a fixed interest rate of 3.0% and into a $35.3 million (€30 million) three-year loan agreement that bears a variable interest rate of Euribor 1-month plus a margin of 0.88%.

Additionally, i n July 2024, the Company entered into a $47 million (€ 40 million) three -year loan agreement that bears a fixed interest rate of 4.03 %.

Our short-term financing requirements are expected to be met by available cash on hand at December 31, 2025 , and by short-term credit lines provided by domestic and foreign banks.

The principal credit facilities for 2024 consist of a $70 million unsecured revolving lines of credit provided by a consortium of domestic commercial banks and approximately $8.3 million in credit lines provided by a consortium of international financial institutions.

The principal credit facilities for 2025 consist of $45 million unsecured revolving lines of credit provided by a consortium of domestic commercial banks and approximately $9.4 million in credit lines provided by a consortium of international financial institutions.

Balances due from short-term borrowings totaled $ 9.4 million and $ 8.3 million as of December 31, 2025 and 2024 , respectively.

In February 2022, our Board of Directors authorized an annual dividend of $ 2.00 per share, payable quarterly.

In February 2023, our Board of Directors authorized an increase in the annual dividend to $ 2.50 per share and in February 2024, our Board of Directors increased the annual dividend to $ 3.00 per share.

In February 2025, our Board of Directors further increased the annual dividend to $3.20 per share.

In February 2023, our Board of Directors authorized an annual dividend of $ 2.50 per share and in February 2024, our Board of Directors increased the annual dividend to $ 3.00 per share.

In February 2025, our Board of Directors further increased the annual dividend to $3.20 per share, and in 2026 our Board of Directors maintained the annual dividend at $3.20 per share.

The next quarterly cash dividend of $ 0.8 0 per share is payable on March 31, 2026 to shareholders of record on March 16, 2026.

1 unchanged sentence

Inflation rates in the U.S.

and foreign countries in which we operate did not have a significant impact on operating results for the year ended December 31, 2024 .

and foreign countries in which we operate did not have a significant impact on operating results for the year ended December 31, 2025 , however, we have already started to see the impacts of tariffs on our cost structure and have adjusted our pricing accordingly.

As such, we anticipate potential inflationary impacts in the first quarter of 2026 and beyond as our suppliers potentially adjust their pricing as well.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis