UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2024


☐	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		41-1590959
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

512 Seventh Avenue, New York, New York		10018
(Address of principal executive offices)		(Zip Code)

(212) 403-0500

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	GIII	The Nasdaq Stock Market

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, 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	☒	Accelerated filer	☐
Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 3, 2024, there were 44,987,939 shares of issuer’s common stock, par value $0.1 per share, outstanding.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	April 30,		April 30,		January 31,
	2024		2023		2024
	(Unaudited)		(Unaudited)
	(In thousands, except per share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	508,434	$	289,729	$	507,829
Accounts receivable, net of allowance for doubtful accounts of $1,195, $18,832 and $1,471, respectively		473,186		494,601		562,363
Inventories		479,671		630,308		520,426
Prepaid income taxes		19,080		7,692		1,356
Prepaid expenses and other current assets		68,143		69,432		68,344
Total current assets		1,548,514		1,491,762		1,660,318
Investments in unconsolidated affiliates		22,007		27,585		22,472
Property and equipment, net		60,588		53,157		55,084
Operating lease assets		209,199		237,056		216,886
Other assets, net		44,875		52,183		45,147
Other intangibles, net		29,653		34,131		31,676
Deferred income tax assets, net		25,581		26,389		19,248
Trademarks		624,982		632,220		630,333
Total assets	$	2,565,399	$	2,554,483	$	2,681,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of notes payable	$	23,664	$	139,418	$	15,026
Accounts payable		158,652		140,064		182,531
Accrued expenses		103,854		99,092		140,535
Customer refund liabilities		59,865		69,408		84,054
Current operating lease liabilities		55,990		51,024		56,587
Income tax payable		5,899		8,234		14,676
Other current liabilities		141		863		219
Total current liabilities		408,065		508,103		493,628
Notes payable, net of discount and unamortized issuance costs		402,687		403,586		402,807
Deferred income tax liabilities, net		48,152		45,561		42,736
Noncurrent operating lease liabilities		168,462		202,406		178,247
Other noncurrent liabilities		20,686		15,325		15,764
Total liabilities		1,048,052		1,174,981		1,133,182

Redeemable noncontrolling interests		(2,528)		(945)		(2,278)

Stockholders' Equity
Preferred stock; 1,000 shares authorized; no shares issued		—		—		—
Common stock - $0.01 par value; 120,000 shares authorized; 49,396, 49,396 and 49,396 shares issued, respectively		264		264		264
Additional paid-in capital		450,844		472,474		458,841
Accumulated other comprehensive loss		(10,090)		(6,936)		(3,207)
Retained earnings		1,165,914		987,180		1,160,112
Common stock held in treasury, at cost - 4,430, 3,802 and 3,668 shares, respectively		(87,057)		(72,535)		(65,750)
Total stockholders' equity		1,519,875		1,380,447		1,550,260
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	2,565,399	$	2,554,483	$	2,681,164

The accompanying notes are an integral part of these statements.

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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE (LOSS) INCOME


	Three Months Ended April 30,
	2024		2023

	(Unaudited)
	(In thousands, except per share amounts)
Net sales	$	609,747	$	606,589
Cost of goods sold		350,854		356,788
Gross profit		258,893		249,801
Selling, general and administrative expenses		236,621		227,961
Depreciation and amortization		8,768		6,576
Operating profit		13,504		15,264
Other (loss) income		(223)		973
Interest and financing charges, net		(5,424)		(12,151)
Income before income taxes		7,857		4,086
Income tax expense		2,305		945
Net income		5,552		3,141
Less: Loss attributable to noncontrolling interests		(250)		(95)
Net income attributable to G-III Apparel Group, Ltd.	$	5,802	$	3,236


NET INCOME PER COMMON SHARE ATTRIBUTABLE TO G-III APPAREL GROUP, LTD.:
Basic:
Net income per common share	$	0.13	$	0.07
Weighted average number of shares outstanding		45,484		46,286

Diluted:
Net income per common share	$	0.12	$	0.07
Weighted average number of shares outstanding		46,734		47,442

Net income	$	5,552	$	3,141
Other comprehensive loss:
Foreign currency translation adjustments		(6,883)		4,715
Other comprehensive (loss) income		(6,883)		4,715
Comprehensive (loss) income	$	(1,331)	$	7,856
Comprehensive loss attributable to noncontrolling interests:
Net loss		(250)		(95)
Foreign currency translation adjustments		—		2
Comprehensive loss attributable to noncontrolling interests		(250)		(93)
Comprehensive (loss) income attributable to G-III Apparel Group, Ltd.	$	(1,581)	$	7,763

The accompanying notes are an integral part of these statements.

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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


					Accumulated				Common
			Additional		Other				Stock
	Common		Paid-In		Comprehensive		Retained		Held In
	Stock		Capital		Loss		Earnings		Treasury		Total

	(Unaudited)
	(In thousands)
Balance as of January 31, 2024	$	264	$	458,841	$	(3,207)	$	1,160,112	$	(65,750)	$	1,550,260
Equity awards vested, net		—		(7,043)		—		—		7,043		—
Share-based compensation expense		—		6,580		—		—		—		6,580
Taxes paid for net share settlements		—		(7,534)		—		—		—		(7,534)
Other comprehensive loss, net		—		—		(6,883)		—		—		(6,883)
Repurchases of common stock		—		—		—		—		(28,350)		(28,350)
Net income attributable to G-III Apparel Group, Ltd.		—		—		—		5,802		—		5,802
Balance as of April 30, 2024	$	264	$	450,844	$	(10,090)	$	1,165,914	$	(87,057)	$	1,519,875

Balance as of January 31, 2023	$	264	$	468,712	$	(11,653)	$	983,944	$	(55,819)	$	1,385,448
Equity awards vested, net		—		(53)		—		—		53		—
Share-based compensation expense		—		3,837		—		—		—		3,837
Taxes paid for net share settlements		—		(22)		—		—		—		(22)
Other comprehensive income, net		—		—		4,717		—		—		4,717
Repurchases of common stock		—		—		—		—		(16,769)		(16,769)
Net income attributable to G-III Apparel Group, Ltd.		—		—		—		3,236		—		3,236
Balance as of April 30, 2023	$	264	$	472,474	$	(6,936)	$	987,180	$	(72,535)	$	1,380,447

The accompanying notes are an integral part of these statements.

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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended April 30,
	2024		2023

	(Unaudited, in thousands)
Cash flows from operating activities
Net income attributable to G-III Apparel Group, Ltd.	$	5,802	$	3,236
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,768		6,576
Loss on disposal of fixed assets		6		393
Non-cash operating lease costs		13,899		14,902
Equity loss in unconsolidated affiliates		893		482
Change in fair value of equity securities		—		(1,009)
Share-based compensation		6,580		3,837
Deferred financing charges and debt discount amortization		823		2,640
Deferred income taxes		(917)		778
Changes in operating assets and liabilities:
Accounts receivable, net		89,177		180,362
Inventories		40,755		79,037
Income taxes, net		(26,501)		(8,448)
Prepaid expenses and other current assets		(61)		2,422
Other assets, net		(487)		448
Customer refund liabilities		(24,189)		(20,352)
Operating lease liabilities		(14,892)		(16,724)
Accounts payable, accrued expenses and other liabilities		(54,165)		(46,749)
Net cash provided by operating activities		45,491		201,831

Cash flows from investing activities
Operating lease assets initial direct costs		(1,648)		(52)
Investment in equity interest of private company		(429)		(3,600)
Capital expenditures		(12,720)		(4,978)
Net cash used in investing activities		(14,797)		(8,630)

Cash flows from financing activities
Repayment of borrowings - revolving facility		(23,528)		(85,400)
Proceeds from borrowings - revolving facility		23,528		5,313
Repayment of borrowings - foreign facilities		(30,539)		(36,073)
Proceeds from borrowings - foreign facilities		39,100		37,199
Purchase of treasury shares		(28,350)		(16,769)
Taxes paid for net share settlements		(7,534)		(22)
Net cash used in financing activities		(27,323)		(95,752)

Foreign currency translation adjustments		(2,766)		628
Net increase in cash and cash equivalents		605		98,077
Cash and cash equivalents at beginning of period		507,829		191,652
Cash and cash equivalents at end of period	$	508,434	$	289,729

Supplemental disclosures of cash flow information
Cash payments:
Interest, net	$	11,953	$	16,781
Income tax payments, net	$	24,182	$	9,176

The accompanying notes are an integral part of these statements.

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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

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. The Company’s DKNY and Donna Karan business in China is operated by Fabco Holding B.V. (“Fabco”), a Dutch joint venture limited liability company that was 75% owned by the Company through April 16, 2024 and was treated as a consolidated majority-owned subsidiary. Effective April 17, 2024, the Company acquired the remaining 25% interest in Fabco that it did not previously own and, as a result, Fabco began being treated as a wholly-owned subsidiary. All material intercompany balances and transactions have been eliminated.

Karl Lagerfeld Holding B.V. (“KLH”), a Dutch limited liability company that is wholly-owned by the Company, Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by the Company, Sonia Rykiel, a Swiss corporation that is wholly-owned by the Company, and Fabco report results on a calendar year basis rather than on the January 31 fiscal year basis used by the Company. Accordingly, the results of KLH, Vilebrequin, Sonia Rykiel and Fabco are included in the financial statements for the quarter ended or ending closest to the Company’s fiscal quarter end. For example, with respect to the Company’s results for the three-month period ended April 30, 2024, the results of KLH, Vilebrequin, Sonia Rykiel and Fabco are included for the three-month period ended March 31, 2024. The Company’s retail operations segment reports on a 52/53 week fiscal year. For fiscal 2025 and 2024, the three-month periods for the retail operations segment were each 13-week periods and ended on May 4, 2024 and April 29, 2023, respectively.

The results for the three months ended April 30, 2024 are not necessarily indicative of the results expected for the entire fiscal year, given the seasonal nature of the Company’s business. The accompanying financial statements included herein are unaudited. All adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations and cash flows for the interim period presented have been reflected.

The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2024 filed with the Securities and Exchange Commission (the “SEC”).

Assets and liabilities of the Company’s foreign operations, where the functional currency is not the U.S. dollar (reporting currency), are translated from the 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.

NOTE 2 – 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.

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The Company’s accounts receivable and allowance for doubtful accounts as of April 30, 2024, April 30, 2023 and January 31, 2024 were:


	April 30, 2024
	Wholesale		Retail		Total

	(In thousands)
Accounts receivable, gross	$	473,075	$	1,306	$	474,381
Allowance for doubtful accounts		(1,132)		(63)		(1,195)
Accounts receivable, net	$	471,943	$	1,243	$	473,186

	April 30, 2023
	Wholesale		Retail		Total

	(In thousands)
Accounts receivable, gross	$	512,315	$	1,118	$	513,433
Allowance for doubtful accounts		(18,769)		(63)		(18,832)
Accounts receivable, net	$	493,546	$	1,055	$	494,601

	January 31, 2024
	Wholesale		Retail		Total

	(In thousands)
Accounts receivable, gross	$	563,130	$	704	$	563,834
Allowance for doubtful accounts		(1,408)		(63)		(1,471)
Accounts receivable, net	$	561,722	$	641	$	562,363

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 credit rating agencies), a specific reserve for bad debt 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.

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The Company had the following activity in its allowance for doubtful accounts:


	Wholesale		Retail		Total

	(In thousands)
Balance as of January 31, 2024	$	(1,408)	$	(63)	$	(1,471)
Provision for credit losses, net		276		—		276
Accounts written off as uncollectible		—		—		—
Balance as of April 30, 2024	$	(1,132)	$	(63)	$	(1,195)

Balance as of January 31, 2023	$	(18,237)	$	(60)	$	(18,297)
Provision for credit losses, net		(532)		(3)		(535)
Accounts written off as uncollectible		—		—		—
Balance as of April 30, 2023	$	(18,769)	$	(63)	$	(18,832)

Balance as of January 31, 2023	$	(18,237)	$	(60)	$	(18,297)
Provision for credit losses, net		166		(3)		163
Accounts written off as uncollectible		16,663		—		16,663
Balance as of January 31, 2024	$	(1,408)	$	(63)	$	(1,471)

NOTE 3 – INVENTORIES

Wholesale inventories, which comprise a significant portion of the Company’s inventory, and KLH inventories 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 $11.3 million, $12.9 million and $16.5 million as of April 30, 2024, April 30, 2023 and January 31, 2024, respectively. The inventory return asset is recorded within prepaid expenses and other current assets on the condensed consolidated balance sheets.

Inventory held on consignment by the Company’s customers totaled $10.3 million, $7.6 million and $6.6 million at April 30, 2024, April 30, 2023 and January 31, 2024, respectively. The Company reflects this inventory on its condensed consolidated balance sheets.

NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Generally Accepted Accounting Principles establish 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 (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.

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The following table summarizes the carrying values and the estimated fair values of the Company’s debt instruments:


		Carrying Value						Fair Value
		April 30,		April 30,		January 31,		April 30,		April 30,		January 31,
Financial Instrument	Level	2024		2023		2024		2024		2023		2024

		(In thousands)
Secured Notes	1	$	400,000	$	400,000	$	400,000	$	401,952	$	376,000	$	401,080
Note issued to LVMH	3		—		123,019		—		—		121,476		—
Unsecured loans	2		8,517		11,212		8,791		8,517		11,212		8,791
Overdraft facilities	2		6,932		4,132		2,651		6,932		4,132		2,651
Foreign credit facility	2		13,025		8,462		8,939		13,025		8,462		8,939

The Company’s debt instruments are recorded at their carrying values in its condensed 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 April 30, 2024. The carrying amount of the Company’s variable rate debt approximates the fair value, as interest rates change with 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 original 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 (“ASC 820”). 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 recorded amortization using the effective interest method over the term of the LVMH Note. The Company repaid $75.0 million of the principal amount of the LVMH Note on June 1, 2023 and the remaining $50.0 million of such principal amount on December 1, 2023.

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 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 2024, the Company recorded a $1.3 million impairment charge primarily related to leasehold improvements, furniture and fixtures, computer hardware and operating lease assets at certain DKNY, Karl Lagerfeld and Vilebrequin stores as a result of the performance of these stores.

NOTE 5 – LEASES

The Company leases retail stores, warehouses, distribution centers, office space and certain 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.

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.

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Certain of the Company’s lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company’s operating lease assets and liabilities as of April 30, 2024, April 30, 2023 and January 31, 2024 consist of the following:



Leases	Classification	April 30, 2024		April 30, 2023		January 31, 2024

		(In thousands)
Assets
Operating	Operating lease assets	$	209,199	$	237,056	$	216,886

Liabilities
Current operating	Current operating lease liabilities	$	55,990	$	51,024	$	56,587
Noncurrent operating	Noncurrent operating lease liabilities		168,462		202,406		178,247
Total lease liabilities		$	224,452	$	253,430	$	234,834

The Company recorded lease costs of $18.2 million and $18.6 million during the three months ended April 30, 2024 and 2023, respectively. Lease costs are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income. The Company recorded variable lease costs and short-term lease costs of $5.3 million and $5.9 million for the three months ended April 30, 2024 and 2023, respectively. Short-term lease costs are immaterial.

As of April 30, 2024, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2029 and thereafter are as follows:


Year Ending January 31,	Amount
	(In thousands)
2025	$	54,456
2026		62,049
2027		49,360
2028		39,594
2029		26,657
After 2029		42,222
Total lease payments	$	274,338
Less: Interest		49,886
Present value of lease liabilities	$	224,452

As of April 30, 2024, there are no material leases that are legally binding but have not yet commenced.

As of April 30, 2024, the weighted average remaining lease term related to operating leases is 4.9 years. The weighted average discount rate related to operating leases is 6.7%.

Cash paid for amounts included in the measurement of operating lease liabilities was $19.4 million and $21.2 million during the three months ended April 30, 2024 and 2023, respectively. Right-of-use assets obtained in exchange for lease obligations were $6.8 million and $10.5 million during the three months ended April 30, 2024 and 2023, respectively.

NOTE 6 – NET INCOME PER COMMON SHARE

Basic net income 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 outstanding during the period. Approximately 9,500 and 302,200 shares of common stock have been excluded from the diluted net income per share calculation for the three months ended April 30, 2024 and 2023, respectively. All share-based payments

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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 following table reconciles the numerators and denominators used in the calculation of basic and diluted net income per share:


	Three Months Ended April 30,
	2024		2023

	(In thousands, except share and per share amounts)
Net income attributable to G-III Apparel Group, Ltd.	$	5,802	$	3,236
Basic net income per share:
Basic common shares		45,484		46,286
Basic net income per share	$	0.13	$	0.07

Diluted net income per share:
Basic common shares		45,484		46,286
Dilutive restricted stock unit awards and stock options		1,250		1,156
Diluted common shares		46,734		47,442
Diluted net income per share	$	0.12	$	0.07

NOTE 7 – NOTES PAYABLE

Long-term debt consists of the following:


	April 30, 2024		April 30, 2023		January 31, 2024

	(In thousands)
Secured Notes	$	400,000	$	400,000	$	400,000
LVMH Note		—		125,000		—
Unsecured loans		8,517		11,212		8,791
Overdraft facilities		6,932		4,132		2,651
Foreign credit facility		13,025		8,462		8,939
Subtotal		428,474		548,806		420,381
Less: Net debt issuance costs ⁽¹⁾		(2,123)		(3,821)		(2,548)
Debt discount		—		(1,981)		—
Current portion of long-term debt		(23,664)		(139,418)		(15,026)
Total	$	402,687	$	403,586	$	402,807

(1)

Does not include debt issuance costs, net of amortization, totaling $2.0 million, $3.6 million and $2.4 million as of April 30, 2024, April 30, 2023 and January 31, 2024, respectively, related to the revolving credit facility. These debt issuance costs have been deferred and are classified in assets in the accompanying condensed 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 August 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 due 2022 (the “Term Loan”), (ii) to pay related fees and expenses and (iii) for general corporate purposes.

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

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

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(the “ABL Facility”) pursuant to the ABL Credit Agreement, or certain future capital markets indebtedness of the Company or the 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 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 “Second ABL Credit Agreement”) with the Lenders named therein and with JPMorgan Chase Bank, N.A., as Administrative Agent. The Second ABL Credit Agreement is a five year senior secured credit facility subject to a springing maturity date if, subject to certain conditions, the Notes are not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. The Second ABL Credit Agreement provides for borrowings in the aggregate principal amount of up to $650 million. The Company and certain of its subsidiaries (the “Guarantors”), are Loan Guarantors under the Second ABL Credit Agreement.

The Second ABL Credit Agreement refinanced, amended and restated the Amended Credit Agreement, dated as of December 1, 2016 (as amended, supplemented or otherwise modified from time to time prior to August 7, 2020, the “Prior Credit Agreement”). The Prior Credit Agreement provided for borrowings of up to $650 million and was due to expire in December 2021. The Second ABL Credit Agreement extended the maturity date to August 2025, subject to a springing maturity date if, subject to certain conditions, the Notes are not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder.

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Amounts available under the Second ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the Second ABL Credit Agreement. Borrowings originally bore interest, at the Borrowers’ option, at LIBOR plus a margin of 1.75% to 2.25% or an alternate base rate margin of 0.75% to 1.25% (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A. from time to time, (ii) the federal funds rate plus 0.5% and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 1.00%, with the applicable margin determined based on Borrowers’ availability under the Second ABL Credit Agreement. In April 2023, the Company amended the Second ABL Credit Agreement to replace LIBOR with the Adjusted Term Secured Overnight Financing Rate (“SOFR”) as a successor rate. All other material terms and conditions of the Second ABL Credit Agreement were unchanged. Borrowings under the Second ABL Credit Agreement now bear interest, at the Borrower’s option, at the alternate base rate (defined as, for a given day, the greatest of (i) the “prime rate” in effect on such day, (ii) the NYFRB Rate (as defined in the amendment) in effect on such day plus 0.5% and (iii) the SOFR (defined as an interest rate per annum equal to SOFR for such interest period plus 0.10%) for a one-month interest period as published two business days prior to such day plus 1%) plus an applicable spread or SOFR plus an applicable spread. The Company applied certain provisions and practical expedients of ASC 848 – Reference Rate Reform related to the transition from LIBOR to SOFR.

The Second ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors. In addition to paying interest on any outstanding borrowings under the Second ABL Credit Agreement, 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.

The Second ABL Credit Agreement contains covenants that, among other things, restrict the Company’s ability to, subject to specified exceptions, 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 April 30, 2024, the Company was in compliance with these covenants.

As of April 30, 2024, the Company had no borrowings outstanding under the Second ABL Credit Agreement. The Second ABL credit agreement also includes amounts available for letters of credit. As of April 30, 2024, there were outstanding trade and standby letters of credit amounting to $4.8 million and $2.9 million, respectively.

The Company has recorded $8.0 million of debt issuance costs related to the Second ABL Credit Agreement. As permitted under ASC 835, the debt issuance costs have been deferred and are presented as an asset which is amortized ratably over the term of the Second ABL Credit Agreement.

In June 2024, the Company entered into the third amended and restated credit agreement that provides for borrowings in the aggregate principal amount of up to $700 million and extends the maturity date to June 2029, subject to certain conditions. See Note 12 – Subsequent Events for more information.

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 bore interest at the rate of 2% per year. $75.0 million of the principal amount of the LVMH Note was paid on June 1, 2023 and the remaining $50.0 million of such principal amount was paid on December 1, 2023.

ASC 820 required the LVMH Note to be recorded at fair value at issuance. As a result, the Company recorded a $40.0 million debt discount. This discount was amortized as interest expense using the effective interest method over the term of the LVMH Note.

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

Overdraft Facilities

During fiscal 2021 and 2025, certain of the Company’s foreign entities entered into overdraft facilities that allow for applicable bank accounts to be in a negative position up to a certain maximum overdraft. These uncommitted overdraft facilities with HSBC Bank allow for an aggregate maximum overdraft of €10 million. Interest on drawn balances accrues at a rate equal to the Euro Interbank Offered Rate plus a margin of 1.75% per annum, payable quarterly. The facility may be cancelled at any time by the Company or HSBC Bank. As part of a COVID-19 relief program, certain of the Company’s foreign entities entered into several state backed overdraft facilities with UBS Bank in Switzerland for an aggregate of CHF 4.7 million at varying interest rates of 0% to 0.5%. As of April 30, 2024, the Company had an aggregate of €6.4 million ($6.9 million) drawn under these various facilities.

Foreign Credit Facility

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 plus a margin of 1.7%. As of April 30, 2024, KLH had €12.1 million ($13.0 million) of borrowings outstanding under this credit facility.

NOTE 8 – REVENUE RECOGNITION

Disaggregation of Revenue

In accordance with ASC 606 – Revenue from Contracts with Customers, the Company discloses 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 Company. The Company has 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, including from retail stores operated by Vilebrequin and Karl Lagerfeld, other than sales of product under the Karl Lagerfeld Paris brand generated by the Company’s 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 consideration 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, Vilebrequin and Sonia Rykiel trademarks owned by the Company.

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, Karl Lagerfeld Paris, G.H. Bass and Wilsons Leather businesses. Retail stores primarily consist of DKNY and Karl Lagerfeld Paris retail stores, substantially all of which are operated as outlet stores. 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.

		Page No.
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets – April 30, 2024 (Unaudited), April 30, 2023 (Unaudited) and January 31, 2024	3
	Condensed Consolidated Statements of Income and Comprehensive (Loss) Income – For the Three Months Ended April 31, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity – April 30, 2024 and April 30, 2023 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows – For the Three Months Ended April 30, 2024 and 2023 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

Part II	OTHER INFORMATION
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 5.	Other Information	30
Item 6.	Exhibits	31