ReGen III Annual Report 2022

Plain-text annual report

2 02 2 A n n u a l Re p o r t & Fo rm 1 0 - K 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 3 5/1/23 1:56 PM 4 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 4 5/1/23 1:57 PM A global leader in fashion “ We have grown and evolved signiﬁcantly over the past 50 years because we lead with an entrepreneurial approach and value relationships. This proven formula will drive G-III as we enter the next phase of our business.” — Morris Goldfarb, Chairman and CEO 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 3 33 5/1/23 8:13 AM TEAM SPORTS 4 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 4 5/1/23 8:13 AM Who we are We are global experts in design, sourcing, manufacturing, distribution, and marketing, bringing excitement and conﬁdence to customers through the fashion we create. 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 5 5 5/2/23 11:34 AM Purpose Bring excitement to fashion by unlocking the potential of our brands Strategic Priorities Foundation for Success To deliver long-term proﬁtability: That powers our priorities: · Drive our power brands across categories Further expand our portfolio through ownership of brands and their licensing opportunities · · · High-performing, forward- thinking team and experienced senior leadership · Merchant expertise in product development Extend our reach by developing our European based brand portfolio · Dominance across a broad range of product categories · Maximize omni-channel opportunities by leveraging data · Signiﬁcantly developed sourcing and supply chain infrastructure · Continue to scale our private label business · Diversiﬁed distribution network to reach customers Values Our world-class team is: · Accountable for our results Passionate about our product · Entrepreneurial in our thinking Proud of our partnerships · Agile in our execution · · 6 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 6 5/1/23 10:49 AM Brands We own and license a diverse portfolio of more than 30 globally recognized heritage and emerging fashion brands and enable them to reach their potential at scale. G-III’s success is fueled by our expertise and ability to leverage our highly developed ecosystem throughout the product life cycle. We have built a best-in-class reputation for our product expertise in both women’s and men’s fashion, across a diverse range of apparel and accessories. Our strengths in designing, sourcing, manufacturing and marketing have enabled G-III to unlock the value of our global brands and be the partner of choice for some of the largest brands and retailers. Owned brands include: Licensed brands include: 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 7 77 5/1/23 8:13 AM 8 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 8 5/2/23 11:20 AM 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 9 9 5/2/23 11:31 AM 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 10 10 5/1/23 8:14 AM 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 11 11 5/2/23 8:15 AM 12 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 12 5/2/23 11:22 AM 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 13 13 5/2/23 11:25 AM 14 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 14 5/1/23 8:15 AM Dear Shareholders, Fiscal 2023 brought about exciting changes to G-III as well as some challenges for both our industry and the Company. In the ﬁrst half of the year, we increased our ownership of the Karl Lagerfeld brand by acquiring the full brand, which furthered our strategic priorities, especially ownership of brands within our portfolio and expanding our global presence. We achieved solid growth with our existing key brands and made strong progress on our omni-channel strategy. We also solidiﬁed two new growth opportunities, which include the re-positioning and expansion of Donna Karan and a new long-term license for the Nautica brand in North America. At our core, G-III embodies an entrepreneurial mindset. Our team’s expertise and ability to move quickly has enabled our success. Once thought of solely as a leather coat business, we have a proven track record of evolving over the years to drive our business. Today, we have become a highly diversiﬁed company and I am extremely proud of the G-III we have built. We ended the year in a strong ﬁnancial position with approximately $750 million in cash and availability. This is after we utilized $260 million in cash for several important investments, including $200 million to complete the Karl Lagerfeld acquisition, $27 million for stock repurchases and $25 million for an investment in a digital opportunity. Our balance sheet strength provides us the ﬂexibility to continue to invest in the future growth of our owned brands and consider acquisitions of new businesses. Net sales for the full ﬁscal year 2023 were $3.23 billion, up 17% from $2.77 billion in ﬁscal 2022. I appreciate what our world class team accomplished this year in the face of several challenges. The dynamic environment that started early in the year with the war in Ukraine and inﬂationary pressures that resulted in our retail partners’ becoming more conservative with orders. We also experienced unique supply chain disruptions which adversely impacted our inventory levels and associated costs. By the end of the year, we had taken actions to moderate our inventory levels and secure additional warehouse capacity allowing us to enter the new year in a better position. The team’s ability to recognize issues and act swiftly to mitigate challenges is precisely the entrepreneurial spirit we foster at G-III. This past year, as people went back to work, resumed socializing and returned to a more normal life, consumer demand shifted away from casual to dressier product. In anticipation of this shift, our teams moved quickly and rebalanced our mix back to these “pre-pandemic” categories and we were able to capture this demand. As customers returned to stores, we rebalanced our omni-channel strategy and redirected merchandise to the right channels to reach end consumers. Accordingly, we continued to grow our key brands, with an emphasis on our owned businesses. This growth can be seen across several categories including outerwear, dresses and suit separates. We have also built solid handbag, footwear and jeans divisions, which are quickly growing. We announced a signiﬁcant change to our licenses for Calvin Klein and Tommy Hilﬁger with staggered category expirations beginning in December 31, 2024 and continuing through December 31, 2027. This extended timeline allows us to strategically transition out of these licenses. While we do not expect signiﬁcant reductions in net sales, net income and cash generation over the next three years, we have been working to develop new growth opportunities, as I mentioned above, with the re-positioning and expansion of Donna Karan and a new long- term license for the Nautica brand in North America. Our owned brands represent $1.3 billion in net sales. With our recent Karl Lagerfeld acquisition, we added a key brand to our owned portfolio. These owned brands are critical to our business because we control the brand direction and they have higher margins than our licensed brands. DKNY and Karl Lagerfeld are experiencing signiﬁcant growth and we see even more opportunities ahead for these iconic brands. Their success gives us conﬁdence that our focus on our growth initiatives will yield strong results. We continue to build on our strong European platform for global growth through our Karl Lagerfeld acquisition and investments to fuel the acceleration of DKNY. Vilebrequin had the best year in its history as the brand continues to ﬁnd new and unique ways to target luxury consumers. I am very pleased with the progress we have made across our digital strategy, having grown the business by 15%, despite a year where industry sales were shifting more to in store shopping across all of retail. This was especially driven by our focus on pureplay partners, including Amazon, Zalando and Fanatics. We invested in our digital team, which drove this growth and believe that this is only the beginning. We have intensiﬁed our focus on our private label business. Our well-developed sourcing and supply chain infrastructure has allowed us to create a service offering for a variety of retailers. The division grew by 50% this year and many more opportunities exist. 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 15 1515 5/1/23 10:53 AM We value the contributions that come from a diverse range of backgrounds, which will better position us for the future. We continue to work towards increasing diversity among our associates and Board of Directors. This year we have also nominated Dr. Joyce F. Brown, Andrew Yaeger and Michael Shaffer to our Board and have added six new directors over the past ﬁve years. I am pleased that we continue to refresh our Board to bring in new perspectives, talent, diversity and ideas that will support our growth. I am genuinely grateful for all our employees whose talent, agility and ﬂexibility, during another dynamic year, have enabled us to navigate the challenging consumer and economic environment while strengthening our focus on our strategic growth initiatives as we look to enhance shareholder value. We have a strong foundation for success in place and I am conﬁdent in our team’s ability to drive our business forward and deliver for our shareholders. On behalf of the entire G-III organization, I would like to thank all our shareholders and stakeholders for their continued interest and support. Sincerely, Morris Goldfarb (“CSR”) agenda, which Throughout the year, we furthered our Corporate Social includes engaging Responsibility our people, protecting the environment and investing in our communities. In addition to our internal capabilities, we have been working with a number of third parties that are helping accelerate our progress. We joined the Sustainable Apparel Coalition (SAC) which works to reduce the social and environmental impact of apparel, footwear and textile production around the world. We engaged ORITAIN, a third-party that uses forensic technology to trace materials back to their ﬁber origins to mitigate sourcing risk. And, we hired a leading environmental consulting ﬁrm to help us develop a roadmap to achieving our goals. Our ongoing charitable initiatives include ﬁnancial support and the time of many of our associates to help organizations providing support to those in need. In addition, we supported the Ukrainian humanitarian crisis ﬁnancially and through in-kind donations of our products and have continued to sponsor scholarship funds to historically black college organizations. For more information, please see our CSR letter which will be posted to our Investor Relations site later this year. Looking ahead, we are excited about two of our recently announced product initiatives which include, re-positioning and expanding the Donna Karan brand aggressively beginning in Spring of 2024 and a long-term license for Nautica across a number of women’s categories and are already directing resources to those areas. These initiatives are the beginning of our replacement strategy as we transition out of the Calvin Klein and Tommy Hilﬁger brands. These new initiatives, along with strategies for our existing portfolio of brands and new opportunities that we are actively working on, provide a long runway of continued growth. Our team is excited about what is to come. At G-III, we have proven time and again over the years that we have the ability to quickly pivot to deliver results. We ended ﬁscal 2023 in a solid ﬁnancial position and made signiﬁcant progress implementing our strategic priorities. Looking ahead, we remain committed to these ﬁve key strategic priorities, which include: · Drive our power brands across categories · Further expand our portfolio through ownership of brands and their licensing opportunities · Extend our reach by developing our international opportunities · Maximize omni-channel opportunities by leveraging data · Continue to scale our private label business 16 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 16 5/1/23 10:56 AM FINANCIAL HIGHLIGHTS (000’s except per share and return on stockholders’ equity data) FISCAL YEAR ENDED JANUARY 31 2019 2020 2021 2022 2023 Net Sales $3,076,208 $3,160,464 $2,055,146 $2,766,538 $3,226,728 Net Income (Loss) $138,067 (1) $143,837 (2) $23,545( 3) $200,593 (4) $(133,061) (5) Diluted Net Income (Loss) per Share $2.75 (1) $2.94 (2) $0.48 (3) $4.05 (4) $(2.79) (5) Working Capital $673,107 $754,728 $942,038 $1,142,052 $1,073,431 Total Assets $2,208,058 $2,565,137 $2,436,386 $2,742,528 $2,712,405 Stockholders Equity $1,189,009 $1,290,672 $1,336,241 $1,519,912 $1,385,448 Return on Stockholders’ Equity 12.0% 11.6% 1.8% 14.0% (9.2)% Common Shares Outstanding [Excluding shares held in treasury]+ 48,709 48,010 48,377 47,916 46,716 (1) Includes (i) non-cash imputed interest expense related to note issued to seller (the “Seller Note”) as part of the consideration for the acquisition of Donna Karan International of $5.0 million and (ii) asset impairments primarily related to leasehold improvements and furniture and ﬁxtures at certain of our retail stores of $2.8 million. The aggregate effect of these expenses were equal to $0.11 per diluted share. (2) Includes (i) non-cash imputed interest expense related to the Seller Note of $5.4 million, (ii) asset impairments primarily related to leasehold improvements and furniture and ﬁxtures at certain of our retail stores, net of gain on lease terminations, of $19.4 million and (iii) a non-cash income tax gain of $6.7 million primarily from foreign tax rate changes. The aggregate effect of these exclusions was equal to $0.25 per diluted share. (3) The Company restructured its retail operations segment and has permanently closed the Wilsons Leather and G.H. Bass stores. Includes net losses from the Wilsons Leather and G.H. Bass store operations of $55.7 million, or $(1.14) per diluted share. The results reﬂect direct store operations including impairment charges, but do not include any allocated corporate overhead charges, shared administrative expenses or shared distribution expenses. The results for the current period also include the impact of the pandemic and the liquidation of the Wilsons Leather and G.H. Bass stores. These operating results for Wilsons Leather and G.H. Bass are presented solely to provide the historical operating results of the portion of the Company’s retail operations segment that was closed and are not intended to be used to develop expectations for future results of the Company or to indicate any future level of proﬁtability of the Company. (4) Includes (i) asset impairments and gain on lease terminations of $1.5 million, (ii) professional fee expenses related to the Karl Lagerfeld transaction of $2.1 million and (iii) non cash imputed interest expense related to the Seller Note of $6.4 million. The aggregate effect of these items were equal to $0.15 per diluted share. (5) Includes (i) gain in fair value of the Company’s minority ownership in Karl Lagerfeld that it held prior to the Company becoming the sole owner of the Karl Lagerfeld entities of $27.1 million, (ii) asset impairments and gain on lease terminations, including the goodwill write-down of $347.2 million, of $349.7 million, (iii) expenses related to the Karl Lagerfeld transaction that include incentive compensation, professional fees, amortization of inventory valuation adjustments and foreign currency losses of $13.9 million, (iv) non cash imputed interest expense related to the Seller Note of $6.9 million and (v) bonus accrual expense reversed due to the goodwill impairment recognized of $17.9 million. The aggregate effect of these items were equal to $5.64 per diluted share. 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 17 17 5/1/23 8:28 AM 18 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 18 5/1/23 8:15 AM UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ ☐ For the transition period from to Commission file number 0-18183 G-III APPAREL GROUP, LTD. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 512 Seventh Avenue, New York, New York (Address of principal executive offices) 41-1590959 (I.R.S. Employer Identification No.) 10018 (Zip Code) Title of each class Common Stock, $0.01 par value per share Name of each exchange on which registered The Nasdaq Stock Market Registrant’s telephone number, including area code: (212) 403-0500 Securities registered pursuant to Section 12(b) of the Act: Trading Symbol(s) GIII Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Non-accelerated filer ☐ Accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No ☒ As of July 31, 2022, the aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant (based on the last sale price for such shares as quoted by the Nasdaq Global Select Market) was approximately $1,075,741,184. The number of outstanding shares of the registrant’s Common Stock as of March 23, 2023 was 46,488,488. Documents incorporated by reference: Certain portions of the registrant’s definitive Proxy Statement relating to the registrant’s Annual Meeting of Stockholders to be held on or about June 8, 2023, to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934 with the Securities and Exchange Commission, are incorporated by reference into Part III of this Report. (This page intentionally left blank) SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS Various statements contained in this Annual Report on Form 10-K or incorporated by reference into this Annual Report on Form 10-K, in future filings by us with the Securities and Exchange Commission (the “SEC”), in our press releases and in oral statements made from time to time by us or on our behalf constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicated by words or phrases such as “anticipate,” “estimate,” “expect,” “will,” “project,” “we believe,” “is or remains optimistic,” “currently envisions,” “forecasts,” “goal” and similar words or phrases and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from the future results, performance or achievements expressed in or implied by such forward- looking statements. Forward-looking statements also include representations of our expectations or beliefs concerning future events that involve risks and uncertainties, including, but not limited to, those described in Part I, “Item 1A. Risk Factors.” SUMMARY OF RISKS AFFECTING OUR BUSINESS Our business is subject to numerous risks. The following summary highlights some of the risks you should consider with respect to our business and prospects. This summary is not complete and the risks summarized below are not the only risks we face. You should review and consider carefully the risks and uncertainties described in more detail in the “Risk Factors” section contained in Item 1A of this Annual Report on Form 10-K which includes a more complete discussion of the risks summarized below as well as a discussion of other risks related to our business and an investment in our common stock. • • • • • • • • • • • • • • • • • • • the failure to maintain our material license agreements could cause us to lose significant revenues and have a material adverse effect on our results of operations; unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the inability to renew the Calvin Klein and Tommy Hilfiger license agreements would cause a significant decrease in our net sales and have a material adverse effect on our results of operations; any adverse change in our relationship with PVH Corp. and its Calvin Klein or Tommy Hilfiger brands would have a material adverse effect on our results of operations; our dependence on the strategies and reputation of our licensors; risks relating to our wholesale operations including, among others, maintaining the image of our proprietary brands, business practices of our customers that could adversely affect us and retail customer concentration; risks relating to our retail operations segment; our ability to achieve operating enhancements and cost reductions from our retail operations; dependence on existing management; our ability to make strategic acquisitions and possible disruptions from acquisitions, including our recent acquisition of the remaining interest in Karl Lagerfeld; need for additional financing; seasonal nature of our business and effect of unseasonable or extreme weather on our business; possible adverse effects from disruptions to the worldwide supply chain; price, availability and quality of materials used in our products; the need to protect our trademarks and other intellectual property; risk that our licensees may not generate expected sales or maintain the value of our brands; the impact of the current economic and credit environment on us, our customers, suppliers and vendors, including without limitation, the effects of inflationary cost pressures and higher interest rates; effects of war, acts of terrorism, natural disasters or public health crises could adversely affect our business and results of operations, including the war in Ukraine; the global health crisis caused by the COVID-19 pandemic has had, and the current and uncertain future outlook of the outbreak will likely continue to have, adverse effects on our business, financial condition and results of operations; our dependence on foreign manufacturers; 1 • • • • • • • • • • • • • risks of expansion into foreign markets, conducting business internationally and exposures to foreign currencies; risks related to the adoption of a national security law in Hong Kong; the need to successfully upgrade, maintain and secure our information systems; increased exposure to consumer privacy, cybersecurity and fraud concerns, including as a result of the remote working environment; possible adverse effects of data security or privacy breaches; the impact on our business of the imposition of tariffs by the United States government and the escalation of trade tensions between countries; changes in tax legislation or exposure to additional tax liabilities could impact our business; the effect of regulations applicable to us as a U.S. public company; focus on corporate responsibility issues by stakeholders; potential effect on the price of our stock if actual results are worse than financial forecasts or if we are unable to provide financial forecasts; fluctuations in the price of our common stock; impairment of our goodwill, trademarks or other intangibles may require us to record charges against earnings; and risks related to our indebtedness. Any forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. A detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations is described in Part I of this Form 10-K under the heading “Risk Factors.” We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. WEBSITE ACCESS TO REPORTS Our website is www.g-iii.com. We make available, free of charge, on our website (under the heading “Investors”) our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. No information contained on our website is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. Information relating to our corporate governance, including copies of our Code of Ethics and Conduct, Audit, Compensation and Nominating and Corporate Governance Committee Charters, and other policies and guidelines, are available at our website under “Investors.” Paper copies of these filings and corporate governance documents are available to stockholders free of charge by written request to Investor Relations, G-III Apparel Group, Ltd., 512 Seventh Avenue, New York, New York 10018. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s website is http://www.sec.gov. 2 ITEM 1. BUSINESS. PART I Unless the context otherwise requires, “G-III,” “us,” “we” and “our” refer to G-III Apparel Group, Ltd. and its subsidiaries. References to fiscal years refer to the year ended or ending on January 31 of that year. For example, our fiscal year ended January 31, 2023 is referred to as “fiscal 2023.” G-III Apparel Group, Ltd. is a Delaware corporation that was formed in 1989. We and our predecessors have conducted our business since 1974. Overview We design, source and market an extensive range of apparel, including outerwear, dresses, sportswear, swimwear, women’s suits and women’s performance wear, as well as women’s handbags, footwear, small leather goods, cold weather accessories and luggage. G-III has a substantial portfolio of more than 30 licensed and proprietary brands, anchored by our global power brands: DKNY, Donna Karan, Karl Lagerfeld, Calvin Klein and Tommy Hilfiger. We are brand owners and licensees, and we distribute our products through multiple channels. Our own proprietary brands include DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc, Marc New York, Wilsons Leather and Sonia Rykiel. We sell products under an extensive portfolio of well-known licensed brands, including Calvin Klein, Tommy Hilfiger, Levi’s, Guess?, Kenneth Cole, Cole Haan, Vince Camuto and Dockers. Beginning in January 2024, we will also sell products under the Nautica brand. Through our team sports business, we have licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League and over 150 U.S. colleges and universities. We also source and sell products to major retailers under their private retail labels. Our products are sold through a cross section of leading retailers such as Macy’s, including its Bloomingdale’s division, Dillard’s, Hudson’s Bay Company, including its Saks Fifth Avenue division, Nordstrom, Kohl’s, TJX Companies, Ross Stores and Burlington. We also sell our products using digital channels through retail partners such as macys.com, nordstrom.com and dillards.com, each of which has a substantial online business. In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos and have made minority investments in two e-commerce retailers. We also distribute apparel and other products directly to consumers through our own DKNY, Karl Lagerfeld, Karl Lagerfeld Paris and Vilebrequin retail stores, as well as through our digital channels for the DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H. Bass, Andrew Marc, Wilsons Leather and Sonia Rykiel businesses. We operate in fashion markets that are intensely competitive. Our ability to continuously evaluate and respond to changing consumer demands and tastes, across multiple market segments, distribution channels and geographic areas is critical to our success. Although our portfolio of brands is aimed at diversifying our risks in this regard, misjudging shifts in consumer preferences could have a negative effect on our business. Our success in the future will depend on our ability to design products that are accepted in the marketplace, source the manufacture of our products on a competitive basis, and continue to diversify our product portfolio and the markets we serve. Segments We report based on two segments: wholesale operations and retail operations. Our wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, other than sales of product under the Karl Lagerfeld Paris brand from our retail stores and digital outlets. Wholesale revenues also include royalty revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, Sonia Rykiel, G.H. Bass and Andrew Marc. 3 Our retail operations segment consists primarily of direct sales to consumers through our company-operated stores and through digital channels. Our company-operated retail channels consist primarily of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, G.H. Bass, Andrew Marc and Wilsons Leather. Substantially all DKNY and Karl Lagerfeld Paris stores are operated as outlet stores. Recent Developments Calvin Klein and Tommy Hilfiger License Extensions In November 2022, we announced the extension of the licenses for Calvin Klein and Tommy Hilfiger products. The amendments to the license agreements for these products provide for staggered extensions by category that expire beginning December 31, 2024 and continuing through December 31, 2027. See the table in “Wholesale Operations- Licensed Products” below for information with respect to the new extension term, any potential renewal term or the existing current term for the Calvin Klein and Tommy Hilfiger license agreements. PVH Corp., the owner of these two brands, has indicated that it intends to produce these products itself once the license agreements expire. Unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the inability to renew the Calvin Klein and Tommy Hilfiger license agreements would cause a significant decrease in our net sales and have a material adverse effect on our results of operations. We continue to strategize near-term growth initiatives across our current owned and licensed brands including category, geographical and digital expansion. Additionally, we are directing resources toward new growth areas, including building our own brands, broadening our European business, developing new licensing opportunities and continuing to seek to acquire new businesses. Karl Lagerfeld Acquisition In May 2022, we acquired from a group of investors the remaining 81% in interests in the parent entity of the Karl Lagerfeld business that we did not already own, for an aggregate consideration of €202.0 million ($216.8 million) in cash, after taking into account certain adjustments. We funded the purchase price from cash on hand. See Note 15 – Karl Lagerfeld Acquisition in the accompanying notes to consolidated financial statements for more information. The addition of the Karl Lagerfeld fashion brand to the G-III portfolio of owned brands advances several of our strategic initiatives, including increasing the direct ownership of brands, capitalizing on their licensing opportunities and further diversifying our global presence. This acquisition represents a significant opportunity to expand our international growth by further developing our European-based brands, which also include Vilebrequin and Sonia Rykiel. We believe that Karl Lagerfeld’s existing digital channel presence could enable us to enhance our omni-channel business and further accelerate our digital initiatives. The influential legacy of the Karl Lagerfeld brand embodies a creative expression that aligns with our goal to provide innovative products for our customers. License Agreement with Nautica In March 2023, we announced the signing of a long-term license with Authentic Brands Group for the Nautica brand in North America. Since being acquired in 2018 by Authentic Brands Group, Nautica’s relevance has expanded globally, and it has become one of their marquee brands. Celebrating its 40-year anniversary, Nautica is available in approximately 1,300 freestanding stores and shop-in-shops globally, along with a strong digital presence across more than 30 countries. We will produce across a number of categories starting with a full women’s jeanswear collection and then expanding in a phased approach into additional categories including sportswear, suit separates and dresses. The new five-year license agreement, effective beginning in January 2024, includes three extensions, for five years each. First deliveries are expected to hit the floor in January 2024. The product is expected to be distributed in better department stores, digital channels and Nautica’s stores and website in North America and franchised stores globally. We believe that significant opportunity 4 exists in the better women’s apparel space in categories where we have strong expertise. The Nautica brand joins our portfolio of some of the largest American brands in the world. Repositioning and Expansion of Donna Karan We acquired the DKNY and Donna Karan brands, two of the most iconic American fashion brands, in December 2016. We initially repositioned and relaunched DKNY and have successfully grown the brand to approximately $600.0 million in annual net sales. We are now focused on the repositioning and expansion of the Donna Karan brand for Spring 2024. The new Donna Karan will be a modern system of dressing created to appeal to a woman’s senses on every level, addressing the full lifestyle needs of a new customer. Our Donna Karan product is expected to be distributed in better department stores, digital channels and our own Donna Karan website in North America and internationally. Donna Karan is widely considered a top fashion brand and is recognized as one of the most famous designer names in American fashion. We believe that the strength of the Donna Karan brand, along with our success with the DKNY brand, demonstrates the potential for our new Donna Karan products. Strategic Initiatives We are focused on the following strategic initiatives, which we believe are critical to our long-term success: • Owning brands: We own a portfolio of proprietary brands including DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, Eliza J, Jessica Howard, G.H. Bass, Andrew Marc and Sonia Rykiel. Owning our own brands is advantageous to us for several reasons: - We can realize significantly higher operating margins because we are not required to pay licensing fees on sales by us of our proprietary products and can also generate licensing revenues (which have no related cost of goods sold) for classes of products not manufactured by us. - There are no channel restrictions, permitting us to market our products internationally, and to utilize a variety of different distribution channels, including online and off-price channels. - We are able to license our proprietary brands in new categories and geographies to carefully selected licensees. - We are able to build equity in these brands to benefit the long-term interests of our stockholders. • Continue to develop and expand our DKNY business and re-position and expand the Donna Karan business: We believe that DKNY and Donna Karan are two of the most iconic and recognizable power brands and that we are well positioned to unlock their potential and expand the reach of these brands. We are leveraging our demonstrated ability to drive organic growth and develop talent within our Company to maximize the potential of the DKNY and Donna Karan brands. Our strategy is for DKNY and Donna Karan to be more accessible brands, both designed and priced to reach a wider range of customers. We are focused on the re-positioning and expansion of the Donna Karan brand for Spring 2024. The new Donna Karan will be a modern system of dressing created to appeal to a woman’s senses on every level, addressing the full lifestyle needs of a new consumer. We believe there is untapped global licensing and distribution potential for these brands and aim to grow royalty streams in the DKNY and Donna Karan businesses through expansion of additional categories with existing licensees, as well as new categories with new licensees. We are committed to making DKNY and Donna Karan fashion and lifestyle brands of choice. • Continued focus on our global power brands: While we sell products under more than 30 licensed and proprietary brands, our global power brands anchor our business: DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld. Each of these brands has substantial name recognition and is well-known in the marketplace. We believe each brand also provides us with significant growth opportunities. We have leveraged the strength of our power brands to become a supplier of choice in a diversified range of product categories. • Expanding our international business: We continue to expand our international business and enter into new markets worldwide. In fiscal 2023, we acquired the remaining interests in the Karl Lagerfeld fashion brand which grew our European business and added new international expertise. In fiscal 2022, we purchased European luxury 5 fashion brand Sonia Rykiel. We own Vilebrequin, a premier provider of status swimwear, resort wear and related accessories that was founded in Europe. We believe these brands can enable us to expand in the international space and that there is untapped potential for these brands. In addition, we believe that the international sales and profit opportunity is quite significant for our DKNY and Donna Karan businesses and, as a result, we are expanding our DKNY and Donna Karan businesses globally. Continued growth, brand development and marketing in overseas markets is critical to driving global brand recognition. • Increasing digital channel business opportunities: We are continuing to make changes to our business to address the additional challenges and opportunities created by the evolving role of the digital marketplace in the retail sector and expect to increase the sale of our products in an omni-channel environment. We are investing in digital personnel, marketing, logistics, planning, distribution and other strategic opportunities to expand our digital footprint. Consumers are increasingly engaging with brands through digital channels, and we believe that this trend will continue to grow in the coming years. Our global power brands serve as the anchor of our business and position us to be the direct beneficiaries of this trend, whether by continuing to leverage our partnerships with the digital channel businesses operated by our licensors and major retailers to facilitate customer engagement or by building out our own digital capabilities. Our Strengths Broad portfolio of globally recognized brands. In an environment of rapidly changing consumer fashion trends, we benefit from a balanced mix of more than 30 licensed and proprietary brands anchored by our global power brands: DKNY, Donna Karan, Karl Lagerfeld, Calvin Klein and Tommy Hilfiger, which have strong brand equity and long-standing consumer appeal. Our overall brand portfolio includes other complementary brands that are diversified across product categories, price points, demographics, occasions, fits and sizes, and styles and genres. Our proprietary brands include DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, Sonia Rykiel, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc, Marc New York and Wilsons Leather. We are a licensee of choice for well-known brands, consisting of fashion brands including Calvin Klein, Tommy Hilfiger, Levi’s, Guess?, Kenneth Cole, Cole Haan, Vince Camuto, Dockers. Beginning in January 2024, we will also sell products under the Nautica brand. We also license team sports oriented brands, including the National Football League, National Basketball Association, Major League Baseball, National Hockey League and over 150 U.S. colleges and universities. We believe that our well-diversified brand portfolio with power brands and complementary brands is well positioned to satisfy ongoing consumer needs and preferences. Additionally, our experience in developing and acquiring licensed brands and proprietary labels, as well as our reputation for producing high quality, well-designed apparel, has led major customers to select us as a partner of choice for their own private label programs. 6 We currently market apparel and other products under, among others, the following licensed and proprietary brand names: Women's Licensed Brands Calvin Klein Calvin Klein Jeans Tommy Hilfiger Nautica* Guess? Kenneth Cole Cole Haan Levi's Vince Camuto Margaritaville Proprietary Brands DKNY Donna Karan Karl Lagerfeld Karl Lagerfeld Paris Andrew Marc Marc New York Vilebrequin Sonia Rykiel G. H. Bass Eliza J Jessica Howard Wilsons Leather Men's Team Sports National Football League Major League Baseball National Basketball Association National Hockey League IMG Collegiate Licensing Company Starter G-III Sports by Carl Banks G-III for Her Calvin Klein Tommy Hilfiger Guess? Kenneth Cole Cole Haan Levi's Dockers Margaritaville DKNY Karl Lagerfeld Karl Lagerfeld Paris Andrew Marc Marc New York Vilebrequin G. H. Bass Wilsons Leather * We will market apparel for Nautica beginning in January 2024. Long-standing relationships forged with retailers and license partners through emphasis on design, sourcing and quality control. We believe our core strengths provide a foundation that drives our partnerships with retailers and licensors. Our in-house design and merchandising teams design substantially all of our licensed, proprietary and private label products, and our designers work closely with our licensors and private label customers to create designs and styles that represent the look they seek to project. We believe that we have developed a significant customer following and positive reputation in the industry as a result of our design capabilities, sourcing expertise, on-time delivery and high standards of quality control. Our service, brand stewardship and industry expertise have allowed us to continue to deliver as a go-to preferred partner for many of our customers. Well-developed supply chain infrastructure is a key core competency that leverages strong vendor relationships developed over the past 40 years. We have long-standing, trust-based relationships with our vendors that form the foundation of our global supply chain that has been built upon over the last 40 years. We have a network of worldwide suppliers that allows us to access the highest quality products, negotiate competitive terms without relying on any single vendor, access new technology and design insights, and enhance our market intelligence. We support and cultivate these relationships by continuously investing management time while also maintaining a physical presence in key jurisdictions. We employ a quality control team and a sourcing group to ensure the quality of our products, as well as local teams that operate on the ground with a hands-on approach and a deep-rooted knowledge base with respect to our manufacturers. By working closely with our global partners on all aspects of the supply chain, we aim to safeguard against potential disruptions. We believe that we have a long-standing competitive advantage with our current supply chain partners and we continue to focus on broadening the breadth and depth of our inventory sourcing capabilities. We continue to focus on methods aimed at bolstering production and devising and implementing strategies to further diversify our production base and expand sourcing capabilities across the globe while leveraging best practices and strong vendor relationships. 7 Diversified business mix across customers, price points, products, and distribution channels. We market our products at multiple price points and across multiple channels of distribution, allowing us to provide products to a broad range of consumers. Our products are sold to approximately 1,700 customers, including a cross section of retailers such as Macy’s, including its Bloomingdale’s division, Dillard’s, Hudson’s Bay Company, including its Saks Fifth Avenue division, Nordstrom, Kohl’s, TJX Companies, Ross Stores and Burlington, as well as membership clubs such as Costco and Sam’s Club. We also sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos and have made minority investments in two e-commerce retailers. Our strong relationships with retailers have been established through many years of personal customer service and our objective of meeting or exceeding retailer expectations. In addition, we continue to make changes to our business to address the additional challenges and opportunities created by the evolving role of the online marketplace in the retail sector and expect to expand the sale of our products in an omni-channel environment. As economic conditions waver and consumer trends change, we believe that our deep-rooted relationships across the retail landscape, diversified brands serving all types of consumers and our product portfolio mix that covers all price points allow us to operate on a flexible and advantageous basis. Experienced management team. Our executive management team has worked together for a significant period of time and has extensive experience in the apparel industry. Morris Goldfarb, our Chairman and Chief Executive Officer, has been with us for over 45 years. Sammy Aaron, our Vice Chairman and President, joined us in 2005 when we acquired Marvin Richards, Neal S. Nackman, our Chief Financial Officer, has been with us for almost 20 years and Jeffrey Goldfarb, our Executive Vice President, has been with us for over 20 years. Our leadership team has demonstrated experience in successfully acquiring, managing, integrating and positioning new businesses having completed ten acquisitions and several joint ventures over the last 20 years, while also adding numerous new licenses and licensed products to our portfolio. Wholesale Operations Licensed Products The sale of licensed products is a key element of our strategy and we have continually expanded our offerings of licensed products for over 25 years. Sales of licensed products accounted for 58.6% of our net sales in fiscal 2023, 67.2% of our net sales in fiscal 2022 and 68.5% of our net sales in fiscal 2021. Net sales of products under the Calvin Klein and Tommy Hilfiger brands constituted approximately 48.0% of our net sales in fiscal 2023 and approximately 50.7% of our net sales in fiscal 2022. In November 2022, we announced the extension of licenses for Calvin Klein and Tommy Hilfiger products. The amendments to the license agreements for these products provide for staggered extensions by category that expire beginning December 31, 2024 and continuing through December 31, 2027. The table below reflects these extensions and also provides similar information for other license agreements. PVH Corp., the owner of Calvin Klein and Tommy Hilfiger, has indicated that it intends to produce these products itself once the license agreements expire. Unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the inability to renew the Calvin Klein and Tommy Hilfiger license agreements would cause a significant decrease in our net sales and have a material adverse effect on our results of operations. 8 In March 2023, we announced the signing of a long-term license with Authentic Brands Group for the Nautica brand in North America. We will produce across a number of categories, starting with jeans then expanding in a phased approach into additional categories including sportswear, suit separates and dresses. The new five-year license agreement, effective beginning in January 2024, includes three extensions, for five years each. First deliveries are expected to hit the floor in January 2024. License Fashion Licenses Calvin Klein (Men's outerwear) Calvin Klein (Women's outerwear) Calvin Klein (Women's dresses) Calvin Klein (Women's suits) Calvin Klein (Women's performance wear) Calvin Klein (Women's better sportswear) Calvin Klein (Better luggage) Calvin Klein (Women's handbags and small leather goods) Calvin Klein (Men's and women's swimwear) Calvin Klein Jeans (Women's jeanswear) Cole Haan (Men's and women's outerwear) Dockers (Men's outerwear) Guess/Guess? (Men's and women's outerwear) Guess/Guess? (Women's dresses) Kenneth Cole NY/Reaction Kenneth Cole (Men's and women's outerwear) Levi's (Men's and women's outerwear) Margaritaville (Men's and women's apparel) Nautica (Women's sportswear, jeanswear, tailored clothing and dresses) Tommy Hilfiger (Men's and women's outerwear) Tommy Hilfiger (Luggage) Tommy Hilfiger (Women's sportswear)* Tommy Hilfiger (Women's dresses)* Tommy Hilfiger (Women's suits)* Tommy Jeans* Tommy Hilfiger x Leagues Vince Camuto (Women's dresses) Team Sports Licenses Collegiate Licensing Company Major League Baseball National Basketball Association National Football League National Hockey League Starter Date Current Term Ends Date Potential Renewal Term Ends December 31, 2025 December 31, 2025 December 31, 2026 December 31, 2026 December 31, 2025 December 31, 2024 December 31, 2027 December 31, 2026 December 31, 2026 December 31, 2024 December 31, 2023 November 30, 2024 December 31, 2023 December 31, 2023 December 31, 2024 November 30, 2024 December 31, 2025 December 31, 2028 December 31, 2025 December 31, 2027 December 31, 2025 December 31, 2026 December 31, 2026 December 31, 2023 December 31, 2025 December 31, 2025 None None None December 31, 2029 None None None None None None December 31, 2025 None None None None None December 31, 2030 December 31, 2043 None None None None December 31, 2029 None None None December 31, 2023 December 31, 2023 September 30, 2025 March 31, 2024 June 30, 2025 December 31, 2024 None None None None None None * These categories are part of the Tommy Hilfiger license agreement that is referred to as “Women’s apparel” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022. We have separated these categories for presentation purposes in this chart as there are different term end dates for these categories in the amendment to the Women’s apparel license agreement. We have continually sought to increase our portfolio of name brands, product offerings and tiers of distribution because we believe that consumers prefer to buy brands they know and brand owners prefer to engage licensees who have a successful track record of developing brands. Under our license agreements, we are generally required to achieve minimum net sales of licensed products, pay guaranteed minimum royalties, make specified royalty and advertising payments (usually based on a percentage of net sales of licensed products), and receive prior approval of the licensor as to all design and other elements of a product prior to production. License agreements may also 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 9 any of these requirements or otherwise fail to meet our material obligations under a license agreement, a licensor usually will have the right to terminate our license. License agreements also typically restrict our ability to assign or transfer the agreement without the prior written consent of a licensor and generally provide that a change in control, including as a result of the acquisition of us by another company, is considered to be a transfer of the license agreement that would give a licensor the right to terminate the license unless it has approved the transaction. Our ability to renew a license agreement may be subject to the discretion of the licensor or to attaining minimum sales and/or royalty levels and to our compliance with the provisions of the agreement. Proprietary Brands Dating back to the beginning of our company, G-III has sold apparel under its own proprietary brands. Over the years, we developed or acquired brands such as G-III Sports by Carl Banks, Eliza J and Jessica Howard. We also acquired Andrew Marc, an aspirational luxury outerwear brand, G.H. Bass, a well-known heritage brand, and Vilebrequin, a premier swimwear and resort wear brand. In our most significant acquisition, we acquired Donna Karan International, which owns DKNY and Donna Karan, two of the world’s most iconic and recognizable power brands. In October 2021, we acquired European luxury fashion brand Sonia Rykiel and in May 2022, we acquired the remaining interests that we did not own in the iconic Karl Lagerfeld fashion brand. We currently design, manufacture, distribute and sell products under our own proprietary brands, as well as license our proprietary brands in a variety of categories. We continue to seek new licensing opportunities to broaden the reach of these brands. DKNY and Donna Karan We own two of the world’s most iconic fashion brands: DKNY and Donna Karan. First launched in 1984, DKNY and Donna Karan design, source, market, retail and distribute collections of women’s and men’s clothing, sportswear, handbags, accessories and shoes under the DKNY and Donna Karan brand names. Based on DKNY’s and Donna Karan’s significant brand equity, we believe there are opportunities to expand existing categories, launch new initiatives and develop an even stronger licensing and distribution base. We believe that both the DKNY and Donna Karan brands have the potential for significant growth. In addition, we expect increased revenues from licensing and from sales growth across many categories of the business. After acquiring the brands in December 2016, we initially focused on re-positioning and re-launching the DKNY brand. Our DKNY products are designed to provide a total wardrobe for a woman’s active, modern lifestyle. Products developed reflect the DNA of the DKNY brand and emphasize a strong price-value relationship. We believe that DKNY is a premier fashion and lifestyle brand. DKNY products produced by us or by our various licensees are sold through department stores, specialty retailers and online retailers worldwide, as well as through company-operated retail stores, digital sites and international brand partners and distributors. We believe that the Donna Karan brand also offers significant growth potential. Donna Karan has been a small business for us to date. We are now focused on the re-positioning and expansion of the brand for Spring 2024. The new Donna Karan will be a modern system of dressing created to appeal to a woman’s senses on every level, addressing the full lifestyle needs of a new consumer. Donna Karan product is expected to be distributed in better department stores, digital channels and our own Donna Karan website in North America and internationally. Donna Karan is widely considered a top fashion brand and is recognized as one of the most famous designer names in American fashion. We believe this indicates that consumer demand exists for the brand. We believe that the strength of the Donna Karan brand, along with our success with the DKNY brand, demonstrates the potential for our new Donna Karan products. We believe there are significant opportunities to enhance the digital business of DKNY and Donna Karan, prudently manage the retail store base for DKNY over the long term and capitalize on our industry relationships in seeking premium placement for DKNY and Donna Karan product categories in department and other retail stores globally. 10 Karl Lagerfeld In May 2022, we acquired the remaining interests in the Karl Lagerfeld fashion brand that we did not own. The addition of the Karl Lagerfeld fashion brand to the G-III portfolio of owned brands advances several of our strategic initiatives, including increasing the direct ownership of brands, capitalizing on their licensing opportunities and further diversifying our global presence. This acquisition represents a significant opportunity to expand our international growth by further developing our European-based brands which also include Vilebrequin and Sonia Rykiel. We believe that Karl Lagerfeld’s existing digital channel presence could enable us to enhance our omni-channel business and further accelerate our digital initiatives. The influential legacy of the Karl Lagerfeld brand embodies a creative expression that aligns with our goal to provide innovative products for our customers. The iconic Karl Lagerfeld brand is known for its signature aesthetic combining Parisian classics with a rock-chic attitude and tailored silhouettes. Its portfolio of accessible, aspirational collections includes ready-to-wear apparel for women, men and children, as well as handbags and small leather goods. Licensed collections include watches, eyewear, footwear, perfumes, candles and fashion jewelry. As of January 31, 2023, Karl Lagerfeld products are distributed through more than 200 stores worldwide, including 62 company-operated stores, located primarily internationally and through digital channels. In addition, Karl Lagerfeld is distributed through a premium wholesale distribution network in Europe, the Middle East and Asia. Vilebrequin Vilebrequin is a premier provider of status swimwear, resort wear and related accessories. Vilebrequin products are sold in over 100 countries around the world. We believe that Vilebrequin has the potential to significantly develop its distribution network worldwide and expand its product offerings. A majority of Vilebrequin’s current revenues are derived from sales in Europe and the United States. As of January 31, 2023, Vilebrequin products were distributed through select wholesale distribution, 97 company-operated stores and 87 licensed stores, located internationally and in the United States, as well as digitally on our websites. Vilebrequin’s iconic designs and reputation are linked to its French Riviera heritage arising from its founding in St. Tropez over forty years ago. Vilebrequin’s men’s swimwear, which accounts for the majority of its sales, is known for its exclusive prints, wide range of colors, attention to detail, fabric quality and well-designed cuts. In addition to men’s swimwear, Vilebrequin sells a collection of women’s swimwear, children’s swimwear, men’s resort wear, women’s resort wear, children’s resort wear and related accessories including hats, beach bags, beach towels, shoes, sunglasses, watches and pool floats. We believe that Vilebrequin is a powerful brand. We plan to continue adding more company operated and franchised retail locations and increase our wholesale distribution of Vilebrequin products throughout the world. In September 2022, Vilebrequin acquired a beach concession in Cannes, and plans to open the first Vilebrequin Beach club at this location in the spring of 2023. Ideally located on the French Riviera, this first Vilebrequin Beach club is expected to further expand our brand awareness. Vilebrequin also opened a branded beach cabana club at the Boca Raton Hotel. We expect to continue to expand with store openings in global key markets and reinforce the luxury status of Vilebrequin with immersive brand experiences. Sonia Rykiel In October 2021, we purchased European luxury fashion brand Sonia Rykiel. Sonia Rykiel, who created this well-known brand, was one of the leading figures of Parisian fashion. We relaunched the brand in the fall of 2022 with the opening of retail stores in Paris, New York and Monaco, and plan to expand further into Europe and other regions in 2023. We believe this purchase will enable us to expand into the luxury space and increase our international presence. We also believe that there is untapped potential for this brand. Licensing of Proprietary Brands As our portfolio of propriety brands has grown, we have licensed these brands in new categories. We began licensing Andrew Marc, Vilebrequin, Sonia Rykiel and G.H. Bass in selected categories after acquiring these brands. Our licensing 11 program has significantly increased as a result of owning the DKNY, Donna Karan and Karl Lagerfeld brands. We currently license our proprietary brands in a variety of categories and continue to seek new licensing opportunities to broaden the reach of these brands. We have strong relationships with category leading license partners, including, but not limited to, Fossil, Marchon, Komar and Inter Parfums. The DKNY and Donna Karan brands have worldwide license agreements for a broad array of products including fragrance, intimates, eyewear, bedding and bath products and women’s sleepwear and loungewear. Additionally, we license the DKNY brand in the United States and internationally for children’s clothing, children’s footwear, men’s and women’s watches, jewelry, men’s tailored clothing, men’s sportswear, men’s dress shirts, men’s underwear, men’s loungewear, men’s swimwear, men’s and women’s golfwear, men’s and women’s socks, and furniture. In September 2021, we entered into a long-term global licensing agreement with Inter Parfums, Inc. for the creation, development and distribution of fragrances and fragrance-related products under the DKNY and Donna Karan brands. Inter Parfums, Inc. became the exclusive licensee for these products effective July 1, 2022 with the initial term of the license extending through December 31, 2032. We believe the fragrance category enables our brands to connect more broadly with global consumers. We intend to continue to focus on expanding licensing opportunities for the DKNY and Donna Karan brands. We believe that we can capitalize on significant, untapped global licensing potential for these brands in a number of categories and we intend to grow royalty streams by expanding existing licenses, as well as through new categories with new licensees. We license the Karl Lagerfeld brand for a wide range of product categories including, but not limited to, footwear, men’s apparel, ready to wear fashions, fragrances, children’s clothing, and eyewear. We license the G.H. Bass brand in the United States and internationally for men’s, women’s and children’s footwear, children’s clothing, men’s denim, men’s underwear and loungewear, and bedding and bath products and the Andrew Marc brand in North America for men’s and boy’s tailored clothing and men’s and women’s denim Retail Operations As of January 31, 2023, our retail operations segment consisted of 59 stores operated under our DKNY and Karl Lagerfeld Paris brands, as well as digital channels for the DKNY, Donna Karan, Karl Lagerfeld Paris, G.H. Bass, Andrew Marc and Wilsons Leather businesses. Our DKNY stores offer a large range of products including sportswear, dresses, outerwear, handbags, footwear and athleisure apparel. Our Karl Lagerfeld Paris stores offer a range of products including sportswear, dresses, outerwear, handbags and footwear. As digital sales of apparel continue to increase, we are developing additional digital marketing initiatives on our websites and through social media. We are investing in digital personnel, marketing, logistics, planning, distribution and other strategic opportunities to expand our digital footprint. Our digital business for our retail operations segment consists of our own web platforms at www.dkny.com, www.donnakaran.com, www.karllagerfeldparis.com, www.ghbass.com, www.andrewmarc.com and www.wilsonsleather.com. Our digital business also includes our own web platforms at www.vilebrequin.com, www.soniarykiel.com and www.karl.com which are part of our wholesale operations segment. We sell our products over the web through retail partners such as macys.com, nordstrom.com and dillards.com, each of which has a substantial online business. In addition, we sell to leading pure online retail partners such as Amazon, Fanatics, Zalando and Zappos and have made minority investments in two e-commerce retailers. Products — Development and Design G-III designs, sources and markets women’s and men’s apparel at a wide range of retail price points. Our product offerings primarily include outerwear, dresses, sportswear, swimwear, women’s suits and women’s performance wear. We also market footwear and accessories including women’s handbags, small leather goods, cold weather accessories, and luggage. 12 G-III’s licensed apparel consists of both women’s and men’s products in a broad range of categories. See “Wholesale Operations — Licensed Products” above. We seek licenses that will enable us to offer a range of products targeting different price points and different distribution channels. We also offer a wide range of products under our own proprietary brands. We work with a diversified group of retailers, such as Macy’s, Harley-Davidson, Costco, Kohl’s and Ross Stores in developing product lines that are sold under their private label programs. Our design teams collaborate with our customers to produce custom-made products for their stores. Store buyers may provide samples to us or may select styles already available in our showrooms. We believe we have established a reputation among these buyers for our ability to produce high quality product on a reliable, expeditious and cost-effective basis. Our in-house designers are responsible for the design and look of our licensed, proprietary and private label products. We work closely with our licensors to create designs and styles for each of our licensed brands. Licensors generally must approve products to be sold under their brand names prior to production. We maintain a global pulse on styles, using trend services and color services to enable us to quickly respond to style changes in the apparel industry. Our experienced design personnel and our focused use of outside services enable us to incorporate current trends and consumer preferences in designing new products and styles. Our design personnel meet regularly with our sales and merchandising departments, as well as with the design and merchandising staffs of our licensors, to review market trends, sales results and the popularity of our latest products. Our designers present their evaluation of the styles expected to be in demand in the United States. We also seek input from selected customers with respect to product design. We believe that our sensitivity to the needs of retailers, coupled with the flexibility of our production capabilities and our continual monitoring of the retail market, enables us to modify designs and order specifications in a timely fashion. Manufacturing and Sourcing G-III’s wholesale operations and retail operations segments arrange for the production of products from independent manufacturers located primarily in Vietnam, China, Indonesia and, to a lesser extent, Bangladesh, Cambodia, Jordan, Egypt and India. Vilebrequin’s products are manufactured primarily in Bulgaria, Morocco, Tunisia, Turkey, Italy and China. Karl Lagerfeld’s products are manufactured primarily in China, Portugal, Turkey and India. A small portion of our garments are manufactured in the United States. We currently have representative offices in Hangzhou, Nanjing and Dongguan, China, as well as in Hong Kong, Vietnam, Indonesia, Bangladesh, and Jordan. These offices act as our liaison with manufacturers in the Far East. G-III’s headquarters provides these liaison offices with production orders stating the quantity, quality, delivery time and types of garments to be produced. The personnel in our liaison offices assist in the negotiation and placement of orders with manufacturers. In allocating production among independent suppliers, we consider a number of criteria, including, but not limited to, compliance, quality, availability of production capacity, pricing and ability to meet changing production requirements. To facilitate better service for our customers and accommodate the volume of manufacturing in the Far East, we also have a subsidiary in Hong Kong. Our Hong Kong subsidiary supports third party production of products on an agency fee basis and acts as an agent for substantially all of our production. Our China and Hong Kong offices monitor production at manufacturers’ facilities to ensure quality control, compliance with our specifications and timely delivery of finished garments to our distribution facilities and, in some cases, direct to our customers. In connection with the foreign manufacture of our products, manufacturers purchase raw materials including fabric, wool, leather and other submaterials (such as linings, zippers, buttons and trim) at our direction. Prior to commencing the manufacture of products, samples of raw materials or submaterials are sent to us for approval. We regularly inspect and supervise the manufacture of our products in order to ensure timely delivery, maintain quality control and monitor compliance with our manufacturing specifications. We also inspect finished products at the factory site. 13 We generally arrange for the production of products on a purchase order basis with completed products manufactured to our design specifications. We assume the risk of loss predominantly on a Freight-On-Board (F.O.B.) basis when goods are delivered to a shipper and are insured against casualty losses arising during shipping. As is customary, we have not entered into any long-term contractual arrangements with any contractor or manufacturer. We believe that the production capacity of foreign manufacturers with which we have developed, or are developing, a relationship is adequate to meet our production requirements for the foreseeable future. We believe that alternative foreign manufacturers are readily available. A majority of all finished goods manufactured for us is shipped to our distribution facilities or to designated third party facilities for final inspection, allocation, and reshipment to customers. The goods are delivered to our customers and us by independent shippers. We choose the form of shipment (principally ship, truck or air) based upon a customer’s needs, cost and timing considerations. Vendor Code of Conduct We are committed to ethical and responsible conduct in all of our operations and respect for the rights of all individuals. We strive to ensure that human rights are upheld for all workers involved in our supply chain, and that individuals experience safe, fair and non-discriminatory working conditions. In addition, we are committed to compliance with applicable environmental requirements and are committed to seeing that all of our products are manufactured and distributed in compliance with applicable environmental laws and regulations. We expect that our business partners will share these commitments, which we enforce through our Vendor Code of Conduct. Our Vendor Code of Conduct specifically requires our manufacturers to not use child, forced or involuntary labor and to comply with applicable environmental laws and regulations. We provide training and guidance to the factories our contractors use related to our Vendor Code of Conduct and the applicable laws in the country in which the factory is located. The training provides the factories with a more in-depth explanation of our Vendor Code of Conduct. In addition to their contractual obligations, we evaluate our suppliers' compliance with our Vendor Code of Conduct through audits conducted both by our employees and third-party compliance auditing firms. Human Capital Our People As of January 31, 2023, we employed approximately 3,600 persons on a full-time basis and approximately 1,100 on a part- time basis. We employ both union and non-union personnel and believe that our relations with our employees are good. We have not experienced any interruption of our operations due to a labor disagreement with our employees. We are an Equal Opportunity Employer with policies, procedures and practices that recognize the value and worth of each individual, covering matters such as safety, training, advancement, discrimination, harassment and retaliation. We provide training on important issues to our personnel. G-III ensures compliance with labor and employment law issues through a variety of processes and procedures, using both internal and external expertise and resources. We continue to work towards achieving a stronger, more engaging workplace coupled with a foundation for enhancing the employee experience by continuing to promote our passion for our product, pride in our partnerships, our accountability and our entrepreneurial spirit. We are committed to the health and safety of our employees and customers and have taken extra care to protect them throughout the fluid nature of the pandemic with responsive workplace policies and procedures. Diversity, Equity and Inclusion We are a diverse workplace and know that, to succeed, we must become an even more diverse, equitable and inclusive organization. Currently, over 40% of our leadership team and 71% of our overall workforce self-identify as women, and 48% of our overall workforce identify as Black, Indigenous and People of Color (“BIPOC”). Of our twelve Board members, there are four women and four people of diverse backgrounds, exceeding NASDAQ requirements for board 14 diversity. We recognize that insights and ideas from a diverse range of backgrounds will better position us for the future and continue to work towards increasing Board diversity. Our commitment to Diversity, Equity and Inclusion also extends outside of our business. We are a founding member of the groundbreaking Social Justice Center at the Fashion Institute of Technology (“FIT”), a premier fashion university, whose purpose is to help establish a program that is intended to increase opportunities and accelerate social equity for BIPOC persons entering our industry for years to come. Additionally, we continued our partnership with UNCF (“United Negro College Fund”) by sponsoring four enriching and rewarding student internships. These interns were provided room and board at FIT. They participated in a program that consisted of educational master class sessions and experienced New York theatre and other local programs. In fiscal 2023, we will continue to support UNCF by providing students the opportunity to gain firsthand experience working at G-III. Diversity, Equity and Inclusion are at the heart of G-III’s values. We strive to create a workplace with opportunities for all. We have made progress and intend to continue to do so in the coming years. Talent Acquisition, Development and Retention Having the right talent in the organization is one of the most critical aspects of our business. This year we grew our HR team to enhance opportunities focused on hiring, developing and retaining talent. We invested in new HR systems that will enhance the recruitment process and facilitate compliance with the continuously changing landscape of employment law. We also introduced a Lunch and Learn program facilitated by our leadership team for employees that has provided an opportunity for continuous learning about our business. We are planning to introduce a G-III Master Class training library in fiscal 2024 that will make these sessions and other educational tools accessible to our employees. Through our aggressive recruiting, we have been able to bring in best-in-class talent. We had several key hires at the Company, including a new head of digital, who is building a new team to accelerate the development of our digital business. Additionally, we welcomed a new President of Donna Karan/DKNY Europe situated in our Milan office who will continue to develop our expanding reach in Europe. Compensation, Benefits, Safety and Wellness We expanded our comprehensive health and retirement benefits to eligible employees this year, most notably, with the introduction of Aetna Inc. for our health plans and Fidelity Investments for our 401(k) plan. We also introduced and sponsored paid subscriptions to Headspace and Noom, smartphone applications that offer dedicated tools to support employee wellness. Corporate Social Responsibility We spend significant time implementing our key initiatives, developing programs and furthering our Corporate Social Responsibility (“CSR”) agenda. • Engage Our People – Embodying our spirit of agility and entrepreneurism, in fiscal 2023 our teams continued to build on the success we achieved in fiscal 2022 as we ensured that business was conducted despite the impact of the COVID-19 pandemic. With teams back in the office fulltime, we began developing and executing several team building activities to bring people together such as our Lunch and Learn program. We also further engaged our supply chain partners to improve their employment practices and positively impact the workforce within our supply chain. We understand that the success of our supply chain is critical to our future and we have taken important steps to improve it. We joined the Sustainable Apparel Coalition (“SAC”) which works to reduce the social and environmental impact of apparel, footwear and textile production around the world by employing the Higg Factory Evaluation Module (“FEM”) which is an environmental assessment of supply chain factories shared among brands and industries. SAC has annual requirements and goals for its members to meet to keep the industry moving towards greater sustainability. Engaging our supply chain partners to participate in SAC is intended to 15 result in more factories completing environmental and social assessments that are shared across the industry. This promotes standardized measurement for products and the supply chain and reduces redundancies among brands and factories performing audits of their sustainability practices. We have continued to focus on the forced labor issues facing our industry and have reviewed our relationships in an attempt to protect against the use of forced labor in our supply chain. We formalized an internal cotton traceability program to further mitigate the risk of forced labor being used to produce product for us. This program includes enhancements to management systems, training, and tracking tools across our supply chain. To further bolster our programs against this risk, we engaged ORITAINTM, a third-party that uses forensic technology to trace materials back to their fiber origins. This traceability is essential to mitigating the risk that forced labor is used throughout the supply chain. We routinely engage with counsel and industry organizations with respect to regulatory developments to ensure our practices and procedures are aligning with the continually developing regulatory landscape. Combined with ORITAINTM’s technology and our internal management systems, we are working to mitigate these global supply chain risks. Additionally, with ORITAINTM’s help, we have begun exploring technology partners that can support us with tracing and tracking our total material usage. Taken together, we believe we have developed a strong approach and intend to continue to refine our oversight of our supply chain. • Protect Our Environment – We continue to work towards reducing our environmental impact by enacting sustainable fashion practices. We are working on determining our Scope 1 and Scope 2 baseline greenhouse gas (“GHG”) emissions for 2022 reporting based on the proposed rules set forth by the Securities and Exchange Commission in March 2022. Using this baseline, we intend to set strategic goals for reducing our GHG emissions from both a short-term and long-term perspective. We have engaged an industry-leading environmental consultancy to support our understanding our of GHG emissions and assist us in developing best practices to support our goal of reducing our environmental impact. Our focus includes (i) understanding the environmental impact made by our choices and how we can reduce those impacts in thoughtful and strategic ways without disrupting our business and (ii) fostering a culture of environmental understanding and accountability in all that we do. We are making progress on our goal to use 100% recycled materials for all synthetic fibers by 2030 by working to set goals for adoption of more sustainable materials. We are exploring potential technology solutions to help us reach our goals. Invest in Our Communities – G-III has a longstanding commitment to philanthropy and supporting communities in which we live and serve. We continue to maximize opportunities to give to and engage with our charitable partners. We are involved with various charitable organizations including Ronald McDonald House, Women In Need (“WIN”), UNCF, Delivering Good, Hetrick Martin Institute and City Harvest, in addition to supporting the new Social Justice Center at the Fashion Institute of Technology. We have also partnered with new programs to provide aid to people impacted by current events. This year, we supported the Ukrainian humanitarian crisis financially and through in-kind donations of our products. We also established a new internal committee, comprised of our employees, who are actively involved in developing and executing charitable initiatives across the organization. This committee has already strengthened our involvement with our charitable partners in new ways. G-III is committed to continuing its mission to help others in the community through corporate and employee donations and volunteerism. Our work with our new consultants is expected to bring about greater change in this coming year as we continue to make progress on our core CSR principles: Engage Our People, Protect Our Environment and Invest in Our Community. They represent a commitment to the greater good and our role in the global community. Customs and Trade Issues Our arrangements with textile manufacturers and suppliers are subject to requisite customs clearances for products and the imposition of export duties. Customs duties on our products presently range from duty free to 37.5%, depending upon the 16 product, composition, construction, country of origin and country of import. A substantial majority of our product is imported into the United States and, to a lesser extent, into Canada and Europe. Countries in which our products are sold may, from time to time, impose new duties, tariffs, surcharges or other import controls or restrictions or adjust prevailing duty or tariff levels. Any action by the executive branch of the United States government to increase tariffs on imported goods, such as the imposition of tariffs on goods manufactured in China, could adversely affect our business. Under the provisions of the World Trade Organization (“WTO”) agreement governing international trade in textiles, known as the “WTO Agreement on Textiles and Clothing,” the United States and other WTO member countries have eliminated quotas on textiles and apparel-related products from WTO member countries. As a result, quota restrictions generally do not affect our business in most countries. Apparel and other products sold by us are also subject to regulations that relate to product labeling, content and safety requirements, licensing requirements and flammability testing. We believe that we are in compliance with those regulations, as well as applicable federal, state, local, and foreign regulations relating to the discharge of materials hazardous to the environment. Marketing and Distribution G-III’s products are sold primarily to department, specialty and mass merchant retail stores in the United States. We sell to approximately 1,700 customers, ranging from national and regional chains to small specialty stores. We also distribute our products through our retail stores and through digital channels for the DKNY, Donna Karan, G.H. Bass, Vilebrequin, Andrew Marc, Karl Lagerfeld Paris, Wilsons Leather and Sonia Rykiel businesses, as well as the digital channels of our retail partners such as Macy’s, Nordstrom, Amazon, Fanatics, Zalando and Zappos. Sales to our ten largest customers accounted for 74.2% of our net sales in fiscal 2023, 78.0% of our net sales in fiscal 2022 and 73.3% of our net sales in fiscal 2021. Sales to Macy’s, which includes sales to its Macy’s and Bloomingdale’s store chains, as well as through macys.com, accounted for an aggregate of 21.6% of our net sales in fiscal 2023, 23.9% of our net sales in fiscal 2022 and 20.9% of our net sales in fiscal 2021. In addition, sales to TJX Companies accounted for an aggregate of 15.4% of our net sales in fiscal 2023, 14.8% of our net sales in fiscal 2022 and 12.9% of our net sales in fiscal 2021. The loss of any of these customers or a significant reduction in purchases by our largest customers could have a material adverse effect on our results of operations. A substantial majority of our sales are made in the United States. We also sell our products to customers in Europe, Canada, the Far East, the Middle East, Central America, South America and Australia, which, on a combined basis, accounted for approximately 19.1% of our net sales in fiscal 2023, 14.5% of our net sales in fiscal 2022 and 14.6% of our net sales in fiscal 2021. Our products are sold primarily through our direct sales force along with our principal executives who are also actively involved in the sale of our products. Some of our products are also sold by independent sales representatives located throughout the United States. The Canadian market is serviced by a sales and customer service team based both in the United States and in Canada. Sales outside of the United States and Canada may be managed by our salespeople located in our sales offices in Europe or Asia depending on the customer. Vilebrequin products are sold through a direct sales force primarily located across Europe. Brand name products sold by us pursuant to a license agreement are promoted by institutional and product advertisements placed by the licensor. Our license agreements generally require us to pay the licensor a fee, based on a percentage of net sales of licensed product, to pay for a portion of these advertising costs. We may also be required to spend a specified percentage of net sales of a licensed product on advertising placed by us. Our marketing and press efforts on behalf of the DKNY and Donna Karan brands are highly focused around communicating brand DNA and visual identity for the new evolution of DKNY and Donna Karan. We are re-building the brand image through high impact ad campaigns that feature socially relevant talent. We are striving to create noteworthy marketing initiatives, collaborations and image programs to build brand awareness and bring in a new young customer. Donna Karan and DKNY will continue to support global licensees with brand campaigns and product images to tell the 17 brand story. We continue to invest in digital media and storytelling for brand amplification and to establish comprehensive commercial marketing tools that will support our global wholesale and retail channels. Karl Lagerfeld’s marketing efforts are inspired by Karl Lagerfeld’s own mantra: “embrace the present and invent the future.” We continuously seek to share relevant and engaging content, with a focus on digital content. Inspired by Karl Lagerfeld’s own passion for collaboration, we regularly foster partnerships with top tier tastemakers and icons. Our campaigns for the Karl Lagerfeld brand are intended to grow awareness across our retail, digital, wholesale and franchise channels. In North America, the Karl Lagerfeld Paris brand further amplifies this vision through locally-relevant brand engagement. We are planning a large-scale marketing campaign including the launch of special products, collaboration with celebrities and the creation of content for our website and social media channels. Our retail partners around the world are hosting events, pop-up shops and dedicating store windows to Karl Lagerfeld. In Spring 2023, Vogue’s Met Gala, along with the museum’s summer exhibition, will pay tribute to the life and work of Karl Lagerfeld. This event is expected to create extensive global news and social media coverage and significantly benefit Karl Lagerfeld’s global brand recognition. We believe these efforts will be the most significant moment for the brand to date and we expect them to drive awareness, interest and sales in the Karl Lagerfeld and Karl Lagerfeld Paris brands. Vilebrequin’s marketing efforts have been based on continually offering new swimwear prints and expanding the range of its products to new categories such as women’s swimwear, ready-to-wear and accessories. Besides its traditional advertising networks (print and outdoor advertising), Vilebrequin is seeking to develop new marketing channels through the use of digital media, product placement, impactful collaborations and public relations. Through the growth of its network of stores, distributors and franchisees, Vilebrequin is seeking to reinforce its position in its traditional markets, such as the United States, Europe and the Middle East, and to develop new markets in Asia. We believe we have developed awareness of our other owned labels primarily through our reputation, consumer acceptance and the fashion press. We primarily rely on our reputation and relationships to generate business in the private label portion of our wholesale operations segment. We believe we have developed a significant customer following and positive reputation in the industry as a result of, among other things, our standards of quality control, on-time delivery, competitive pricing and willingness and ability to assist customers in their merchandising of our products. As digital sales of apparel continue to increase, we are developing initiatives to increase our digital presence through our own websites and through the websites of our retail partners. We are working closely with our retail partners to provide consumers with a high quality viewing experience for our products. We are also working to increase our digital sales through marketing, social influencers and other online drivers of sales. Seasonality Retail sales of apparel have traditionally been seasonal in nature. Historically, our wholesale business has been dependent on our sales during our third and fourth fiscal quarters. Net sales during the third and fourth quarters accounted for approximately 60% of our net sales in fiscal 2023, 64% of our net sales in fiscal 2022 and 66% of our net sales in fiscal 2021. We are highly dependent on our results of operations during the second half of our fiscal year. The second half of the year is expected to continue to provide a larger amount of our net sales and a substantial majority of our net income for the foreseeable future. Trademarks We own some of the trademarks used by us in connection with our wholesale operations segment, as well as almost all of the trademarks used in our retail operations segment. We act as licensee of certain trademarks owned by third parties that are used in connection with our business. The principal brands that we license are summarized under the heading “Wholesale Operations – Licensed Products” above. We own a number of proprietary brands that we use in connection with our business and products including, among others, DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. Bass, Andrew Marc, Marc New York, Eliza J, Jessica Howard, Wilsons Leather, Sonia Rykiel and G-III Sports by Carl Banks. 18 We have registered, or applied for registration of, many of our trademarks in multiple jurisdictions for use on a variety of apparel and related other products. In markets outside of the United States, our rights to some of our trademarks may not be clearly established. In the course of our attempt to expand into foreign markets, we may experience conflicts with various third parties who have acquired ownership rights in certain trademarks that would impede our use and registration of some of our trademarks. Such conflicts may arise from time to time as we pursue international expansion. Although we have not in the past suffered any material restraints or restrictions on doing business in desirable markets or in new product categories, we cannot be sure that significant impediments will not arise in the future as we expand product offerings and introduce additional brands to new markets. We regard our trademarks and other proprietary rights as valuable assets and believe that they have value in the marketing of our products. We vigorously protect our trademarks and other intellectual property rights against infringement. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth certain information with respect to our executive officers. Name Morris Goldfarb Sammy Aaron Neal S. Nackman Jeffrey Goldfarb Age 72 63 63 46 Position Chairman of the Board, Chief Executive Officer and Director Vice Chairman, President and Director Chief Financial Officer and Treasurer Executive Vice President and Director Morris Goldfarb is our Chairman of the Board and Chief Executive Officer, as well as one of our directors. Mr. Goldfarb has served as an executive officer of G-III and our predecessors since our formation in 1974. Sammy Aaron is our Vice Chairman and President, as well as one of our directors. He has served as an executive officer since we acquired the Marvin Richards business in July 2005. Mr. Aaron is also the Chief Executive Officer of our Calvin Klein divisions. Neal S. Nackman has been our Chief Financial Officer since September 2005 and was elected Treasurer in April 2006. Mr. Nackman served as Vice President — Finance from December 2003 until April 2006. Jeffrey Goldfarb has been our Executive Vice President and Director of Strategic Planning since June 2016, and serves as one of our directors. He has been employed by G-III in a number of other capacities since 2002. Prior to becoming Executive Vice President, he served as our Director of Business Development for more than five years. Jeffrey Goldfarb is the son of Morris Goldfarb. ITEM 1A. RISK FACTORS. The following risk factors should be read carefully in connection with evaluating our business and the forward-looking statements contained in this Annual Report on Form 10-K. Any of the following risks could materially adversely affect our business, our prospects, our operating results, our financial condition, the trading prices of our securities and the actual outcome of matters as to which forward-looking statements are made in this report. Additional risks that we do not yet know of or that we currently think are immaterial may also affect our business operations. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward- looking statements. Furthermore, the COVID-19 pandemic (including federal, state and local governmental responses, broad economic impacts and market disruptions) has heightened risks discussed in the risk factors described in this Annual Report on Form 10-K. 19 Risk Factors Relating to Our Wholesale Operations The failure to maintain our material license agreements could cause us to lose significant revenues and have a material adverse effect on our results of operations. We are dependent on sales of licensed products for a substantial portion of our revenues. In fiscal 2023, net sales of licensed product accounted for 58.6% of our net sales compared to 67.2% of our net sales in fiscal 2022 and 68.5% of our net sales in fiscal 2021. We are generally required to achieve specified minimum net sales, make specified royalty and advertising payments and receive prior approval from the licensor as to all design and other elements of each product prior to production. License agreements also may restrict our ability to enter into other license agreements for competing products or acquire businesses that produce competing products without the consent of the licensor. If we do not satisfy any of the material requirements of a license agreement or receive approval with respect to a restricted transaction, a licensor will usually have the right to terminate our license. 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. If a license contains a renewal option, there are usually minimum net sales and other conditions that must be met in order to be able to renew. If a license does not contain a renewal option, and we desire to renew the license, we must negotiate renewal terms with the licensor. However, even if we comply with all of the terms of a license agreement, we cannot guarantee that we will be able to renew an agreement when it expires even if we desire to do so as a licensor may decide to manufacture the licensed products itself or engage a new licensee for the products. 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, or inability to renew the license agreements for these brands, would have a material adverse effect on our results of operations. As of January 31, 2023, 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 48.0% of our net sales in fiscal 2023 and approximately 50.7% of our net sales in fiscal 2022. On November 30, 2022, we announced the extension of licenses for Calvin Klein and Tommy Hilfiger products. The amendments to the license agreements for Calvin Klein and Tommy Hilfiger products provide for staggered extensions by category that expire beginning December 31, 2024 and continuing through December 31, 2027. See the table in “Wholesale Operations-Licensed Products” above for information with respect to the new extension term, any potential renewal term or the existing current term for the Calvin Klein and Tommy Hilfiger license agreements. PVH, the owner of these two brands, has indicated that it intends to produce these Calvin Klein and Tommy Hilfiger products itself once these license agreements expire. Unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the inability to renew the Calvin Klein and Tommy Hilfiger license agreements would cause a significant decrease in our net sales and have a material adverse effect on our results of operations. Our success is dependent on the strategies and reputation of our licensors. We strive to offer our products on a multiple brand, multiple channel and multiple price point basis. As a part of this strategy, we license the names and brands of numerous recognized companies and designers. 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. 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 20 sales and profitability. Further, we are unable to control the quality of the products produced by our licensors and their other licensees. If they do not maintain the quality of their goods, the brand image may be adversely affected, which could also affect our sales and profitability. In addition, as licensed products 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. Our business and the success of our products could be harmed if we are unable to maintain or enhance the images of our proprietary brands. The growth of our proprietary brands, their favorable images and our customers’ connection to our brands has contributed to our success. Our proprietary brands include DKNY, Donna Karan, Karl Lagerfeld, G.H. Bass, Vilebrequin, Sonia Rykiel, Andrew Marc and Wilsons Leather, among others. In addition, brand value is based in part on consumer perceptions of a variety of qualities, including merchandise quality and corporate integrity. Negative claims or publicity regarding G-III, our brands, our products or the failure, on the part of G-III or our employees, to maintain the safety, integrity and ethics standards that we set for our operations, as well as those expected of members of our industry could adversely affect our reputation and sales regardless of whether such claims are accurate. Social media, which accelerates the dissemination of information, can increase the challenges of responding to negative claims. 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. Any harm to our brands or reputation could adversely affect our business, results of operations or financial condition. 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. Our customers’ buying patterns, as well as the need to provide additional allowances to customers, could have a material adverse effect on our business, results of operations and financial condition. Strategic initiatives undertaken by our customers, including developing their own private label brands, selling national brands on an exclusive basis or reducing the number of vendors they purchase from, could also impact our sales to these customers. There is a trend among major retailers to concentrate purchasing among a narrowing group of vendors. 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 74.2% of our net sales in fiscal 2023, 78.0% of our net sales in fiscal 2022 and 73.3% of our net sales in fiscal 2021, with the Macy’s Inc. group accounting for approximately 21.6% of our net sales in fiscal 2023, 23.9% of our net sales in fiscal 2022 and 20.9% of our net sales in fiscal 2021. In addition, TJX Companies accounted for approximately 15.4% of our net sales in fiscal 2023, 14.8% of our net sales in fiscal 2022 and 12.9% of our net sales in fiscal 2021. We expect that these customers will continue to provide a significant percentage of our sales. Reductions in purchases by these customers or other large retailers could adversely affect our sales. Sales to customers generally occur on an order-by-order basis that may be subject to cancellation or rescheduling by the customer. A decision by our major customers to decrease the amount of merchandise purchased from us, increase the use of their own private label brands, sell a national brand on an exclusive basis or change the manner of doing business with us could reduce our revenues and materially adversely affect our results of operations. The loss of any of our large customers, the reduction in stores operated by a large customer or the bankruptcy or serious financial difficulty of any of our large customers, could have a material adverse effect on us. 21 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 segment reported an operating loss of $33.6 million in fiscal 2023, $24.8 million in fiscal 2022 and $126.8 million in fiscal 2021. Our ongoing plan for our retail operations focuses on the operations and growth of our DKNY and Karl Lagerfeld Paris stores, as well as operating our digital business. 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. Leasing of significant amounts of real estate exposes us to possible liabilities and losses. All of the stores operated by us are leased. Accordingly, we are subject to all of the risks associated with leasing real estate. Store leases generally require us to pay a fixed minimum rent and a variable amount based on a percentage of annual sales at that location. We generally cannot cancel our leases. If an existing or future store is not profitable, and we decide to close it, we may be committed to perform certain obligations under the applicable lease including, among other things, paying rent for the balance of the applicable lease term. As each of our leases expires, if we do not have a renewal option, we may be unable to negotiate a renewal on commercially acceptable terms, or at all, which could cause us to close stores in desirable locations. In addition, we may not be able to close an unprofitable store due to an existing operating covenant, which may cause us to operate the location at a loss and prevent us from finding a more desirable location. Our retail stores are heavily dependent on the ability and desire of consumers to travel and shop. A reduction in the volume of outlet mall traffic could adversely affect our retail sales. Substantially all of the stores in our retail operations segment are operated as outlet stores and located in larger outlet centers, many of which are located in, or near, vacation destinations or away from large population centers where department stores and other traditional retailers are concentrated. Economic uncertainty, increased fuel prices, travel concerns and other circumstances, which would lead to decreased travel, could have a material adverse effect on sales at our outlet stores. Other factors that could affect the success of our outlet stores include: • • • • • • • the location of the outlet mall or the location of a particular store within the mall; the other tenants occupying space at the outlet mall; increased competition in areas where the outlet malls are located; a downturn in the economy generally or in a particular area where an outlet mall is located; the shift to online shopping; a downturn in foreign shoppers in the United States; and the amount of advertising and promotional dollars spent on attracting consumers to outlet malls. Sales at our outlet stores are derived, in part, from the volume of traffic at the malls where our stores are located. Our outlet stores benefit from the ability of a mall’s other tenants and other area attractions to generate consumer traffic in the vicinity of our stores and the continuing popularity of outlet malls as shopping destinations. Changes in areas around our existing retail locations, including the type and nature of the other retailers located near our stores, that result in reductions in customer foot traffic or otherwise render the locations unsuitable could cause our sales to be less than expected. A reduction in outlet mall traffic as a result of these or other factors could materially adversely affect our business. Our digital business faces distinct risks, and our failure to successfully manage this business could have a negative impact on our profitability. We are investing in our digital business and seeking to increase the amount of business derived from our digital operations. The successful operation and expansion of our digital business, as well as our ability to provide a positive shopping experience that will generate orders and drive subsequent visits, depends on operating an appealing digital platform and 22 providing an efficient and uninterrupted operation of our order-taking and fulfillment operations. Risks associated with our digital business include: • • • • • • • • the security or failure of the computer systems, including those of third-party vendors, that operate our digital sites including, among others, inadequate system capacity, computer viruses, human error, changes in programming, security breaches or other cybersecurity concerns, system upgrades or migration of these services to new systems; disruptions in the Internet or telecom service or power outages; reliance on third parties for computer hardware and software and merchandise deliveries; rapid technology changes; the failure to deliver products to customers on-time, as ordered and without damage or to satisfy customer expectations; credit or debit card fraud and other payment processing issues; liability for online content; and consumer privacy concerns and regulations. Problems in any of these areas could result in a reduction in sales, increased costs and damage to our reputation and brands, which could adversely affect our business and results of operations. Risk Factors Relating to the Operation of Our Business If we lose the services of our key personnel, or are unable to attract key personnel, our business will be harmed. Our future success depends on Morris Goldfarb, our Chairman and Chief Executive Officer, and other key personnel. The loss of the services of Mr. Goldfarb and any negative market or industry perception arising from the loss of his services could have a material adverse effect on us and the market price of our common stock. Our other executive officers have substantial experience and expertise in our business and have made significant contributions to our success. 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. 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. 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. 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. 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 extends to August 2025. Our growth is dependent on our ability to continue to be able to extend and, if necessary, increase this credit facility. We also issued Senior Secured Notes in fiscal 2021. While we were able to refinance our debt in fiscal 2021, we cannot be sure we will be able to continue to secure alternative financing on satisfactory terms or at all. The loss of the use of our credit facility or the inability to replace this facility or the Senior Secured Notes when each expires or matures would materially impair our ability to operate our business. 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 23 60% of our net sales in fiscal 2023, 64% of our net sales in fiscal 2022 and 66% of our net sales in fiscal 2021. 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. 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. Our quarterly results of operations for our retail business also may fluctuate based upon such factors as the timing of certain holiday seasons, the number and timing of new store openings, the acceptability of seasonal merchandise offerings, the timing and level of markdowns, store closings and remodels, competitive factors, weather and general economic conditions. The second half of the year is expected to continue to have a disproportionate effect on our annual results of operations for the foreseeable future. Extreme or unseasonable weather conditions could adversely affect our business. Extreme weather events and changes in weather patterns can influence customer trends and shopping habits. Extended periods of unseasonably warm temperatures during the fall and winter seasons, or cool weather during the summer season, may diminish demand for our seasonal merchandise. Heavy snowfall, hurricanes or other severe weather events in the areas in which our retail stores and the retail stores of our wholesale customers are located may decrease customer traffic in those stores and reduce our sales and profitability. If severe weather events were to force closure of or disrupt operations at the distribution centers we use for our merchandise, we could incur higher costs and experience longer lead times to distribute our products to our retail stores, wholesale customers or digital channel customers. If prolonged, such extreme or unseasonable weather conditions could adversely affect our business, financial condition and results of operations. Our ability to deliver our products to the market could be disrupted if we encounter problems affecting our logistics and distribution systems. We rely on distribution facilities operated by us or by third parties to transport, warehouse and ship products to our customers. Our logistic and distribution systems include computer-controlled and automated equipment, which may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures. 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. Our business interruption insurance may not adequately protect us from the adverse effects that could be caused by significant disruptions affecting our distribution facilities. In addition, our distribution capacity is dependent on the timely performance of services by third parties, including the transportation of products to and from our distribution facilities. If we encounter problems affecting our distribution system, our ability to meet customer expectations, manage inventory, complete sales and achieve operating efficiencies could be materially adversely affected. Supply chain disruptions have adversely affected, and could continue to adversely affect, our ability to import our products in a timely manner and our freight costs. There were numerous factors disrupting the shipping industry during fiscal 2023 that negatively affected transit times from our overseas suppliers. These disruptions also affected our ability to import our product in a manner that allowed for timely delivery to our customers. As a result of supply chain disruptions, we accelerated production schedules to allow for more lead time and to accommodate the anticipated extended transit times from our overseas suppliers in an effort to import our product in a manner that allowed for timely delivery to our customers. As a result, our inventory levels are higher than in prior years. Elevated inventory levels and lack of additional space in our distribution centers contributed to us incurring significant demurrage charges in our third fiscal quarter. Demurrage charges are charges paid to steamship carriers for freight remaining in the terminal for longer periods than initially agreed upon. These charges had a significant impact on our results of operations in our third fiscal quarter, and to a lesser extent, in our fourth fiscal quarter. We expect that our inventory levels will be higher than normal through at least the first half of fiscal 2024. As a result, we expect our warehouse operations may be less efficient, and we expect to incur additional labor and storage costs related to our inventory levels in the first half of fiscal 2024. 24 If we are unable to mitigate these supply chain disruptions, our ability to meet customer expectations, manage inventory and complete sales could be materially adversely affected. In addition, if we are unable to offset higher warehousing costs through product price increases or other measures, our results of operations may be adversely affected. The need of retailers to rationalize excess inventory could lead to discounts or excess promotional activities, which could adversely affect our results of operations. In certain circumstances, such as in response to supply chain disruptions, companies in the apparel and retail industries that rely on the importation of merchandise may choose to accelerate their production schedule in order to meet expected customer demand, which can lead to higher inventory levels. Higher marketplace inventories and a rapidly changing economic environment have caused retailers to rationalize their inventory levels. As a result, retailers have increased promotional activity to reduce their inventory. While we have planned for a certain amount of promotional activity, additional promotional activity in excess of what we have planned for could have an adverse effect on our results of operations. Fluctuations in the price, availability and quality of materials used in our products could have a material adverse effect on our cost of goods sold and our ability to meet our customers’ demands. Fluctuations in the price, availability and quality of raw materials used in our products could have a material adverse effect on our cost of sales or our ability to meet the demands of our customers. We compete with numerous entities for supplies of materials and manufacturing capacity. Raw materials are vulnerable to adverse climate conditions, animal diseases and natural disasters that can affect the supply and price of raw materials. We may not be able to pass on all or any portion of higher raw material prices to our customers. Future increases in raw material prices could have an adverse effect on our results of operations. Any raw material price increase or increase in costs related to the transport of our products could increase our cost of sales and potentially decrease our profitability unless we are able to pass higher prices on to our customers. In addition, if one or more of our competitors is able to reduce its production costs by taking greater advantage of any reductions in raw material prices, favorable sourcing agreements or new manufacturing technologies (which enable manufacturers to produce goods on a more cost-effective basis) we may face pricing pressures from those competitors and may be forced to reduce our prices or face a decline in net sales, either of which could have an adverse effect on our business, results of operations or financial condition. 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. We may, however, experience conflict with various third parties who acquire or claim ownership rights in certain trademarks. We cannot be sure that the actions we have taken to establish and protect our trademarks and other proprietary rights will be adequate to protect our rights, or that any of our intellectual property will not be challenged or held invalid or unenforceable, and we may not be able to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as a violation of the trademarks and proprietary rights of others. Our failure to protect our trademarks could diminish the value of our brands, and could cause customer or consumer confusion, which could, in turn, adversely affect the validity of our trademarks and our business, results of operations and financial condition. In the course of our attempts to expand into foreign markets, we may experience conflicts with various third parties who have acquired ownership rights in certain trademarks, which would impede our use and registration of some of our trademarks. Such conflicts are common and may arise from time to time as we pursue international expansion, such as with the international expansion of our DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. 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. Enforcing rights to our intellectual property may be difficult and expensive, and we may not be successful in combating counterfeit products and stopping infringement of our intellectual property rights, which could make it easier for competitors to capture market share. Counterfeit products may reduce our net sales and may also damage our brands due to their lower quality. If we are unable to protect, maintain or enforce our 25 intellectual property rights against third parties, our business, financial condition and results of operations may be materially adversely affected. Furthermore, we cannot be certain that the conduct of our business does not and will not infringe, misappropriate or otherwise conflict with the intellectual property rights of others, and our efforts to enforce our trademark and other intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our trademark and other intellectual property rights. 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. If we are found to have infringed, misappropriated or otherwise violated rights of third parties, we could be required to pay substantial damages, obtain licenses, cease the manufacture, use or sale of certain intellectual property, or cease making or selling certain products. There can be no assurance that licenses will be available on commercially reasonable terms, if at all. 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 currently license, and expect to continue licensing, certain of our proprietary rights, such as trademarks, to third parties. If our licensees fail to successfully market and sell licensed products, or fail to obtain sufficient capital or effectively manage their business operations, customer relationships, labor relationships, supplier relationships or credit risks, this could adversely affect our revenues, both directly from reduced royalties received and indirectly from reduced sales of our other products. We also rely on our licensees to help preserve the value of our brand. 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. Although we make efforts to police the use of our trademarks by our licensees, we cannot be certain that these efforts will be sufficient to ensure that our licensees abide by the terms of their licenses. In the event that our licensees fail to do so, our trademark rights could be harmed. Moreover, the misuse of our brand by, or negative publicity involving, a licensee, could have a material adverse effect on our brand and on us. Risk Factors Relating to the Economy and the Apparel Industry Recent and future economic conditions, including volatility in the financial and credit markets, inflation and increases in interest rates, may adversely affect our business. Economic conditions have affected, and in the future may adversely affect, the apparel industry and our major customers. Economic conditions have, at times, led to a reduction in overall consumer spending, which could have an adverse impact on sales of our products. A disruption in the ability of our significant customers to access liquidity could cause serious disruptions or an overall deterioration of their businesses which could lead to a significant reduction in their orders of our products and the inability or failure on their part to meet their payment obligations to us, any of which could have a material adverse effect on our results of operations and liquidity. A significant adverse change in a customer’s financial and/or credit position could also require us to sell fewer products to that customer, assume greater credit risk relating to that customer’s receivables or could limit our ability to collect receivables related to previous purchases by that customer. As a result, our reserves for doubtful accounts and write-offs of accounts receivable may increase. Inflationary pressures have impacted the entire economy, including our industry. We have experienced increased costs in many aspects of our business, including our product costs and freight. During fiscal 2023, we have implemented price increases on many of our products. Our price increases were an effort to mitigate the effect of higher costs, although, the impact of price increases on consumer demand and on our business and results of operations is uncertain. We expect inflationary pressures to continue to impact our business throughout fiscal 2024. Recent historic high rates of inflation, including increased fuel and food prices, have led to a softening of consumer demand and increased promotional activity 26 in our categories and may lead to further challenges to grow our sales. Ongoing inflation may also negatively impact our cost structure and labor costs in the future. The Federal Reserve raised interest rates multiple times in fiscal 2023 in response to concerns about inflation and it is expected to continue to raise interest rates in fiscal 2024. 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. 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. The apparel industry is cyclical. Purchases of outerwear, sportswear, swimwear, footwear and other apparel and accessories tend to decline during recessionary periods and may decline for a variety of other reasons, including changes in fashion trends and the introduction of new products or pricing changes by our competitors. Retailers have also responded to the shift in the types of apparel purchased by consumers based on their adjusted lifestyle needs resulting from changes to the work environment and leisure activities caused by the COVID-19 pandemic. Uncertainties regarding future economic prospects, including as a result of concerns with respect to the possibility of a recession, the increase in interest rates or the COVID-19 pandemic, may affect consumer-spending habits and could have an adverse effect on our results of operations. Weak economic conditions have had a material adverse effect on our results of operations at times in the past and could have a material adverse effect on our results of operations in the future as well. The competitive nature of our industry may result in lower prices for our products and decreased gross profit margins. The apparel business is highly competitive. We have numerous competitors with respect to the sale of apparel, footwear and accessories, including digital websites, distributors that import products from abroad and domestic retailers with established foreign manufacturing capabilities. Many of our competitors have greater financial and marketing resources and greater manufacturing capacity than we do. The general availability of contract manufacturing capacity also allows ease of access by new market entrants. The competitive nature of the apparel industry may result in lower prices for our products and decreased gross profit margins, either of which may materially adversely affect our sales and profitability. 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. 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. We sell our products to major department, mass merchant and specialty store chains. Continued consolidation in the retail industry, as well as store closing or retailers ceasing to do business, could negatively impact our business. Various customers of ours, including Macy’s and Kohl’s, have reduced their store count and others have filed for bankruptcy. Store closings could adversely affect our business and results of operations. Consolidation could reduce the number of our customers and potential customers. With increased consolidation in the retail industry, we are increasingly dependent on retailers whose bargaining strength may increase and whose share of our business may grow. As a result, we may face greater pressure from these customers to provide more favorable terms, including increased support of their retail margins. As purchasing decisions become more centralized, the risks from consolidation increase. A store group could decide to close stores, decrease the amount of product purchased from us, modify the amount of floor space allocated to apparel in general or to our products specifically or focus on promoting private label products or national brand products for which it has exclusive rights rather than promoting our products. Customers are also concentrating purchases among a narrowing group of vendors. These types of decisions by our key customers could adversely affect our business. The effects of war, including the war in Ukraine, acts of terrorism, natural disasters or public health crises could adversely affect our business and results of operations. The current war in Ukraine and the continued threat of terrorism, heightened security measures and military action in response to acts of terrorism or civil unrest has, at times, disrupted commerce and intensified concerns regarding the United 27 States and world economies. The imposition of additional sanctions by the United States and/or foreign governments, as well as the sanctions already in place, could lead to restrictions related to sales and our supply chain for which the financial impact is uncertain. In addition, the war has also led to, and may lead to further, broader unfavorable macroeconomic implications, including unfavorable foreign exchange rates, increases in fuel prices, food shortages, a weakening of the European economy, lower consumer demand and volatility in financial markets. These implications of the war in Ukraine could have a material adverse effect on our business and our results of operations. Any other acts of terrorism or new or extended hostilities may disrupt commerce and undermine consumer confidence, which could negatively impact our sales and results of operations. Similarly, the occurrence of one or more natural disasters, such as hurricanes, fires, floods or earthquakes, or public health crises, such as the COVID-19 pandemic, could result in the closure of one or more of our distribution centers, our corporate headquarters or a significant number of stores or impact one or more of our key suppliers. These types of events could result in additional increases in energy prices or shortages, the temporary or long-term disruption in the supply of product, disruption in the transport of product from overseas, delay in the delivery of product to our factories, our customers or our stores and disruption in our information and communication systems. Accordingly, these types of events could have a material adverse effect on our business and our results of operations. Risks Related to the COVID-19 Pandemic The global health crisis caused by the COVID-19 pandemic has had, and the current and uncertain future outlook of the outbreak may continue to have, a significant adverse effect on our business, financial condition and results of operations. The COVID-19 pandemic has affected businesses around the world since our first quarter of fiscal 2021. Federal, state and local governments in the United States and around the world, as well as private entities, mandated various restrictions, including closing of retail stores and restaurants, travel restrictions, restrictions on public gatherings, stay at home orders and advisories, and quarantining of people who may have been exposed to the virus. The response to the COVID-19 pandemic negatively affected the global economy, disrupted global supply chains and created significant disruption of the financial and retail markets, including a disruption in consumer demand for apparel and accessories. The continued impact of the COVID-19 pandemic on our business operations remains uncertain and cannot be predicted. During fiscal 2022 and 2023, there were periodic incidents of a resurgence in the number of cases of COVID-19 and its variants in the U.S. and certain other parts of the world, which caused business disruptions for us and/or our wholesale customers, suppliers and vendors. Even as government restrictions and company initiatives have been lifted or significantly reduced, consumer behavior, spending levels and/or shopping preferences, such as willingness to congregate in shopping centers or other populated locations, could be adversely affected. The extent to which COVID-19 impacts our results in fiscal 2024 will depend on continued developments in the United States and around the world in the public and private responses to the pandemic. New information may emerge concerning the severity of the outbreak and the spread of variants of the COVID-19 virus in locations that are important to our business. Actions taken to contain COVID-19 or treat its impact may change or become more restrictive if additional waves of infections occur. The impact of COVID-19 on our business and operating results could differ materially from our assumptions based on a number of factors largely outside of our control. Risks Related to Our International Operations We are dependent upon foreign manufacturers. We do not own or operate any manufacturing facilities. We also do not have long-term written agreements with any of our manufacturers. As a result, any of these manufacturers may unilaterally terminate its relationship with us at any time. Almost all of our products are imported from independent foreign manufacturers. The failure of these manufacturers to meet required quality standards could damage our relationships with our customers. In addition, the failure by these manufacturers to ship products to us in a timely manner could cause us to miss the delivery date requirements of our 28 customers. The failure to make timely deliveries could cause customers to cancel orders, refuse to accept delivery of products or demand reduced prices. Additionally, our arrangements with foreign manufacturers subject us to risks of engaging in business abroad, including currency fluctuations, political or labor instability and potential import restrictions, duties and tariffs. We do not maintain insurance for the potential lost profits due to disruptions of our overseas manufacturers. 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 37.6% of our inventory purchased in fiscal 2023, 34.2% of our inventory purchased in fiscal 2022 and 32.8% of our inventory purchased in fiscal 2021. Products sourced from Vietnam represented approximately 31.4% of our inventory purchased in fiscal 2023, 32.2% of our inventory purchased in fiscal 2022 and 36.2% of our inventory purchased in fiscal 2021. While we source our products from many different manufacturers, we rely on a few manufacturers for a significant amount of our products. In fiscal 2023, we sourced 25.7% and 15.2% of our purchases from two different vendors in Vietnam and in fiscal 2022, we sourced 35.5% and 17.1% of our purchases from two different vendors in Vietnam. In fiscal 2023, we sourced 18.8% of our purchases from one vendor in China and in fiscal 2022, we sourced 19.4% 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. 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. 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 impacts of the war in Ukraine and the COVID-19 pandemic. 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. dollar, our functional currency. We have foreign currency exposure related to foreign denominated revenues and costs, which must be translated into U.S. dollars. Fluctuations in foreign currency exchange rates may adversely affect our reported earnings and the comparability of period-to-period results of operations. In addition, while certain currencies (notably the Hong Kong dollar and Chinese Renminbi) are currently managed in value in relation to the U.S. dollar by foreign central banks or governmental entities, such conditions may change, thereby exposing us to various risks as a result. 29 Certain of our foreign operations purchase products from suppliers denominated in U.S. dollars and Euros, which may expose such operations to increases in cost of goods sold (thereby lowering profit margins) as a result of foreign currency fluctuations. Our exposures are primarily concentrated in the Euro. Changes in currency exchange rates may also affect the relative prices at which we and our foreign competitors purchase and sell products in the same market and the cost of certain items required in our operations. In addition, certain of our foreign operations have receivables or payables denominated in currencies other than their functional currencies, which exposes such operations to foreign exchange losses as a result of foreign currency fluctuations. Such fluctuations in foreign currency exchange rates could have an adverse effect on our business, results of operations and financial condition. We are not currently engaged in any hedging activities to protect against currency risks. If there is downward pressure on the value of the dollar, our purchase prices for our products could increase. We may not be able to offset an increase in product costs with a price increase to our customers. We are subject to numerous risks associated with international operations. Our ability to capitalize on the potential of our international operations, including to realize the benefits of our DKNY, Donna Karan, Vilebrequin and Sonia Rykiel businesses, as well as of the recently acquired Karl Lagerfeld brand, and successfully expand into international markets, is subject to risks associated with international operations. These include: the burdens of complying with a variety of foreign laws and regulations, including trade and labor restrictions; local product preferences and product requirements; • • • more stringent regulation relating to privacy and data protection, including with respect to the collection, use and processing of personal information, particularly in Europe; • more stringent regulation relating to privacy and data access to, or use of, commercial or personal information, particularly in Europe; less rigorous protection of intellectual property; compliance with United States and other country laws relating to foreign operations, including the Foreign Corrupt Practices Act, which prohibits U.S. companies from making improper payments to foreign officials for the purpose of obtaining or retaining business; unexpected changes in regulatory requirements; and new tariffs or other barriers in international markets. • • • • We are also subject to general political and economic risks in connection with our international operations, including: • • • political instability and terrorist attacks; changes in diplomatic and trade relationships; and general and economic fluctuations in specific countries or markets. Changes in regulatory, geopolitical, social or economic policies and other factors may have a material adverse effect on our international business in the future or may require us to exit a particular market or significantly modify our current business practices. The national security law adopted in Hong Kong may result in disruptions to our business operations in Hong Kong and additional tariffs and trade restrictions. 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. The U.S. 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 could have an adverse impact on our results of operations. To date, no such disruptions have occurred. 30 Risks Related to Cybersecurity, Data Privacy and Information Technology Laws on privacy continue to evolve, and place further limits on how we collect or use customer information could adversely affect our business. We collect, store and process customer information primarily for marketing purposes and to improve the services we provide. 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”). 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. 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. If we fail to comply with applicable laws and regulations, we may be subject to legal exposure, as well as financial and reputational damage, which could impact our business, financial condition and results of operations. Any additional limitations imposed on the use of consumer information by federal, state, local or foreign governments, could have an adverse effect on our future marketing activities. Governmental focus on data security and/or privacy may lead to additional legislation or regulations. As a result, we may have to modify our business to further improve data security and privacy compliance, which would result in increased expenses and operating complexity, or in ways that negatively affect our or our third-party service providers’ business, results of operations or financial condition. To the extent our, or our business partners’, security procedures and protection of consumer information prove to be insufficient or inadequate, we may become subject to litigation or other claims, fines, penalties or other obligations, which could expose us to liability and cause damage to our reputation, brand and results of operations. We are subject to rules relating to the processing of credit card payments. Failure to comply with these rules could result in an ability to process payments which would adversely affect our retail business. Because we process and transmit payment card information, we are subject to the Payment Card Industry (“PCI”) Data Security Standard (the “Standard”), and card brand operating rules (“Card Rules”). The Standard is a comprehensive set of requirements for enhancing payment account data security that was developed by the PCI Security Standards Council to help facilitate the broad adoption of consistent data security measures. We are required by Card Rules to comply with the Standard, and our failure to do so may result in fines or restrictions on our ability to accept payment cards. Under certain circumstances specified in the Card Rules, we may be required to submit to periodic audits, self-assessments or other assessments of our compliance with the Standard. Such activities may reveal that we have failed to comply with the Standard. If an audit, self-assessment or other test determines that we need to take steps to remediate any deficiencies, such remediation efforts may distract the management team of our retail business and require it to undertake disruptive, costly and time-consuming remediation efforts. In addition, even if we comply with the Standard, there is no assurance that we will be protected from a security breach, which may materially affect our reputation and our ability to conduct our business. 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. Failure to keep up with changes in technology could result in the loss of business. Failure to comply with the Standard or Card Rules could result in losing certification under the PCI standards and an inability to process payments. 31 If we do not successfully upgrade, maintain and secure our information systems to support the needs of our organization, this could have an adverse impact on the operation of our business. We rely heavily on information systems to manage operations, including a full range of financial, sourcing, retail and merchandising systems, and regularly make investments to upgrade, enhance or replace these systems. The reliability and capacity of our information systems is critical. 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. Increased cyber-security threats pose a potential risk to the security and viability of our information technology systems, as well as the confidentiality, integrity and availability of the data stored on those systems. If our information technology systems suffer severe damage, disruption or shutdown, by unintentional or malicious actions of employees and contractors or by cyber-attacks, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions, reputational damage, transaction errors, processing inefficiencies, increased overhead costs, excess inventory, product shortages and a loss of important information, causing our business, financial condition and results of operations to be adversely affected. Any disruptions affecting our information systems, or any delays or difficulties in transitioning to new systems or in integrating them with current systems, could have a material adverse impact on the operation of our business. We could also be required to spend significant financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and information systems. In addition, our ability to continue to operate our business without significant interruption in the event of a disaster or other disruption depends in part on the ability of our information systems to operate in accordance with our disaster recovery and business continuity plans. While we devote significant resources to network security, backup and disaster recovery, enhanced training and other security measures to protect our systems and data, security measures cannot provide absolute security or guarantee that we will be successful in preventing or responding to every breach or disruption on a timely basis. In addition, due to the constantly evolving nature of security threats, we cannot predict the form and impact of any future incident, and the cost and operational expense of implementing, maintaining and enhancing protective measures to guard against increasingly complex and sophisticated cyber threats could increase significantly. If any of these risks materialize, our reputation and our ability to conduct our business may be materially adversely affected. A data security or privacy breach could adversely affect our business. We collect, process, transmit and store personal, sensitive and confidential information, including our proprietary business information and that of consumers (including users of our websites) and our wholesale partners, distributors, employees, suppliers and business partners. The protection of customer, employee and company data is critical to us. Customers have a high expectation that we will adequately protect their personal information from cyberattack or other security breaches. A significant breach of customer, employee, or company data could damage our reputation and result in lost sales, fines, or lawsuits. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breaches due to employee error, malfeasance or other disruptions. Any such breach or attack could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Because the methods used to obtain unauthorized access change frequently and may not be immediately detected, we may be unable to anticipate these methods or promptly implement preventative measures. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations and the services we provide to customers and damage our reputation, which could adversely affect our business, revenues and competitive position. In addition to taking the necessary precautions ourselves, we require that third-party service providers implement reasonable security measures to protect our customers’ identity and privacy. We do not, however, control these third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future. 32 Legal and Regulatory Risks Tariffs that have been, and might be, imposed by the United States government or a resulting trade war could have a material adverse effect on our results of operations. Legislation that would restrict the importation or increase the cost of textiles and apparel produced abroad has been periodically introduced in Congress. The enactment of new legislation or international trade regulation, or executive action affecting international textile or trade agreements, could adversely affect our business. International trade agreements that can provide for tariffs and/or quotas can increase the cost and limit the amount of product that can be imported. We cannot predict whether quotas, duties, taxes, or other similar restrictions will be imposed in the U.S., the European Union, Asia, or other countries upon the import or export of our products in the future, or what effect any of these actions would have, if any, on our business, results of operations, and financial condition. Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors may have a material adverse effect on our business in the future, or may require us to exit a particular market or significantly modify our current business practices. The apparel and accessories industry has been impacted by Section 301 tariffs imposed by the United States government on goods imported from China. Tariffs on handbags and leather outerwear imported from China were effective beginning in September 2018. These tariffs initially increased existing duties by 10% of the merchandise cost to us. The level of tariffs on these product categories was later increased to 25% beginning May 10, 2019. Section 301 tariffs were set to expire in July and August of 2022, but were extended through September 30, 2023. In May 2022, the Special Trade Representative invited public comments as to the effects of the tariffs and exclusions on different industries. The government closed its most recent round of comments in January 2023 and is evaluating whether additional comments are necessary. While the government considers these comments, it is not known which duties will or will not be continued, whether new products will be added to the scope of the tariffs, or whether duties will fluctuate in amount. On August 1, 2019, the United States government announced new 10% tariffs that cover the remaining estimated $300 billion of inbound trade from China, including most of our apparel products. On August 23, 2019, the United States government announced that the new tariffs would increase from 10% to 15%. A portion of the new 15% tariffs went into effect on September 1, 2019. Some of the additional tariffs on certain categories of products were delayed until December 15, 2019, but have not yet gone into effect as the United States and China entered into a “phase one” trade agreement in January 2020 . It is difficult to accurately estimate the impact on our business from these tariff actions or similar actions or when any additional tariffs may become effective. For fiscal 2023, approximately 37.6% of the products that we sold were manufactured in China. For fiscal 2022, approximately 34.2% of the products that we sold were manufactured in China. Following accusations against China that it employed forced labor in manufacturing processes within the country, a bill was introduced in January 2023 to strip China of its permanent Most Favored Nation status, effectively requiring China to re-secure its position by annually applying for presidential approval as a member country. Because Most Favored Nation status grants special treatment among member counties with respect to tariffs, if this bill were to pass it would substantially increase tariffs between the United States and China. If the U.S. and China are not able to resolve their differences, additional tariffs or quotas may be put in place and additional products may become subject to tariffs. Tariffs or quotas on additional products imported by us from China would increase our costs, could require us to increase prices to our customers and would cause us to seek price concessions from our vendors. If we are unable to increase prices to offset an increase in tariffs, this would result in our realizing lower gross margins on the products sold by us and will negatively impact our operating results. We have reduced our reliance on China by moving production to other countries, including Vietnam and Indonesia. We will continue to explore alternative production partners to further diversify our sourcing network and to reduce our reliance on any one particular country. These efforts may not enable us to offset the adverse effects of any increases in tariffs. 33 Changes in tax legislation or exposure to additional tax liabilities could impact our business. The change in the U.S. presidency and control of Congress last year could result in changes to U.S. tax laws that would have a negative impact on our results of operations. 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. 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. A number of countries are actively pursuing fundamental changes to the tax laws applicable to multinational companies. Furthermore, tax authorities may choose to examine or investigate our tax reporting or tax liability, including an examination of our existing transfer pricing policies. Adverse outcomes from examinations may lead to adjustments to our income tax liabilities or provisions for uncertain tax position reserves. We are required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth, property, and goods and services taxes, in both the United States and various other jurisdictions. Tax authorities regularly examine these non-income taxes. The outcomes from these examinations, changes in the business, changes in applicable tax rules or other tax matters may have an adverse impact on our results of operations. 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. 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. As a result, even effective internal controls may not provide reasonable assurances with respect to the preparation and presentation of financial statements. We cannot provide assurance that, in the future, our management will not find a material weakness in connection with its annual review of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We also cannot provide assurance that we could correct any such weakness to allow our management to assess the effectiveness of our internal control over financial reporting as of the end of our fiscal year in time to enable our independent registered public accounting firm to state that such assessment will have been fairly stated in our Annual Report on Form 10-K or state that we have maintained effective internal control over financial reporting as of the end of our fiscal year. Discovery and disclosure of a material weakness in our internal control over financial reporting could have a material impact on our financial statements and could cause the market price of our securities to decline. While we have developed and instituted corporate compliance programs and continue to update our programs in response to newly implemented or changing regulatory requirements, we cannot provide assurance that we are or will be in compliance with all potentially applicable corporate regulations. 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. 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. 34 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. Between February 1, 2020 and March 23, 2023, the market price of our common stock has ranged from a low of $2.96 to a high of $35.80 per share. The market price of our common stock may change significantly in response to various factors and events beyond our control, including: • • • • • • • • • fluctuations in our quarterly revenues or those of our competitors as a result of seasonality or other factors; a shortfall in revenues or net income from that expected by securities analysts and investors; changes in securities analysts’ estimates of our financial performance or the financial performance of our competitors or companies in our industry generally; announcements concerning our competitors; changes in product pricing policies by our competitors or our customers; changes in tariff and trade policies; actual or perceived adverse effects from the COVID-19 pandemic; general conditions in our industry; and general conditions in the securities markets. Our actual financial results might vary from our publicly disclosed financial forecasts. From time to time, we have publicly disclosed financial forecasts. Our forecasts reflect numerous assumptions concerning our expected performance, as well as other factors that are beyond our control and that might not turn out to be correct. As a result, variations from our forecasts could be material. Our financial results are subject to numerous risks and uncertainties, including those identified throughout this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K and in the documents incorporated by reference in this Annual Report. If our actual financial results are worse than our financial forecasts or forecasts provided by outside investment analysts, or others, the price of our common stock may decline. Investors who rely on these predictions when making investment decisions with respect to our securities do so at their own risk. We take no responsibility for any losses suffered as a result of such changes in our stock price. We do 35 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. If our trademarks and other intangibles become impaired, we may be required to record additional charges to earnings. As of January 31, 2023, we had trademarks and other intangibles in an aggregate amount of $663.0 million, or approximately 24% of our total assets and approximately 48% of our stockholders’ equity. Approximately $395.5 million of our trademarks and other intangibles was recorded in connection with our acquisition of DKNY and Donna Karan and approximately $182.6 million of our trademarks and other intangibles was recorded in connection with our recent acquisition of Karl Lagerfeld. Under accounting principles generally accepted in the United States (“GAAP”), we review our goodwill and other indefinite life intangibles for impairment annually as of January 31 of each fiscal year and when events or changes in circumstances warrant. A significant decline in our stock price and market capitalization or deterioration in our projected results could result in an impairment of our trademarks and/or other intangibles, or any future goodwill. Other events or changes may indicate the carrying value may not be recoverable due to factors such as reduced estimates of future cash flows and profitability, increased cost of debt or slower growth rates in our industry. Estimates of future cash flows and profitability are based on an updated long-term financial outlook of our operations. However, actual performance in the near-term or long-term could be materially different from these forecasts, which could impact future estimates. As of January 31, 2023, we were required to record a $347.2 million charge to earnings in our financial statements as our goodwill was determined to be fully impaired as a result of our decline in market capitalization. We may be required to record additional significant charges to earnings in our financial statements during a period in which an impairment of our trademarks and other intangible assets is determined to exist which could negatively affect the market price of our securities. 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. In addition, we also incurred $125.0 million of debt pursuant to the LVMH Note that constituted a portion of the purchase price for the acquisition of DKNY and Donna Karan. 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. For example, it could: • make it more difficult for us to satisfy our obligations under the Senior Secured Notes and 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; require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures or other general corporate purposes; limit our flexibility in planning for, or reacting to, changes in our business and industry; place us at a disadvantage compared to competitors that may have proportionately less debt; limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements; and increase our cost of borrowing. • • • • • • 36 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. These restrictions limit our ability, among other things, to: • • incur, assume or permit to exist additional indebtedness (including guarantees thereof); pay dividends or certain other distributions on our capital stock or repurchase our capital stock or prepay subordinated indebtedness; prepay, redeem or repurchase certain debt; issue certain preferred stock or similar equity securities; incur liens on assets; • • • • make certain loans, investments or other restricted payments; • allow to exist certain restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us; engage in transactions with affiliates; alter the business that we conduct; and sell certain assets or merge or consolidate with or into other companies. • • • As a result of these restrictions, we may be: • • • limited in how we conduct our business; unable to raise additional debt or equity financing to operate during general economic or business downturns; or 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. 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. In addition, an event of default under the ABL Credit Agreement would permit the lenders thereunder to terminate all commitments to extend further credit under that Agreement. 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. 37 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. A deterioration of our results of operations and cash flow resulting from decreases in consumer spending, could, among other things, impact our ability to comply with financial covenants in the ABL Credit Agreement. Our historical sources of liquidity to fund ongoing cash requirements include cash flows from operations, cash and cash equivalents, borrowings through our credit facility and equity offerings. The sufficiency and availability of credit may be adversely affected by a variety of factors, including, without limitation, the tightening of the credit markets, including lending by financial institutions who are sources of credit for our borrowing and liquidity; an increase in the cost of capital; the reduced availability of credit; our ability to execute our strategy; the level of our cash flows, which will be impacted by retailer and consumer acceptance of our products and the level of consumer discretionary spending; maintenance of financial covenants included in our ABL Credit Agreement, interest rate fluctuations and the adverse impact of the COVID-19 pandemic on the U.S. and world-wide economies and on our business. Interest rates increased in fiscal 2023 and are expected to increase in fiscal 2024. We cannot predict the future level of interest rates or the effect of any increase in interest rates on the availability or aggregate cost of our borrowings. Higher interest rates increase the cost of our borrowings under our revolving credit facility, may increase economic uncertainty and may negatively affect consumer spending. Volatility in interest rates may adversely affect our business or our customers. If interest rates continue to increase, our capacity to obtain necessary liquidity may be negatively impacted. We cannot be certain that any additional required financing, whether debt or equity, will be available in amounts needed or on terms acceptable to us, if at all. As of January 31, 2023, we were in compliance with the financial covenants in our credit facility. Compliance with these financial covenants is dependent on the results of our operations, which are subject to a number of factors including current economic conditions. The economic environment has at times resulted in lower consumer confidence and lower retail sales. Adverse developments in the economy, including as a result of the COVID-19 outbreak, could lead to reduced consumer spending which could adversely impact our net sales and cash flow, which could affect our compliance with our financial covenants. A violation of our covenants could limit access to our credit facilities. 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. 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. 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. 38 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 2023 and are expected to continue to increase in fiscal 2024. As a result, our debt service obligations on our variable rate indebtedness increased. 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 $6.5 million change in annual cash interest expense under the ABL Credit Agreement. Financing extended to us under the ABL Credit Agreement is made at variable rates that use LIBOR or an alternate base rate (as determined by that Agreement) as a benchmark for establishing the interest rate. LIBOR quotations will cease as of June 30, 2023. We are in the process of transitioning the reference rate used in our ABL Credit Agreement from LIBOR to the Secured Overnight Financing Rate. We expect this transition to be completed prior to the date LIBOR quotations cease. The consequences of the change in the reference rate cannot be entirely predicted and could have an adverse impact on the market value for or value of LIBOR-linked securities, loans, and other financial obligations or extensions of credit to us. 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. 39 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 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. These ratings are based on a number of factors including their assessment of our financial strength and financial policies. Our borrowing costs will be dependent to some extent on the rating assigned to our debt. However, there can be no assurance that any particular rating assigned to us will remain in effect for any given period of time or that a rating will not be changed or withdrawn by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating so warrant. Incurrence of additional debt by us could adversely affect our credit rating. Any disruptions or turmoil in the capital markets or any downgrade of our credit rating could adversely affect our cost of funds, liquidity, competitive position and access to capital markets, which could materially and adversely affect our business operations, financial condition and results of operations. In addition, downgrading the credit rating of our debt securities or placing us on a watch list for possible future downgrading would likely have an adverse effect on the market price of our Common Stock. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. ITEM 2. PROPERTIES. The offices, sales showrooms, distribution centers and warehouses that are material to us, all of which are leased, consist of: Location 500 and 512 Seventh Avenue, New York City 231 West 39th Street, New York City Jamesburg, New Jersey South Brunswick, New Jersey Carlstadt, New Jersey Property Type Corporate Office and showrooms Corporate Office and showrooms Distribution center Distribution center Distribution center Lease Expiration March 2023 through March 2028 Renewal Option Square Footage 5-year 313,000 June 2034 December 2028 January 2025 April 2024 - 5-year - 10-year 22,000 583,000 305,000 197,000 The leases for a large portion of our corporate office and showrooms located at 500 and 512 Seventh Avenue, New York City expires in March 2023. We are currently engaged in discussions with the landlord with respect to the renewal of these leases. Retail Stores As of January 31, 2023, we operated 97 Vilebrequin retail stores, 59 DKNY and Karl Lagerfeld Paris stores, 62 Karl Lagerfeld stores and 4 Sonia Rykiel stores. In addition, we operated 22 DKNY stores in China that are 75% owned by us. Most leases for retail stores in the United States require us to pay annual minimum rent plus a contingent rent dependent on the store’s annual sales in excess of a specified threshold. In addition, the leases generally require us to pay costs such as real estate taxes and common area maintenance costs. Retail store leases are typically between three and ten years in duration. Recently, store leases have been for shorter durations with an option to terminate if certain sales levels are not met. Our leases expire at varying dates through 2035. Vilebrequin has 56 stores located in Europe, 20 stores located in the United States, 11 stores located in Asia, 7 stores located in Mexico and 3 stores in the Caribbean. DKNY has 22 stores located in the United States, 5 stores located in Europe and 2 stores located in Canada. In addition, DKNY has 22 stores located in Asia operated by Fabco. Karl Lagerfeld Paris has 29 stores located in the United States and 1 store located in Canada. Sonia Rykiel has 3 stores located in Europe and 1 store located in the United States. Karl Lagerfeld has 62 stores located in Europe. 40 The following table indicates the periods during which our retail leases expire: Fiscal Year Ending January 31, 2024 2025 2026 2027 2028 and thereafter Total ITEM 3. LEGAL PROCEEDINGS. Number of Stores 54 41 35 24 90 244 In the ordinary course of our business, we are subject to periodic claims, investigations and lawsuits. Although we cannot predict with certainty the ultimate resolution of claims, investigations and lawsuits, asserted against us, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our business, financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 41 ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. PART II Market For Common Stock The Nasdaq Global Select Market is the principal United States trading market for our common stock. Our common stock is traded under the symbol “GIII”. On March 23, 2023, there were 16 holders of record and, we believe, approximately 27,700 beneficial owners of our common stock. Dividend Policy Our Board of Directors (the “Board”) currently intends to follow a policy of retaining any earnings to finance the growth and development of our business. Any future determination as to the payment of cash dividends will be dependent upon our financial condition, results of operations and other factors deemed relevant by the Board. Issuer Purchases of Equity Securities The following table sets forth the repurchases of shares of our common stock during the fourth quarter of fiscal 2023: Date Purchased November 1 - November 30, 2022 December 1 - December 31, 2022 January 1 - January 31, 2023 Total Number of Shares Purchased (1) (2) Average Price Paid Per Share (1) — $ 777,008 — 777,008 $ — 13.31 — 13.31 Total Number of Share Purchased as Part of Publicly Announced Program (2) Maximum Number of Shares that may yet be Purchased Under the Program (2) — $ 775,707 — 775,707 $ 9,188,126 8,412,419 8,412,419 8,412,419 (1) (2) Included in this table are 1,301 shares withheld during December 2022 in connection with the settlement of vested restricted stock units to satisfy tax withholding requirements. Our 2015 Long-Term Incentive Plan provides that shares withheld are valued at the closing price per share on the date withheld. In March 2022, our Board of Directors reapproved a previously authorized share repurchase program and increased the number of shares remaining under that program from 2,293,149 to 10,000,000 shares. This program has no expiration date. Repurchases under the program may be made from time to time through open market purchases, accelerated share repurchase programs, privately negotiated transactions or other methods, as we deem appropriate. 42 Performance Graph The following Performance Graph and related information shall not be deemed to be “soliciting material” or “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that we specifically request that it be treated as soliciting material or incorporate it by reference into such filing. The SEC requires us to present a chart comparing the cumulative total stockholder return on our Common Stock with the cumulative total stockholder return of (i) a broad equity market index and (ii) a published industry index or peer group. This chart compares the Common Stock with (i) the S&P 500 Composite Index and (ii) the S&P 500 Textiles, Apparel and Luxury Goods Index, and assumes an investment of $100 on January 31, 2018 in each of the Common Stock, the stocks comprising the S&P 500 Composite Index and the stocks comprising the S&P 500 Textiles, Apparel and Luxury Goods Index. G-III Apparel Group, Ltd. Comparison of Cumulative Total Return (January 31, 2018 — January 31, 2023) $200 $150 E C I R P $100 $50 $0 1/31/2018 1/31/2019 1/31/2020 1/31/2021 1/31/2022 1/31/2023 DATE GIII S&P 500 (SPX) S&P 500 Textiles, Apparel & Luxury Goods 43 ITEM 6. [Reserved] ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. Unless the context otherwise requires, “G-III,” “us,” “we” and “our” refer to G-III Apparel Group, Ltd. and its subsidiaries. References to fiscal years refer to the year ended or ending on January 31 of that year. For example, our fiscal year ended January 31, 2023 is referred to as “fiscal 2023.” We consolidate the accounts of all of our wholly-owned and majority-owned subsidiaries. Karl Lagerfeld Holding B.V. (“KLH”) is a Dutch limited liability company that was 19% owned by us through May 30, 2022 and was accounted for during that time using the equity method of accounting. Effective May 31, 2022, we acquired the remaining 81% interest in KLH that we did not previously own and, as a result, KLH began being treated as a consolidated wholly-owned subsidiary. KL North America B.V. (“KLNA”) is a Dutch joint venture limited liability that was 49% owned by us and 51% indirectly owned by KLH through May 30, 2022 and was accounted for during that time using the equity method of accounting. KLNA operates the Karl Lagerfeld business in the United States, Mexico and Canada. Effective May 31, 2022, KLNA became an indirect wholly-owned subsidiary of us as a result of our acquisition of the remaining 81% interest in KLH we did not previously own. All material intercompany balances and transactions have been eliminated. The results of KLH are included in our consolidated financial statements beginning May 31, 2022. Each of Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by us, KLH, Fabco Holding B.V. (“Fabco”) and Sonia Rykiel, which we purchased in October 2021, report results on a calendar year basis rather than on the January 31 fiscal year basis used by G-III. Accordingly, the results of Vilebrequin, KLH, Fabco and Sonia Rykiel are and will be included in our financial statements for the year ended or ending closest to G-III’s fiscal year. For example, for G-III’s fiscal year ended January 31, 2023, the results of Vilebrequin, KLH, Fabco and Sonia Rykiel are included for the year ended December 31, 2022. For the year ended December 31, 2022, the results of KLH, which includes KLNA, are included for the period from June 1, 2022 through December 31, 2022. The results of the 49% ownership interest in KLNA and 19% ownership interest in KLH that we owned prior to our acquisition of the remaining interests in KLH that we did not previously own are included for the period from February 1, 2022 through May 30, 2022. Our retail operations segment uses a 52/53-week fiscal year. For fiscal 2023 and 2022, the retail operations segment reported based on a 52-week fiscal year that ended on January 28, 2023 and January 29, 2022, respectively. The following presentation of management’s discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our financial statements, the accompanying notes and other financial information appearing elsewhere in this Report. A discussion with respect to a comparison of the results of operations of fiscal 2022 compared to the fiscal year ended January 31, 2021 (“fiscal 2021”), other financial information related to fiscal 2021 and information with respect to Liquidity and Capital Resources at January 31, 2021 and for fiscal 2021 is contained under the headings “Results of Operations” and “Liquidity and Capital Resources” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2022. Overview G-III designs, sources and markets an extensive range of apparel, including outerwear, dresses, sportswear, swimwear, women’s suits and women’s performance wear, as well as women’s handbags, footwear, small leather goods, cold weather accessories and luggage. G-III has a substantial portfolio of more than 30 licensed and proprietary brands, anchored by our global power brands: DKNY, Donna Karan, Karl Lagerfeld, Calvin Klein and Tommy Hilfiger. We are not only licensees, but also brand owners, and we distribute our products through multiple channels. Our own proprietary brands include DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, Andrew Marc, Marc New York, Wilsons Leather and Sonia Rykiel. We sell products under an extensive portfolio of well-known licensed brands, including Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Levi’s, Guess?, Kenneth 44 Cole, Cole Haan, Vince Camuto, Dockers and, as of January 2024, Nautica. Through our team sports business, we have licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League and over 150 U.S. colleges and universities. We also source and sell products to major retailers under their private retail labels. Our products are sold through a cross section of leading retailers such as Macy’s, including its Bloomingdale’s division, Dillard’s, Hudson’s Bay Company, including its Saks Fifth Avenue division, Nordstrom, Kohl’s, TJX Companies, Ross Stores and Burlington. We also sell our products using digital channels through retail partners such as macys.com, nordstrom.com and dillards.com, each of which has a substantial online business. In addition, we sell to leading pure online retail partners such as Amazon, Fanatics, Zalando and Zappos. We also distribute apparel and other products directly to consumers through our own DKNY, Karl Lagerfeld, Karl Lagerfeld Paris and Vilebrequin retail stores, as well as through our digital channels for the DKNY, Donna Karan, Karl Lagerfeld, Karl Lagerfeld Paris, Vilebrequin, G.H. Bass, Andrew Marc, Wilsons Leather and Sonia Rykiel businesses. We operate in fashion markets that are intensely competitive. Our ability to continuously evaluate and respond to changing consumer demands and tastes, across multiple market segments, distribution channels and geographic areas is critical to our success. Although our portfolio of brands is aimed at diversifying our risks in this regard, misjudging shifts in consumer preferences could have a negative effect on our business. Our success in the future will depend on our ability to design products that are accepted in the marketplace, source the manufacture of our products on a competitive basis, and continue to diversify our product portfolio and the markets we serve. We believe that consumers prefer to buy brands they know, and we have continually sought to increase the portfolio of name brands we can offer through different tiers of retail distribution, for a wide array of products at a variety of price points. We have increased the portfolio of brands we offer through licenses, acquisitions and joint ventures. It is our objective to continue to expand our product offerings and we are continually discussing new licensing opportunities with brand owners and seeking to acquire established brands. Recent Developments Calvin Klein and Tommy Hilfiger License Extensions In November 2022, we announced the extension of the licenses for Calvin Klein and Tommy Hilfiger products. The amendments to the license agreements for these products provide for staggered extensions by category that expire beginning December 31, 2024 and continuing through December 31, 2027. See the table in “Wholesale Operations- Licensed Products” above for information with respect to the new extension term, any potential renewal term or the existing current term for the Calvin Klein and Tommy Hilfiger license agreements. PVH Corp., the owner of these two brands, has indicated that it intends to produce these products itself once the license agreements expire. Unless we are able to increase the sales of our other products, acquire new businesses and/or enter into other license agreements covering different products, the inability to renew the Calvin Klein and Tommy Hilfiger license agreements would cause a significant decrease in our net sales and have a material adverse effect on our results of operations. We continue to strategize near-term growth initiatives across our current owned and licensed brands including category, geographical and digital expansion. Additionally, we are directing resources toward new growth areas, including building our own brands, broadening our European business, developing new licensing opportunities, such as our recently announced new license agreement with Nautica, and continuing to seek to acquire new businesses. Karl Lagerfeld Acquisition In May 2022, we acquired from a group of investors the remaining 81% in interests in the parent entity of the Karl Lagerfeld business that we did not already own, for an aggregate consideration of €202.0 million ($216.8 million) in cash, after 45 taking into account certain adjustments. We funded the purchase price from cash on hand. See Note 15 – Karl Lagerfeld Acquisition in the accompanying notes to condensed consolidated financial statements for more information. The addition of the Karl Lagerfeld fashion brand to the G-III portfolio of owned brands advances several of our strategic initiatives, including increasing the direct ownership of brands, capitalizing on their licensing opportunities and further diversifying our global presence. This acquisition represents a significant opportunity to expand our international growth by further developing our European-based brands, which also include Vilebrequin and Sonia Rykiel. We believe that Karl Lagerfeld’s existing digital channel presence could enable us to enhance our omni-channel business and further accelerate our digital initiatives. The influential legacy of the Karl Lagerfeld brand embodies a creative expression that aligns with our goal to provide innovative products for our customers. License Agreement with Nautica In March 2023, we announced the signing of a long-term license with Authentic Brands Group for the Nautica brand in North America. We will produce across a number of categories starting with a full women’s jeanswear collection and then expanding in a phased approach into additional categories including sportswear, suit separates and dresses. The new five-year license agreement, effective beginning in January 2024, includes three extensions, for five years each. First deliveries are expected to hit the floor in January 2024. The product is expected to be distributed in better department stores, digital channels and Nautica’s stores and website in North America and franchised stores globally. We believe that significant opportunity exists in the better women’s apparel space in categories where we have strong expertise. The Nautica brand joins our portfolio of some of the largest American brands in the world. Repositioning and Expansion of Donna Karan We acquired the DKNY and Donna Karan brands, two of the most iconic American fashion brands, in December 2016. We initially repositioned and relaunched DKNY and have successfully grown the brand to approximately $600.0 million in annual net sales. We are now focused on the repositioning and expansion of the Donna Karan brand for Spring 2024. The new Donna Karan will be a modern system of dressing created to appeal to a woman’s senses on every level, addressing the full lifestyle needs of a new customer. Our Donna Karan product is expected to be distributed in better department stores, digital channels and our own Donna Karan website in North America and internationally. Donna Karan is widely considered a top fashion brand and is recognized as one of the most famous designer names in American fashion. We believe that the strength of the Donna Karan brand, along with our success with the DKNY brand, demonstrates the potential for our new Donna Karan products. Segments We report based on two segments: wholesale operations and retail operations. Our wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, other than sales of product under the Karl Lagerfeld Paris brand from our retail stores and digital outlets. Wholesale revenues also include royalty revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, Sonia Rykiel, G.H. Bass and Andrew Marc. Our retail operations segment consists primarily of direct sales to consumers through our company-operated stores and through digital channels. Our company-operated stores consists primarily of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, G.H. Bass, Andrew Marc and Wilsons Leather. Substantially all DKNY and Karl Lagerfeld Paris stores are operated as outlet stores. 46 Trends Affecting Our Business Industry Trends Significant trends that affect the apparel industry include retail chains closing unprofitable stores, an increased focus by retail chains and others on expanding digital sales and providing convenience-driven fulfillment options, the continued consolidation of retail chains and the desire on the part of retailers to consolidate vendors supplying them. We sell our products online through retail partners such as macys.com, nordstrom.com and dillards.com, each of which has a substantial online business. As sales of apparel through digital channels continue to increase, we are developing additional digital marketing initiatives on both our web sites and third party web sites and through social media. We are investing in digital personnel, marketing, logistics, planning, distribution and other strategic opportunities to expand our digital footprint. Our digital business consists of our own web platforms at www.dkny.com, www.donnakaran.com, www.ghbass.com, www.vilebrequin.com, www.andrewmarc.com, www.wilsonsleather.com, www.soniarykiel.com, www.karllagerfeldparis.com and www.karl.com. In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando and Zappos and have made minority investments in two e-commerce retailers. A number of retailers have experienced financial difficulties, which in some cases have resulted in bankruptcies, liquidations and/or store closings. The financial difficulties of a retail customer of ours could result in reduced business with that customer. We may also assume higher credit risk relating to receivables of a retail customer experiencing financial difficulty that could result in higher reserves for doubtful accounts or increased write-offs of accounts receivable. We attempt to mitigate credit risk from our customers by closely monitoring accounts receivable balances and shipping levels, as well as the ongoing financial performance and credit standing of customers. Retailers are seeking to differentiate their offerings by devoting more resources to the development of exclusive products, whether by focusing on their own private label products or on products produced exclusively for a retailer by a national brand manufacturer. Exclusive brands are only made available to a specific retailer, and thus customers loyal to their brands can only find them in the stores of that retailer. We have attempted to respond to general trends in our industry by continuing to focus on selling products with recognized brand equity, by attention to design, quality and value and by improving our sourcing capabilities. We have also responded with the strategic acquisitions made by us, such as our recent purchase of the interests not owned by us that resulted in Karl Lagerfeld becoming our wholly-owned subsidiary, and new license agreements entered into by us that added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines and expanding distribution channels. We believe that our broad distribution capabilities help us to respond to the various shifts by consumers between distribution channels and that our operational capabilities will enable us to continue to be a vendor of choice for our retail partners. Inflation and Interest Rates Inflationary pressures have impacted the entire economy, including our industry. We are experiencing increased costs in many aspects of our business, including our freight costs as discussed below under “Supply Chain”. We have implemented price increases on many of our products. Our price increases are an effort to mitigate the effect of higher costs, although, the impact of price increases on consumer demand and on our business and results of operations is uncertain. We expect inflationary pressures to continue to impact our business throughout fiscal 2024. Recent historic high rates of inflation, including increased fuel and food prices, has led to a softening of consumer demand and increased promotional activity in our categories and may lead to further challenges to grow our sales. Ongoing inflation may also negatively impact our cost structure and labor costs in the future. The Federal Reserve raised interest rates multiple times in fiscal 2023 in response to concerns about inflation and is expected to continue to do so in fiscal 2024. Higher interest rates 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 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. 47 Foreign currency fluctuation Our consolidated operations are impacted by the relationships between our reporting currency, the U.S. Dollar, and those of our non-United States subsidiaries whose functional/local currency is other than the U.S. Dollar, primarily the Euro. We continue to expect volatility in the global foreign currency exchange rates, which may have a negative impact on the reported results of certain of our non-United States subsidiaries in the future, when translated to the U.S. Dollar. Supply Chain There were numerous factors disrupting the shipping industry that have negatively affected transit times from our overseas suppliers, as well as our ability to ensure that we were able to import our product in a manner that allows for timely delivery to our customers. Congestion at ports of origin and ports of entry caused significant changes to the itineraries of our steamship carriers. Truck driver shortages, shortages of truck equipment such as the chassis that the containers are transported on, and the inability of ports to provide reliable pick uptimes, also negatively impacted our ability to timely receive goods. In addition, issues with respect to labor contracts for workers at certain ports on the west coast of the United States resulted in shifting delivery of goods to ports on the east coast of the United States which caused increased delays at east coast ports. More recently, shipping costs have returned to comparable, and in some cases lower than, pre-pandemic levels. Our ability to secure container space has improved as has the congestion at the ports around the world. Transit times in general, while improving, remain longer than normal due to capacity decline and carrier schedule changes. This is expected to remain a challenge in fiscal 2024 and may negatively impact our ability to deliver product to our retail partners and customers in a timely manner. As a result of supply chain disruptions, we had accelerated production schedules to allow for more lead time and to accommodate the anticipated extended transit times from our overseas suppliers in an effort to import our product in a manner that allows for timely delivery to our customers. As a result, our inventory levels are higher than in prior years. Elevated inventory levels, lack of additional space in our distribution centers, port congestion and the logistical challenges related to trucking all contributed to us incurring significant demurrage charges in our third fiscal quarter. Demurrage charges are charges paid to steamship carriers for freight remaining in the terminal for longer periods than initially agreed upon. These charges had a significant impact on our statement of operations in our third fiscal quarter, and to a lesser extent, in our fourth fiscal quarter. We are still expecting to have inventory levels that are higher than normal through the first half of fiscal 2024. As a result, we expect our warehouse operations may be less efficient, and we expect to incur additional labor and storage costs related to our inventory in the first half of fiscal 2024. We are actively negotiating new contracts with two of our long-term steamship carrier partners and are considering to add a third to insure minimal risk should rates increase. We are presently securing all space needed through existing contracts and are no longer relying on the secondary market. We believe that our existing carriers will be able to manage demand for fiscal 2024 and, as a result, our reliance on the secondary market will be greatly reduced if not eliminated. Excess Inventory in the Marketplace Higher marketplace inventories and a rapidly changing economic environment have caused retailers to rationalize their inventory levels. As a result, retailers have increased promotional activity to reduce their inventory. While we have planned for a certain amount of promotional activity, additional promotional activity in excess of what we have planned for could have an adverse effect on our results of operations. Impact of COVID-19 The continued impact of the COVID-19 pandemic on our business operations remains uncertain and cannot be predicted. The extent to which COVID-19 impacts our results will depend on continued developments in the United States and around the world in the public and private responses to the pandemic. New information may emerge concerning the severity of the outbreak and the spread of variants of the COVID-19 virus in locations that are important to our business. Actions 48 taken to contain COVID-19 or treat its impact may change or become more restrictive if additional waves of infections occur. We continue to monitor the latest developments regarding the COVID-19 pandemic and have incorporated certain assumptions regarding the duration, severity and global macroeconomic impact of the pandemic into our financial outlook. The impact of COVID-19 on our business and operating results could differ materially from these assumptions based on a number of factors largely outside of our control. War in Ukraine The current war in Ukraine and the continued threat of terrorism, heightened security measures and military action in response to acts of terrorism or civil unrest has disrupted commerce and intensified concerns regarding the United States and world economies. Less than 1% of our revenue in fiscal 2023 was generated in Russia and Ukraine. However, the imposition of additional sanctions by the United States and/or foreign governments, as well as the sanctions already in place, could lead to restrictions related to sales and our supply chain for which the financial impact is uncertain. In addition, the war has also led to, and may lead to further, broader unfavorable macroeconomic implications, including unfavorable foreign exchange rates, increases in fuel prices, food shortages, a weakening of the European economy, lower consumer demand and volatility in financial markets. These implications of the war in Ukraine could have a material adverse effect on our business and our results of operations. Critical Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Significant accounting policies employed by us, including the use of estimates, are presented in the notes to our consolidated financial statements. Critical accounting policies are those that are most important to the portrayal of our financial condition and our results of operations, and require management’s most difficult, subjective and complex judgments, as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our most critical accounting estimates, discussed below, pertain to revenue recognition, accounts receivable, inventories, income taxes, goodwill and intangible assets, impairment of long-lived assets and equity awards. In determining these estimates, management must use amounts that are based upon its informed judgments and best estimates. We continually evaluate our estimates, including those related to customer allowances and discounts, product returns, bad debts and inventories, and carrying values of intangible assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. Revenue Recognition We recognize revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606 – Revenue From Contracts With Customers (“ASC 606”). Under ASC 606, wholesale revenue is recognized when control transfers to the customer. We consider control to have been transferred when we have transferred physical possession of the product, we have a right to payment for the product, the customer has legal title to the product and the customer has the significant risks and rewards of the product. Wholesale revenues are adjusted by variable considerations arising from implicit or explicit obligations. Variable consideration includes trade discounts, end of season markdowns, sales allowances, cooperative advertising, return liabilities and other customer allowances. We estimate the anticipated variable consideration and record this estimate as a reduction of revenue in the period the related product revenue is recognized. Variable consideration is estimated based on historical experience, current contractual and statutory requirements, specific known events and industry trends. The reserves for variable consideration are recorded under customer refund liabilities. Historical return rates are calculated on a product line basis. The remainder of the historical rates for variable consideration are calculated by customer by product lines. 49 We recognize retail sales when the customer takes possession of the goods and tenders payment, generally at the point of sale. Digital revenues from customers through our digital platforms are recognized when the customer takes possession of the goods. Our sales are recorded net of applicable sales taxes. Both wholesale revenues and retail store revenues are shown net of returns, discounts and other allowances. We classify cooperative advertising as a reduction of net sales. Licensing revenue is recognized at the higher of royalty earned or guaranteed minimum royalty. Accounts Receivable In the normal course of business, we extend credit to our wholesale customers based on pre-defined credit criteria. Accounts receivable, as shown on our consolidated balance sheet, are net of an allowance for doubtful accounts. In circumstances where we are aware of a specific customer’s inability to meet its financial obligation (such as in the case of bankruptcy filings, extensive delay in payment or substantial downgrading by credit sources), a specific reserve for bad debts is recorded against amounts due to reduce the net recognized receivable to the amount reasonably expected to be collected. For all other wholesale customers, an allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectability based on historical trends and an evaluation of the impact of economic conditions. Our financial instruments consist of trade receivables arising from revenue transactions in the ordinary course of business. We consider our trade receivables to consist of two portfolio segments: wholesale and retail trade receivables. Wholesale trade receivables result from credit we extend to our wholesale customers based on pre-defined criteria and are generally due within 30 to 60 days. Retail trade receivables primarily relate to amounts due from third-party credit card processors for the settlement of debit and credit card transactions and are typically collected within 3 to 5 days. Inventories Wholesale inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value, which comprises a significant portion of our inventory. Retail and Vilebrequin inventories are stated at the lower of cost (determined by the weighted average method) or net realizable value. We continually evaluate the composition of our inventories, assessing slow-turning, ongoing product as well as fashion product from prior seasons. The net realizable value of distressed inventory is based on historical sales trends of our individual product lines, the impact of market trends and economic conditions, expected permanent retail markdowns and the value of current orders for this type of inventory. A provision is recorded to reduce the cost of inventories to the estimated net realizable values, if required. Income Taxes As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax expense, together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. Goodwill and Intangible Assets ASC Topic 350 – Intangibles – Goodwill and Other (“ASC 350”) requires that goodwill and intangible assets with an indefinite life be tested for impairment at least annually and are required to be written down when impaired. We perform our test in the fourth fiscal quarter of each year, or more frequently, if events or changes in circumstances indicate the carrying amount of such assets may be impaired. Goodwill and intangible assets with an indefinite life are tested for impairment by comparing the fair value of the reporting unit with its carrying value. We have identified two reporting units, which are wholesale operations and retail operations. Fair value is generally determined using discounted cash flows, market multiples and market capitalization. Significant estimates used in the fair value methodologies include estimates of future cash flows, future short-term and long-term growth rates, weighted average cost of capital and estimates of market 50 multiples of the reportable unit. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for intangible assets with an indefinite life and any future goodwill. We perform our annual test for goodwill as of January 31 of each year. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. The evaluation consists of either using a qualitative approach to determine whether it is more likely than not that the fair value of the assets is less than their respective carrying values or a quantitative impairment test, if necessary. In performing a qualitative evaluation, we consider many factors in evaluating whether the carrying value of goodwill may not be recoverable, including declines in our stock price and market capitalization in relation to our book value and macroeconomic conditions affecting our business. In performing a quantitative evaluation, our first step in the goodwill impairment review is to compare the fair value of the wholesale operations reporting unit to our carrying value. If the fair value of the reporting unit exceeds our carrying value, goodwill is not impaired and no further testing is required. To estimate the fair value of a reporting unit for the purposes of our annual or periodic analyses, we make estimates and judgments about the future cash flows of that reporting unit. Although our cash flow forecasts are based on assumptions that are consistent with our plans and estimates we are using to manage the underlying businesses, there is significant exercise of judgment involved in determining the cash flows attributable to a reporting unit. In addition, we make certain judgments about allocating shared assets to the estimated balance sheets of our reporting units. We also consider our and our competitor’s market capitalization on the date we perform the analysis. Changes in judgment on these assumptions and estimates could result in a goodwill impairment charge. We also perform our annual test for intangible assets with indefinite lives as of January 31 of each year using a qualitative evaluation or a quantitative test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. Critical estimates in valuing intangible assets include future expected cash flows from license agreements, trade names and customer relationships. In addition, other factors considered are the brand awareness and market position of the products sold by the acquired companies and assumptions about the period of time the brand will continue to be used in the combined company’s product portfolio. Management’s estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. If we did not appropriately allocate these components or we incorrectly estimate the useful lives of these components, our computation of amortization expense may not appropriately reflect the actual impact of these costs over future periods, which may affect our results of operations. Trademarks having finite lives are amortized over their estimated useful lives and measured for impairment when events or circumstances indicate that the carrying value may be impaired. We have allocated the purchase price of the companies we acquired to the tangible and intangible assets acquired and liabilities we assumed, based on their estimated fair values. These valuations require management to make significant estimations and assumptions, especially with respect to intangible assets. The fair values assigned to the identifiable intangible assets acquired were based on assumptions and estimates made by management using unobservable inputs reflecting our own assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available. Fiscal 2023 Annual Goodwill Impairment Testing We performed our annual test of our wholesale reporting unit as of January 31, 2023 by electing to bypass the qualitative assessment and proceed directly to the quantitative impairment test using a discounted cash flows method to estimate the fair value of our wholesale reporting unit. We made this election due to the decline in our market capitalization. The fair value of the wholesale reporting unit for goodwill impairment testing was determined using an income approach and validated using a market approach. The income approach was based on discounted projected future (debt-free) cash flows for the reporting unit. The discount rate applied to these cash flows were based on the weighted average cost of capital for the wholesale reporting unit, which takes market participant assumptions into consideration, inclusive of a 51 Company-specific 7.5% risk premium to account for the additional risk of uncertainly perceived by market participants related to our overall cash flows. Estimated future operating cash flows were discounted at a rate of 17.5% to account for the relative risks of the estimated future cash flows. For the market approach, used to validate the results of the income approach method, we used the guideline company method, which analyzes market multiples of adjusted earnings before interest, taxes, depreciation and amortization for a group of comparable public companies. As a result of our fiscal 2023 annual impairment test, we recorded a $347.2 million non-cash impairment charge during our fourth quarter of fiscal 2023 to fully impair the carrying value of our goodwill, which was included in asset impairments and gain on lease terminations in our consolidated statements of operations and comprehensive income (loss). This impairment charge was recorded to our wholesale operations segment. Fiscal 2022 and Fiscal 2021 Annual Goodwill Impairment Testing We performed our annual tests of our wholesale reporting unit using a qualitative review as of January 31, 2022 and 2021 and determined that no impairment existed at those dates. The results of our annual tests determined that the estimated fair value of our wholesale reporting unit was substantially in excess of its carrying value. Fiscal 2023 Annual Indefinite-Lived Intangible Assets Impairment Testing We performed our annual test of our indefinite-lived trademarks as of January 31, 2023 using a qualitative evaluation or a quantitative impairment test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. We determined that the fair values of each of our indefinite-lived intangible assets substantially exceeded its carrying value and, therefore, there were no impairments identified as of January 31, 2023 as a result of these tests. Fiscal 2022 and Fiscal 2021 Annual Indefinite-Lived Intangible Assets Impairment Testing We performed our annual test of our indefinite-lived trademarks using a qualitative review as of January 31, 2022 and 2021 and determined that no impairment existed at those dates. The results of our annual tests determined that the estimated fair values of our indefinite-lived trademarks were substantially in excess of their carrying values. Our indefinite-lived trademark balance is primarily composed of the Donna Karan/DKNY trademarks that were acquired in fiscal 2017 and the Karl Lagerfeld trademark that was acquired in fiscal 2023. The fair value of our goodwill and indefinite-lived intangible assets are considered a Level 3 valuation in the fair value hierarchy. Impairment of Long-Lived Assets All property and equipment and other long-lived assets are reviewed for potential impairment when events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. If such indicators are present, it is determined whether the sum of the estimated undiscounted future cash flows attributable to such assets are less than the carrying value of the assets. A potential impairment has occurred if projected future undiscounted cash flows are less than the carrying value of the assets. In fiscal 2023, we recorded a $2.7 million impairment charge primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. In fiscal 2022, we recorded a $1.5 million impairment charge primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. 52 In fiscal 2021, we recorded a $20.1 million impairment charge primarily related to operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather and G.H. Bass stores, primarily due to the retail restructuring, as well as at certain DKNY and Vilebrequin stores as a result of the performance at these stores. Equity Awards Restricted Stock Units Restricted stock units (“RSU’s”) are time based awards that do not have market or performance conditions and either (i) cliff vest after three years or (ii) vest over a three year period. The grant date fair value for RSU’s are based on the quoted market price on the date of grant. Compensation expense for RSU’s is recognized in the consolidated financial statements on a straight-line basis over the service period based on their grant date fair value. Performance Based Restricted Stock Units Performance based restricted stock units consist of both performance based restricted stock units (“PRSU’s”) and performance stock units (“PSU’s”). PRSU’s were granted to executives prior to fiscal 2020 and included (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company’s stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target. PRSU’s generally vest over a two to five year period. For restricted stock units with market conditions, the Company estimates the grant date fair value using a Monte Carlo simulation model. This valuation methodology utilizes the closing price of the Company’s common stock on grant date and several key assumptions, including expected volatility of the Company’s stock price, and risk-free rates of return. This valuation is performed with the assistance of a third party valuation specialist. PRSU’s are expensed over the service period under the accelerated attribution method. PSU’s were granted to executives beginning in fiscal 2020 and vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur. PSU’s granted in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer shares for two years subsequent to the date of vesting. PSU’s are expensed over the service period under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals. Results of Operations The following table sets forth our operating results both in dollars and as a percentage of our net sales for the fiscal years indicated below: Year Ended January 31, 2023 2022 (In thousands, except for percentage of net sales amounts) Net sales Cost of goods sold Gross Profit Selling, general and administrative expenses Depreciation and amortization Asset impairments and gain on lease terminations Operating profit (loss) Other income Interest and financing charges, net Income (loss) before income taxes Income tax expense (benefit) Net income (loss) Less: Loss attributable to noncontrolling interests Net income (loss) attributable to G-III Apparel Group, Ltd. $ 3,226,728 2,125,591 1,101,137 833,151 27,762 349,686 (109,462) 27,894 (56,602) (138,170) (3,788) (134,382) (1,321) $ (133,061) 100.0 % $ 2,766,538 65.9 34.1 25.8 0.9 10.8 (3.4) 0.9 (1.8) (4.3) (0.1) (4.2) — (4.2)% $ 1,778,349 988,189 648,015 27,626 1,455 311,093 9,549 (49,666) 270,976 70,875 200,101 (492) 200,593 100.0 % 64.3 35.7 23.4 1.0 0.1 11.2 0.3 (1.8) 9.7 2.6 7.1 — 7.1 % 53 Year ended January 31, 2023 (“fiscal 2023”) compared to year ended January 31, 2022 (“fiscal 2022”) Net sales for fiscal 2023 increased to $3.23 billion from $2.77 billion in the prior year. Net sales of our segments are reported before intercompany eliminations. Net sales of our wholesale operations segment increased to $3.16 billion from $2.71 billion in the comparable period last year. This increase is primarily the result of a $131.7 million increase in net sales of Calvin Klein licensed products, $130.4 million in net sales resulting from the inclusion of the results of the recently acquired Karl Lagerfeld business for seven months of fiscal 2023, a $32.4 million increase in net sales of Karl Lagerfeld Paris products, an $18.6 million increase in net sales of our DKNY and Donna Karan products and a $14.5 million increase in net sales of Tommy Hilfiger licensed products. The increase in sales of Calvin Klein products was primarily related to dresses, women’s suits and men’s and women’s outerwear. The increase in sales of Karl Lagerfeld Paris products was primarily related to handbags, men’s outerwear and shoes. The increase in sales of DKNY and Donna Karan products was primarily related to dresses, women’s suits and luggage. The increase in sales of Tommy Hilfiger products was primarily related to dresses and suits. Net sales of our retail operations segment increased to $137.2 million from $117.7 million in the same period last year. The number of retail stores in our retail operations segment decreased from 60 at January 31, 2022 to 59 at January 31, 2023. While there was no significant change in our total retail store count compared to the prior year, the increase in net sales of our retail operations segment is primarily the result of an increase in the number of Karl Lagerfeld Paris retail stores and a decrease in the number of DKNY retail stores compared to the prior year. Our Karl Lagerfeld Paris retail stores performed better than our DKNY retail stores, as our DKNY stores were adversely impacted by decreased tourism and spending from consumers in China. Gross profit was $1.1 billion, or 34.1% of net sales, for fiscal 2023 and compared to $988.2 million, or 35.7% of net sales, last year. The gross profit percentage in our wholesale operations segment was 32.6% for the year ended January 31, 2023 as compared to 34.2% for the year ended January 31, 2022. The addition of the recently acquired Karl Lagerfeld business for seven months of fiscal 2023 resulted in an increase of 1.4% to the gross profit percentage in our wholesale operations segment as this business operates at a higher gross profit percentage than our legacy wholesale operations segment. The gross profit percentage in the current year period was negatively impacted by $41.6 million in charges resulting from our inability to pick up freight from port terminals and return containers to ocean carriers in a timely manner compared to an insignificant amount of similar charges in the same period last year. Additionally, the gross profit percentage in the current year period was negatively impacted by higher promotional activity, inflationary pressure on product costs and increased freight costs, partially offset by the implementation of price increases by us. The gross profit percentage in our retail operations segment was 49.9% for the year ended January 31, 2023 compared to 50.9% for the same period last year. The gross profit percentage in our retail operations segment was negatively impacted in the current year by increased promotional activity. Selling, general and administrative expenses increased to $833.2 million in fiscal 2023 from $648.0 million in fiscal 2022. The inclusion of the results of the acquired Karl Lagerfeld business for seven months in fiscal 2023 represented $76.2 million of this increase. The remainder of the increase in expenses was primarily due to increases of (i) $50.5 million in third-party warehouse and facility expenses, (ii) $27.3 million in advertising related to digital and brand promotional activities and (iii) $5.0 million in compensation expense, primarily from increased salary expenses. Depreciation and amortization expense was $27.8 million in fiscal 2023 and $27.6 million in fiscal 2022. In fiscal 2023, we recorded $349.7 million of asset impairments and gain on lease terminations. This charge is primarily comprised of (i) a $347.2 million goodwill impairment charge as a result of our decline in our stock price and (ii) a $2.7 million impairment charge related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. In fiscal 2022, we recorded $1.5 million of asset impairments and gain on lease terminations primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. 54 Other income was $27.9 million in fiscal 2023 compared to other income of $9.5 million in fiscal 2022. Other income in the current period consisted primarily of a gain of $27.1 million during the year ended January 31, 2023 as a result of the remeasurement of our previously held 19% investment in the parent of Karl Lagerfeld and 49% interest in the North American operations of Karl Lagerfeld as of the effective date of the acquisition of the remaining interests in the parent of Karl Lagerfeld. Additionally, other income consisted of $0.7 million in income from unconsolidated affiliates during fiscal 2023 compared to $8.1 million in income from unconsolidated affiliates in fiscal 2022. Other loss in the current period consisted of $4.7 million of foreign currency losses during fiscal 2023 compared to $2.6 million in fiscal 2022. Interest and financing charges, net for fiscal 2023, were $56.6 million compared to $49.7 million for fiscal 2022. The increase is primarily due to higher average borrowings on our revolving credit facility in the current year period. We had no borrowings outstanding under our revolving credit facility in the same period last year. Income tax benefit for fiscal 2023 was $3.8 million compared to income tax expense of $70.9 million for the prior year primarily due to our net loss position resulting from a $347.2 million goodwill impairment charge. Our effective tax rate was 2.7% in fiscal 2023 compared to 26.2% in the prior year. This decrease in our effective tax rate is primarily due to the goodwill impairment charges which significantly decreased pretax book income in relation to tax expense. Liquidity and Capital Resources Cash Availability We rely on our cash flows generated from operations, cash and cash equivalents and the borrowing capacity under our revolving credit facility to meet the cash requirements of our business. The cash requirements of our business are primarily related to the seasonal buildup in inventories, compensation paid to employees, payments to vendors in the normal course of business, capital expenditures, interest payments on debt obligations and income tax payments. As of January 31, 2023, we had cash and cash equivalents of $191.7 million and availability under our revolving credit facility in excess of $550 million. As of January 31, 2023, we were in compliance with all covenants under our senior secured notes and revolving credit facility. Senior Secured Notes In August 2020, we completed a private debt offering of $400 million aggregate principal amount of our 7.875% Senior Secured Notes due 2025 (the “Notes). The terms of the Notes are governed by an indenture, dated as of August 7, 2020 (the “Indenture”), among us, the guarantors party thereto and U.S. Bank, National Association, as trustee and collateral agent (the “Collateral Agent”). The net proceeds of the Notes were used (i) to repay the $300 million that was outstanding under our prior term loan facility (the “Term Loan”), (ii) to pay related fees and expenses and (iii) for general corporate purposes. The Notes bear interest at a rate of 7.875% per year payable semi-annually in arrears on February 15 and August 15 of each year. The Notes are unconditionally guaranteed on a senior-priority secured basis by our current and future wholly-owned domestic subsidiaries that guarantee any of our credit facilities, including our ABL facility (the “ABL Facility”) pursuant to the ABL Credit Agreement, or certain future capital markets indebtedness of ours or the guarantors. The Notes and the related guarantees are secured by (i) first priority liens on our Cash Flow Priority Collateral (as defined in the Indenture), and (ii) a second-priority lien on our ABL Priority Collateral (as defined in the Indenture), in each case subject to permitted liens described in the Indenture. In connection with the issuance of the Notes and execution of the Indenture, we and the Guarantors entered into a pledge and security agreement (the “Pledge and Security Agreement”), among us, the Guarantors and the Collateral Agent. 55 The Notes are subject to the terms of the intercreditor agreement which governs the relative rights of the secured parties in respect of the ABL Facility and the Notes (the “Intercreditor Agreement”). The Intercreditor Agreement restricts the actions permitted to be taken by the Collateral Agent with respect to the Collateral on behalf of the holders of the Notes. The Notes are also subject to the terms of the LVMH Note subordination agreement which governs the relative rights of the secured parties in respect of the LVMH Note, the ABL Facility and the Notes. We may redeem some or all of the Notes at any time and from time to time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. If we experience a Change of Control (as defined in the Indenture), we are required to offer to repurchase the Notes at 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The Indenture contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, incur restrictions on the ability of our restricted subsidiaries that are not guarantors to pay dividends or make certain other payments, create or incur certain liens, sell assets and subsidiary stock, impair the security interests, transfer all or substantially all of our assets or enter into merger or consolidation transactions, and enter into transactions with affiliates. The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in the Indenture, failure to pay certain other indebtedness, failure of certain guarantees to be enforceable, failure to perfect certain collateral securing the Notes, failure to pay certain final judgments, and certain events of bankruptcy or insolvency. We incurred debt issuance costs totaling $8.5 million related to the Notes. In accordance with ASC 835, the debt issuance costs have been deferred and are presented as a contra-liability, offsetting the outstanding balance of the Notes, and are amortized over the remaining life of the Notes. Second Amended and Restated ABL Credit Agreement In August 2020, our subsidiaries, G-III Leather Fashions, Inc., Riviera Sun, Inc., CK Outerwear, LLC, AM Retail Group, Inc. and The Donna Karan Company Store LLC (collectively, the “Borrowers”), entered into the second amended and restated credit agreement (the “ABL Credit Agreement”) with the Lenders named therein and with JPMorgan Chase Bank, N.A., as Administrative Agent. The ABL Credit Agreement is a five year senior secured credit facility subject to a springing maturity date if, subject to certain conditions, the LVMH Note is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. The ABL Credit Agreement provides for borrowings in the aggregate principal amount of up to $650 million. We and certain of our subsidiaries (the “Guarantors”), are Loan Guarantors under the ABL Credit Agreement. The ABL Credit Agreement refinanced, amended and restated the Amended Credit Agreement, dated as of December 1, 2016 (as amended, supplemented or otherwise modified from time to time prior to August 7, 2020, the “Prior Credit Agreement”), by and among the Borrowers and the Loan Guarantors (each as defined therein) party thereto, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., in its capacity as the administrative agent thereunder. The Prior Credit Agreement provided for borrowings of up to $650 million and was due to expire in December 2021. The ABL Credit Agreement extended the maturity date to August 2025, subject to a springing maturity date if, subject to certain conditions, the LVMH Note is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. Amounts available under the ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the ABL Credit Agreement. Borrowings bear interest, at the Borrowers’ option, at LIBOR plus a margin of 1.75% to 2.25% or an alternate base rate margin of 0.75% to 1.25% (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A. from time to time, (ii) the federal funds rate plus 0.5% and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 1.00%, with the applicable margin determined based on Borrowers’ availability under the ABL Credit Agreement. The ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors. In addition to paying interest on any outstanding borrowings under the ABL Credit Agreement, we are required 56 to pay a commitment fee to the lenders under the credit agreement with respect to the unutilized commitments. The commitment fee accrues at a tiered rate equal to 0.50% per annum on the average daily amount of the available commitments when the average usage is less than 50% of the total available commitments and decreases to 0.35% per annum on the average daily amount of the available commitments when the average usage is greater than or equal to 50% of the total available commitments. As of January 31, 2023, interest under the ABL Credit Agreement was being paid at an average rate of 5.31% per annum. The revolving credit facility contains covenants that, among other things, restrict our ability, subject to specified exceptions, to incur additional debt; incur liens; sell or dispose of certain assets; merge with other companies; liquidate or dissolve the Company; acquire other companies; make loans, advances, or guarantees; and make certain investments. In certain circumstances, the revolving credit facility also requires us to maintain a fixed charge coverage ratio, as defined in the agreement, not less than 1.00 to 1.00 for each period of twelve consecutive fiscal months of the Company. As of January 31, 2023, the Company was in compliance with these covenants. As of January 31, 2023, we had $80.1 million of borrowings outstanding under the ABL credit agreement. The ABL Credit Agreement also includes amounts available for letters of credit. As of January 31, 2023, there were outstanding trade and standby letters of credit amounting to $5.2 million and $3.4 million, respectively. At the date of the refinancing of the Prior Credit Agreement, we had $3.3 million of unamortized debt issuance costs remaining from the Prior Credit Agreement. We extinguished and charged to interest expense $0.4 million of the prior debt issuance costs and incurred new debt issuance costs totaling $5.1 million related to the ABL Credit Agreement. We have incurred a total of $8.0 million of debt issuance costs related to our ABL Credit Agreement. As permitted under ASC 835, the debt issuance costs have been deferred and are presented as an asset which is amortized ratably over the term of the ABL Credit Agreement. Reference Rate Reform The interest rate under our revolving credit facility is indexed to LIBOR. LIBOR quotations will cease as of June 30, 2023. We are in the process of transitioning the reference rate used in our ABL Credit Agreement from LIBOR to the Secured Overnight Financing Rate. We expect this transition to be completed prior to the date LIBOR quotations cease. We do not expect a material change to our interest expense or results of operations from the change in the reference rate used for our ABL Credit Agreement. LVMH Note We issued to LVMH, as a portion of the consideration for the acquisition of DKNY and Donna Karan, a junior lien secured promissory note in favor of LVMH in the principal amount of $125 million (the “LVMH Note”) that bears interest at the rate of 2% per year. $75 million of the principal amount of the LVMH Note is due and payable on June 1, 2023 and $50 million of such principal amount is due and payable on December 1, 2023. The LVMH Note is classified in current portion of notes payable in our consolidated balance sheet as of January 31, 2023. Based on an independent valuation, it was determined that the LVMH Note should be treated as having been issued at a discount of $40 million in accordance with ASC 820 — Fair Value Measurements. This discount is being amortized as interest expense using the effective interest method over the term of the LVMH Note. In connection with the issuance of the LVMH Note, LVMH entered into (i) a subordination agreement providing that our obligations under the LVMH Note are subordinate and junior to our obligations under the revolving credit facility and Term Loan and (ii) a pledge and security agreement with us and our subsidiary, G-III Leather, pursuant to which we and G-III Leather granted to LVMH a security interest in specified collateral to secure our payment and performance of our obligations under the LVMH Note that is subordinate and junior to the security interest granted by us with respect to our obligations under the revolving credit facility and Term Loan. 57 Unsecured Loans Several of our foreign entities borrow funds under various unsecured loans of which a portion is to provide funding for operations in the normal course of business while other loans are European state backed loans as part of COVID-19 relief programs. In the aggregate, the Company is currently required to make quarterly installment payments of principal in the amount of €0.6 million. Interest on the outstanding principal amount of the unsecured loans accrues at a fixed rate equal to 0% to 5.0% per annum, payable on either a quarterly or monthly basis. As of January 31, 2023, the Company had an aggregate outstanding balance of €10.1 million ($10.9 million) under these various unsecured loans. Overdraft Facilities During fiscal 2021, T.R.B International SA (“TRB”), a subsidiary of Vilebrequin, entered into several overdraft facilities that allow for applicable bank accounts to be in a negative position up to a certain maximum overdraft. TRB entered into an uncommitted overdraft facility with HSBC Bank allowing for a maximum overdraft of €5 million. Interest on drawn balances accrues at a fixed rate equal to the Euro Interbank Offered Rate plus a margin of 1.75% per annum, payable quarterly. The facility may be cancelled at any time by TRB or HSBC Bank. As part of a COVID-19 relief program, TRB and its subsidiaries also entered into several state backed overdraft facilities with UBS Bank in Switzerland for an aggregate of CHF 4.7 million at varying interest rates of 0% to 0.5%. As of January 31, 2023, TRB had an aggregate €3.4 million ($3.7 million) drawn under these various facilities. Foreign Credit Facility KLH has a credit agreement with ABN AMRO Bank N.V. with a credit limit of €15.0 million which is secured by specified assets of KLH. Borrowings bear interest at the Euro Interbank Offered Rate (“EURIBOR”) plus a margin of 1.7%. As of January 31, 2023, KLH had €7.3 million ($7.8 million) of borrowings outstanding under this credit facility. Outstanding Borrowings Our primary operating cash requirements are to fund our seasonal buildup in inventories and accounts receivable, primarily during the second and third fiscal quarters each year. Due to the seasonality of our business, we generally reach our peak borrowings under our asset-based credit facility during our third fiscal quarter. The primary sources to meet our operating cash requirements have been borrowings under this credit facility and cash generated from operations. We had $80.1 million of borrowings outstanding under our ABL Credit Agreement as of January 31, 2023 and no borrowings outstanding under the facility as of January 31, 2022. We had $400 million in borrowings outstanding under the Notes at each of January 31, 2023 and January 31, 2022. Our contingent liability under open letters of credit was approximately $8.6 million at January 31, 2023 and $14.0 million at January 31, 2022. In addition to the amounts outstanding under these two loan agreements, at January 31, 2023 and 2022, we had $125.0 million of face value principal amount outstanding under the LVMH Note. The amount outstanding under the LVMH Note is scheduled to be repaid during fiscal 2024. We had an aggregate of €10.1 million ($10.9 million) and €7.4 million ($8.4 million) outstanding under the Company’s various unsecured loans as of January 31, 2023 and January 31, 2022, respectively. We also had €3.4 million ($3.7 million) and €2.6 million ($2.9 million) outstanding under Vilebrequin’s overdraft facilities as of January 31, 2023 and January 31, 2022, respectively and €7.3 million ($7.8 million) outstanding under our foreign credit facility as of January 31, 2023. Share Repurchase Program In March 2022, our Board of Directors authorized an increase in the number of shares covered by our share repurchase program to an aggregate amount of 10,000,000 shares. Pursuant to this program, during fiscal 2023 we acquired 1,587,581 of our shares of common stock for an aggregate purchase price of $26.9 million and during fiscal 2022 we acquired 656,213 of our shares of common stock for an aggregate purchase price of $17.3 million. The timing and actual number of shares repurchased, if any, will depend on a number of factors, including market conditions and prevailing stock prices, and are subject to compliance with certain covenants contained in our loan agreement. Share repurchases may take place on the open market, in privately negotiated transactions or by other means, and would be made in accordance with applicable 58 securities laws. As of January 31, 2023, we had 8,412,419 authorized shares remaining under this program. As of March 23, 2023, we had approximately 46,488,488 shares of common stock outstanding. Cash from Operating Activities We used $104.6 million of cash from operating activities in fiscal 2023, primarily due to our net loss of $133.1 million, increases of $163.7 million in inventories and $41.0 million in accounts receivable, as well as a decrease of $107.2 million in accounts payable and accrued expenses. In addition, we had a non-cash charge of $55.1 million in deferred income taxes and a non-cash $27.1 million gain on our 19% investment in the parent of Karl Lagerfeld and 49% investment in the North American operations of Karl Lagerfeld in connection with our acquisition of the remaining interests in the parent of the Karl Lagerfeld business. These items were offset, in part, by non-cash charges relating primarily to asset impairments and gain on lease terminations of $349.7 million, share-based compensation of $32.5 million and depreciation and amortization of $27.8 million. We generated $185.8 million of cash from operating activities in fiscal 2022, primarily as a result of our net income of $200.6 million and non-cash charges relating primarily to depreciation and amortization of $27.6 million, deferred income taxes of $21.1 million and share-based compensation of $17.4 million. We also generated cash from operating activities from an increase of $124.6 million in accounts payable and accrued expenses. These items were offset, in part, by increases of $112.8 million in accounts receivable and $95.7 million in inventories, as well as decreases of $12.6 million in customer refund liabilities. Cash from Investing Activities In fiscal 2023, we used $218.0 million of cash in investing activities primarily as a result of cash paid, net of cash acquired, of $168.6 million for the acquisition of KLH. We also used $25.0 million for a minority investment in an e-commerce retailer and had $21.5 million in capital expenditures primarily related to infrastructure and information technology expenditures and additional fixturing costs at department stores. In fiscal 2022, we used $51.5 million of cash in investing activities. We used $25.0 million for a minority investment in an e-commerce retailer. We subsequently sold a portion of that investment for $5.0 million. In addition, we also had $18.3 million in capital expenditures primarily related to infrastructure and information technology expenditures and additional fixturing costs at department stores. In addition, we used $13.2 million for our investment in connection with a brand acquisition. Cash from Financing Activities In fiscal 2023, we generated $51.6 million of cash in financing activities primarily as a result of borrowings of $587.3 million under our ABL Credit Agreement, partially offset by repayments of $507.2 million under that Agreement. These borrowings were also offset, in part, by $26.9 million of cash used to repurchase 1,587,581 shares of our common stock under our share repurchase program and $9.8 million for taxes paid in connection with net share settlements of stock grants that have vested. In fiscal 2022, we used $23.4 million of cash in financing activities. We used $17.3 million of cash to repurchase 656,213 shares of our common stock under our share repurchase program and $4.3 million for taxes paid in connection with net share settlements of stock grants that have vested. Financing Needs We believe that our cash on hand and cash generated from operations, together with funds available under the ABL Credit Agreement, are sufficient to meet our expected operating and capital expenditure requirements. We may seek to acquire other businesses in order to expand our product offerings. We may need additional financing in order to complete one or more acquisitions. We cannot be certain that we will be able to obtain additional financing, if required, on acceptable terms or at all. 59 Recent Accounting Pronouncements See Note 1.19 – Effects of Recently Adopted and Issued Accounting Pronouncements in the accompanying notes to our consolidated financial statements in this Annual Report on Form 10-K for a description of recently adopted accounting pronouncements and issued accounting pronouncements that we believe may have an impact on our consolidated financial statements when adopted. Tabular Disclosure of Contractual Obligations As of January 31, 2023, our contractual obligations were as follows (in millions): Payments Due By Period Contractual Obligations Operating lease obligations Minimum royalty payments (1) Long-term debt obligations (2) Purchase obligations (3) Total $ Total 318.1 315.5 627.4 5.2 $ 1,266.2 Less Than 1 Year $ 70.4 127.5 219.4 5.2 $ 422.5 More Than $ 1-3 Years 4-5 Years 5 Years 53.4 — 0.7 — 54.1 $ 116.9 $ 77.4 35.7 2.2 — $ 674.3 $ 115.3 152.3 405.1 — $ (1) (2) (3) Includes obligations to pay minimum scheduled royalty, advertising and other required payments under various license agreements. Includes: (a) $400.0 million related to our Notes that will mature in fiscal 2026, (b) $125.0 million in face principal amount of the note issued to LVMH payable in fiscal 2024, (c) $10.9 million in our various unsecured loans which have maturity dates ranging from fiscal 2026 through fiscal 2029 and requires us to make quarterly installment payments of €0.6 million and (d) $3.7 million in our various overdraft facilities, (d) $7.8 million in our foreign credit facilities and (e) $3.7 million in our overdraft facilities. We had $80.1 million borrowings outstanding under our revolving credit facility as of January 31, 2023. Includes outstanding trade letters of credit, which represent inventory purchase commitments, which typically mature in less than six months. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Foreign Currency Exchange Rate Risks and Commodity Price Risk We negotiate substantially all our purchase orders with foreign manufacturers in United States dollars. Thus, notwithstanding any fluctuation in foreign currencies, our cost for any purchase order is not subject to change after the time the order is placed. However, if the value of the United States dollar against local currencies were to decrease, manufacturers might increase their United States dollar prices for products. Our sales from the non-U.S. operations could be affected by currency fluctuations, primarily relating to the Euro. We cannot fully anticipate all of our currency exposures and therefore foreign currency fluctuations may impact our business, financial condition, and results of operations. However, we believe that the risks related to these fluctuations are not material due to the low volume of transactions by us that are denominated in currencies other than the U.S. dollar. Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our operating results. We experienced increased costs in many aspects of our business during fiscal 2023. We implemented price increases on many of our products. Our price increases were an effort to mitigate the effect of higher costs. We expect inflationary pressures to continue to impact our business throughout fiscal 2024. See our “Risk Factors Relating to the Operation of our Business” and “Risk Factors Relating to the Economy and the Apparel Industry” contained in Item 1A – Risk Factors of this Annual Report on Form 10-K. Interest Rate Exposure We are subject to market risk from exposure to changes in interest rates relating to our ABL Credit Agreement. We borrow under this credit facility to support general corporate purposes, including capital expenditures and working capital needs. The U.S. Federal Reserve Board increased interest rates multiple times in fiscal 2023 and is expected to approve additional 60 increases in the interest rate in fiscal 2024. These increases in interest rates by the Federal Reserve will result in increases in our interest expense under our ABL Credit Agreement. Based on the outstanding balance of our ABL Credit Agreement during the year ended January 31, 2023, we estimate that each 100 basis point increase in our borrowing rates would result in additional interest expense to us of approximately $1 million for each $100 million outstanding our ABL Credit Agreement. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Financial statements and supplementary data required pursuant to this Item begin on page F-1 of this Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. ITEM 9A. CONTROLS AND PROCEDURES. As of January 31, 2023, our management, including the Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15I under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure, and thus, are effective in making known to them material information relating to G-III required to be included in this Report. Changes in Internal Control over Financial Reporting During our last fiscal quarter, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining an adequate system of internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria on Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on its assessment, management has concluded that we maintained effective internal control over financial reporting as of January 31, 2023, based on criteria in Internal Control — Integrated Framework (2013), issued by the COSO. On May 31, 2022, we completed our acquisition of KLH. See Note 15 – Karl Lagerfeld Acquisition in the accompanying notes to our consolidated financial statements in this Annual Report for further information on our acquisition of KLH. We have excluded the internal control over financial reporting of KLH for fiscal 2023 from our assessment of, and 61 conclusion on the effectiveness of, our internal control over financial reporting. KLH’s assets, consisting primarily of trademark value, constituted approximately 13.7% of our consolidated assets at January 31, 2023 and net sales of KLH constituted approximately 4.0% of our net sales for the fiscal year ended January 31, 2023. Our independent auditors, Ernst & Young LLP, a registered public accounting firm, have audited and reported on our consolidated financial statements and the effectiveness of our internal control over financial reporting. The reports of our independent auditors appear on pages F-1 and F-3 of this Form 10-K and express unqualified opinions on the consolidated financial statements and the effectiveness of our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. None. 62 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. We have adopted a code of ethics and business conduct, or Code of Ethics and Conduct, which applies to all of our employees, our principal executive officer, principal financial officer, principal accounting officer controller and persons performing similar functions. Our Code of Ethics and Conduct is located on our Internet website at www.g-iii.com under the heading “Corporate Governance.” Any amendments to, or waivers from, a provision of our Code of Ethics and Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions will be disclosed on our Internet website within five business days following such amendment or waiver. The information contained on or connected to our Internet website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report we file with or furnish to the Securities and Exchange Commission. The information required by Item 401 of Regulation S-K regarding directors is contained under the heading “Proposal No. 1 — Election of Directors” in our definitive Proxy Statement (the “Proxy Statement”) relating to our Annual Meeting of Stockholders to be held on or about June 8, 2023, to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934 with the Securities and Exchange Commission, and is incorporated herein by reference. For information concerning our executive officers, see “Business — Information About Our Executive Officers” in Item 1 in this Form 10-K. information required by The the heading “Delinquent Section 16(a) Reports” in our Proxy Statement and is incorporated herein by reference. The information required by Items 407(c)(3), (d)(4), and (d)(5) of Regulation S-K is contained under the heading “Corporate Governance” in our Proxy Statement and is incorporated herein by reference. Item 405 of Regulation S-K is contained under ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item 11 is contained under the headings “Executive Compensation” and “Compensation Committee Report” in our Proxy Statement and is incorporated herein by reference. 63 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Security ownership information of certain beneficial owners and management as called for by this Item 12 is incorporated by reference to the information set forth under the heading “Beneficial Ownership of Common Stock by Certain Stockholders and Management” in our Proxy Statement. Equity Compensation Plan Information The following table provides information as of January 31, 2023, the last day of fiscal 2023, regarding securities issued under G-III’s equity compensation plans that were in effect during fiscal 2023. Number of Securities to be Issued Upon Exercise of Outstanding Options, Outstanding Options, Warrants and Rights Warrants and Rights Weighted Average Exercise Price of Plan Category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total (a) (b) 2,402,774 (1) $ — 2,402,774 (1) $ — — — Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) 2,214,053 (2) — 2,214,053 (2) Includes outstanding awards of 2,402,774 shares of Common Stock issuable upon vesting of restricted stock units. (1) (2) Under our 2015 Long-Term Incentive Plan. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by this Item 13 is contained under the headings “Certain Relationships and Related Transactions” and “Corporate Governance” in our Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by this Item 14 is contained under the heading “Principal Accounting Fees and Services” in our Proxy Statement and is incorporated herein by reference. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. PART IV 1. Financial Statements. 2. Financial Statement Schedules. The Financial Statements and Financial Statement Schedules are listed in the accompanying index to consolidated financial statements beginning on page F-1 of this report. All other schedules, for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are shown in the financial statements or are not applicable and therefore have been omitted. 64 Exhibits: The following exhibits filed as part of this report or incorporated herein by reference are management contracts or compensatory plans or arrangements: Exhibits 10.1, 10.1(a), 10.1(b), 10.1(c), 10.1(d), 10.1(e), 10.5, 10.5(a), 10.5(b), 10.6, 10.6(a), 10.6(b), 10.6(c), 10.6(d), 10.7, 10.8, 10.8(a), 10.8(b), 10.8(c), 10.8(d), 10.8(e), 10.11, 10.12, 10.13 and 10.14. Exhibit No. 2.1 2.1(a) 3.1 3.1(a) 3.1(b) 3.1(c) 3.2 4.1 4.1(a) 4.2 10.1 10.1(a) 10.1(b) 10.1(c) 10.1(d) 10.1(e) 10.2 10.3 10.3(a) 10.3(b) 10.4 10.4(a) 10.4(b) 10.4(c) 10.4(d) Document Stock Purchase Agreement, dated as of July 22, 2016, by and between G-III Apparel Group, Ltd. (“G-III”) and LVMH Moet Hennessy Louis Vuitton Inc. (“LVMH”) (including the exhibits thereto). Amendment No. 1 to Stock Purchase Agreement, dated November 30, 2016, by and between G-III and LVMH. Certificate of Incorporation. Certificate of Amendment of Certificate of Incorporation, dated June 8, 2006. Certificate of Amendment of Certificate of Incorporation, dated June 7, 2011. Certificate of Amendment of Certificate of Incorporation, dated June 30, 2015. By-Laws, as amended, of G-III. Promissory Note, dated December 1, 2016, from G-III to LVMH. Indenture, dated as of August 7, 2020, among G-III Apparel Group, Ltd., the guarantors party thereto and U.S. Bank, National Association, as trustee and collateral agent, relating to the 7.875% Senior Secured Notes due 2025. Description of Securities Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb. Amendment, dated October 1, 1999, to the Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb. Amendment, dated January 28, 2009, to Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb. Letter Amendment, dated March 13, 2013, to Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb. Letter Amendment, dated April 28, 2014, to Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb. Letter Amendment, dated March 29, 2022, to Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb. Second Amended and Restated ABL Credit Agreement, dated as of August 7, 2020, among G-III Leather Fashions, Inc., Riviera Sun, Inc., CK Outerwear, LLC, AM Retail Group, Inc. and The Donna Karan Company Store LLC, as Borrowers, the other Borrowers party thereto, the Loan Guarantors party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as the Administrative Agent. Lease, dated June 1, 1993, between 512 Seventh Avenue Associates (“512”) and G-III Leather Fashions, Inc. (“G-III Leather”) (34th and 35th floors). Lease amendment, dated July 1, 2000, between 512 and G-III Leather (34th and 35th floors). Second Amendment of Lease, dated March 26, 2010, between 500-512 Seventh Avenue Limited Partnership, the successor to 512 (collectively, “512”) and G-III Leather (34th and 35th floors). Incorporated by Reference File No. Date Filed 000-18183 7/28/2016 Form 8-K 8-K 000-18183 12/6/2016 8-K 000-18183 10-Q (Q2 2007) 000-18183 000-18183 000-18183 000-18183 000-18183 000-18183 8-K 8-K 8-K 8-K 8-K 7/2/2008 9/13/2006 6/9/2011 7/1/2015 3/15/2013 12/6/2016 8/7/2020 10-K (2020) 000-18183 10-K/A (2006) 000-18183 3/30/2020 5/8/2006 10-K/A (2006) 000-18183 5/8/2006 8-K 000-18183 2/3/2009 8-K 000-18183 3/15/2013 8-K 000-18183 5/14/2015 8-K 000-18183 3/31/2022 8-K 000-18183 8/7/2020 10-K/A (2006) 000-18183 5/8/2006 10-K/A (2006) 000-18183 5/8/2006 10-Q (Q3 2011) 000-18183 12/10/2010 Lease, dated January 31, 1994, between 512 and G-III (33rd floor). Lease amendment, dated July 1, 2000, between 512 and G-III (33rd floor). Second Amendment of Lease, dated March 26, 2010, between 512 and G-III Leather (33rd floor). Second Amendment of Lease, dated March 26, 2010, between 512 and G-III Leather (10th floor). Third Amendment of Lease, dated March 26, 2010, between 512 and G-III Leather (21st, 22nd, 23rd, 24th and 36th floors). 10-K/A (2006) 000-18183 10-K/A (2006) 000-18183 10-Q (Q3 2011) 000-18183 12/10/2010 5/8/2006 5/8/2006 10-Q (Q3 2011) 000-18183 12/10/2010 10-Q (Q3 2011) 000-18183 12/10/2010 65 Exhibit No. 10.4(e) 10.4(f) 10.4(g) 10.4(h) 10.5 10.5(a) 10.5(b) 10.6 10.6(a) 10.6(b) 10.6(c) 10.6(d) 10.7 10.8 10.8(a) 10.8(b) 10.8(c) 10.8(d) 10.8(e) 10.9 (a) 10.9 (b) 10.10 10.10(a) 10.11 10.12 Document Sixth Amendment of Lease, dated May 23, 2013, by and between G-III Leather Fashions, Inc. as Tenant and 500-512 Seventh Avenue Limited Partnership as Landlord, (2nd Floor (including mezzanine), 21st, 22nd, 23rd, 24th, 27th, 29th, 31st, 36th and 40th Floors). Seventh Amendment of Lease dated April 25, 2014, by and between G-III Leather Fashions, Inc. as Tenant and 500-512 Seventh Avenue Limited Partnership as Landlord (2nd Floor (including mezzanine), 21st, 22nd, 23rd, 24th, 27th, 29th, 31st, 36th, 39th and 40th Floors). Eighth Amendment Of Lease, dated June 16, 2016, by and between G-III Leather Fashions, Inc. as Tenant and 500-512 Seventh Avenue Limited Partnership as Landlord* (2nd Floor (including mezzanine), 3rd, 4th, 5th, 21st, 22nd, 23rd, 24th, 27th, 28th, 29th, 30th, 31st, 36th, 39th and 40th Floors) Ninth Amendment of Lease, dated May 14, 2018, by and between G-III Leather Fashions, Inc. as Tenant and 500-512 Seventh Avenue Limited Partnership as Landlord, (2nd Floor (including mezzanine), 3rd, 4th, 5th, 21st, 22nd, 23rd, 24th, 26th, 27th, 28th, 29th, 30th, 31st, 36th, 39th and 40th Floors at 512 Seventh Avenue and 2nd and Part of 3rd at 500 Seventh Avenue). G-III 2005 Amended and Restated Stock Incentive Plan, (the “2005 Plan”). Form of Option Agreement for awards made pursuant to the 2005 Plan. Form of Restricted Stock Agreement for restricted stock awards made pursuant to the 2005 Plan. G-III 2015 Long-Term Incentive Plan, as amended. Form of Performance Share Unit Agreement for April 17, 2019 performance share unit grants. Form of Restricted Stock Unit Agreement for April 27, 2020 restricted stock unit grants. Form of Amended and Restated Restricted Stock Unit Agreement, dated June 28, 2021, with respect to revised awards under the 2015 Plan. Form of Performance Share Unit Agreement for March 18, 2022 performance share unit awards. Form of Executive Transition Agreement, as amended. Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III. Amendment, dated October 3, 2008, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III. Amendment, dated January 28, 2009, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III. Letter Amendment, dated March 13, 2013, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III. Letter Amendment, dated April 28, 2014, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III. Letter Amendment, dated March 29, 2022, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III. Lease agreement dated June 29, 2006 between The Realty Associates Fund VI, LP and G-III. First Amendment of Lease, dated July 31, 2012, by and between Centerpoint Herrod, LLC, as successor in interest to The Realty Associates Fund VI, LP, and G-III. Lease Agreement, dated December 21, 2009 and effective December 28, 2009, by and between G-III, as Tenant, and Granite South Brunswick LLC, as Landlord. First Amendment of Lease, dated September 16, 2020, by and between G-III Apparel Group, Ltd. as Tenant and Granite South Brunswick LLC as Landlord. Form of Indemnification Agreement. Employment Agreement, dated as of December 9, 2016, between G-III and Jeffrey D. Goldfarb. 66 Incorporated by Reference File No. Form 10-Q (Q1 2014) 000-18183 Date Filed 6/10/2013 10-Q (Q1 2015) 000-18183 6/5/2014 10-K (2018) 000-18183 4/2/2018 10-Q (Q1 2019) 000-18183 6/11/2018 8-K 10-K (2009) 8-K 3/15/2013 000-18183 000-18183 4/16/2009 000-18183 6/15/2005 8-K 8-K 000-18183 6/11/2021 000-18183 4/23/2019 10-Q (Q1 2021) 000-18183 6/9/2020 8-K 000-18183 6/30/2021 8-K 000-18183 3/24/2022 8-K 2/16/2011 10-Q (Q3 2011) 000-18183 12/10/2010 000-18183 8-K 000-18183 10/6/2008 8-K 000-18183 2/3/2009 8-K 000-18183 3/15/2013 8-K 8-K 000-18183 4/30/2014 000-18183 3/31/2022 10-Q (Q2 2007) 000-18183 9/13/2006 10-K (2019) 000-18183 3/28/2019 10-Q (Q3 2011) 000-18183 12/10/2010 10-Q (Q3 2021) 000-18183 12/10/2020 10-Q (Q3 2011) 000-18183 12/10/2010 000-18183 12/14/2016 8-K Exhibit No. 10.13 10.14 10.17 Document Amendment to Executive Transition Agreement, dated as of December 9, 2016, between G-III and Jeffrey D. Goldfarb. Severance Agreement, dated as of December 9, 2016, between G-III and Neal Nackman. Lease, dated December 7, 2011, between 400 Commerce Boulevard LLC. and G-III Leather Fashions, Inc. 21* 23.1* Subsidiaries of G-III. 31.2* 31.1* 32.1** Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP. Certification by Morris Goldfarb, Chief Executive Officer of G-III Apparel Group, Ltd., pursuant to Rule 13a – 14(a) or Rule 15d – 14(a) of the Securities Exchange Act of 1934, as amended, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023. Certification by Neal S. Nackman, Chief Financial Officer of G-III Apparel Group, Ltd., pursuant to Rule 13a – 14(a) or Rule 15d – 14(a) of the Securities Exchange Act of 1934, as amended, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023. Certification by Morris Goldfarb, Chief Executive Officer of G-III Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023. Certification by Neal S. Nackman, Chief Financial Officer of G-III Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the year ended January 31, 2023. iXBRL Instance Document. 101.INS* 101.SCH* iXBRL Schema Document. 101.CAL* iXBRL Calculation Linkbase Document. 101.DEF* iXBRL Extension Definition. 101.LAB* iXBRL Label Linkbase Document. 101.PRE* iXBRL Presentation Linkbase Document. 104* Cover Page Interactive Data File (embedded within the Inline XBRL document) 32.2** Incorporated by Reference File No. 000-18183 Date Filed 12/6/2016 Form 8-K 8-K 000-18183 12/14/2016 10-K (2017) 000-18183 4/3/2017 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — * Filed herewith. ** Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. Exhibits have been included in copies of this Report filed with the Securities and Exchange Commission. We will provide, without charge, a copy of these exhibits to each stockholder upon the written request of any such stockholder. All such requests should be directed to Investor Relations, G-III Apparel Group, Ltd., 512 Seventh Avenue, 31st floor, New York, New York 10018. ITEM 16. FORM 10-K SUMMARY. Not applicable. 67 EXHIBIT INDEX 21 23.1 31.1 31.2 32.1 32.2 Subsidiaries of G-III. Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP. Certification by Morris Goldfarb, Chief Executive Officer of G-III Apparel Group, Ltd., pursuant to Rule 13a – 14(a) or Rule 15d – 14(a) of the Securities Exchange Act of 1934, as amended, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023. Certification by Neal S. Nackman, Chief Financial Officer of G-III Apparel Group, Ltd., pursuant to Rule 13a – 14(a) or Rule 15d – 14(a) of the Securities Exchange Act of 1934, as amended, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023. Certification by Morris Goldfarb, Chief Executive Officer of G-III Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023. Certification by Neal S. Nackman, Chief Financial Officer of G-III Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023. 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE 104 iXBRL Instance Document. iXBRL Schema Document. iXBRL Calculation Linkbase Document. iXBRL Extension Definition. iXBRL Label Linkbase Document. iXBRL Presentation Linkbase Document. Cover Page Interactive Data File (embedded within the Inline XBRL document) 68 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES G-III APPAREL GROUP, LTD. By: /s/ Morris Goldfarb Morris Goldfarb, Chief Executive Officer March 27, 2023 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Director, Chairman of the Board and Chief Executive Officer (principal executive officer) Chief Financial Officer (principal financial and accounting officer) Date March 27, 2023 March 27, 2023 /s/ Morris Goldfarb Morris Goldfarb /s/ Neal S. Nackman Neal S. Nackman /s/ Sammy Aaron Sammy Aaron /s/ Thomas J. Brosig Thomas J. Brosig /s/ Alan Feller Alan Feller /s/ Jeffrey Goldfarb Jeffrey Goldfarb /s/ Victor Herrero Victor Herrero /s/ Robert L. Johnson Robert L. Johnson /s/ Patti H. Ongman Patti H. Ongman /s/ Laura Pomerantz Laura Pomerantz /s/ Cheryl Vitali Cheryl Vitali /s/ Lisa Warner Wardell Lisa Warner Wardell /s/ Richard White Richard White Director, Vice Chairman and President March 27, 2023 March 27, 2023 March 27, 2023 March 27, 2023 March 27, 2023 March 27, 2023 March 27, 2023 March 27, 2023 March 27, 2023 March 27, 2023 March 27, 2023 Director Director Director Director Director Director Director Director Director Director 69 (This page intentionally left blank) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE (Item 15(a)) G-III Apparel Group, Ltd. and Subsidiaries Reports of Independent Registered Public Accounting Firm (PCAOB ID 42) Consolidated Balance Sheets Consolidated Statements of Operations and Comprehensive Income (Loss) Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements SCHEDULE II — Valuation and Qualifying Accounts Page F-1 F-5 F-6 F-7 F-8 F-9 S-1 All other schedules for which provision is made in the applicable regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, accordingly, are omitted. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of G-III Apparel Group, Ltd. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of G-III Apparel Group, Ltd. and subsidiaries (the Company) as of January 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended January 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 27, 2023 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Wholesale revenue variable consideration Description of the Matter As described in Note 1 and Note 2 to the consolidated financial statements, wholesale revenue is adjusted by variable consideration arising from implicit or explicit obligations. The reserves for variable consideration are recorded as customer refund liabilities and totaled $89.8 million as of January 31, 2023. Auditing the Company's measurement of variable consideration related to non-contractual markdowns and returns from wholesale customers is especially challenging because the method of calculation involves subjective management assumptions about estimates of the expected markdowns and returns. For example, in addition to historical experience, estimates of future markdown allowances and returns from wholesale customers are adjusted to reflect management’s assumptions about performance of the F-1 Company’s merchandise, specific known events and industry trends. Changes in the assumptions can have a material effect on the amount of variable consideration recognized. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process for estimating variable consideration. For example, we tested controls over management’s review of the significant assumptions underlying the estimates of the refund liabilities for markdown allowances and returns from wholesale customers. To test the Company’s measurement of variable consideration related to non-contractual markdowns and returns from wholesale customers, our audit procedures included, among others, evaluating the Company’s methodologies, evaluating the significant assumptions described above and testing the completeness and accuracy of the underlying data used in management's analyses. We compared the significant assumptions used by management to current market and economic trends, historical results and other relevant factors. Further, we performed sensitivity analyses to evaluate the changes in variable consideration that would result from changes in the significant assumptions. In addition, we performed a retrospective review of actual customer chargebacks for markdowns and returns to evaluate the historical accuracy of the Company’s estimates. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2000. New York, New York March 27, 2023 F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of G-III Apparel Group, Ltd. Opinion on Internal Control Over Financial Reporting We have audited G-III Apparel Group, Ltd and subsidiaries’ internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, G-III Apparel Group, Ltd. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023, based on the COSO criteria. As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of KLH, which is included in the 2023 consolidated financial statements of the Company and constituted 13.7% of total assets, as of January 31, 2023 and 4.0% of revenues, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of KLH. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended January 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 27, 2023 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. F-3 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, New York March 27, 2023 F-4 G-III Apparel Group, Ltd. and Subsidiaries CONSOLIDATED BALANCE SHEETS ASSETS Current assets Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $18.3 million and $17.4 million, respectively Inventories Prepaid income taxes Prepaid expenses and other current assets Total current assets Investments in unconsolidated affiliates Property and equipment, net Operating lease assets Other assets, net Other intangibles, net Deferred income tax assets, net Trademarks Goodwill Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current portion of notes payable Accounts payable Accrued expenses Customer refund liabilities Current operating lease liabilities Income tax payable Other current liabilities Total current liabilities Notes payable, net of discount and unamortized issuance costs Deferred income tax liabilities, net Noncurrent operating lease liabilities Other non-current liabilities Total liabilities Redeemable noncontrolling interests Stockholders' Equity Preferred stock; 1,000 shares authorized; no shares issued and outstanding Common stock - $0.01 par value; 120,000 shares authorized; 49,396 and 49,396 shares issued, respectively Additional paid-in capital Accumulated other comprehensive loss Retained earnings Common stock held in treasury, at cost - 2,680 and 1,480 shares, respectively Total stockholders' equity Total liabilities, redeemable noncontrolling interests and stockholders' equity January 31, 2023 January 31, 2022 (In thousands, except per share amounts) $ 191,652 $ 465,984 $ $ 674,963 709,345 5,886 70,654 1,652,500 24,467 53,742 239,665 52,644 34,842 26,389 628,156 — 2,712,405 135,518 169,508 115,586 89,760 52,917 14,875 905 579,069 483,840 44,783 204,974 15,141 1,327,807 (850) — 605,512 512,155 14,502 54,704 1,652,857 65,503 48,805 169,595 54,992 31,361 3,559 453,329 262,527 2,742,528 4,237 236,921 128,124 86,788 42,763 9,995 1,977 510,805 515,344 40,010 142,868 13,118 1,222,145 471 — 264 468,712 (11,653) 983,944 (55,819) 1,385,448 2,712,405 $ 264 456,329 (14,529) 1,117,005 (39,157) 1,519,912 2,742,528 $ $ $ The accompanying notes are an integral part of these statements. F-5 G-III Apparel Group, Ltd. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation and amortization Asset impairments and gain on lease terminations Operating profit (loss) Other income Interest and financing charges, net Income (loss) before income taxes Income tax expense (benefit) Net income (loss) Less: Loss attributable to noncontrolling interests Net income (loss) attributable to G-III Apparel Group, Ltd. Year Ended January 31, 2021 2022 2023 (In thousands, except per share amounts) $ 3,226,728 $ 2,766,538 $ 2,055,146 1,310,704 1,778,349 744,442 988,189 605,102 648,015 38,625 27,626 17,873 1,455 82,842 311,093 3,238 9,549 (50,354) (49,666) 35,726 270,976 12,203 70,875 23,523 200,101 (22) (492) 23,545 2,125,591 1,101,137 833,151 27,762 349,686 (109,462) 27,894 (56,602) (138,170) (3,788) (134,382) (1,321) $ (133,061) $ 200,593 $ NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO G-III APPAREL GROUP, LTD.: Basic: Net income (loss) per common share Weighted average number of shares outstanding Diluted: Net income (loss) per common share Weighted average number of shares outstanding Net income (loss) Other comprehensive income (loss): Foreign currency translation adjustments Other comprehensive income (loss): Comprehensive income (loss) Comprehensive loss attributable to noncontrolling interests: Net loss Foreign currency translation adjustments Comprehensive loss attributable to noncontrolling interests Comprehensive income (loss) attributable to G-III Apparel Group, Ltd. $ $ (2.79) $ 4.14 $ 47,653 48,426 0.49 48,242 (2.79) $ 4.05 $ 47,653 49,516 0.48 48,781 $ (134,382) $ 200,101 $ 23,523 2,965 2,965 (131,417) (12,456) (12,456) 187,645 (15,885) (15,885) 7,638 (1,321) (89) (1,410) (492) 21 (471) $ (132,827) $ 187,174 $ (22) (29) (51) 7,587 The accompanying notes are an integral part of these statements. F-6 G-III Apparel Group, Ltd. and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Common Stock Held In Treasury Total Balance as of January 31, 2020 Equity awards exercised/vested, net Share-based compensation expense Taxes paid for net share settlements Other comprehensive gain, net Net income attributable to G-III Apparel Group, Ltd. Balance as of January 31, 2021 Equity awards exercised/vested, net Share-based compensation expense Taxes paid for net share settlements Other comprehensive loss, net Repurchases of common stock Cumulative effect of change in accounting principle Net income attributable to G-III Apparel Group, Ltd. Balance as of January 31, 2022 Equity awards exercised/vested, net Share-based compensation expense Taxes paid for net share settlements Other comprehensive loss, net Repurchases of common stock Net loss attributable to G-III Apparel Group, Ltd. Balance as of January 31, 2023 $ 264 $ 452,142 $ — — — — — 264 — — — — — — — 264 — — — — — (9,538) 6,137 (324) — — 448,417 (5,172) 17,424 (4,340) — — — — 456,329 (10,287) 32,475 (9,805) — — (In thousands) (18,008) $ 893,138 $ (36,864) $ 1,290,672 297 6,137 (324) 15,914 — — — 15,914 9,835 — — — — — — — — (2,094) — — — (12,435) — 23,545 916,683 — — — — — — (27,029) 5,172 — — — (17,300) 23,545 1,336,241 — 17,424 (4,340) (12,435) (17,300) — (271) — (271) — (14,529) — — — 2,876 — 200,593 1,117,005 — — — — — — (39,157) 10,287 — — — (26,949) 200,593 1,519,912 — 32,475 (9,805) 2,876 (26,949) — — — $ 264 $ 468,712 $ (11,653) $ (133,061) (133,061) 983,944 $ (55,819) $ 1,385,448 — The accompanying notes are an integral part of these statements. F-7 G-III Apparel Group, Ltd. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Cash flows from operating activities Net income (loss) attributable to G-III Apparel Group, Ltd. Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of assets and liabilities acquired: Depreciation and amortization Loss on disposal of fixed assets Non-cash operating lease costs Asset impairments and gain on lease terminations Dividend received from unconsolidated affiliate Equity (gain)/loss in unconsolidated affiliates Change in fair value of equity investment Share-based compensation Deferred financing charges and debt discount amortization Extinguishment of deferred financing costs Deferred income taxes Non-cash gain on fair value of prior minority ownership of Karl Lagerfeld Non-cash gain on fair value of prior minority ownership of Fabco Changes in operating assets and liabilities: Accounts receivable, net Inventories Income taxes, net Prepaid expenses and other current assets Other assets, net Customer refund liabilities Operating lease liabilities Accounts payable, accrued expenses and other liabilities Net cash provided by (used in) operating activities Cash flows from investing activities Operating lease assets initial direct costs Investment in e-commerce retailer Investment in equity securities Sale of equity securities Sale of portion of investment in e-commerce retailer Capital expenditures Acquisition of KLH, net of cash acquired Acquisition of other foreign business, net of cash acquired Investment in brand acquisition Net cash used in investing activities Cash flows from financing activities Repayment of borrowings - revolving credit facility Proceeds from borrowings - revolving credit facility Repayment of borrowings - foreign facilities Proceeds from borrowings - foreign facilities Repayment of borrowings - unsecured term loan Proceeds from borrowings - unsecured term loan Proceeds from borrowings - senior secured notes Payment of financing costs Proceeds from exercise of equity awards Purchase of treasury shares Taxes paid for net share settlements Net cash provided by (used in) financing activities Foreign currency translation adjustments Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental disclosures of cash flow information Cash payments: Interest, net Income tax payments, net Stock received from licensing agreement 2023 Year Ended January 31, 2022 (In thousands) 2021 $ (133,061) $ 200,593 $ 23,545 27,762 210 54,492 349,686 — (674) (1,258) 32,475 10,239 — (55,147) (27,071) — (40,990) (163,671) 12,588 (11,398) 1,520 2,972 (56,092) (107,181) (104,599) (84) (25,000) (22,378) 22,434 — (21,528) (168,592) (2,810) — (217,958) (507,166) 587,254 (75,496) 83,794 — — — — — (26,949) (9,805) 51,632 (3,407) (274,332) 465,984 191,652 $ 27,626 136 43,351 1,455 (1,352) (8,118) (1,636) 17,424 9,677 — 21,117 — — (112,814) (95,652) 9,742 8,373 752 (12,567) (46,922) 124,613 185,798 — (25,000) — — 5,000 (18,261) — — (13,244) (51,505) — — (1,483) — (549) 230 — — — (17,300) (4,340) (23,442) 3,199 114,050 351,934 465,984 44,108 38,071 $ $ — $ 54,393 39,821 4,831 38,625 1,079 71,368 17,873 2,695 (601) — 6,137 10,014 6,503 24,844 — (2,693) 38,900 143,525 (13,795) 24,514 (663) (136,436) (86,448) (94,228) 74,758 (4,093) — — — — (16,035) — — — (20,128) (1,291,424) 1,291,424 — — (300,530) 8,883 400,000 (13,551) 297 — (324) 94,775 5,157 154,562 197,372 351,934 16,418 1,971 — $ $ $ $ $ $ $ $ The accompanying notes are an integral part of these statements. F-8 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS January 31, 2023, 2022 and 2021 NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows: 1. Business Activity and Principles of Consolidation As used in these financial statements, the term “Company” or “G-III” refers to G-III Apparel Group, Ltd. and its subsidiaries. The Company designs, sources and markets an extensive range of apparel, including outerwear, dresses, sportswear, swimwear, women’s suits and women’s performance wear, as well as women’s handbags, footwear, small leather goods, cold weather accessories and luggage. The Company also operates retail stores and licenses its proprietary brands under several product categories. The Company consolidates the accounts of its wholly-owned and majority-owned subsidiaries. Fabco Holding B.V. (“Fabco”) is a Dutch joint venture limited liability company that is 75% owned by the Company and is treated as a consolidated majority-owned subsidiary. In October 2021, the Company purchased Sonia Rykiel, a wholly-owned operating subsidiary. The results of Sonia Rykiel are included in our consolidated financial statements beginning in the fourth quarter of fiscal 2022. Karl Lagerfeld Holding B.V. (“KLH”) is a Dutch limited liability company that was 19% owned by the Company through May 30, 2022 and was accounted for during that time using the equity method of accounting. Effective May 31, 2022, the Company acquired the remaining 81% interest in KLH that it did not previously own and, as a result, KLH began being treated as a consolidated wholly-owned subsidiary. KL North America B.V. (“KLNA”) is a Dutch joint venture limited liability company that was 49% owned by the Company and 51% indirectly owned by KLH through May 30, 2022 and was accounted for during that time using the equity method of accounting. Effective May 31, 2022, KLNA became an indirect wholly-owned subsidiary of the Company as a result of the Company’s acquisition of the remaining 81% interest in KLH it did not previously own. All material intercompany balances and transactions have been eliminated. The results of KLH are included in the Company’s consolidated financial statements beginning May 31, 2022. Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by the Company, KLH, Fabco and Sonia Rykiel, which the Company purchased in October 2021, report results on a calendar year basis rather than on the January 31 fiscal year basis used by the Company. Accordingly, the results of Vilebrequin, KLH, Fabco and Sonia Rykiel are included in the financial statements for the year ended or ending closest to the Company’s fiscal year end. For example, with respect to the Company’s results for the year ended January 31, 2023, the results of Vilebrequin, Fabco and Sonia Rykiel are included for the year ended December 31, 2022. For the year ended December 31, 2022, the results of KLH, which includes KLNA, are included for the period from July 1, 2022 through December 31, 2022. The results of the Company’s previous 49% ownership interest in KLNA and 19% ownership interest in KLH are included for the period from February 1, 2022 through May 30, 2022. The Company’s retail operations segment reports on a 52/53-week fiscal year. For fiscal 2023 and 2022, the retail operations segment reported based on a 52-week fiscal year. 2. Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. 3. Revenue Recognition Wholesale revenue is recognized when control transfers to the customer. The Company considers control to have been transferred when the Company has transferred physical possession of the product, the Company has a right to payment for the product, the customer has legal title to the product and the customer has the significant risks and rewards of the product. F-9 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Wholesale revenues are adjusted by variable considerations arising from implicit or explicit obligations. Variable consideration includes trade discounts, end of season markdowns, sales allowances, cooperative advertising, return liabilities and other customer allowances. The Company estimates the anticipated variable consideration and records this estimate as a reduction of revenue in the period the related product revenue is recognized. Variable consideration is estimated based on historical experience, current contractual requirements, specific known events and industry trends. The reserves for variable consideration are recorded as customer refund liabilities. Historical return rates are calculated on a product line basis. The remainder of the historical rates for variable consideration are calculated by customer by product lines. The Company recognizes retail sales when the customer takes possession of the goods and tenders payment, generally at the point of sale. Digital revenues from customers through the Company’s digital platforms are recognized when the customer takes possession of the goods. The Company’s sales are recorded net of applicable sales taxes. Both wholesale revenues and retail store revenues are shown net of returns, discounts and other allowances. Licensing revenue is recognized at the higher of royalty earned or guaranteed minimum royalty. 4. Accounts Receivable In the normal course of business, the Company extends credit to its wholesale customers based on pre-defined credit criteria. Accounts receivable are net of an allowance for doubtful accounts. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligation (such as in the case of bankruptcy filings, extensive delay in payment or substantial downgrading by credit sources), a specific reserve for bad debts is recorded against amounts due to reduce the net recognized receivable to the amount reasonably expected to be collected. For all other wholesale customers, an allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectability based on historical trends and an evaluation of the impact of economic conditions. The Company’s financial instruments consist of trade receivables arising from revenue transactions in the ordinary course of business. The Company considers its trade receivables to consist of two portfolio segments: wholesale and retail trade receivables. Wholesale trade receivables result from credit the Company has extended to its wholesale customers based on pre-defined criteria and are generally due within 30 to 60 days. Retail trade receivables primarily relate to amounts due from third-party credit card processors for the settlement of debit and credit card transactions and are typically collected within 3 to 5 days. See Note 3 – Allowance for Doubtful Accounts. 5. Inventories Wholesale inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value, which comprises a significant portion of the Company’s inventory. Effective February 1, 2021, the Company elected to change its method of accounting for retail inventories from the lower of cost or market as determined by the retail inventory method to the lower of cost or net realizable value using the weighted average cost method. The Company believes the new method is preferable as it provides better matching of cost of goods sold with revenue, improves the precision of inventory valuation at the balance sheet dates, and more closely aligns with the valuation methods used throughout the rest of the Company. In addition, the change in inventory valuation better aligns with the way the Company manages its business with a focus on the actual margin realized. F-10 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company determined that it was impractical to apply this change in accounting principle retrospectively due to a lack of available information. As a result, the Company applied the change prospectively as of February 1, 2021. The cumulative adjustment as of February 1, 2021 was a decrease of $0.3 million in both inventories and retained earnings. The change in accounting principle did not have a material effect on the Company’s consolidated financial statements as of and for the year ended January 31, 2023. Vilebrequin inventories are stated at the lower of cost (determined by the weighted average method) or net realizable value. 6. Goodwill and Other Intangibles Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations accounted for under the purchase method of accounting. Goodwill is subject to annual impairment tests using a qualitative evaluation or a quantitative test using an income approach through a discounted cash flow analysis methodology. The discounted cash flow approach requires that certain assumptions and estimates be made regarding industry economic factors and future profitability. Intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment tests using a qualitative evaluation or a quantitative test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. Other intangibles with finite lives, including license agreements, trademarks and customer lists are amortized on a straight-line basis over the estimated useful lives of the assets (currently ranging from 5 to 17 years). Impairment charges, if any, on intangible assets with finite lives are recorded when indicators of impairment are present and the discounted cash flows estimated to be derived from those assets are less than the carrying amounts of the assets. During fiscal 2023, the Company recorded a $347.2 million non-cash impairment charge to fully impair the carrying value of its goodwill. See Note 7 – Intangible Assets. 7. Leases The Company accounts for its leases in accordance with ASC Topic 842 – Leases (“ASC 842”). The Company determines if an arrangement is, or contains, a lease at contract inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For leases with an initial term greater than 12 months, a lease liability is recorded on the balance sheet at the present value of future payments discounted at the incremental borrowing rate (discount rate) corresponding with the lease term. An operating lease asset is recorded based on the initial amount of the lease liability, plus any lease payments made to the lessor before or at the lease commencement date and any initial direct costs incurred, less any tenant improvement allowance incentives received. The difference between the minimum rents paid and the straight-line rent (deferred rent) is reflected within the associated operating lease asset. The Company has elected to account for lease and non-lease components as a single component. The lease classification evaluation begins at the commencement date. The lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain or the failure to exercise such option would result in an economic penalty. All of the Company’s leases are classified as operating leases. 8. Depreciation and Amortization Property and equipment are recorded at cost. Depreciation and amortization are computed by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the life of the lease or the useful life of the improvement, whichever is shorter. F-11 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 9. Impairment of Long-Lived Assets All property and equipment and other long-lived assets are reviewed for potential impairment when events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. If such indicators are present, it is determined whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than the carrying value of the assets. A potential impairment has occurred if projected future undiscounted cash flows are less than the carrying value of the assets. In fiscal 2023, the Company recorded a $2.7 million impairment charge related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. In fiscal 2022, the Company recorded a $1.5 million impairment charge related to the leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. In fiscal 2021, the Company recorded a $20.1 million impairment charge related to the operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather and G.H. Bass stores, primarily due to the retail restructuring, as well as at certain DKNY and Vilebrequin stores as a result of the performance at these stores. 10. Income Taxes The Company accounts for income taxes and uncertain tax positions in accordance with ASC Topic 740 — Income Taxes (“ASC 740”). Income taxes are accounted for under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of differences between the tax bases of assets and liabilities and their financial reporting amounts using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a return, as well as guidance on de-recognition, classification, interest and penalties and financial statement reporting disclosures. It is also the Company's policy to provide for uncertain tax positions and the related interest and penalties based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established, or is required to pay amounts in excess of the liability, or when other facts and circumstances change, the Company's effective tax rate in a given financial statement period may be materially affected. The United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, which includes various income tax provisions aimed at providing economic relief. One of those provisions allows any loss generated in fiscal 2021 to be carried back to each of the 5 taxable years preceding the taxable year of such a loss. The Company has elected to use this relief and carried back the fiscal 2021 tax loss to a tax year with a 35% federal rate. Additionally, the CARES Act permits Qualified Improvement Property to qualify for 15-year depreciation and therefore be also eligible for 100 percent first-year bonus depreciation. The Company has elected to take 100% bonus depreciation for all qualified improvement property. F-12 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 11. Net Income (Loss) Per Common Share Basic net income (loss) per common share has been computed using the weighted average number of common shares outstanding during each period. Diluted net income per share, when applicable, is computed using the weighted average number of common shares and potential dilutive common shares, consisting of unvested restricted stock unit awards and stock options outstanding during the period. Approximately 11,000 and 182,000 shares of common stock have been excluded from the diluted net income per share calculation for the years ended January 31, 2022 and 2021, respectively. All share-based payments outstanding that vest based on the achievement of performance conditions, and for which the respective performance conditions have not been achieved, have been excluded from the diluted per share calculation. The Company issued no shares of common stock in connection with the exercise or vesting of equity awards during the years ended January 31, 2023, 2022 and 2021, respectively. Instead, the Company re-issued 387,792, 194,965 and 367,290 treasury shares in connection with the vesting of equity awards in fiscal 2023, 2022 and 2021, respectively. The following table reconciles the numerators and denominators used in the calculation of basic and diluted net income (loss) per share: Year Ended January 31, 2022 (In thousands, except share and per share amounts) 2021 2023 Net income (loss) attributable to G-III Apparel Group, Ltd. Basic net income (loss) per share: Basic common shares Basic net income (loss) per share Diluted net income (loss) per share: Basic common shares Dilutive restricted stock unit awards and stock options Diluted common shares Diluted net income (loss) per share 12. Equity Award Compensation $ $ $ (133,061) $ 200,593 $ 23,545 47,653 (2.79) $ 48,426 4.14 $ 48,242 0.49 47,653 — 47,653 (2.79) 48,426 1,090 49,516 $ 4.05 $ 48,242 539 48,781 0.48 ASC Topic 718, Compensation — Stock Compensation, requires all share-based payments to employees, including grants of restricted stock unit awards and employee stock options, to be recognized as compensation expense over the service period (generally the vesting period) based on their grant date fair values. The Company accounts for forfeited awards as they occur as permitted by ASC 718. Ultimately, the actual expense recognized over the vesting period will be for those shares that vested. Restricted stock units (“RSU’s”) are time based awards that do not have market or performance conditions and generally (i) cliff vest after three years or (ii) vest over a three year period. Performance based restricted stock units (“PRSU’s”) granted to executives prior to fiscal 2020 include (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company’s stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target. PRSU’s generally vest over a two to five year period. Performance stock units (“PSU’s”) were granted to executives beginning in fiscal 2020 and vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur. The PSU’s granted in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer of shares for two years subsequent to the date of vesting. RSU’s and employee stock options are expensed on a straight-line basis. PRSU’s are expensed under the accelerated attribution method. PSU’s are expensed under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals. F-13 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Excess tax benefits arising from the lapse or exercise of an equity award are recognized in income tax expense. The assumed proceeds from applying the treasury stock method when computing net income (loss) per share is amended to exclude the amount of excess tax benefits that would be recognized in additional paid-in capital. 13. Cost of Goods Sold Cost of goods sold includes the expenses incurred to acquire, produce and prepare inventory for sale, including product costs, warehouse staff wages, freight in, import costs, packaging materials, the cost of operating the overseas offices and royalty expense. Gross margins may not be directly comparable to those of the Company’s competitors, as income statement classifications of certain expenses may vary by company. Additionally, costs expected to be incurred when products are returned should be accrued for upon the sale of the product as a component of cost of goods sold. 14. Shipping and Handling Costs Shipping and handling costs consist of warehouse facility costs, third party warehousing, freight out costs, and warehouse supervisory wages and are included in selling, general and administrative expenses. Shipping and handling costs included in selling, general and administrative expenses were $187.6 million, $130.2 million and $111.8 million for the years ended January 31, 2023, 2022 and 2021, respectively. 15. Advertising Costs The Company expenses advertising costs as incurred and includes these costs in selling, general and administrative expenses. Advertising paid as a percentage of sales under license agreements are expensed in the period in which the sales occur or are accrued to meet guaranteed minimum requirements under license agreements. Advertising expense was $131.6 million, $93.1 million and $55.3 million for the years ended January 31, 2023, 2022 and 2021, respectively. Prepaid advertising, which represents advance payments to licensors for minimum guaranteed payments for advertising under the Company’s licensing agreements, was $8.3 million and $6.7 million at January 31, 2023 and 2022, respectively. 16. Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. In determining these estimates, management must use amounts that are based upon its informed judgments and best estimates. The Company continually evaluates its estimates, including those related to customer allowances and discounts, product returns, bad debts, inventories, equity awards, income taxes, carrying values of intangible assets and long-lived assets including right of use assets. Estimates are based on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. 17. Fair Value of Financial Instruments GAAP establishes a three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy for a particular asset or liability depends on the inputs used in its valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally-derived F-14 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (unobservable). A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1 — inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — inputs to the valuation methodology based on quoted prices for similar assets or liabilities in active markets for substantially the full term of the financial instrument; quoted prices for identical or similar instruments in markets that are not active for substantially the full term of the financial instrument; and model-derived valuations whose inputs or significant value drivers are observable. Level 3 — inputs to the valuation methodology based on unobservable prices or valuation techniques that are significant to the fair value measurement. The following table summarizes the carrying values and the estimated fair values of the Company’s debt instruments: Financial Instrument Level 2023 2022 2023 2022 Carrying Value Fair Value January 31, January 31, January 31, January 31, Secured Notes Revolving credit facility Note issued to LVMH Unsecured loans Overdraft facilities Foreign credit facility 1 2 3 2 2 2 $ 400,000 80,087 121,202 10,866 3,657 7,792 (In thousands) $ 400,000 $ 380,000 80,087 119,426 10,866 3,657 7,792 — 114,255 8,367 2,903 — $ 422,020 — 110,123 8,367 2,903 — The Company’s debt instruments are recorded at their carrying values in its consolidated balance sheets, which may differ from their respective fair values. The fair value of the Company’s secured notes is based on their current market price as of January 31, 2023. The carrying amount of the Company’s variable rate debt approximates the fair value, as interest rates change with the market rates. Furthermore, the carrying value of all other financial instruments potentially subject to valuation risk (principally consisting of cash, accounts receivable and accounts payable) also approximates fair value due to the short-term nature of these accounts. The 2% note in the principal amount of $125 million (the “LVMH Note”) issued to LVMH Moet Hennessy Louis Vuitton Inc. (“LVMH”) in connection with the acquisition of DKNY and Donna Karan was recorded on the balance sheet at a discount of $40.0 million in accordance with ASC 820 — Fair Value Measurements. For purposes of this fair value disclosure, the Company based its fair value estimate for the LVMH Note on the initial fair value as determined at the date of the acquisition of DKNY and Donna Karan and records the amortization using the effective interest method over the term of the LVMH Note. The fair value of the LVMH Note was considered a Level 3 valuation in the fair value hierarchy. Non-Financial Assets and Liabilities The Company’s non-financial assets that are measured at fair value on a nonrecurring basis include long-lived assets, which consist primarily of property and equipment and operating lease assets. The Company reviews these assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable. For assets that are not recoverable, an impairment loss is recognized equal to the difference between the carrying amount of the asset or asset group and its estimated fair value. For operating lease assets, the Company determines the fair value F-15 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) of the assets by discounting the estimated market rental rates over the remaining term of the lease. These fair value measurements are considered level 3 measurements in the fair value hierarchy. During fiscal 2023, the Company recorded a $2.7 million impairment charge related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. During fiscal 2022, the Company recorded a $1.5 million impairment charge primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. During fiscal 2021, the Company recorded a $20.1 million impairment charge primarily related to operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather and G.H. Bass stores, primarily due to the Company’s retail restructuring, as well as at certain DKNY and Vilebrequin stores as a result of the performance at these stores. 18. Foreign Currency Translation Certain of the Company’s international subsidiaries use different functional currencies, which are, for the most part, the local currency. In accordance with the authoritative guidance, assets and liabilities of the Company’s foreign operations are translated from foreign currency into U.S. dollars at period-end rates, while income and expenses are translated at the weighted average exchange rates for the period. The related translation adjustments are reflected as a foreign currency translation adjustment in accumulated other comprehensive loss within stockholders’ equity. 19. Effects of Recently Adopted and Issued Accounting Pronouncements Recently Adopted Accounting Guidance There was no new accounting guidance adopted during the year ended January 31, 2023. Accounting Guidance Issued Being Evaluated for Adoption The Company has reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the consolidated financial statements. NOTE 2 — REVENUE RECOGNITION Wholesale revenue is recognized upon the transfer of goods to customers in an amount that reflects the expected consideration to be received in exchange for these goods. The difference between the amount initially billed and the amount collected represents variable consideration. Variable consideration includes trade discounts, end of season markdowns, sales allowances, cooperative advertising, return liabilities and other customer allowances. The Company estimates the anticipated variable consideration and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The liability recorded in connection with variable consideration, except for cooperative advertising, has been classified as a current liability under “customer refund liabilities” on the consolidated balance sheets. The Company classifies cooperative advertising as a reduction of net sales in the consolidated statements of operations and comprehensive income (loss). Costs expected to be incurred when products are returned should be accrued for upon the sale of the product as a component of cost of goods sold. Disaggregation of Revenue In accordance with ASC 606, the Company elected to disclose its revenues by segment. Each segment presents its own characteristics with respect to the timing of revenue recognition and the type of customer. In addition, disaggregating revenues using a segment basis is consistent with how the Company’s Chief Operating Decision Maker manages the F-16 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Company. The Company identified the wholesale operations segment and the retail operations segment as distinct sources of revenue. Wholesale Operations Segment. Wholesale revenues include sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, other than sales of product under the Karl Lagerfeld Paris brand from our retail stores and digital outlets. Wholesale revenues from sales of products are recognized when control transfers to the customer. The Company considers control to have been transferred when the Company has transferred physical possession of the product, the Company has a right to payment for the product, the customer has legal title to the product and the customer has the significant risks and rewards of the product. Wholesale revenues are adjusted by variable considerations arising from implicit or explicit obligations. Wholesale revenues also include revenues from license agreements related to the DKNY, Donna Karan, Karl Lagerfeld, G.H. Bass, Andrew Marc and Vilebrequin trademarks owned by the Company. As of January 31, 2023, revenues from license agreements represented an insignificant portion of wholesale revenues. Retail Operations Segment. Retail store revenues are generated by direct sales to consumers through company-operated stores and product sales through the Company’s digital channels for the DKNY, Donna Karan, G.H. Bass, Karl Lagerfeld Paris, Andrew Marc and Wilsons Leather businesses. Prior to completion of the retail restructuring in fiscal 2021, retail stores primarily consisted of Wilsons Leather, G.H. Bass, DKNY and Karl Lagerfeld Paris retail stores, substantially all of which are operated as outlet stores. The Company’s Wilsons Leather and G.H. Bass stores were closed in fiscal 2021 as a result of the retail restructuring. Retail operations segment revenues are recognized at the point of sale when the customer takes possession of the goods and tenders payment. Digital revenues primarily consist of sales to consumers through the Company’s digital platforms. Digital revenue is recognized when a customer takes possession of the goods. Retail sales are recorded net of applicable sales tax. Variable Consideration. The difference between the amount initially billed and the amount collected represents variable consideration. The Company may provide customers with discounts, rebates, credit returns and price reductions. The Company may also contribute to customers’ promotional activities or incur charges for compliance violations. These adjustments to the initial selling price often occur after the sales process is completed. The Company identified the following elements of variable consideration: Markdowns. Markdown allowances consist of accommodations in the form of price reductions to wholesale customers for purchased merchandise. In general, markdowns are granted to full price customers, such as department stores. Markdowns may vary year-over-year and are granted based on the performance of Company merchandise at a customer’s retail stores. Term Discounts. Term discounts represent a discount from the initial wholesale sales price to certain wholesale customers consistent with customary industry practice. Sales Allowances. Sales allowances are reductions of the selling price agreed upon with wholesale customers. Sales allowances may be contractual or may be granted on a case-by-case basis. Non-contractual sales allowances may be granted in connection with billing adjustments and, in some cases, for product related issues. Advertising Allowances. Advertising allowances consist of the Company’s financial participation in the promotional efforts of its wholesale customers. Wholesale customers may charge back a portion of the advertising expense incurred against open invoices. Advertising programs are generally agreed upon at the beginning of a season. Other Allowances. General allowances consist of price reductions granted to a wholesale customer and may relate to the Company’s participation in costs incurred by the customer during the sales process, as well as price differences, shortages and charges for operational non-compliance. F-17 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Return of Merchandise. For wholesale customers, the Company may make accommodations for returns of merchandise that is underperforming at a customer’s retail stores. For retail customers, as a matter of Company policy, whether merchandise is purchased at the Company’s stores or on its digital platforms, the consumer generally has up to 90 days to return merchandise from the date of purchase. Variable consideration is estimated based on historical experience, current contractual and statutory requirements, specific known events and industry trends. The reserves for variable consideration are recorded under customer refund liabilities. As of January 31, 2023 and 2022, customer refund liabilities amounted to $89.8 million and $86.8 million, respectively. Historical return rates are calculated on a product line basis. The remainder of the historical rates for variable consideration are calculated by customer by product lines. Contract Liabilities The Company’s contract liabilities, which are recorded within accrued expenses in the accompanying consolidated balance sheets, primarily consist of gift card liabilities and advance payments from licensees. In some of its retail concepts, the Company also offers a limited loyalty program where customers accumulate points redeemable for cash discount certificates that expire 90 days after issuance. Total contract liabilities were $5.1 million at both January 31, 2023 and 2022. The Company recognized $4.0 million in revenue for the year ended January 31, 2023 which related to contract liabilities that existed at January 31, 2022. There were no contract assets recorded as of January 31, 2023 and January 31, 2022. Substantially all of the advance payments from licenses as of January 31, 2023 are expected to be recognized as revenue within the next twelve months. NOTE 3 — ALLOWANCE FOR DOUBTFUL ACCOUNTS The Company’s financial instruments consist of trade receivables arising from revenue transactions in the ordinary course of business. The Company considers its trade receivables to consist of two portfolio segments: wholesale and retail trade receivables. Wholesale trade receivables result from credit the Company has extended to its wholesale customers based on pre-defined criteria and are generally due within 30 to 60 days. Retail trade receivables primarily relate to amounts due from third-party credit card processors for the settlement of debit and credit card transactions and are typically collected within 3 to 5 days. The Company’s accounts receivable and allowance for doubtful accounts as of January 31, 2023 and 2022 were: Accounts receivable, gross Allowance for doubtful accounts Accounts receivable, net Accounts receivable, gross Allowance for doubtful accounts Accounts receivable, net Wholesale January 31, 2023 Retail (In thousands) Total $ $ 692,033 (18,237) 673,796 $ $ 1,227 $ (60) 1,167 $ 693,260 (18,297) 674,963 Wholesale January 31, 2022 Retail (In thousands) Total $ $ 620,737 (17,307) 603,430 $ $ 2,166 $ (84) 2,082 $ 622,903 (17,391) 605,512 The allowance for doubtful accounts for wholesale trade receivables is estimated based on several factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations (such as in the case of bankruptcy filings (including potential bankruptcy filings), extensive delay in payment or substantial downgrading by F-18 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) credit rating agencies), a specific reserve for bad debts is recorded against amounts due from that customer to reduce the net recognized receivable to the amount reasonably expected to be collected. For all other wholesale customers, an allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the end of the reporting period for financial statements, assessments of collectability based on historical trends and an evaluation of the impact of economic conditions. The Company considers both current and forecasted future economic conditions in determining the adequacy of its allowance for doubtful accounts. The allowance for doubtful accounts for retail trade receivables is estimated at the credit card chargeback rate applied to the previous 90 days of credit card sales. In addition, the Company considers both current and forecasted future economic conditions in determining the adequacy of its allowance for doubtful accounts. The Company had the following activity in its allowance for credit losses: Balance as of January 31, 2022 Provision for credit losses Accounts written off as uncollectible Balance as of January 31, 2023 Balance as of January 31, 2021 Provision for credit losses Accounts written off as uncollectible Balance as of January 31, 2022 NOTE 4 — INVENTORIES Wholesale January 31, 2023 Retail (In thousands) $ $ (17,307) (1,002) 72 (18,237) $ (84) 24 — (60) $ Wholesale January 31, 2022 Retail (In thousands) $ $ (17,429) (103) 225 (17,307) $ $ (30) $ (54) — (84) $ Total (17,391) (978) 72 (18,297) Total (17,459) (157) 225 (17,391) Wholesale inventories, which comprise a significant portion of the Company’s inventory, are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. Retail and Vilebrequin inventories are stated at the lower of cost (determined by the weighted average method) or net realizable value. Substantially all of the Company’s inventories consist of finished goods. The inventory return asset, which consists of the amount of goods that are anticipated to be returned by customers, was $19.2 million and $18.9 million at January 31, 2023 and 2022, respectively. The inventory return asset is recorded within prepaid expenses and other current assets on the consolidated balance sheets as of January 31, 2023 and 2022. Inventory held on consignment by the Company’s customers totaled $6.6 million and $4.5 million at January 31, 2023 and 2022, respectively. Consignment inventory is stored at the facilities of the Company’s customers. The Company reflects this inventory on its consolidated balance sheets. F-19 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 5 — PROPERTY AND EQUIPMENT Property and equipment consist of: Machinery and equipment Leasehold improvements Furniture and fixtures Computer equipment and software Less: accumulated depreciation Estimated life 2023 2022 January 31, 5 years 3-13 years 3-10 years 2-5 years (In thousands) $ $ 2,437 $ 83,768 130,340 52,293 268,838 (215,096) 53,742 $ 1,882 77,491 102,813 43,484 225,670 (176,865) 48,805 Depreciation expense was $23.5 million, $23.6 million and $34.0 million for the years ended January 31, 2023, 2022 and 2021, respectively. For the year ended January 31, 2023, the Company recorded a $1.8 million impairment charge related to leasehold improvements and furniture and fixtures at certain DKNY and Karl Lagerfeld Paris stores as a result of the performance of these stores. For the year ended January 31, 2022, the Company recorded a $1.3 million impairment charge related to leasehold improvements and furniture and fixtures of certain DKNY and Karl Lagerfeld Paris stores as a result of the performance of these stores. For the year ended January 31, 2021, the Company recorded an $0.8 million impairment charge related to leasehold improvements and furniture and fixtures of certain Wilsons Leather and G.H. Bass stores, primarily due to the retail restructuring, as well as at certain DKNY stores as a result of the performance of these stores. The Company evaluates long-lived assets, which consist primarily of property and equipment and operating lease assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the evaluation process, the Company first compares the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, the Company needs to determine the fair value of the assets. The Company compares the carrying value of the asset or asset group to its estimated fair value. If the fair value is less than the carrying value, the Company recognizes an impairment charge. The carrying amount of the asset or asset group is reduced to the estimated fair value based on a discounted cash flow valuation. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. The Company reviews retail store assets for potential impairment based on historical cash flows, lease termination provisions and forecasted future retail store operating results. If the Company recognizes an impairment charge for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset. NOTE 6 — LEASES The Company accounts for its leases in accordance with ASC 842. The Company elected the short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component. The Company determines whether an arrangement is, or contains, a lease at contract inception. The Company leases certain retail stores, warehouses, distribution centers, office space and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Total rent payable is recorded during the lease term, including rent escalations in which the amount of future rent is certain or fixed on the straight-line basis over the term of the lease (including any rent holiday periods beginning upon control of F-20 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) the premises and any fixed payments stated in the lease). For leases with an initial term greater than 12 months, a lease liability is recorded on the balance sheet at the present value of future payments discounted at the incremental borrowing rate (discount rate) corresponding with the lease term. An operating lease asset is recorded based on the initial amount of the lease liability, plus any lease payments made to the lessor before or at the lease commencement date and any initial direct costs incurred, less any tenant improvement allowance incentives received or payable at commencement. The difference between the minimum rents paid and the straight-line rent (deferred rent) is reflected within the associated operating lease asset. The lease classification evaluation begins at the commencement date. The lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain or the failure to exercise such option would result in an economic penalty. All retail store, warehouse, distribution center and office leases are classified as operating leases. The Company does not have any finance leases. Operating lease expense is generally recognized on a straight-line basis over the lease term. Most leases are for a term of one to ten years. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to ten years. Several of the Company’s retail store leases include an option to terminate the lease based on failure to achieve a specified sales volume. The exercise of lease renewal options is generally at the Company’s sole discretion. The exercise of lease termination options is generally by mutual agreement between the Company and the lessor. Certain of the Company’s lease agreements include contingent rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Contingent rent is accrued each period as the liabilities are incurred. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants. The Company’s lease assets and liabilities as of January 31, 2023 and 2022 consist of the following: Leases Assets Operating Total lease assets Liabilities Current operating Noncurrent operating Total lease liabilities Classification Operating lease assets Current operating lease liabilities Noncurrent operating lease liabilities January 31, 2023 January 31, 2022 (In thousands) $ $ $ $ 239,665 $ 239,665 $ 169,595 169,595 52,917 $ 204,974 257,891 $ 42,763 142,868 185,631 During fiscal 2023, the Company recorded a $0.7 million impairment charge related to the operating lease assets at certain DKNY stores as a result of the performance at these stores. During fiscal 2022, the Company recorded a $0.2 million impairment charge related to the operating lease assets at certain Vilebrequin and DKNY stores as a result of the performance at these stores. During fiscal 2021, the Company recorded a $19.4 million impairment charge related to the operating lease assets at certain Wilsons Leather and G.H. Bass stores, primarily due to the retail restructuring, as well as at certain DKNY and Vilebrequin stores as a result of the performance at these stores The Company determines the fair value of operating lease assets by discounting the estimated market rental rates over the remaining term of the lease. The Company’s leases do not provide the rate of interest implicit in the lease. Therefore, the Company uses its incremental borrowing rate based on the information available at commencement date of each lease in determining the present value of lease payments. F-21 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company recorded lease costs of $64.9 million, $55.7 million and $92.4 million during the years ended January 31, 2023, 2022 and 2021, respectively. Lease costs are recorded within selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income (loss). The Company recorded variable lease costs and short-term lease costs of $17.1 million, $10.5 million and $6.7 million for the years ended January 31, 2023, 2022 and 2021, respectively. Short-term lease costs are immaterial. As of January 31, 2023, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2028 and thereafter are as follows: Year Ending January 31, 2024 2025 2026 2027 2028 After 2028 Total lease payments Less: Interest Present value of lease liabilities Amount (In thousands) 70,448 63,918 52,971 42,257 35,158 53,389 318,141 60,250 257,891 $ $ $ As of January 31, 2023, there are no material leases that are legally binding but have not yet commenced. As of January 31, 2023, the weighted average remaining lease term related to operating leases is 5.5 years. The weighted average discount rate related to operating leases is 7.8%. Cash paid for amounts included in the measurement of operating lease liabilities is $69.8 million and $60.1 million as of January 31, 2023 and 2022, respectively. Right-of-use assets obtained in exchange for lease obligations were $126.8 million and $30.8 million during the years ended January 31, 2023 and 2022, respectively. NOTE 7 — INTANGIBLE ASSETS Intangible assets consist of: January 31, 2023 Estimated Life Gross Carrying Amount Accumulated Amortization (In thousands) Net Carrying Amount Finite-lived intangible assets Licenses Customer relationships Other Total finite-lived intangible assets Indefinite-lived intangible assets Trademarks Total indefinite-lived intangible assets Total intangible assets, net 14 years 15-17 years 5-10 years $ $ 18,955 52,392 8,583 79,930 $ $ (17,314) $ (22,931) (4,843) (45,088) $ $ 1,641 29,461 3,740 34,842 628,156 628,156 662,998 F-22 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) January 31, 2022 Estimated Life Gross Carrying Amount Accumulated Amortization (In thousands) Net Carrying Amount Finite-lived intangible assets Licenses Customer relationships Other Total finite-lived intangible assets Indefinite-lived intangible assets Goodwill Trademarks Total indefinite-lived intangible assets Total intangible assets, net Amortization expense 14 years 15-17 years 5-10 years $ $ 19,334 48,240 8,534 76,108 $ $ (17,113) $ (20,224) (7,410) (44,747) $ $ 2,221 28,016 1,124 31,361 262,527 453,329 715,856 747,217 Amortization expense with respect to finite-lived intangibles amounted to $3.9 million, $3.7 million and $4.3 million for the years ended January 31, 2023, 2022 and 2021, respectively. The estimated amortization expense with respect to intangibles for the next five years is as follows: Year Ending January 31, 2024 2025 2026 2027 2028 Amortization Expense (In thousands) $ 4,267 4,115 4,050 3,776 3,206 Intangible assets with finite lives are amortized over their estimated useful lives and measured for impairment when events or circumstances indicate that the carrying value may be impaired. Change in Goodwill Changes in the amounts of goodwill for each of the years ended January 31, 2023 and 2022 are summarized by reportable segment as follows (in thousands): January 31, 2021 Acquisition of Sonia Rykiel Currency translation January 31, 2022 Acquisition of Karl Lagerfeld Acquisition of other foreign business Impairment Currency translation January 31, 2023 Wholesale $ 263,135 1,518 (2,126) 262,527 84,336 3,523 (347,172) (3,214) $ — $ Retail — — — — — — — — — $ Total 263,135 1,518 (2,126) 262,527 84,336 3,523 (347,172) (3,214) — F-23 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Impairment Goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired and accounted for under the purchase method. The Company reviews and tests its goodwill and intangible assets with indefinite lives for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may be impaired. The Company performs its goodwill test as of January 31 of each year using a qualitative evaluation or a quantitative test using an income approach through a discounted cash flow analysis methodology. The discounted cash flow approach requires that certain assumptions and estimates be made regarding industry economic factors and future profitability. The Company also performs its annual test for intangible assets with indefinite lives as of January 31 of each year using a qualitative evaluation or a quantitative test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. Fiscal 2023 Annual Goodwill Impairment Test The Company performed its annual test of its wholesale reporting unit as of January 31, 2023 by electing to bypass the qualitative assessment and proceed directly to the quantitative impairment test using a discounted cash flows method to estimate the fair value of its wholesale reporting unit. The Company made this election due to its decline in market capitalization. The fair value of the wholesale reporting unit for goodwill impairment testing was determined using an income approach and validated using a market approach. The income approach was based on discounted projected future (debt-free) cash flows for the reporting unit. The discount rate applied to these cash flows was based on the weighted average cost of capital for the wholesale reporting unit, which takes market participant assumptions into consideration, inclusive of a Company- specific 7.5% risk premium to account for the additional risk of uncertainly perceived by market participants related to the Company’s overall cash flows. Estimated future operating cash flows were discounted at a rate of 17.5% to account for the relative risks of the estimated future cash flows. For the market approach, used to validate the results of the income approach method, the Company used the guideline company method, which analyzes market multiples of adjusted earnings before interest, taxes, depreciation and amortization for a group of comparable public companies. As a result of the Company’s fiscal 2023 annual impairment test, the Company recorded a $347.2 million non-cash impairment charge during its fourth quarter of fiscal 2023 to fully impair the carrying value of its goodwill, which was included in assets impairments and gain on lease terminations in the Company’s consolidated statements of operations and comprehensive income (loss). This impairment charge was recorded to the Company’s wholesale operations segment. Fiscal 2022 and Fiscal 2021 Annual Goodwill Impairment Test The Company performed its annual tests of its wholesale reporting unit using a qualitative review as of January 31, 2022 and 2021 and determined that no impairment existed at those dates. The results of the Company’s annual tests determined that the estimated fair values of its wholesale reporting unit were substantially in excess of its carrying value. Fiscal 2023 Annual Indefinite-Lived Intangible Assets Impairment Test The Company performed its annual test of its indefinite-lived trademarks as of January 31, 2023 using a qualitative evaluation or a quantitative impairment test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. The Company determined that the fair values of each of its indefinite-lived intangible assets substantially exceeded its carrying value and, therefore, there were no impairments identified as of January 31, 2023 as a result of these tests. F-24 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Fiscal 2022 and Fiscal 2021 Annual Indefinite-Lived Intangible Assets Impairment Test The Company performed its annual test of its indefinite-lived trademarks using a qualitative review as of January 31, 2022 and 2021 and determined that no impairment existed at those dates. The results of the Company’s annual tests determined that the estimated fair values of its indefinite-lived trademarks were substantially in excess of their carrying values. The Company’s indefinite-lived trademark balance is primarily composed of the Donna Karan/DKNY trademarks that were acquired in fiscal 2017 and the Karl Lagerfeld trademark that was acquired in fiscal 2023. The fair value of the Company’s goodwill and indefinite-lived intangible assets are considered a Level 3 valuation in the fair value hierarchy. NOTE 8 — NOTES PAYABLE AND OTHER LIABILITIES Long-term debt Long-term debt consists of the following: Secured Notes Revolving credit facility Note issued to LVMH Unsecured loans Overdraft facilities Foreign credit facility Subtotal Less: Net debt issuance costs (1) Debt discount Current portion of long-term debt Total January 31, 2023 January 31, 2022 (in thousands) $ $ 400,000 $ 80,087 125,000 10,866 3,657 7,792 627,402 (4,246) (3,798) (135,518) 483,840 $ 400,000 — 125,000 8,367 2,903 — 536,270 (5,944) (10,745) (4,237) 515,344 (1) Does not include the debt issuance costs, net of amortization, totaling $4.0 million and $5.6 million as of January 31, 2023 and 2022, respectively, related to the revolving credit facility. The debt issuance costs have been deferred and are classified in assets in the accompanying consolidated balance sheets in accordance with ASC 835. Senior Secured Notes In August 2020, the Company completed a private debt offering of $400 million aggregate principal amount of its 7.875% Senior Secured Notes due 2025 (the “Notes”). The terms of the Notes are governed by an indenture (the “Indenture”), among the Company, the guarantors party thereto and U.S. Bank, National Association, as trustee and collateral agent (the “Collateral Agent”). The net proceeds of the Notes were used (i) to repay the $300 million that was outstanding under the Company’s prior term loan facility (the “Term Loan”), (ii) to pay related fees and expenses and (iii) for general corporate purposes. The Notes bear interest at a rate of 7.875% per year payable semi-annually in arrears on February 15 and August 15 of each year. The Notes are unconditionally guaranteed on a senior-priority secured basis by the Company’s current and future wholly- owned domestic subsidiaries that guarantee any of the Company’s credit facilities, including the Company’s ABL facility F-25 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (the “ABL Facility”) pursuant to the ABL Credit Agreement, or certain future capital markets indebtedness of the Company or guarantors. The Notes and the related guarantees are secured by (i) first priority liens on the Company’s Cash Flow Priority Collateral (as defined in the Indenture), and (ii) a second-priority lien on the Company’s ABL Priority Collateral (as defined in the Indenture), in each case subject to permitted liens described in the Indenture. In connection with the issuance of the Notes and execution of the Indenture, the Company and the Guarantors entered into a pledge and security agreement (the “Pledge and Security Agreement”), among the Company, the Guarantors and the Collateral Agent. The Notes are subject to the terms of the intercreditor agreement which governs the relative rights of the secured parties in respect of the ABL Facility and the Notes (the “Intercreditor Agreement”). The Intercreditor Agreement restricts the actions permitted to be taken by the Collateral Agent with respect to the Collateral on behalf of the holders of the Notes. The Notes are also subject to the terms of the LVMH Note subordination agreement which governs the relative rights of the secured parties in respect of the LVMH Note, the ABL Facility and the Notes. The Company may redeem some or all of the Notes at any time and from time to time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. If the Company experiences a Change of Control (as defined in the Indenture), the Company is required to offer to repurchase the Notes at 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, incur restrictions on the ability of the Company’s restricted subsidiaries that are not guarantors to pay dividends or make certain other payments, create or incur certain liens, sell assets and subsidiary stock, impair the security interests, transfer all or substantially all of the Company’s assets or enter into merger or consolidation transactions, and enter into transactions with affiliates. The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in the Indenture, failure to pay certain other indebtedness, failure of certain guarantees to be enforceable, failure to perfect certain collateral securing the Notes, failure to pay certain final judgments, and certain events of bankruptcy or insolvency. The Company incurred debt issuance costs totaling $8.5 million related to the Notes. In accordance with ASC 835, the debt issuance costs have been deferred and are presented as a contra-liability, offsetting the outstanding balance of the Notes, and are amortized over the remaining life of the Notes. Second Amended and Restated ABL Credit Agreement In August 2020, the Company’s subsidiaries, G-III Leather Fashions, Inc., Riviera Sun, Inc., CK Outerwear, LLC, AM Retail Group, Inc. and The Donna Karan Company Store LLC (collectively, the “Borrowers”), entered into the second amended and restated credit agreement (the “ABL Credit Agreement”) with the Lenders named therein and with JPMorgan Chase Bank, N.A., as Administrative Agent. The ABL Credit Agreement is a five year senior secured credit facility subject to a springing maturity date if, subject to certain conditions, the LVMH Note is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. The ABL Credit Agreement provides for borrowings in the aggregate principal amount of up to $650 million. The Company and certain of its subsidiaries (the “Guarantors”), are Loan Guarantors under the ABL Credit Agreement. F-26 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The ABL Credit Agreement refinanced, amended and restated the Amended Credit Agreement, dated as of December 1, 2016 (as amended, supplemented or otherwise modified from time to time prior to August 7, 2020, the “Prior Credit Agreement”), by and among the Borrowers and the Loan Guarantors (each as defined therein) party thereto, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., in its capacity as the administrative agent thereunder. The Prior Credit Agreement provided for borrowings of up to $650 million and was due to expire in December 2021. The ABL Credit Agreement extended the maturity date to August 2025, subject to a springing maturity date if, subject to certain conditions, the LVMH Note is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. Amounts available under the ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the ABL Credit Agreement. Borrowings bear interest, at the Borrowers’ option, at LIBOR plus a margin of 1.75% to 2.25% or an alternate base rate margin of 0.75% to 1.25% (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A. from time to time, (ii) the federal funds rate plus 0.5% and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 1.00%, with the applicable margin determined based on Borrowers’ availability under the ABL Credit Agreement. The ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors. In addition to paying interest on any outstanding borrowings under the ABL Credit Agreement, the Company is required to pay a commitment fee to the lenders under the credit agreement with respect to the unutilized commitments. The commitment fee accrues at a tiered rate equal to 0.50% per annum on the average daily amount of the available commitments when the average usage is less than 50% of the total available commitments and decreases to 0.35% per annum on the average daily amount of the available commitments when the average usage is greater than or equal to 50% of the total available commitments. As of December 31, 2022, interest under the ABL Credit Agreement was being paid at an average rate of 5.31% per annum. The revolving credit facility contains covenants that, among other things, restrict the Company’s ability, subject to specified exceptions, to incur additional debt; incur liens; sell or dispose of certain assets; merge with other companies; liquidate or dissolve the Company; acquire other companies; make loans, advances, or guarantees; and make certain investments. In certain circumstances, the revolving credit facility also requires the Company to maintain a fixed charge coverage ratio, as defined in the agreement, not less than 1.00 to 1.00 for each period of twelve consecutive fiscal months of the Company. As of January 31, 2023, the Company was in compliance with these covenants. As of January 31, 2023, the Company had $80.1 million borrowings outstanding under the ABL Credit Agreement. The ABL credit agreement also includes amounts available for letters of credit. As of January 31, 2023, there were outstanding trade and standby letters of credit amounting to $5.2 million and $3.4 million, respectively. At the date of the refinancing of the Prior Credit Agreement, the Company had $3.3 million of unamortized debt issuance costs remaining from the Prior Credit Agreement. The Company extinguished and charged to interest expense $0.4 million of the prior debt issuance costs and incurred new debt issuance costs totaling $5.1 million related to the ABL Credit Agreement. The Company has a total of $8.0 million debt issuance costs related to its ABL Credit Agreement. As permitted under ASC 835, the debt issuance costs have been deferred and are presented as an asset which is amortized ratably over the term of the ABL Credit Agreement. LVMH Note As a portion of the consideration for the acquisition of DKNY and Donna Karan, the Company issued to LVMH a junior lien secured promissory note in the principal amount of $125.0 million that bears interest at the rate of 2% per year. $75.0 million of the principal amount of the LVMH Note is due and payable on June 1, 2023 and $50.0 million of such principal amount is due and payable on December 1, 2023. The LVMH Note is classified in current portion of notes payable in the Company’s consolidated balance sheet as of January 31, 2023. F-27 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) In connection with the issuance of the LVMH Note, LVMH entered into (i) a subordination agreement providing that the Company’s obligations under the LVMH Note are subordinate and junior to the Company’s obligations under the revolving credit facility and the Term Loan, and (ii) a pledge and security agreement with the Company and its subsidiary, G-III Leather Fashions, Inc., pursuant to which the Company and G-III Leather Fashions, Inc. granted to LVMH a security interest in specified collateral to secure the Company’s payment and performance of the Company’s obligations under the LVMH Note that are subordinate and junior to the security interest granted by the Company with respect to the Company’s obligations under the revolving credit facility agreement and Term Loan. ASC 820 requires the note to be recorded at fair value at issuance. As a result, the Company recorded a $40.0 million debt discount. This discount is being amortized as interest expense using the effective interest method over the term of the LVMH Note. Unsecured Loans Several of the Company’s foreign entities borrow funds under various unsecured loans of which a portion is to provide funding for operations in the normal course of business while other loans are European state backed loans as part of COVID-19 relief programs. In the aggregate, the Company is currently required to make quarterly installment payments of principal in the amount of €0.6 million under these loans. Interest on the outstanding principal amount of the unsecured loans accrues at a fixed rate equal to 0% to 5.0% per annum, payable on either a quarterly or monthly basis. As of January 31, 2023, the Company had an aggregate outstanding balance of €10.1 million ($10.9 million) under these unsecured loans. Overdraft Facilities During fiscal 2021, TRB entered into several overdraft facilities that allow for applicable bank accounts to be in a negative position up to a certain maximum overdraft. TRB entered into an uncommitted overdraft facility with HSBC Bank allowing for a maximum overdraft of €5 million. Interest on drawn balances accrues at a rate equal to the Euro Interbank Offered Rate plus a margin of 1.75% per annum, payable quarterly. The facility may be cancelled at any time by TRB or HSBC Bank. As part of a COVID-19 relief program, TRB and its subsidiaries have also entered into several state backed overdraft facilities with UBS Bank in Switzerland for an aggregate of CHF 4.7 million at varying interest rates of 0% to 0.5%. As of January 31, 2023, TRB had an aggregate of €3.4 million ($3.7 million) drawn under these various facilities. Foreign Credit Facility KLH has a credit agreement with ABN AMRO Bank N.V. with a credit limit of €15.0 million which is secured by specified assets of KLH. Borrowings bear interest at the Euro Interbank Offered Rate (“EURIBOR”) plus a margin of 1.7%. As of January 31, 2023, KLH had €7.3 million ($7.8 million) of borrowings outstanding under this credit facility. Future Debt Maturities As of January 31, 2023, the Company’s mandatory debt repayments mature in the years ending up to January 31, 2027 or thereafter. Year Ending January 31, 2024 2025 2026 2027 2028 and thereafter $ Amount (In thousands) 219,403 2,797 402,313 1,489 1,400 F-28 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accrued expenses Accrued expenses consist of the following: Accrued bonuses Other accrued expenses Total NOTE 9 — INCOME TAXES The income tax provision is comprised of the following: Current Federal State and city Foreign Deferred Federal State and city Foreign Income tax expense (benefit) Income (loss) before income taxes United States Non-United States January 31, 2023 January 31, 2022 (in thousands) $ $ 16,831 $ 98,755 115,586 $ 50,119 78,005 128,124 2023 Year Ended January 31, 2022 (In thousands) 2021 $ 27,982 $ 8,278 14,647 50,907 39,283 4,484 5,991 49,758 $ (15,828) (491) 3,803 (12,516) (50,764) (4,457) 526 (54,695) (3,788) $ 17,090 2,116 1,911 21,117 70,875 22,770 3,364 (1,415) 24,719 $ 12,203 $ $ (106,086) $ 234,034 36,942 $ (138,170) $ 270,976 (32,084) $ 37,727 (2,001) $ 35,726 The United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, which includes various income tax provisions aimed at providing economic relief. One of those provisions allows any loss generated in fiscal 2021 to be carried back to each of the 5 taxable years preceding the taxable year of such a loss. The Company elected to use this relief and carried back the fiscal 2021 tax loss to a tax year with a 35% federal rate. Additionally, the CARES Act permits Qualified Improvement Property to qualify for 15-year depreciation and therefore be also eligible for 100 percent first-year bonus depreciation. The Company has elected to take 100% bonus depreciation for all qualified improvement property. Effective January 1, 2018, the Tax Cuts and Jobs Act (“TCJA”) subjects a U.S. parent company to current tax on its global intangible low-taxed income (“GILTI”). For fiscal 2023, the Company has elected to treat the tax effect of GILTI as a current period expense. F-29 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The significant components of the Company’s net deferred tax asset at January 31, 2023 and 2022 are summarized as follows: Deferred income tax assets: Compensation Inventory Provision for bad debts and sales allowances Supplemental employee retirement plan Net operating loss Operating lease liability Foreign tax credit carryforward Section 174 R&D amortization Other Gross deferred income tax assets Less: valuation allowance Net deferred income tax assets Deferred income tax liabilities: Depreciation and amortization Intangibles Operating lease asset Accrued expenses Prepaid expenses and other Other Total deferred income tax liabilities Net deferred tax liabilities 2023 2022 (In thousands) $ 879 $ 12,197 15,237 688 33,749 56,519 3,865 478 — 123,612 (33,087) 90,525 (6,268) (48,760) (50,995) (57) (2,279) (560) (108,919) $ (18,394) $ 1,807 7,918 15,972 710 10,949 32,721 2,805 — 782 73,664 (14,481) 59,183 (56,901) (9,576) (27,272) (59) (1,826) — (95,634) (36,451) The total undistributed earnings of the Company’s foreign subsidiaries are approximately $155 million for the fiscal year ended January 31, 2023. Upon distribution of those earnings in the form of dividends, the Company does not anticipate any material tax costs. As such, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of undistributed foreign earnings. Those earnings are considered indefinitely reinvested. Even though the undistributed earnings could have been distributed back generally without U.S. federal income tax as a result of the one-time transition tax under the TCJA regime, the Company does not expect to change its indefinite reinvestment categorization with respect to those earnings. F-30 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following is a reconciliation of the statutory federal income tax rate to the effective rate reported in the financial statements for the years ended January 31: Provision for Federal income taxes at the statutory rate State and local income taxes, net of Federal tax benefit Permanent differences U.S. tax on foreign earnings(1) Foreign tax rate differential Share-based payments Foreign tax credit Valuation allowance Net operating loss carryback Goodwill Impairment Non-taxable capital gain Other, net Actual provision for income taxes 2023 21.0 % (2.1) (2.1) (6.0) 1.2 (0.1) 7.9 (3.1) — (17.3) 5.1 (1.8) 2.7 % 2022 21.0 % 2.0 2.8 1.5 — — (3.4) 0.8 — — — 1.5 26.2 % 2021 21.0 % (0.6) 6.6 6.2 (0.3) 12.5 (7.3) 13.7 (18.6) — — 1.0 34.2 % (1) Prior year U.S. tax on foreign earnings has been reclassed for presentation purposes. The Company’s effective tax rate decreased 23.5% percent in fiscal 2023 compared to fiscal 2022. This decrease in the Company’s effective tax rate is primarily the result of the Company’s charges related to goodwill impairment of $347.2 million which significantly decreased pretax book income in relation to its tax expense. The Company’s effective tax rate decreased 8.0% percent in fiscal 2022 as compared to fiscal 2021. The decrease in the Company’s fiscal 2022 effective tax rate compared to the fiscal 2021 effective tax rate is primarily the result of the Company’s significant increase in pretax book income in relation to its tax expense. At January 31, 2023, the Company had state net operating loss carryforwards of $4.7 million that expire at various times beginning in 2023. In addition, the Company had foreign net operating loss carryforwards of $28.9 million, some jurisdictions having indefinite expirations. The Company also has federal foreign tax credit carryforwards of $3.9 million, which expire beginning in 2030. Valuation allowances represent deferred tax benefits where management is uncertain if the Company will have the ability to recognize those benefits in the future. During the year ended January 31, 2023, the Company recorded an additional valuation allowance of $18.6 million against its deferred tax assets, of which $14 million relates to opening balance sheet adjustments on the Karl Lagerfeld acquisition and $4.6 million relates to standalone state tax losses and foreign retail losses. Unrecognized Tax Benefits A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows: Balance at February 1, Additions based on tax positions related to the current year Additions for tax positions of prior years Lapses of statues of limitations Balance at January 31, $ $ F-31 2023 2022 (In thousands) 2,293 — 595 (446) 2,442 2,442 $ 245 895 — 3,582 $ 2021 2,111 — 182 — 2,293 $ $ G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company accounts for uncertain income tax positions in accordance with ASC 740 — Income Taxes. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of January 31, 2023, there was an increase in the unrecognized tax position reserve of $1.1 million related to state and local income tax return filings. The Company’s policy on classification is to include interest in interest and financing charges, net and penalties in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss). The Company and certain of its subsidiaries are subject to U.S. Federal income tax as well as the income tax of multiple state, local, and foreign jurisdictions. Of the major jurisdictions, the Company and its subsidiaries are subject to examination in the United States and various foreign jurisdictions for fiscal year 2014 and forward. The Company is currently under audit examination by New York, New Jersey and France for fiscal years 2016 through 2019. The Company believes that it is reasonably possible there will be no change to its unrecognized income tax position reserves during the next twelve months due to the applicable statues of limitations. NOTE 10 — COMMITMENTS AND CONTINGENCIES License Agreements The Company has entered into license agreements that provide for royalty payments based on net sales of licensed products. The Company incurred royalty expense (included in cost of goods sold) of $162.9 million, $145.1 million and $116.8 million for the years ended January 31, 2023, 2022 and 2021, respectively. Contractual advertising expense, which is included in selling, general and administrative expenses and is normally based on a percentage of net sales associated with certain license agreements, was $45.2 million, $41.2 million and $29.5 million for the years ended January 31, 2023, 2022 and 2021, respectively. Based on minimum net sales requirements, future minimum royalty and advertising payments required under these agreements are: Year Ending January 31, 2024 2025 2026 2027 2028 Thereafter Legal Proceedings Amount (In thousands) 127,542 88,412 63,839 29,206 6,490 — 315,489 $ In the ordinary course of business, the Company is subject to periodic claims, investigations and lawsuits. Although the Company cannot predict with certainty the ultimate resolution of claims, investigations and lawsuits, asserted against the Company, it does not believe that any currently pending legal proceeding or proceedings to which it is a party could have a material adverse effect on its business, financial condition or results of operations. Canadian Customs Duty Examination In October 2017, the Canada Border Service Agency (“CBSA”) issued an audit report to G-III Apparel Canada ULC (“G- III Canada”), a wholly-owned subsidiary of the Company, challenging the valuation used by G-III Canada for certain goods imported into Canada between February 1, 2014 and October 27, 2017. The CBSA requested that G-III Canada F-32 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) reassess its customs entries for that period and change the valuation method used to pay duties with respect to goods imported in the future. As a result of this reassessment, in March 2018, G-III Canada provided a bond to the CBSA in the amount of CAD$26.9 million ($20.9 million) representing customs duty and interest through December 31, 2017 that was claimed to be owed to the CBSA. Beginning February 1, 2018, the Company began paying duties based on the new valuation method. Cumulative amounts paid and deferred through January 31, 2023, related to the higher dutiable values, were CAD$15.5 million ($11.5 million). G-III Canada filed a Notice of Appeal with the Canadian International Trade Tribunal (the “Tribunal”) appealing the CBSA decision. A hearing on the appeal was held on December 7, 2021. On August 22, 2022, the Tribunal ruled in favor of G-III Canada and G-III Canada’s appeal has been allowed by the Tribunal. The decision was not appealed by the CBSA. As a result, G-III Canada will continue to declare dutiable values utilizing its pre-audit methodology, with the addition of a dutiable design assist (“design assist”). In accordance with the Tribunal ruling, G-III Canada has received a refund from the CBSA of CAD$1.5 million ($1.1 million), including interest and net of the design assist, for amounts paid by G-III Canada between February 1, 2014 and January 31, 2018. G-III Canada has filed adjustment requests with the CBSA for the period from February 1, 2018 to January 31, 2022 to amend declared dutiable values. These amendments are expected to result in a refund of duty and interest of approximately CAD$13.2 million ($9.8 million) after deductions for the design assist and related interest. The bond issued by G-III Canada in March 2018 has been released back to the Company. NOTE 11 — STOCKHOLDERS’ EQUITY Share Repurchase Program In March 2022, our Board of Directors authorized an increase in the number of shares covered by our share repurchase program to an aggregate amount of 10,000,000 shares. The timing and actual number of shares repurchased, if any, will depend on a number of factors, including market conditions and prevailing stock prices, and are subject to compliance with certain covenants contained in the loan agreement. Share repurchases may take place on the open market, in privately negotiated transactions or by other means, and would be made in accordance with applicable securities laws. During fiscal 2023, pursuant to this program, the Company acquired 1,587,581 shares of its common stock for an aggregate purchase price of $26.9 million. During fiscal 2022, pursuant to this program, the Company acquired 656,213 shares of its common stock for an aggregate purchase price of $17.3 million. No shares of common stock were acquired pursuant to this program during fiscal 2021. As of January 31, 2023, we had 8,412,419 authorized shares remaining under this program. Long-Term Incentive Plan As of January 31, 2023, the Company had 2,214,053 shares available for grant under its long-term incentive plan. The plan provides for the grant of equity and cash awards, including restricted stock awards, stock options and other stock unit awards to directors, officers and employees. Restricted stock units (“RSU’s”) generally (i) cliff vest after three years or (ii) vest over a three year period. Performance based restricted stock units (“PRSU’s”) granted to executives prior to fiscal 2020 include (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company’s stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target. Performance stock units (“PSU’s”) were granted to executives beginning in fiscal 2020 and generally vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance standards must be satisfied for vesting to occur. PSU’s granted in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer of shares for two years subsequent to the date of vesting. F-33 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Restricted Stock Units and Performance Based Restricted Stock Units Restricted Stock Units Unvested as of January 31, 2020 Granted Vested Cancelled Unvested as of January 31, 2021 Granted Vested Cancelled Unvested as of January 31, 2022 Granted Vested Cancelled Unvested as of January 31, 2023 Restricted Stock Units Awards Outstanding $ 242,943 1,280,664 $ (107,917) $ (22,422) $ $ 1,393,268 326,791 $ (201,260) $ (2,650) $ $ 1,516,149 1,076,509 $ (656,814) $ (17,599) $ $ 1,918,245 Weighted Average Grant Date Fair Value Performance Based Restricted Stock Units Weighted Average Awards Outstanding Grant Date Fair Value 37.95 10.25 37.96 39.41 12.47 31.52 20.43 33.46 15.48 26.88 29.11 31.21 17.07 1,058,710 — (279,053) (312,827) 466,830 176,212 (125,934) — 517,108 308,317 (78,998) (261,898) 484,529 $ $ $ $ $ $ $ $ $ $ $ $ $ 36.15 — 32.43 42.41 34.17 31.43 30.23 — 34.20 31.42 35.77 35.60 31.41 RSU’s are time based awards that do not have market or performance conditions and (i) cliff vest after three years or (ii) vest over a three year period. The grant date fair value for RSU’s are based on the quoted market price on the date of grant. Compensation expense for RSU’s is recognized in the consolidated financial statements on a straight-line basis over the service period based on their grant date fair value. Performance Based Restricted Stock Units Performance based restricted stock units consist of both PRSU’s and PSU’s. PRSU’s were granted to executives prior to fiscal 2020 and included (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company’s stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target. PRSU’s generally vest over a two to five year period. For restricted stock units with market conditions, the Company estimates the grant date fair value using a Monte Carlo simulation model. This valuation methodology utilizes the closing price of the Company’s common stock on grant date and several key assumptions, including expected volatility of the Company’s stock price, and risk-free rates of return. This valuation is performed with the assistance of a third party valuation specialist. PRSU’s are expensed over the service period under the accelerated attribution method. Performance stock units (“PSU’s”) were granted to executives beginning in fiscal 2020 and vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur. The PSU’s granted to executives in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer shares for two years subsequent to the date of vesting. PSU’s are expensed over the service period under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals. The Company accounts for forfeited awards as they occur as permitted by ASC 718. Ultimately, the actual expense recognized over the vesting period will be for those shares that vest. F-34 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company recognized $32.5 million, $17.4 million and $6.1 million in share-based compensation expense for the years ended January 31, 2023, 2022 and 2021 respectively, related to restricted stock unit grants. At January 31, 2023, 2022 and 2021, unrecognized costs related to the restricted stock units totaled $20.8 million, $21.2 million and $12.9 million, respectively. The total fair value of awards for which restrictions lapsed was $20.4 million, $10.8 million and $5.0 million as of January 31, 2023, 2022 and 2021, respectively. Stock Options Stock options outstanding at beginning of year Exercised Granted Cancelled or forfeited Stock options outstanding at end of year Exercisable Shares 10,000 (10,000) 2023 Weighted Average Exercise 18.11 — — 18.11 $ — $ — $ $ — $ — $ 2022 Weighted Average Exercise $ — $ — $ $ $ $ 23.63 — — 30.32 18.11 18.11 Shares 39,311 (21,066) 2021 Weighted Average Exercise 18.51 14.07 — — 23.63 23.63 $ $ — $ — $ $ $ 18,245 18,245 Shares 18,245 (8,245) — 10,000 — 10,000 Compensation expense for employee stock options is recognized in the consolidated financial statements over the service period (generally the vesting period) based on their fair value. Stock options are valued using the Black-Scholes option pricing model. The Black-Scholes model requires subjective assumptions regarding dividend yields, expected volatility, expected life of options and risk-free interest rates. These assumptions reflect management’s best estimates. Changes in these inputs and assumptions can materially affect the estimate of fair value and the amount of our compensation expense for stock options. No stock options were granted during the years ended January 31, 2023, January 31, 2022 and January 31, 2021. The Company accounts for forfeited awards as they occur as permitted by ASC 718. Ultimately, the actual expense recognized over the vesting period will be for those shares that vest. There were no stock options outstanding at January 31, 2023. There were no stock options exercised during the years ended January 31, 2023 and January 31, 2022. The Company did not recognize compensation expense for year ended January 31, 2023 and January 31, 2022 related to stock options. The Company recognized $0.1 million in compensation expense for the year ended January 31, 2021 related to stock options. NOTE 12 — CONCENTRATION Two customers in the wholesale operations segment accounted for approximately 21.6% and 15.4%, respectively, of the Company’s net sales for the year ended January 31, 2023. Three customers in the wholesale operations segment accounted for approximately 23.9%, 14.8% and 12.7%, respectively, of the Company’s net sales for the year ended January 31, 2022. Two customers in the wholesale operations segment accounted for approximately 20.9% and 12.9%, respectively, of the Company’s net sales for the year ended January 31, 2021. Four customers in the wholesale operations segment accounted for approximately 22.9%, 13.2%, 12.3% and 11.5%, respectively, of the Company’s net accounts receivable as of January 31, 2023. Three customers in the wholesale operations segment accounted for approximately 26.4%, 15.5% and 11.3%, respectively, of the Company’s net accounts receivable as of January 31, 2022. F-35 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 13 — EMPLOYEE BENEFIT PLANS The Company maintains a 401(k) plan (the “GIII Plan”) and trust for non-union employees. The Plan provides for a Safe Harbor (non-discretionary) matching contribution of 100% of the first 3% of the participant’s contributed pay plus 50% of the next 2% of the participant’s contributed pay. The Company made matching contributions of $4.0 million, $0.3 million and $1.5 million for the years ended January 31, 2023, 2022 and 2021, respectively. Effective May 2020, the Company temporarily suspended 401(k) matching contributions due to the COVID-19 pandemic. The Company reinstated 401(k) matching contributions effective January 1, 2022. NOTE 14 — SEGMENTS The Company’s reportable segments are business units that offer products through different channels of distribution. The Company has two reportable segments: wholesale operations and retail operations. The wholesale operations segment includes sales of products under the Company’s owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, other than sales of the Karl Lagerfeld Paris brand from retail stores and digital outlets. Wholesale revenues also include revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H. Bass and Andrew Marc and Sonia Rykiel. The retail operations segment consists primarily of direct sales to consumers through Company-operated stores, which, prior to the completion of the retail restructuring in fiscal 2021, consisted primarily of Wilsons Leather, G.H. Bass, DKNY and Karl Lagerfeld Paris stores, substantially all of which are operated as outlet stores. Sales through Company-owned digital channels, with the exception of Vilebrequin, are also included in the retail operations segment. As a result of the restructuring of the Company’s retail operations, the Company closed its Wilsons Leather, G.H. Bass and Calvin Klein Performance retail stores during fiscal 2021. After completion of the restructuring, the Company’s retail operations segment consists of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, G.H Bass, Andrew Marc and Wilsons Leather. The following segment information, in thousands, is presented for the fiscal years ended: Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation and amortization Asset impairments and gain on lease terminations Operating profit (loss) Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation and amortization Asset impairments and gain on lease terminations Operating profit (loss) Wholesale $ 3,160,025 2,127,318 1,032,707 736,820 23,980 347,722 (75,815) $ Wholesale $ 2,710,787 1,782,533 928,254 567,949 24,023 368 335,914 $ $ $ $ $ January 31, 2023 Retail 137,231 68,801 68,430 96,331 3,782 1,964 (33,647) Elimination (1) Total $ $ (70,528) $ 3,226,728 2,125,591 (70,528) 1,101,137 — 833,151 — 27,762 — 349,686 — (109,462) — $ January 31, 2022 Retail 117,656 57,721 59,935 80,066 3,603 1,087 (24,821) Elimination (1) Total $ $ (61,905) $ 2,766,538 1,778,349 (61,905) 988,189 — 648,015 — 27,626 — 1,455 — 311,093 — $ F-36 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation and amortization Asset impairments and gain on lease terminations Operating profit (loss) Wholesale $ 1,916,763 1,229,548 687,215 444,549 31,998 1,010 209,658 $ January 31, 2021 Retail 170,421 113,194 57,227 160,553 6,627 16,863 (126,816) $ $ Elimination (1) Total $ $ (32,038) $ 2,055,146 1,310,704 (32,038) 744,442 — 605,102 — 38,625 — 17,873 — 82,842 — $ (2) Represents intersegment sales to the Company’s retail operations segment. The total net sales by licensed and proprietary product sales for each of the Company’s reportable segments are as follows: Licensed brands Proprietary brands Wholesale net sales Licensed brands Proprietary brands Retail net sales 2023 $ 1,891,522 1,268,503 $ 3,160,025 2021 January 31, 2022 (In thousands) $ 1,820,491 $ 1,390,112 526,651 $ 2,710,787 $ 1,916,763 890,296 $ $ — $ 137,231 137,231 $ 39,604 $ 78,052 117,656 $ 17,488 152,933 170,421 The Company allocates overhead to its business segments on various bases, which include units shipped, space utilization, inventory levels, and relative sales levels, among other factors. The method of allocation has been applied consistently on a year-to-year basis. The total assets for each of the Company’s reportable segments, as well as assets not allocated to a segment, are as follows: Wholesale Retail Corporate Total Assets January 31, 2023 January 31, 2022 (In thousands) $ 1,746,314 $ 127,047 839,044 $ 2,712,405 $ 2,073,834 111,517 557,177 2,742,528 The total net sales and long-lived assets by geographic region are as follows: 2023 2022 2021 Geographic Region United States Non-United States Net Sales $ 2,609,710 617,018 $ 3,226,728 Long-Lived Assets $ 633,799 426,106 $ 1,059,905 Net Sales $ 2,365,919 400,619 $ 2,766,538 Long-Lived Assets Net Sales Long-Lived Assets $ 938,947 $ 1,755,791 $ 834,181 258,165 $ 1,089,671 $ 2,055,146 $ 1,092,346 299,355 150,724 Capital expenditures for locations outside of the United States totaled $10.5 million, $4.3 million and $3.0 million for the years ended January 31, 2023, 2022 and 2021, respectively. F-37 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 15 — KARL LAGERFELD ACQUISITION On April 29, 2022, the Company entered into a share purchase agreement (the “Purchase Agreement”) with a group of investors pursuant to which the Company agreed to acquire, on the terms set forth and subject to the conditions set forth in the Purchase Agreement, the remaining 81% interest in KLH that it did not already own, for an aggregate consideration of €202.0 million (approximately $216.8 million) in cash, after taking into account certain adjustments. The acquisition closed on May 31, 2022. The Company funded the purchase price from cash on hand. On May 31, 2022, the effective date of the acquisition, the Company’s previously held 19% investment in KLH and 49% investment in KLNA were remeasured at fair value using a market approach based on the purchase price of the acquisition and a discount for lack of control related to the Company’s previously held minority investment in KLH. As a result of this remeasurement, a non-cash gain of $27.1 million was recorded as of the effective date of the acquisition. The addition of KLH to the Company’s portfolio of owned brands advances several of its strategic initiatives, including increasing its direct ownership of brands and their licensing opportunities and further diversifying its global presence. This acquisition offers additional opportunities to expand the Company’s international growth by further developing its European-based brands, which also include Vilebrequin and Sonia Rykiel. The Company believes that KLH’s existing digital channel presence provides an opportunity for the Company to enhance its omni-channel business and further accelerate its digital initiatives. Purchase Price Consideration The purchase price of $207.6 million, after taking into account certain adjustments, was paid from cash on hand. The purchase price has been revised to include adjustments in accordance with the Purchase Agreement. The initial purchase price and the valuation of the prior minority ownership for the acquisition of KLH is as follows (in thousands): Cash disbursed for the acquisition of KLH Plus: cash acquired Plus: aggregate adjustments to purchase price Initial purchase price Plus: fair value of prior minority ownership Total consideration $ $ 168,592 38,499 516 207,607 102,858 310,465 F-38 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Allocation of the Purchase Price Consideration The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition: (In thousands) Cash and cash equivalents Accounts receivable, net Inventories Prepaid income taxes Prepaid expenses and other current assets Property, plant and equipment, net Operating lease assets Goodwill Trademarks Customer relationships Deferred income taxes Other long-term assets Total assets acquired Notes payable Accounts payable Accrued expenses Operating lease liabilities Income taxes payable Deferred income taxes Other long-term liabilities Total liabilities assumed Total fair value of acquisition consideration $ $ $ $ 38,499 28,449 33,489 1,100 3,347 11,545 55,753 84,336 178,823 4,294 5,131 2,237 447,003 3,606 9,175 15,261 58,942 2,099 42,222 5,233 136,538 310,465 During the year ended January 31, 2023, the Company recorded adjustments to the fair values of assets acquired and liabilities assumed at the date of acquisition based on additional information obtained. The Company recorded an additional $36.9 million in both total assets and total liabilities, primarily related to goodwill, deferred tax assets and liabilities, operating lease assets, inventories, accounts receivable, net, accounts payable, customer relationships and operating lease liabilities. The Company recognized goodwill for tax purposes of approximately $84.3 million in connection with the acquisition of KLH. The goodwill was assigned to the Company’s wholesale operations reporting unit. The Company intends to make an election under Internal Revenue Code Section 338(g) to amortize the total goodwill and intangible assets over a 15 year period for income tax purposes in the United States. The fair values assigned to identifiable intangible assets acquired were based on assumptions and estimates made by management using unobservable inputs reflecting the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available. The fair values of the trademarks were determined using the relief from royalty method and the fair value of the customer relationships were determined using an income approach. The Company classifies these intangibles as Level 3 fair value measurements. Identifiable intangible assets acquired include the following (in thousands): Trademarks Customer relationships Fair Value $ $ 178,823 4,294 183,117 Weighted Average Amortization Period — 8 — F-39 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company recognized approximately $5.6 million of acquisition related costs that were expensed in fiscal 2023 and fiscal 2022. The fiscal 2023 and fiscal 2022 acquisition and integration costs are recorded within selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income (loss) for the fiscal years ended January 31, 2023 and January 31, 2022, respectively. The estimates of fair value of assets acquired and liabilities assumed are preliminary and subject to change based on completion of certain working capital adjustments and the tax implications of the Company’s purchase price allocation. The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition. Net Sales, Operating Income and Pro Forma Impact of the Transaction The amount of net sales and operating loss of KLH since the acquisition date included in the consolidated statements of operations and comprehensive income (loss) for the year ended January 31, 2023 were $129.4 million and ($75.6) million, respectively. The operating loss of KLH includes a $83.2 million non-cash impairment charge related to goodwill recognized during the fourth quarter of fiscal 2023. The following table reflects the unaudited pro forma consolidated results of operations of the Company for the periods presented, as though the acquisition of KLH had occurred on February 1, 2021. Year Ended January 31, 2023 2022 Net sales Net income Earnings per share: Basic Diluted (unaudited, in thousands, except per share amounts) 2,931,583 219,108 3,295,452 (154,908) $ $ (3.25) (3.25) 4.52 4.42 The pro forma adjustments are based upon available information and certain assumptions that the Company considers reasonable. The unaudited pro forma condensed combined financial data is based on preliminary estimates and assumptions set forth in the accompanying notes. Pro forma adjustments are necessary to reflect (i) the changes in depreciation and amortization expense resulting from fair value adjustments to intangible assets, (ii) amortization of the inventory fair value adjustment, (iii) expenses for incentive compensation arrangements acquired as part of the acquisition agreement, (iv) elimination of royalty expenses related to the Company’s license agreement with KLNA, (v) the taxation of G-III’s and KLH’s combined income as a result of the acquisition, as well as the tax effects related to such pro forma adjustments, (vi) the $27.1 million gain recorded to remeasure to fair value the previously held investments in KLH and KLNA as though the gain was recorded on February 1, 2021 and (vii) adjustments for accounting policy changes to conform to G-III’s presentation. The pro forma results do not include any realized or anticipated cost synergies or other effects of the integration of KLH. Accordingly, such pro forma amounts are not indicative of the results that actually would have occurred had the acquisition been completed on February 1, 2021, nor are they indicative of the future operating results of the combined company. NOTE 16 — EQUITY INVESTMENTS Investment in Karl Lagerfeld Holding B.V. In February 2016, the Company acquired a 19% minority interest in KLH, the parent company of the group that holds the worldwide rights to the Karl Lagerfeld brand. The Company paid €32.5 million (equal to $35.4 million at the date of the transaction) for this interest. This investment was intended to expand the partnership between the Company and the owners of Karl Lagerfeld brand and extend their business development opportunities on a global scale. In May 2022, the Company F-40 G-III Apparel Group, Ltd. And Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) acquired the remaining 81% interest in KLH that it did not previously own, and, as a result, KLH began being treated as a consolidated wholly-owned subsidiary. Prior to May 2022, the investment in KLH was accounted for under the equity method of accounting and was reflected in Investment in Unconsolidated Affiliates on the consolidated balance sheets at January 31, 2022. Investment in KL North America In June 2015, the Company entered into a joint venture agreement with Karl Lagerfeld Group BV (“KLBV”). The Company paid KLBV $25.0 million for a 49% ownership interest in KLNA. KLNA holds brand rights to all Karl Lagerfeld trademarks, including the Karl Lagerfeld Paris brand the Company currently uses, for all consumer products (except eyewear, fragrance, cosmetics, watches, jewelry, and hospitality services) and apparel in the United States, Canada and Mexico. In May 2022, KLNA became an indirect wholly-owned subsidiary of the Company as a result of the Company’s acquisition of the remaining 81% interest in KLH it did not previously own. Prior to May 2022, the investment in KLNA was accounted for under the equity method of accounting and was reflected in Investment in Unconsolidated Affiliates on the consolidated balance sheets at January 31, 2022. NOTE 17 — RELATED PARTY TRANSACTIONS Transactions with E-Commerce Retailer In fiscal 2023, the Company made a $25.0 million investment in an e-commerce retailer. The Company’s Chief Executive Officer and Executive Vice President indirectly own 1.4% of the e-commerce retailer through their ownership in a private investment partnership. The Company had no material transactions with the e-commerce retailer during the year ended January 31, 2023. Transactions with Fabco Prior to December 1, 2020, G-III owned a 49% ownership interest in Fabco and was considered a related party of Fabco. The Company sells inventory to Fabco and granted Fabco’s subsidiary the right to use certain Donna Karan and DKNY trademarks. In fiscal 2021, the Company sold $2.7 million in inventory to Fabco. The Company recorded $0.9 million of licensing revenue from Fabco during the period of fiscal 2021 prior to Fabco becoming a consolidated majority-owned subsidiary of the Company. Transactions with KL North America Prior to May 30, 2022, G-III owned a 49% ownership interest in KLNA and was considered a related party of KLNA (see Note 16). The Company entered into a licensing agreement to use the brand rights to certain Karl Lagerfeld trademarks held by KLNA. The Company incurred royalty and advertising expense of $3.6 million during the period of February 1, 2022 through May 30, 2022 prior to KLNA becoming a consolidated indirect wholly-owned subsidiary of the Company. The Company incurred royalty and advertising expense of $8.1 million, $3.5 million for the years ended January 31, 2022 and 2021, respectively. NOTE 18 — SUBSEQUENT EVENTS In March 2023, the Company announced the signing of a long-term license with Authentic Brands Group for the Nautica brand in North America. The Company will produce across a number of categories starting with a full women’s jeanswear collection and then expanding in a phased approach into additional categories including sportswear, suit separates and dresses. The new five-year license agreement, effective beginning in January 2024, includes three extensions, for five years each. First deliveries are expected to hit the floor in January 2024. The product is expected to be distributed in better department stores, digital channels and Nautica’s stores and website in North America and franchised stores globally. F-41 SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Years ended January 31, 2023, 2022 and 2021 Description Year ended January 31, 2023 Deducted from asset accounts Allowance for doubtful accounts Reserve for returns Reserve for sales allowances (2) Year ended January 31, 2022 Deducted from asset accounts Allowance for doubtful accounts Reserve for returns Reserve for sales allowances (2) Year ended January 31, 2021 Allowance for doubtful accounts Reserve for returns Reserve for sales allowances (2) Balance at Beginning of Period Charges to Cost and Expenses Deductions (1) Balance at End of Period (In thousands) $ 17,391 30,821 55,967 $ 104,179 $ 17,459 40,704 58,651 $ 116,814 $ 978 $ 72 32,155 152,205 $ 188,310 $ 184,432 31,944 155,388 $ 157 $ 225 29,358 120,289 $ 137,237 $ 149,872 19,475 117,605 $ 18,297 30,610 59,150 $ 108,057 $ 17,391 30,821 55,967 $ 104,179 $ 710 46,489 186,929 $ 234,128 $ 16,882 $ 41,348 101,337 133 47,133 229,615 $ 159,567 $ 276,881 $ 17,459 40,704 58,651 $ 116,814 (1) Accounts written off as uncollectible, net of recoveries. (2) See Note 1 in the accompanying notes to consolidated financial statements for a description of sales allowances. S-1 Shareholder Information Patti H. Ongman Independent Retail Consultant and Former Chief Merchandising Officer Macy’s Laura Pomerantz Vice Chairman, Head of Strategic Accounts Cushman & Wakefield Cheryl Vitali Global President, American Luxury Brands L’Oréal Lisa Warner Wardell Executive Chairman Adtalem Global Education Richard White Chief Executive Officer Aeolus Capital Group LLC CORPORATE INFORMATION Corporate Office 512 Seventh Avenue New York, New York 10018 Auditors Ernst & Young L.L.P. One Manhattan West New York, NY 10001 Legal Counsel Norton Rose Fulbright US LLP 1301 Avenue of the Americas New York, New York 10019 Corporate Stock Listing NASDAQ Global Select Market Symbol: GIII Registrar & Transfer Agent EQ Shareowner Services 1110 Centre Pointe Curve, Suite 101 Mendota Heights, MN 55120 ANNUAL MEETING The Annual Meeting of Stockholders will be held at the offices of: Norton Rose Fulbright US LLP 1301 Avenue of the Americas New York, New York 10019 Thursday, June 8, 2023 30th Floor at 10:00 AM All shareholders are cordially invited to attend. BOARD OF DIRECTORS Morris Goldfarb Chairman and Chief Executive Officer G-III Apparel Group, Ltd. Sammy Aaron Vice Chairman and President G-III Apparel Group, Ltd. Thomas J. Brosig Former President, Nikki Beach Worldwide Former President and CEO, Penrod’s Restaurant Group Alan Feller Retired CFO G-III Apparel Group, Ltd. Jeffrey Goldfarb Executive Vice President and Director of Strategic Planning G-III Apparel Group, Ltd. Victor Herrero Global Chief Executive Officer Lovisa Holdings, Ltd. Robert L. Johnson Founder and Chairman, The RLJ Companies, LLC Former Founder and Chairman of Black Entertainment Television (BET) CORPORATE OFFICERS Morris Goldfarb Chairman and Chief Executive Officer Sammy Aaron Vice Chairman and President Neal S. Nackman Chief Financial Officer Jeffrey Goldfarb Executive Vice President and Director of Strategic Planning 51485_ShareholderInformation.indd 1 51485_ShareholderInformation.indd 1 5/1/23 12:22 PM 5/1/23 12:22 PM V i l e b r e q u i n L a P l a g e x l ’ O n d i n e , C a n n e s Fra n ce 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 6 6 5/1/23 1:57 PM K a r l L a g e r f e l d H o t e l , M a c a u C h i n a 51485_GIII_2022_ANNUAL_REPORT_DRAFT_04_28.indd 1 5/1/23 1:56 PM

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