G III APPAREL GROUP LTD /DE/

G-III Apparel Group, Ltd. operates as a global leader in fashion with expertise in design, sourcing, distribution and marketing, enabling it to fuel growth across a portfolio of over 30 globally recognized owned and licensed brands, anchored by its key owned brands DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin. The company develops products across a diverse range of lifestyle categories including outerwear, dresses, sportswear, suit separates, athleisure, jeans, swimwear, as well as handbags, footwear, small leather goods, cold weather accessories and luggage, with brands positioned to sell at various price points with global distribution across a diverse mix of channels and geographies.

Primary competitors are not named in the filing, but the company states it has built strong, long standing relationships with its retail partners through years of personalized service and a consistent focus on meeting or exceeding expectations. The company's competitive advantages include merchant expertise in product development, dominance across a range of categories, a well-developed sourcing and supply chain infrastructure, a diversified global distribution network, and an experienced senior leadership team. Sales to the ten largest customers accounted for 67.6% ¹ of net sales in fiscal 2026, with Macy's Inc. group accounting for 20.6% ², TJX Companies for 11.4% ³, and Ross Stores for 11.0% ⁴.

The company generates revenue through two operating segments: wholesale operations and retail operations. The wholesale segment sells products to approximately 1,500 customers, ranging from national and regional chains to small specialty stores, while the retail segment distributes products through company operated retail stores and digital platforms for the DKNY, Donna Karan, Vilebrequin, Karl Lagerfeld, Karl Lagerfeld Paris, G.H. Bass, Wilsons Leather and Sonia Rykiel businesses. The business is highly seasonal, with net sales during the third and fourth quarters accounting for approximately 60% ⁵ of net sales in fiscal 2026, 61% ⁶ in fiscal 2025 and 59% ⁷ in fiscal 2024.

The company's owned brands include DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, Eliza J, Jessica Howard, Andrew Marc, G.H. Bass, Wilsons Leather and Sonia Rykiel, and accounted for approximately 57% ⁸ of net sales in fiscal 2026, 52% ⁹ in fiscal 2025 and 47% ¹⁰ in fiscal 2024. DKNY net sales were approximately $650 million ¹¹ in fiscal 2026, $675 million ¹² in fiscal 2025 and $590 million ¹³ in fiscal 2024. Karl Lagerfeld net sales were approximately $630 million ¹⁴ in fiscal 2026, $580 million ¹⁵ in fiscal 2025 and $475 million ¹⁶ in fiscal 2024. The DKNY brand operates more than 70 stores worldwide, including 13 company operated stores. The Karl Lagerfeld brand is distributed through more than 200 stores worldwide, as well as through 67 company operated stores, across over 60 countries, and additionally operates 34 Karl Lagerfeld Paris company operated stores in North America. Vilebrequin is distributed in 104 company operated stores and 97 franchised operated stores and is sold in over 100 countries worldwide.

Licensed brands include Calvin Klein, Tommy Hilfiger, Levi's, Nautica, Halston, Champion, Converse, BCBG, French Connection, Starter and major national sports leagues, among others, and sales of licensed products accounted for 43.0% ¹⁷ of net sales in fiscal 2026, 48.0% ¹⁸ in fiscal 2025 and 53.4% ¹⁹ in fiscal 2024. The company's licenses for Calvin Klein products expire on a staggered basis which began on December 31, 2024, and will continue through December 31, 2027. Licenses for Tommy Hilfiger products expire on a staggered basis which began on December 31, 2025, and will continue through December 31, 2027. In March 2023, G-III entered into a licensing agreement with Authentic Brands Group for the Nautica brand for distribution in North America. In May 2023, G-III announced the signing of a 25-year master licensing agreement with Xcel Brands, Inc. for the Halston brand. In September 2023, G-III entered into the Champion license to produce men's and women's outerwear for distribution in North America. In September 2024, G-III announced a global licensing agreement for Converse, Inc., to design and produce adult men's and women's apparel. In July 2024, G-III entered into a licensing agreement with Marquee for its BCBG and BCBG GENERATION brands for distribution in the United States and Canada. Effective February 2026, G-III entered into a new licensing agreement for the French Connection brand to develop and distribute women's and men's apparel and selected accessory products across North America.

In fiscal 2025, the company acquired an 18.7% ²⁰ ownership stake in AWWG, a global fashion group and premier platform for international brands. In June 2024, the company amended and restated its ABL Credit Agreement to, among other things, extend its maturity date from August 2025 to June 2029. The company's retail operations segment reported an operating loss of $5.0 million ²¹ in fiscal 2026, $14.0 million ²² in fiscal 2025 and $30.5 million ²³ in fiscal 2024. The company identified a material weakness in the operating effectiveness of controls related to information technology general controls over business applications that support financial reporting processes within the Karl Lagerfeld subsidiary.

In fiscal 2026, the company generated approximately $672.1 million ²⁴ in net sales outside the United States, or approximately 23% ²⁵ of total net sales. Sales to customers outside the United States accounted for approximately 22.7% ²⁶ of net sales in fiscal 2026, 22.6% ²⁷ in fiscal 2025 and 22.5% ²⁸ in fiscal 2024. As of January 31, 2026, the company employed approximately 3,400 ²⁹ full-time and 1,100 ³⁰ part-time associates. Approximately 59% ³¹ of the leadership team and 71% ³² of the overall workforce are women, and 47% ³³ of the workforce identify as Black, Indigenous, or People of Color.

The company's first major growth vector is driving growth of its owned brands, with full control over design, production, global distribution and marketing, generating higher operating margins and providing an incremental licensing income stream. The company believes it has a significant runway for growth in North America as well as internationally for its key owned brands DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin. The second major growth vector is expanding the complementary portfolio of licensed brands, with the company having brought to market three new licensed brands in 2024 (Nautica, Halston, and Champion), launching two additional licenses in Fall 2025 (Converse and BCBG), and signing a new licensing agreement for the French Connection brand in January 2026, with plans to grow these brands as distribution expands and new product launches over the course of these multi-year licenses.

The third major growth vector is expanding global reach, with the company generating approximately $672.1 million ³⁴ in net sales outside the United States in fiscal 2026, or approximately 23% ³⁵ of total net sales. The company's acquisition of an 18.7% ³⁶ ownership stake in AWWG is expected to be a key accelerator to international growth, with AWWG becoming the official agent for DKNY, Donna Karan and Karl Lagerfeld across Spain and Portugal, as well as for licensed Converse products in select countries. The company is also exploring opportunities to manage certain brands owned by AWWG in North America. The fourth growth vector is enhancing omni-channel capabilities, with the company making targeted investments to strengthen global go-to-market execution, including enhanced data capabilities, upgrades to owned brand websites and expanded digital partnerships.

The company's retail operations segment reported an operating loss of $5.0 million ³⁷ in fiscal 2026, improving from a loss of $14.0 million ³⁸ in fiscal 2025 and $30.5 million ³⁹ in fiscal 2024, reflecting the execution of the retail segment turnaround strategy which included management changes, reducing the store footprint, and rebasing the merchandising strategy. The company is making targeted investments to strengthen global go-to-market execution, including enhanced data capabilities, upgrades to owned brand websites and expanded digital partnerships, and is leveraging deeper consumer insights to inform design and merchandising while improving product presentation across owned and partner platforms.

The company's sourcing operations are based in China and Hong Kong, with additional sourcing offices in Vietnam, Indonesia, Jordan, Bangladesh and Cambodia. During fiscal 2026, approximately 72% ⁴⁰ of product was sourced from Vietnam, China and Bangladesh. In fiscal 2026, the company sourced 25% ⁴¹ of its product from China, which is a decrease by more than half from its highest levels of sourcing from China experienced years ago as the company made significant efforts to better diversify its supply chain. The company does not own any manufacturing facilities and generally arranges for production on a purchase order basis with completed products manufactured to its design specifications.

The company's primary source of working capital to support growth is its ABL Credit Agreement, which was amended and restated in June 2024 to extend its maturity date from August 2025 to June 2029. The company's growth is dependent on its ability to continue to be able to access and, if necessary, increase this credit facility. The company also has an overdraft facility with UBS Bank and a foreign line of credit for a subsidiary of Vilebrequin. The filing does not disclose specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy figures beyond the declaration of a quarterly dividend.

The company faces structural headwinds from the imposition of additional tariffs on goods imported into the United States beginning in April 2025, with incremental tariffs on products imported from many countries including China, Vietnam and Bangladesh, and the potential for further increases and revisions or terminations to existing trade agreements. In response, some countries have announced or are considering retaliatory tariffs on United States exports and other trade restrictions, leading to significant volatility and uncertainty in global markets. The company also faces headwinds from the seasonal nature of its business, with net sales during the third and fourth quarters accounting for approximately 60% ⁴² of net sales in fiscal 2026, and the large amount of outerwear sold making the company vulnerable to unusually warm weather conditions during the peak fall and winter outerwear selling season.

The company faces constraints from its significant customer concentration, with the ten largest customers accounting for 67.6% ⁴³ of net sales in fiscal 2026, and the loss of any of these customers or a significant reduction in purchases could have a material adverse effect on results of operations. The company also faces constraints from the failure to maintain or renew material license agreements, as net sales of licensed product accounted for 43.0% ⁴⁴ of net sales in fiscal 2026, and the company is 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.

The most material risk is the failure to maintain or renew material license agreements, as net sales of licensed product accounted for 43.0% ⁴⁵ of net sales in fiscal 2026, and the company is 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. A second critical risk is significant customer concentration, with the ten largest customers accounting for 67.6% ⁴⁶ of net sales in fiscal 2026, Macy's Inc. group accounting for 20.6% ⁴⁷, TJX Companies for 11.4% ⁴⁸, and Ross Stores for 11.0% ⁴⁹, and the loss of any of these customers or a significant reduction in purchases could have a material adverse effect. A third material risk is the imposition of additional tariffs on goods imported into the United States beginning in April 2025, with incremental tariffs on products imported from many countries including China, Vietnam and Bangladesh, and the company sourced 25% ⁵⁰ of its product from China in fiscal 2026. A fourth risk is the retail operations segment continuing to incur losses, as it reported an operating loss of $5.0 million ⁵¹ in fiscal 2026, $14.0 million ⁵² in fiscal 2025 and $30.5 million ⁵³ in fiscal 2024, and the company's turnaround strategy may not significantly improve results. A fifth risk is the seasonal nature of the business, with net sales during the third and fourth quarters accounting for approximately 60% ⁵⁴ of net sales in fiscal 2026, making the company vulnerable to weather disruptions and other seasonal factors.

Management's message emphasizes four key strategic pillars: driving growth of owned brands, building the complementary portfolio of licensed brands, expanding global reach, and enhancing omni-channel capabilities. Management highlights that owned brands accounted for approximately 57% ⁵⁵ of net sales in fiscal 2026, up from 52% ⁵⁶ in fiscal 2025 and 47% ⁵⁷ in fiscal 2024, reflecting the successful shift toward higher-margin proprietary brands. Management also emphasizes the acquisition of an 18.7% ⁵⁸ ownership stake in AWWG as a key accelerator to international growth, and notes that the company generated approximately $672.1 million ⁵⁹ in net sales outside the United States in fiscal 2026, or approximately 23% ⁶⁰ of total net sales. The tone is forward-looking and confident, with management stating they believe there is significant runway for growth in North America as well as internationally for key owned brands DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin, and that the company is in the early stages of global expansion for DKNY.