G-III Apparel Group, Ltd. Aktie

Good day, and thank you for standing by. Welcome to the G-III Apparel Group Second Quarter Fiscal 2027 Earnings Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Neal Nackman, CFO. Please go ahead.

Good morning, and thank you for joining us. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guaranteed and actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements.

In addition, during the call, we will refer to non-GAAP gross profit, non-GAAP net income and non-GAAP net income per share and adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures to GAAP measures in our press release, which is also available on our website.

I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Thank you, Neal, and thank you, everyone, for joining us. We made good progress in the second quarter with earnings exceeding our guidance, driven by solid execution, significant gross margin expansion and disciplined expense management. We also reached an incredibly important milestone with the completion of the Marc Jacobs acquisition yesterday. We believe this is transformational for G-III and significantly enhances our portfolio of owned brands while accelerating our evolution into a brand-led global apparel powerhouse.

Second quarter net sales were $554 million, slightly below our plan driven in a large part by our European business, which was impacted by macro softness in the region. Calvin Klein and Tommy Hilfiger delivered lower results than planned as we exit these licenses. Excluding Tommy and Calvin, our go-forward portfolio grew high single digits in the quarter. The quality of our sales is also improving. We remain focused on full price selling, disciplined inventory management and protecting the long-term positioning of our brands. For example, wholesale sales in full-price channels were up more than 20% for the go-forward portfolio in the second quarter.

Gross margin was a particular highlight, expanding 440 basis points compared to last year. The improvement reflects the benefit of pricing actions, healthy full-price selling and the continued mix toward the mix shift toward our higher-margin owned brands. We also benefited from the cost savings initiatives we continue to implement across the business.

Non-GAAP earnings per diluted share for the quarter was $0.26, ahead of guidance of $0.15 to $0.25. We're operating in a dynamic macroeconomic backdrop. The American consumer remains resilient but selective, while Europe continues to be more challenged. Despite these pressures, consumers are responding to newness and fashion, and we're encouraged by the strong sales of our product offerings.

Stepping back, we're making significant progress transforming G-III and are laying the foundation for a higher-growth, higher-margin business. Since PVH announced the take back of Tommy Hilfiger and Calvin Klein licenses in fiscal 2023, we've lost nearly $1.2 billion in revenue from these businesses by the end of this year. Excluding any contribution from Marc Jacobs, we will have replaced $700 million of these sales with our go-forward portfolio growing at a high single-digit rate annually. And importantly, we're replacing these revenues at higher margin.

Marc Jacobs represents a pivotal opportunity for G-III and is directly aligned with our vision for the company. We believe strongly in the long-term opportunity for Marc Jacobs, and we're excited to work with its talented team. LVMH has been an excellent steward of the brand. This is the second transaction where we've acquired brands from LVMH. The first brought us DKNY and Donna Karan, which have been tremendously successful with G-III and have become dominant brands in global fashion, together with generating approximately $2.7 billion in annual retail sales. We're pleased to build on the history with the acquisition of another iconic brand.

Let me reiterate the 3 core drivers behind our strategic rationale for the transaction. First, Marc Jacobs is a truly differentiated global brand founded in 1984 and it has built a passionate follower around the world -- following around the world and a deep connection with the highly engaged fashion-conscious consumers. With its premium aspirational and fashion forward positioning, few brands today have the same combination of fashion authority, cultural influence and multigenerational appeal.

Marc remains the center of the brand's creative vision and has shaped the fashion conversation for decades. His runway collections are an important reflection of what makes the brand so special. Continuing to command the attention and reinforces its fashion authority, his most recent show in June is a great example of the energy and excitement Marc creates, which we see an opportunity to translate across a broader commercial offering and bring more consumers into the world of Marc Jacobs.

That same creative energy extends to how the brand connects to consumers through innovative storytelling. It's new campaign, the swap blends fashion, entertainment and culture through its episodic format with the next installment debuting in September 9.

Second, we see significant opportunity to unlock the next phase of growth for the brand. Today, the business is primarily driven by handbags, small leather goods and accessories, which represent approximately 90% of revenues. We see considerable opportunity to build the ready-to-wear business and create a more complete expression of the Marc Jacobs lifestyle while maintaining the brand's positioning and creative integrity. This aligns perfectly with G-III's core strengths and our track record of developing and scaling apparel businesses.

Marc Jacobs also has a strong global licensing business, providing another important avenue for growth and value creation. Fragrance is an established and successful category for the brand through its long-standing partnership with Coty, including the Daisy franchise. The recent relaunch of Marc Jacobs Beauty is off to a very strong start, and the brand also has established businesses in categories like eyewear and children's apparel. This also considerable potential across channels, Marc Jacobs generates approximately 2/3 of its revenue through direct-to-consumer with over 100 company-operated stores and a robust digital platform. The majority of its stores are in the outlet channel and generate healthy 4-wall profitability.

G-III, meanwhile, brings extensive wholesale capabilities and long-standing relationships with leading retailers globally, creating an opportunity to broaden distribution thoughtfully. Internationally, we see additional room to grow through both existing operations and strong local strategic partners. Together, these opportunities across product, channel and geography provide a significant multiyear growth runway.

Third, the structure of the transaction provides G-III with multiple avenues for value creation. G-III owns 100% of the Marc Jacobs operating company, including retail, wholesale and e-commerce, and will lead product development, sourcing, distribution, marketing and provide global licensing services. Together with WHP Global. We also own the Marc Jacobs intellectual property through a 50%-50% joint venture, giving G-III a 50% partnership in the earnings generated by the licensing business. WHP will lead the global licensing strategy, while G-III will provide ongoing brand marketing and licensing services to existing and new partners, helping to ensure that products and consumer experiences remain consistent with the Marc Jacobs brand globally.

WHP brings significant global licensing experience with its portfolio generating over $9.5 billion in annual retail sales across more than 80 countries. We look forward to working together to expand Marc Jacobs into an additional license category and geographies. We also plan to invest meaningfully in the Marc Jacobs brand from marketing and product to digital, stores and broader consumer experience. As both an owner and an active steward of the brand, we will bring our capabilities and resources behind both and directly operated and licensed businesses while preserving the brand's desirability and creative independence.

Let me briefly touch on our balance sheet, which remains an important strength of G-III. We ended the second quarter with nearly $530 million in cash and approximately $1 billion in available liquidity. Our cash position benefited from the receipt of approximately $134 million in tariff refunds, including interest during the second quarter. Following the close of the Marc Jacobs transaction, our balance sheet remains very healthy with ample liquidity and financial flexibility to continue investing in our brands and strategic growth initiatives as well as return capital to shareholders.

During the second quarter, we returned more than $12 million through share repurchases and our dividend. Inventory remains in excellent shape, down approximately 13% compared to last year, reflecting our continued disciplined approach to inventory management.

Now let me walk you through some highlights from our own brands. Donna Karan remains one of our most powerful growth opportunities with sales increasing more than 45% in the second quarter and momentum continues to build. The brand is benefiting from solid consumer demand, healthy full-price selling and its aspirational positioning. Digital performance also remains strong with growth across traffic, conversion and AUR. The consumer is reacting favorably to newness in the offering. Donna Karan Weekend, which launched last November is performing well, while the dress business was a standout in the second quarter. We're also seeing growth across lifestyle categories as the mix of the business becomes more diversified.

Handbags delivered double-digit growth through the quarter, while footwear also performed well with distribution expanding this fall through additional doors at Nordstrom's, Macy's and Dillard's. The business' growth is supported by digital first marketing efforts with engaging social content, custom storytelling and strategic VIP partnerships throughout the summer season. And I'm excited to share that today, we're launching Donna Karan's Fall 2026 global campaign with Kendall Jenner as the new face of the brand. Kendall brings tremendous global reach to the brand and embodies Donna Karan in a fresh and modern way. We believe this campaign provides a powerful opportunity to introduce the brand to new audiences around the world.

Donna Karan will also be featured in the first-of-its-kind Macy's celebration of American fashion. As part of the campaign, there'll be a limited edition capsule collection reimagined from some of the iconic pieces that define Donna's legacy, reinforcing the brand's place in fashion. We're still in the early stages with Donna Karan and see significant opportunities to grow the brand meaningfully over time.

Turning to DKNY. We continue to build momentum at DKNY and remain focused on strengthening the quality of sales with healthy full price sell-throughs in North America and continued strength across our direct-to-consumer channels. Our retail partners are also allocating more space to the brand. We're seeing increased store counts for fall 2026, Spring '27, and key retail partners in North America.

Internationally, we're expanding DKNY with our existing partners and see significant opportunity to grow distribution across Europe and other key markets. On dkny.com, we saw a mid-20% growth versus the prior year, driven by increased conversion and healthy AUR growth, while DKNY stores delivered a solid mid-single-digit comp during the quarter. Licensing is another important growth avenue for DKNY with strong performance in fragrance led by the iconic Be Delicious franchise. We're also expanding into additional lifestyle categories, including a new [indiscernible] license in North America launching next spring.

Our investments in talent and marketing continue to drive strong visibility and engagement, broadening reach and strengthening the brand's connection with consumers. Building on the success of our year-long partnership with Hailey Bieber, Fall 2026 marks a new chapter for DKNY with Iris Law and Amelia Gray, both are influential voices for new generation of style. The campaign builds on our effort to broaden DKNY's reach with younger consumers while remaining rooted in the energy and attitude of New York. We are focused on building DKNY's momentum through product newness, continued growth in direct-to-consumer and expanding the brand globally over time.

With Karl Lagerfeld, the brand delivered strong growth in North America, led by our wholesale business, while European sales continue to be affected by the challenging consumer environment. Despite this, gross margins expanded in Europe, supported by pricing channel mix and sourcing execution. We see significant opportunity across the Karl Lagerfeld brand. In North America, Karl Lagerfeld Paris is expanding across both men's and women's with strong momentum in categories, including dresses and footwear. Internationally, Karl Lagerfeld Jeans continues to outperform and remain an important growth engine, particularly with younger consumers. We're building Karl Lagerfeld as a global lifestyle brand, leveraging our licensing and hospitality business to broaden the brand's reach and create new ways for consumers to experience it.

As part of this, we opened the first ever Karl Lagerfeld Cafe in Amsterdam. Brand ambassador, Paris Hilton, visited the cafe while in town, generating additional visibility and engagement around the opening. In hospitality, the Karl Lagerfeld Residences in Lisbon launched in June. The development is positioned among the city's most prestigious residential projects and aligns well with the brand's aspirational positioning. Today, the brand has 1 hotel and 1 residential project open with 5 additional projects in development, further demonstrating the opportunity to extend Karl Lagerfeld beyond fashion. Looking ahead, we expect strong marketing visibility in the second half, supported by the third season of our partnership with Paris Hilton and the launch of our new global Not-Karl campaign. With its distinctive global identity and significant growth opportunities, we remain confident in Karl Lagerfeld's long-term potential.

Vilebrequin delivered positive growth in the second quarter with resilient performance across key markets, including Europe, the Caribbean and Asia. We're pleased with this performance, particularly given the challenging consumer backdrop in Europe. Margin for the brand exceeded our target in the quarter supported by higher AURs and healthy consumer demand for the brand. Building on the success of our first collaboration with Fiat last year, in June, we teamed up again to launch a second limited edition Topolino Vilebrequin collection edition. Demand has been very strong and the collaboration is another great example of the brand's reach and its unique connection to summer. On the hospitality front, the Vilebrequin La Plage Miami Beach Club launched in July further extending the brand's luxury lifestyle positioning beyond swimwear.

Turning to our license business. Our sports and lifestyle platform remains an important area of opportunity and delivered healthy growth in the quarter. We believe -- we feel very good about the business -- where the business is positioned. As consumer trends evolve beyond the recent focus on athletic footwear, we're seeing opportunities across other areas of sports and lifestyle. We're focused on bringing together iconic heritage brands with relevant moments across sports, fashion, music and culture.

Starter is a good example. We're finding new ways to expand the brand beyond traditional sports. This includes new partnerships and collaborations, such as our limited edition Pokemon jacket with Target. By connecting Starter's iconic heritage with cultural moments, we believe we can create unique collectible products that resonate strongly with consumers.

Converse also continue to scale as we expand distribution following our initial launch last year. We remain in the early stages of developing the brand and continue to see significant runway. Levi's was a highlight in the quarter and saw a meaningful expansion during the period. The brand is aligned with current fashion trends as consumers shift from performance outerwear into a more casual lifestyle that plays directly to Levi's heritage.

Our contemporary platform is gaining momentum with French Connection and BCBG, both launched within the last year, performing well during the quarter. This fall, we will launch Joules, the premium British lifestyle brand owned by Next, one of the U.K.'s largest fashion retailers in approximately 400 doors across North America. Our licensed portfolio remains an important growth platform, expanding our reach across consumer segments and lifestyle categories where our market share remains underpenetrated.

Let me now turn to outlook. We are reiterating our previous guidance for fiscal 2027 net sales of approximately $2.71 billion and increasing our non-GAAP earnings per diluted share guidance to $2.20 to $2.30, reflecting the upside in second quarter earnings. Importantly, this guidance excludes the financial impact of Marc Jacobs. Let me provide some context around this. We completed the transaction yesterday. Given the timing of the close, we do not believe we yet have the appropriate level of visibility to incorporate Marc Jacobs into our formal fiscal 2027 outlook. We expect to update our fiscal 2027 guidance to include Marc Jacobs when we report our third quarter results in December.

To provide some additional color, we expect Marc Jacobs' operating business to generate approximately $350 million in global sales this year. This figure excludes licensing revenues generated through the intellectual property joint venture, which is 50% owned by G-III. Looking to next year, we expect meaningful top line growth as we expand into new categories, including the launch of ready-to-wear. Long term, we believe Marc Jacobs can generate $1 billion in annual revenue for G-III.

As we discussed when we announced the transaction, we expect the acquisition to be dilutive in the first 12 months of ownership and to be accretive thereafter. We expect slight dilution for the remainder of the fiscal 2027. Beyond the initial years of ownership, we believe the opportunity for Marc Jacobs is significant. We look forward to partnering with Marc and preserving the brand's unique creative ethos as we build the business for long-term growth.

In closing, I'm pleased with the progress we're making as we transform G-III. We delivered earnings ahead of our guidance driven by strong margin expansion and expense management. Our go-forward business is growing at a healthy rate, and Marc Jacobs significantly expands our long-term opportunity. As we integrate the business, we will also execute on our previously mentioned cost-saving initiatives while identifying additional efficiencies to drive greater profitability over time. We have a powerful portfolio of globally recognized brands, strong merchant and sourcing capabilities, deep retail relationship and a very healthy balance sheet. I believe these strengths position G-III to deliver significant value for our shareholders.

I'll now pass the call to Neal to discuss our financial results in more detail.

Thank you, Morris. Net sales for the second quarter ended July 31, 2026, were $555 million, down 10% compared to $613 million in the same period last year. Net sales of our wholesale segment were $531 million compared to $589 million in the previous year. The decrease was primarily due to the anticipated reductions in Calvin Klein and Tommy Hilfiger net sales, partially offset by healthy growth in our go-forward portfolio. Net sales of our retail segment were $40 million for the second quarter compared to $41 million in the previous year second quarter, driven primarily by the transition of our G.H. Bass digital business to a licensee. Comparable store sales increase for Donna Karan and DKNY compared to the prior year.

Turning to gross margins. Second quarter gross margin was 45.2% compared to 40.8% in the previous year, an increase of approximately 440 basis points. Gross margin benefited from the continued mix shift to higher-margin owned brands as well as selective price increases. The wholesale segment's gross margin percentage was 43.3% compared to 38.9% in the previous year, reflecting price increases as well as the mix shift to higher-margin owned brands. The gross margin percentage in our retail segment was 50.6% compared to 52.4% in the prior year with the current quarter impacted by increased promotional activity.

SG&A expenses were $231 million in the second quarter, which is similar to the $227 million in the prior year after the exclusion of $4 million of expenses related to the Marc Jacobs acquisition. As expected, we saw expense deleverage as we continue to make investments in our people, technology and marketing, offset in part by warehouse expense efficiencies as we began to see the benefit of our efforts to optimize capacity.

GAAP net income for the second quarter was $20.2 million or $0.46 per diluted share compared to $10.9 million or $0.25 per diluted share in the previous year. Non-GAAP net income for the second quarter was $11.5 million or $0.26 per diluted share compared to non-GAAP net income of $11.2 million or $0.25 per diluted share in last year's second quarter.

Turning to the balance sheet. We ended the second quarter in a strong financial position with $529 million in cash, up from $302 million in the prior year. Our cash position benefited from the receipt of approximately $134 million in tariff refunds, including interest income during the second quarter. Our liquidity position remains very strong, and we ended the second quarter with approximately $1 billion in available liquidity. Inventories are healthy and are down 13% compared to the prior year. Subsequent to the quarter end, we funded the Marc Jacobs transaction with a combination of cash on hand and borrowings under our ABL. Following the close, our financial position remains very healthy with ample liquidity and significant financial flexibility.

Now let me discuss our outlook. Our fiscal 2027 guidance excludes the financial impact of Marc Jacobs. For the full fiscal year 2027, we are reiterating our guidance for net sales of approximately $2.71 billion, down approximately 8% compared to the prior year. This reflects approximately $460 million of lost sales from Calvin Klein and Tommy Hilfiger products, partially offset by the growth of our go-forward portfolio, which we continue to expect to grow high single digits.

We are raising our guidance for non-GAAP net income to between $97 million and $101 million or between $2.20 and $2.30 per diluted share, reflecting year-to-date results. Full year adjusted EBITDA is now expected to be between $174 million and $178 million. For the third quarter of fiscal 2027, we expect net sales of approximately $870 million compared to $989 million in the third quarter of fiscal 2026. The comparison reflects the continued exit of the PVH licenses with the third quarter representing the largest year-over-year reduction in PVH revenues this fiscal year. We expect non-GAAP net income in the third quarter of between $59 million and $64 million or $1.34 to $1.45 per diluted share. This compares to non-GAAP net income of $83.4 million or $1.90 per diluted share for the third quarter of fiscal 2026.

Let me add some context around modeling. In terms of gross margin, we continue to expect close to 400 basis points of gross margin improvement for the year. The outlook reflects strong first half margin performance, price increases and the continued mix shift to higher-margin owned brands. Our guidance assumed the tariffs for the remainder of the year will approximate current rates. As a reminder, in the fourth quarter of fiscal 2026, SG&A included $17.5 million of bad debt expense, primarily related to the bankruptcy of Saks Global, which will not repeat this year.

On interest, we now expect net interest income on a non-GAAP basis of approximately $5 million for the full year. We are estimating our non-GAAP tax rate to be approximately 32.2% for the year. We expect capital expenditures to be approximately $40 million. Our guidance does not anticipate any additional share repurchases for the balance of fiscal 2027. With respect to Marc Jacobs, as Morris mentioned, we expect slight dilution to G-III's forecasted earnings in fiscal 2027. We expect the acquisition will be dilutive for the first 12 months of ownership and accretive thereafter.

Looking to next year, Marc Jacobs will be an important contributor to G-III's growth, reflecting a full year contribution from the business as well as the additional growth we expect as we expand into categories such as ready-to-wear and others. As you think about G-III's overall revenues in fiscal 2028, it is also important to remember that approximately $370 million of Calvin Klein and Tommy Hilfiger net sales we expect to generate this year will not recur into next year. Even with this transition, the underlying growth of our go-forward business, together with the addition of Marc Jacobs positions G-III well for the future.

That concludes my comments. I will now turn the call back to Morris for closing remarks.

Thank you, Neal. I'm incredibly excited about the future of G-III and the opportunities ahead. I want to thank the entire G-III team for their hard work and dedication and warmly welcome the Marc Jacobs team to G-III.

Operator, we're now ready to take some questions.

[Operator Instructions] And our first question will be coming from the line of Bob Drbul of BTIG.

I was just wondering if you could expand a bit more just on the sales this quarter in terms of how you felt about the progress, but also when you look at the reiteration of the sales for the second half, just like your comfort level around the sales outlook, sort of wholesale specifically. And then can you expand some with more performance in Europe, the declines that you saw in Europe and sort of how much that impacted this quarter and what your assumptions are in the back half?

Thanks, Bob. Thanks for your question. The sales in the second quarter, although we missed guidance by a little bit, there are so many factors that enter into our lives at the end of the quarter that are not necessarily negative long term. They're certainly not negative long term. There's a delivery delay caused by weather or container miss. I mean we always -- we're in such a tight time frame with allocations from our retailers that it's hard to process and get everything in on time. And occasionally, if we miss a container or two, it's not monumental as far as we're concerned generally, it flows into the next quarter, which is why you see no change in -- or a positive change in our fourth quarter and year-end results.

So we don't -- although it is disappointing and everybody faces the same objectives, we don't view this as a critical miss at all. It's not a miss. It's a shift into another quarter. And literally, it's a day or 2 away. There's a cutoff that's the midnight of the end of the quarter. And the following day, it's quite possible that we've made it up. So we don't dwell on a miss that is not pivot off of the company. That doesn't affect us. It does sometimes affect stock view. Unfortunately, we can't control that.

As far as the decline in Europe, traffic in Europe is down dramatically. And the economics, as we see and we all read the same papers, London goes through changes. Some of the important department stores are struggling in England, the important streets in London are garnering less traffic. The Middle East is not traveling to the extent that they have historically, and there are promotional elements that impact our business.

We, again, are on top of it, they probably have the warmest second quarter they've had in their history. I was in London during the early part of June, late part of May and June, and there were record-breaking days that you really couldn't go out, which should impacted business dramatically as well. So there's an assortment of reasons, I believe. I don't believe there is a result of mismanagement or misdirection of what we're accomplishing, quite honestly. I like the product, I like the organization and the people that are challenged to grow the business in Europe. I like them better every day. So to personally grade what we're doing, I'd say we get high marks and we're even expanding on it. We believe that we can impact that business much more positively than we have historically. We grow as a percentage of sales every year, and that comes with a comfort level and a better understanding of a geography that's relatively new to us. So we're comfortable with where Europe sits on what we can control to affect our business.

Bob, this is Neal. Just to add to that. In terms of comfort level with the rest of the year, look, the wholesale drives our business. We've got a wholesale order book that's comparable to where we were last year in terms of forecasting while we don't have the entire year completed, we're about 90% of an order book that's complete for the year. So that, combined with the fact that the go-forward portfolio has been performing well. We're performing well in retail, performing well at wholesale. Both those things give us comfort with the balance of the year forecast.

And I guess, can you also spend some time on the gross margin, I guess, tariff implications and sort of how you're utilizing them, but also just U.S. wholesale, the promotional environment, what you're seeing and how back-to-school has trended so far for you guys.

Yes. Look, tariffs hit us by really in a shocking way last year. I think we adjusted for them this year. We probably had the benefit in the early part of the year but there has not been increases from where we started. We still have some exposure to that as the rest of the year winds out. But we think that we've priced our product appropriately at this point. And therefore, we reflect a pretty significant increase in the gross margin percentage this year versus last year. That's probably a main driver. And it, of course, as we shift to more business into our go-forward portfolio, that portfolio does have a higher gross margin percentage, especially the owned businesses, and that's really kind of the -- that combination is what drives the strong gross margin.

And Bob, as it relates to the promotional activity, as we stated, our business in full-priced retail is up with our own brands, over 20%. The promotional environment in department stores is not as aggressive as it's been historically. Natural margins seem to increase every year. There's better product, there's better care, there's better service as we look at our department store landscape. Investments in the last couple of years has been fairly aggressive and to protect the integrity of product and better service the consumers. So the experience in department stores seems to have gotten much better in the last couple of years.

And as far as the off-price channel, again, we've seen some of the earnings releases of off-price retailers, and they seem to be somewhat under pressure, which I don't understand the reason. The expectation is as the consumer is concerned about gas prices and housing, you would assume that, that business would be would be better, at least for the quarter, and that might be a result of weather where people are simply not going out. It could be a result of the World Cup. There are many factors that enter into it.

So my money is on the fact that the off-price channel prospers, they're incredible on how they find solutions for their business. They find amazing product, and they offer value to the consumer. And I think there's a life for both.

Great. And congratulations on the Marc Jacobs closing that, and we look forward to hearing much more about it and seeing it in your portfolio.

And our next question will be coming from the line of Ashley Owens of KeyBanc Capital Markets.

All right. Great. So maybe to start, I appreciate the highlight here for some of the 3Q declines at the PVH pressure that will be occurring in the quarter. But are there any other nuances we should be aware of for 3Q such as any headwinds embedded for further pressure in Europe? Any weather-related conservatism you may be factoring in with regards to outerwear? And then with 4Q, I think the guide implies low single-digit decline. So some decent improvement there from the third quarter. Is that primarily a function of some of the freight timing that you highlighted earlier?

So let me answer your last question first. There are some unique situations as it relates to weather and transporting our containers. We seem to have some concerns, nothing that is critical today, but could be a factor going forward. There are storms throughout our traffic routes. And we look at it every day. We review where the miss might occur in delivering on time. And to date, we seem to be okay. But we watch it very, very carefully.

Your question on weather. We're also reading the fact that this could be an alert for an incredibly warm winter. Our business in outerwear has decreased. Today, it's barely north of -- not that it's barely because it's a large business. It's a little more than 25% of our overall sales. And if you came to me 10 years ago, I would have told you it was 100% of our sales.

So we've -- I guess, we've hedged our bet. We are a major factor in swimwear. We're one of the major factors of dresses. So if there's a demand for swimwear, any time of the year, we're in business, dresses are less seasonal and offer less of a concern for us in a warm weather environment. So we're appropriately hedged and the coats in many ways has become more of a fashion item than a weather item. Our outerwear is lighter and more fashionable and appropriate for wearing indoors than ever before. So I don't think there's a concern for the weather in our business. Should there be a storm, and we're all locked down because of snow, that would be a concern.

Okay. That's helpful. Just a follow-up, sorry, really quickly. But maybe on Marc Jacobs, because you did provide, I think, some additional color on this call and just talking about that long-term path to $1 billion in revenue, maybe a little bit more in detail, but what portion of the opportunity would you believe could be achieved through some of those broadening of categories and channels that exist today already versus entirely new product areas such as ready-to-wear?

So Ashley, there's nothing that's entirely new because Marc Jacobs has touched on all categories, but it's not -- the company is not focused on anything other than handbags, small leather goods and accessories. That's basically been their focus justified by the dominance they created in several handbags and their focus on retail.

Their stores are relatively small. They have limited product categories. And we have a different headset. We have a template that has worked incredibly well for us as you see with Karl Lagerfeld and DKNY and now Donna Karan. And prior to that, the [indiscernible] that we built with Calvin Klein and Tommy Hilfiger that was virtually nonexistent by creating classifications that have multiple exposures in department stores. We probably coined the classification categories for the department stores. They're highly profitable for us. And they provide scale to our business.

So that's sort of untouched with Marc Jacobs. That's the big opportunity. it takes a little bit of time to identify exactly where you want to be and what categories you want to launch first. And we're going through that as we speak. The doors were just opened to us yesterday. We've spent the greater part of, I guess, the last 3, 4 months negotiating with 2 partners, LVMH, who is now out of the mix and WHP and understanding our zone and explaining what we want to accomplish. And with not a lot of access to the existing strategy or the talent pool that LVMH has built. It is simply their way. We accepted it. When we closed respecting the desires or more so of the demands of LVMH. And we're getting our arms wrapped around it, as we speak.

There was lanes that we understood clearly. And you'll be surprised as to how fast we create and ship product in classifications that were clear to us. We were under development of classifications before we even closed on the business.

And as I've said multiple times, the transition of the PVH assets afforded us some of the best talent in the world that set in our organization that was going to transition into other areas of our business. So having the talent pool at G-III and adding this tremendous talent pool that exists at Marc Jacobs, I think we can do this transition relatively quickly. And become a dominant player in all sectors of fashion, not only handbags and accessories.

And beyond that, Marc is amazing as far as the media is concerned. Our commitment to -- and what we've learned in the last few years about marketing and the result of great marketing we're going to apply to Marc Jacobs as well.

Okay. Great. Maybe just one final question here for me. One modeling clarification. But I think the language around tariffs this quarter was changed a little bit from assuming rates consistent with the prior IEEPA tariff last quarter to assuming current rates. Did the embedded tariff assumption actually change within the model for the second half?

Yes. At this point, we did change internally, and we are viewing the current tariffs as opposed in our modeling process.

[Operator Instructions] And our next question will come from the line of Dana Telsey of Telsey Advisory Group.

Yes. This is Rob on for Dana. I know you guys aren't going to any specifics on the Marc Jacobs acquisition. But I guess maybe higher level, if you could talk about some of the near-term opportunities you're seeing in the second half year or maybe some of the seasonality of the business that we should be mindful of. And then on the synergy side, anything immediate that comes to mind near term that can help benefit both the brand and your current portfolio of brands and how that will impact the overall margin profile of the portfolio going forward.

So there are certainly synergies. We were, as I said before, the gates have just been open. We know what we know, quite honestly, on how we can leverage our systems, real estate, our talent pool into lesser efficiencies, quite honestly, that exist in Marc Jacobs.

Marc Jacobs has been through a process where there have been many empty spaces. We don't have to hire for that. I don't believe we have a lot of the spaces filled with the G-III talent pool. And beyond that, we haven't really touched on what WHP and their licensing capabilities are. We reviewed yesterday just post closing, all the opportunities that WHP has on their plate, which will provide income for G-III. There are licenses that are going to be signed relatively quickly. There are areas of the world that have been underpenetrated that will now be penetrated, whether it be through our offices or offices or businesses that we'll oversee the segment of business for us through licensing. And it's an exciting time for G-III, and I believe for WHP as well.

The executives of WHP and G-III, Jeff Goldfarb, traveled extensively to lay the groundwork down for licensing. And I think that's a huge opportunity for us. So the reason for the investment, we could have set by and been a licensee and paid a royalty, and we see great opportunity into the brand value of Marc Jacobs.

And I would now like to turn the call back to Morris for closing remarks.

Thank you all for listening to our story. And stay tuned. Next quarter, we'll talk about what we've achieved with Marc Jacobs. Thank you.

And this concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you for standing by. Welcome to the G-III Apparel Group First Quarter Fiscal 2027 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Neal Nackman, Chief Financial Officer. Sir, please go ahead.

Good morning, and thank you for joining us.

Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guaranteed and actual results may differ materially from those expressed or implied in forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements.

In addition, during the call, we will refer to non-GAAP gross profit, non-GAAP net income and loss, non-GAAP net income and loss per share and adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures to GAAP measures in our press release, which is also available on our website.

I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Thank you, Neal, and thank you, everyone, for joining us. We're very pleased with our first quarter performance, which came in ahead of expectations driven by continued momentum across our go-forward portfolio and disciplined management of the P&L. Net sales were $536 million ahead of guidance, the quality of total company sales continues to strengthen, driven by a meaningful increase in full price sales versus the prior year. Our go-forward portfolio delivered growth even as the top line was pressured by the planned loss of PVH brand revenues. We saw growth in our go-forward portfolio in both North America and Europe despite the macroeconomic challenges in the European market.

Non-GAAP loss per share was $0.21, which was also ahead of our guidance range for the quarter. Importantly, we delivered gross margin expansion for the first time since fiscal 2025, reflecting healthy full price selling, strong inventory management, a shift towards owned brands and tariff mitigation efforts. Non-GAAP gross margins in the first quarter were up 350 basis points versus the prior year. Our balance sheet remains very healthy and we ended the first quarter with cash of $394 million and inventories down 8% versus prior year.

The macroeconomic backdrop remains volatile with the ongoing conflict in the Middle East impacting global consumer sentiment. Despite this, we're executing with discipline and our brands continue to gain share helping to exceed our expectations for the first quarter and increase our outlook for fiscal 2027. Stepping back, our first quarter demonstrates that we're executing our strategy to evolve from a primarily licensed portfolio into a balanced global fashion house with meaningful owned brands. And that brings me to our recently announced acquisition of the iconic Marc Jacobs brand in partnership with WHP Global, which represents a significant milestone for G-III and is strongly aligned to our vision of strategic transformation. The Marc Jacobs acquisition accelerates our transition toward higher margin, longer duration brand equity. This acquisition is upgrading the quality of our earnings and advancing our long-term growth trajectory.

We see three core drivers of the strategic rationale behind this transaction. First, Marc Jacobs is a global and iconic brand with Marc Jacobs himself being one of the most influential designers in modern American fashion. Since founding his namesake brand in 1984, he's built a global fashion house that defines trends, influences culture and connects with consumers across generations. The brand's positioning is premium and aspirational yet remains accessible which is well aligned with our portfolio and [ heritage ]. We're acquiring Marc Jacobs because of its cultural relevance and creative authority not to change what is special.

Today, the brand has over 100 company-operated stores worldwide, with the majority located in the United States and has a strong e-commerce platform. The brand's direct-to-consumer operations are complemented by a growing wholesale and retail partner network. This diversified omnichannel foundation and strong brand recognition provide a solid base for future expansion. Second, we see significant opportunity to unlock the next phase of growth for Marc Jacobs, building upon its scalable platform we see a lot of potential ahead for the brand, which directly aligns with our operational expertise and brand-building strengths. From a product perspective, Marc Jacobs assortment is currently led by handbags and accessories, while our expertise is deeply rooted in apparel. We see considerable opportunity to expand the brand's lifestyle across new product categories while further enhancing G-III's capabilities and scale in leather goods and accessories.

In terms of channel mix, the brand leans more heavily towards retail and e-commerce, while G-III brings a [indiscernible] global wholesale platform and long-standing retailer relationships. Geographically, we believe we can further expand the Marc Jacobs brands globally and expect to see strong interest from leading distributors around the world. This acquisition positions us to expand our reach and partner with some of the best operators in key markets globally. The third key point in our rationale is the unique structure of this transaction. G-III will own 100% of the operating company and will lead all aspects in the brand's operations, including product development, sourcing, merchandising and global marketing to drive long-term growth. We will also offer global services to all licensee operations to ensure with the brand's positioning, standards and long-term vision. Together, G-III and WHP Global will own the Marc Jacobs intellectual property through a 50-50 joint venture. As an equal owner of the JV, G-III will directly participate in the growth of the brand's royalty income stream and cash flow generation. WHP Global a leader in brand management and global licensing whose portfolio includes brands such as [ Vera Wang ], [ Ragan Bone ], G-Star and [indiscernible] will lead the expansion of licensing opportunities across categories and geographies.

With a shared vision for the future of the Marc Jacobs brand this structure will maximize value creation and capitalize on each partner's strengths. Importantly, G-III had a long history of identifying iconic brands with large runways for growth, acquiring and successfully scaling it. Our approach begins with a respect for the brand's heritage and is rooted in preserving the brand's codes and make them special.

The DKNY and Donna Karan acquisition in 2016 to is a strong example of G-III's track record of value creation. Over the past decade, we've successfully reiterated DKNY, relaunched the Donna Karan brand increased revenues by more than 150% and significantly improved profitability. Karl Lagerfeld is another strong example, here with one of the most celebrated designers in fashion with tremendous global recognition yet substantial opportunity to build brand around them. First, we built a business in North America from scratch, and since taking full ownership of the brand in 2022, we've increased revenues by approximately 90% while broadening its reach globally.

With Vilebrequin, we saw our brand with a storied history and a loyal following yet significant untapped potential. Since acquiring the brand in 2012, we reestablished Vilebrequin as a pure luxury swimwear brand and developed lifestyle partnerships that reinforce its premium positioning. Lastly, Calvin Klein and Tommy Hilfiger demonstrate G-III's long-standing ability to build and scale brands. For more than 20 years, we successfully built up and expanded both brands in North America, introducing new categories and turned around underperforming ones. We grew net wholesale sales for these businesses into a combined $1.5 billion platform at their peak. We believe Marc Jacobs is a natural fit for our portfolio and aligns perfectly with the brand building model that has been so successful for us in the past. We expect the transaction to be dilutive in the first year, however, we anticipate accretion thereafter. Moreover, we believe there is a significant multiyear opportunity in both growing the operating business as well as licensing income and free cash flow from the joint venture.

We will fund our approximately $500 million investment through a combination of cash and our revolving credit facility. This structure provides us with ample liquidity and flexibility while maintaining a prudent approach to our balance sheet. After the anticipated close of the acquisition in the third quarter, our financial health will continue to be solid with low leverage, significant available liquidity and strong cash flow. Overall, we're confident in our ability to help lead the Marc Jacobs brand into its next chapter of growth. G-III will protect and grow the brand's desirability through a disciplined approach in category expansion, sourcing, scale and global distribution. The brand will gain the infrastructure of a global public platform while retaining its creative independence. Long term, we believe the business can generate $1 billion in annual revenues for G-III. As we drive revenue growth, we expect to see meaningful long-term product accretion and cash flow generation. We will provide more details, including our go-forward strategy when the transaction closes.

Now turning to our own brands. At Donna Karan, the brand once again outperformed delivering approximately 40% growth in the first quarter, driven by healthy sell-throughs and strong AURs. Lifestyle momentum across categories continues supported in part by our licensing efforts. Fragrance continues to be a standout and a few weeks ago, we added a new scent to the popular Cashmere collection. Donna Karan Jewelry exceeded expectations at wholesale with key styles selling-out, reorders underway and expanded doors for Fall 2026. Looking ahead, we will launch Intimates for holiday 2026 with our licensed partner, [ Komar ], further expanding the brand's lifestyle reach. Digital performance grew with donnakaran.com sales up nearly 60%, driven by increases in traffic, conversion and AUR. We continue to support the brand through targeted marketing investments that drive visibility and reinforce brand desirability. Interest from celebrity stylists and A-list talent remains strong across both the newer and archival collections, underscoring the brands enduring relevance. The strength of this brand continues to attract top-tier creative partners. And looking ahead to fall, we're partnered with a global talent whose unmatched social reach and relevance will introduce the world of Donna Karan to new audiences worldwide.

At DKNY we continue to position the brand for long-term strength. In the first quarter our North American direct-to-consumer business grew meaningfully with stores delivering a double-digit comp increase, higher productivity and improved full price sell-throughs across seasonal categories. Sales on dkny.com increased over 40% during the strong spring season, driven by higher conversion rates, targeted marketing and increased newness that resonated with our core customer. Our Hailey Bieber-led campaign remained an important driver of brand visibility and engagement during the spring season and will continue into the summer months. A strong connection to a highly engaged audience helped drive increased traffic to our site and broaden the awareness of the brand globally.

We also kicked off another season of our Yankee sponsorship, reinforcing the brand's connection to New York City's culture and style. Internationally, a new DKNY flagship store opened in Shanghai strategically located in one of the city's premier fashion destinations as we continue our focus on expanding the brand's global footprint. Overall, we're seeing healthy lifestyle momentum, strong digital engagement and continued progress in our DTC and international initiatives.

At Karl Lagerfeld, the brand performed well in the quarter with strength led by North America, where we saw a healthy growth across our DTC channels. Despite a challenging backdrop in Europe, International performance was supported by growth in Karl Lagerfeld jeans, which continued to gain traction to our younger customer, delivering a high single-digit increase during the quarter. While we expect the European market to remain soft given ongoing pressure on consumer sentiment, we're encouraged by the strong brand momentum we see across the business. Our marketing initiatives continue to drive strong visibility and engagement.

Building on the success of our initial partnership with Paris Hilton, the second chapter of our global campaign generated record engagement across the digital, social and experiential platforms. This included an event that shut down Herald Square with a DJ performance by Paris her self and a Macy's shopping experience celebrating the spring/summer collection. These efforts reinforce the brand's cultural relevance and expanded visibility across key markets.

Finally, Vilebrequin performed strongly in the first quarter with broad-based growth across all regions. As the brand enters its peak selling season, we continue to build momentum through a series of spring and summer activations and collaborations. This included the recent launch of the Vilebrequin Beach Club in Miami, as well as several activations during the Con Film Festival at our La Plage location in [indiscernible]. Overall, our own brands are becoming stronger, more profitable and increasingly global, reinforcing their role as the core driver of our long-term growth. The momentum we are seeing across North America is expanding brand awareness and consumer interest in markets around the world, creating new opportunities for growth. Digital expansion continues to be an important growth driver, and our investments across our own sites are delivering strong results.

During the quarter, DTC sales increased close to 40% and versus last year, reflecting healthy consumer engagement across the portfolio. Q1 performance across retail partner sites exceeded expectations driven by strong execution in digital wholesale like Amazon and [ Zalando ] as well as marketplace channels. Handbags were a standout category during the quarter with strong growth across our key owned brands. Results were supported by relevant designs, disciplined marketing investments and improved promotional execution. As we expand our omnichannel presence, we will continue to invest in data, AI capabilities and digital infrastructure to enhance engagement and profitability across the business.

Our License business continues to complement our own brands in a capital-light profitable manner with a focus on strong brands with our Contemporary Fashion and Sports and Lifestyle platforms. Contemporary Fashion strengthens our presence in modern lifestyle categories and complements our own brand portfolio. While Sports Lifestyle expands our reach to passionate fan communities through team partnerships and specialized distribution channels. Within contemporary brands, BCBG, which we launched last fall, is exceeding our expectations with customers responding very positively to the the refreshed point of view in modern styling. French Connection, which we added to our portfolio in the first quarter, is also off to a strong start as we refine the brand positioning with a clearer aesthetic and more focused product and distribution strategy.

In April, we launched -- we relaunched the U.S. site as part of our efforts to reinvigorate the brand in the market. We're excited to share the news of our new partnership with NEXT one of the largest fashion retailers in the U.K., which will create opportunities to collaborate across brands and categories over time. The first initiative is the license agreement with Joules, NEXT's, premium British lifestyle brand known for its country inspired lifestyle aesthetic and bright, colorful collections, the brand has a strong point of view that we believe will resonate well with consumers in North America. Under the license agreement, we will design, distribute and market men's and women's apparel and accessories in the U.S. and Canada. So far, the response has been very encouraging with close to 350 doors confirmed for a fall launch. We believe there is a meaningful opportunity to grow the Joules brand in North America over time.

In Sports and Lifestyle, our Team Sports business remains healthy and represents a considerable growth opportunity. We continue to advance several strategic initiatives in this category including the addition of a new WNEA license, which we see as well aligned with both the momentum in women's sports and our capabilities in this space. Converse is performing nicely across nearly 900 points of sale while remaining in the early innings of scaling. Starters continues to execute well and is finding moments to connect sports, fashion and culture. In Q1, the brand shipped a limited edition Pokemon Jacket exclusively with Target which launched in early May and sold-out in less than 10 minutes. Collaborations will continue to play an important role in the brand strategy.

In conclusion, I'm pleased with our team's execution in the first quarter and our ability to exceed guidance. Today, we're reiterating our guidance for fiscal 2027 net sales to be approximately $2.71 billion and are raising our guidance for non-GAAP EPS, which is now expected to be $2.15 to $2.25, up from our prior outlook of $2 to $2.10. We continue to expect our go-forward portfolio to grow in the high single-digit range for the year, demonstrating the strong underlying health of our core business. The consumer and retail environment remains dynamic, and we'll continue to focus on executing our strategy.

Stepping back, our transformation is creating a stronger, more dynamic future for G-III. We're building a portfolio of premium global brands, where creative identity, cultural relevance and pricing integrity are protected and enhanced through disciplined ownership. Our evolution into global apparel powerhouse is well underway, and the strength of our portfolio has never been clearer. Our key owned brands DKNY, donna Karan, Karl Lagerfeld, Vilebrequin and soon, Marc Jacobs are globally recognized and have meaningful runway for growth. With extraordinary brands strong execution, deep industry relationships and talented global team, we believe G-III is uniquely positioned to drive sustainable long-term growth and significant shareholder value. Thank you.

I will now pass the call to Neal to discuss financials.

Thank you, Morris. Net sales for the first quarter ended April 30, 2026, were $536 million down 8% compared to $584 million in the same period last year. First quarter sales were ahead of guidance of approximately [ $530 ] million. Net sales of our Wholesale segment were $515 million compared to $563 million in the previous year. During the quarter, growth in our go-forward portfolio was offset by the anticipated reductions in PVH license revenues. Net sales of our Retail segment were $41 million for the first quarter compared to net sales of $36 million in the previous year's first quarter. Comparable store sales were healthy and increased for Karl Lagerfeld Paris, Donna Karan and DKNY compared to the prior year.

Let me touch on tariffs. Following the U.S. Supreme Court's decision in February, the U.S. Court of International Trade ordered U.S. Customs and Border Protection to refund IEEPA tariffs. As a result of this ruling and other available information, we have assessed that the recovery of previously paid IEEPA tariffs is probable. Accordingly, we have recorded a receivable of $140 million, reflecting our claim for IEEPA tariffs. We concurrently reduced our cost of goods sold by approximately $120 million, which represents the expense related to the tariffs. Additionally, in the first quarter, we recognized an approximate $20 million reduction in the carrying value of our April 30, 2026 inventories for tariffs previously capitalized. The inventory benefit will flow through cost of goods sold during the balance of fiscal 2027.

Of the approximately $120 million reduction in cost of goods sold, $103 million was related to IEEPA tariffs expensed in fiscal 2026. We have excluded the impact of those prior year tariffs from our non-GAAP first quarter fiscal 2027 results and have updated non-GAAP fiscal 2027 outlook.

Turning to gross margins. First quarter gross margins on a GAAP basis were 64.9% compared to 42.2% in the previous year. Excluding the non-GAAP IEEPA tariff recovery benefit, adjusted gross margin was 45.7%, up 350 basis points compared to [ 42% ] in the prior year. Gross margin benefited from pricing actions taken last year to mitigate tariffs as well as the mix shift to higher-margin owned brands from licenses.

The Wholesale segment's gross margin percentage was 63.8% compared to 40.4% in last year's comparable quarter. Excluding the impact of the IEEPA tariff benefit gross margin in our Wholesale segment was 43.8% for the first quarter. The gross margin percentage in our Retail segment was 48% compared to 53.5% in the prior year's period. Non-GAAP SG&A expenses were $252 million in the first quarter compared to $231 million in last year's first quarter. As previously discussed, with anticipated increased SG&A this year as we continue to make investments in our people, technology and marketing to support our future growth. Our first quarter was also impacted by higher compensation expenses attributable to our higher-than-expected profitability.

Non-GAAP net loss for the first quarter was $8.7 million or $0.21 per share compared to non-GAAP net income of $8.4 million or $0.19 per diluted share in last year's first quarter. First quarter net loss was ahead of guidance, largely driven by better-than-anticipated gross margin.

Turning to the balance sheet. We ended the first quarter in a strong financial position with $394 million in cash, up from $258 million in the prior year. We expect that our cash position will further improve with the benefit from the expected tariff recovery this year. Our liquidity position remains robust, and we ended first quarter with over $800 million in available liquidity. Inventories are in excellent shape and are down 8% compared to the prior year.

Now let me discuss our outlook. Our outlook does not include any impact as a result of the pending Marc Jacobs transaction. For the full fiscal year 2027, we are reiterating guidance for net sales of approximately $2.71 billion, down 8% to the prior year. This reflects approximately $470 million of lost sales from Calvin Klein and Tommy Hilfiger products, partially offset by the growth of our go-forward portfolio, which we continue to expect to grow high single digits. We are raising our guidance for non-GAAP net income for the year, which is now expected to be between $95 million and $99 million or between $2.15 and $2.25 per diluted share up from our prior outlook for diluted earnings per share of $2 to $2.10.

Full year adjusted EBITDA is now expected to be between $178 million and $182 million up from our prior outlook of $158 million to $162 million. For the second quarter of fiscal 2027, we expect net sales of approximately $570 million compared to $613 million in the second quarter of fiscal 2026. We expect non-GAAP net income in the second quarter of between $7 million and $11 million or $0.15 to $0.25 per diluted share. This compares to non-GAAP net income of $11 million or $0.25 per diluted share for the second quarter of fiscal 2026.

We expect gross margin expansion of approximately 450 basis points in the second quarter.

Let me touch on a few modeling items. With respect to tariffs, our updated guidance assumes the tariffs for the remainder of the year will approximate those that existed under the IEEPA regime, which would anticipate an increase to rates currently in effect. In terms of gross margin, we now expect approximately 400 basis points of gross margin improvement for the year, higher than our initial guidance for the 300 basis points of expansion. The increase in our outlook reflects the realized upside in the first quarter gross margin and the expected benefit from the reduced inventory carrying costs associated with the tariff refund which will favorably impact cost of goods sold over the balance of the year.

For SG&A, we continue to expect expense deleverage this year as our newer businesses scale and as we continue to invest in our business to support growth. As we discussed last quarter, we have identified cost-saving initiatives that are expected to generate $25 million of run rate savings in fiscal 2028, and we will continue to evaluate our cost structure. We expect the level of de-leverage to improve sequentially as we move through the year. We continue to expect net interest income of approximately $2 million for the full year and now estimate our non-GAAP tax rate to be approximately 33.5%. The higher tax rate is attributable to the anticipation of higher nondeductible items than previously expected. We expect capital expenditures to be approximately $40 million for the year. Our guidance does not anticipate any potential share repurchases for the year. That concludes my comments.

I will now turn the call back to Morris for closing remarks.

Thank you, Neal, and thank you all for joining us today. I've never been more excited about the future of G-III. I want to thank all of our team members for their hard work and dedication as well as our shareholders for their continued support. Operator, we're now ready to take some questions.

[Operator Instructions] Our first question is going to come from the line of Bob Drbul with BTIG.

This is [ Jay Catsicas ] on for Bob. So your own brands continue to post strong growth and are becoming a much larger percentage of sales. Could you discuss where you see the biggest white space opportunities across the brands, whether it's category expansion or international growth, DTC? And how large do you think these brands can ultimately become?

Thank you for your question, Jay. Jay, these brands are still in their early stage of development. We've done an amazing job of classification expansion. We're at the early stage of international growth, and we're not yet matured on the licensing potential of any one of these brands. The -- will hit on DKNY first. DKNY is arguably maybe the most commercial piece that grown beautifully over time, and it's gaining market share as there is -- there's change in our industry in branding and positioning. We seem to be picking up more real estate and strengthen classification, greater depth and classifications. So our familiarity with the customer base in North America is very, very strong. Our ability to govern how the brands are positioned is respected. And it's been a really nice run.

And again, I believe it's the early stage. With Donna Karan, we're barely in the third or fourth inning. This is really our second year with the launch of Donna Karan. Classification expansion is not at maturity yet. We're successful in pretty much any classification that we've placed in the marketplace. We're cautious on distribution. There's protection for the brand, the brand, its integrity and it's archival value to our company and to the consumer. Growth digitally is being achieved. We're fine-tuning some of the floors in our digital distribution, which is going to make a huge difference for the future. So Donna Karan, again, has got growth that could be 3x the size of what it is today. We've not even touched on the international component of Donna Karan. There's an appetite for it, and we're about ready to launch Donna Karan internationally. None of our overseas offices are representing the product of Donna Karan for distribution yet. We're almost there.

And Karl Lagerfeld. Karl Lagerfeld contrary to some of these brands to DKNY and Donna Karan is possibly best known in the European market. Karl Lagerfeld was born, and he himself is born in Germany. The adoption of his talent and his persona went to France very quickly. And the Globe quite candidly, I might say that he's the best designer of all time. So we were penetrated in Europe to some degree, and underpenetrated in North America. We believe there is tremendous growth. The sell-throughs have been amazing, possibly the best of what we have, and our Retail presence is minuscule. Our next focus will be to grow the Retail potential of all our brands. We will have -- we've aligned our talent pool in Retail or in the process of aligning our talent pool in Retail, to enable us to grow direct-to-consumer in that venue.

And Vilebrequin is -- Vilebrequin is a fun brand that hasn't scratched the surface yet. Today, it's best known for a men's luxury swim [indiscernible], it will be ready to wear in the future. We're distributing the brand and its presence in places like [indiscernible] on the beach [indiscernible], we're dominant as the luxury swim brand. We'll be on the beach and clubs to a greater extent in the coming years. And the -- possibly the trophy might be our new acquisition.

We believe that Marc Jacobs and the man and the brand have a huge following that addresses the millennials, the Gen Z consumer and the luxury consumer that is a little bit older, it crosses -- it crosses generations. So we're going to expand our retail. We're going to expand our offerings to include a much broader assortment of apparel and fine-tune was well created in handbags and accessories. So there's a tremendous amount of internal growth that's still available to us. The company is just excited by everything that's happening around us. The sell-throughs on our own brands, the new acquisitions and the new launches. We're not talking very much about BCBG, French Connection, Converse and [indiscernible], which we've worked at for the last few years, and we finally found a solution for [indiscernible], that will post profits for us in the coming years.

And as I said in our script, we're aligned with NEXT in the U.K. to attempt to build some of their brands here. The first initiative is Joules, and we've been successful in placing it yet to be shipped -- but we believe that there's a good deal of opportunity with even our licensed initiative. It's a well-balanced machine, something that was created initially as a licensing model. We evolved into owning a couple of insignificant brands through today possibly being the dominant fashion provider of owned brands as well as still not giving up on our licensed partnerships. So well balanced, well managed and consistent in performance and not many companies in our sector can make that statement. Sorry for the long-winded effort, Jay, but hopefully, I've answered your question

Our next question will come from the line of Dana Telsey with Telsey Advisory Group.

Nice to see the progress. Congratulations on the Marc Jacobs acquisition. As you think about your portfolio now, Morris, and obviously, you have many brands that could be $1 billion in sales. Is there a difference to what the distribution could be? Obviously, I see Marc Jacobs, you have wholesale opportunity. How do you see the margin potential of the combined portfolio accelerating?

Thank you for your question, Dana. It's a really good one. It's what we've been focused on. Margin enhancements are really what we're about today. If you look at our performance across our brands, this has not been an easy period. We're transitioning out of our largest pieces of business. So what you're getting in performance is a combination of exiting brands as well as entering to a greater extent, our own brands where our margins are better. It's difficult to maintain high margin as you exit and your 20-year-old assets the consumer knows, not the consumer, but your customers know that it's a period of transition, and there's a desire to move your inventory and end up -- there's a requirement to distribute your inventory and not be left with anything over a period of time.

So we're aggressive in moving our inventory there. As far as our own brands, we have a lifetime. We're managing our margins in a different fashion, and it's showing great results for us. The beauty of Marc Jacobs, margins are not the problem. Their margins at retail are exceptionally good. Their scale is more the issue. And we're good at that. We're good at providing solutions for scaling the business. We've shown that pretty much in every asset that we've taken on, be it Vilebrequin where there is not a markdown to be seen. There are global relationships that enhance the scale of the business and there's a respect and integrity that we retain as we build these brands. So I'd say we've done an amazing job of building and being recognized for continued growth and prosperity for our retailers.

We seem to -- as stuff comes our way, and it's not all positive. We find solutions. This is a team that just works 24/7 in supplying solutions for the retailer and retain the retail presence that we have, that again, we all know that's not an easy feat, in diminishing door count and diminishing opportunity for distribution of product. And we seem to be solving it.

Got it. And one other thing, just given the category categories of Marc Jacobs, which is leather goods and accessories. Is there any cross-pollination that could benefit any of your other brands to expand their sales in the category?

Cross-pollination in sourcing and development possibly design, we keep the design separate by brand, whether it's a license or an own brand, whether it's a mass market brand or a premium luxury brand. We retained the specialness of everything that we own. So the intent is not to [indiscernible] the acquisition. It's to continue to make it special. We bought it because it was special. We have a partner that sees it the same way. And not only what we do, the way we will license the category is out there'll be -- the brand will be protected. It's not intended to hit the mass market at any point. It's intended to create an important diffusion brand yet to be decided.

But in console with our retail partners. There's a big appetite for a diffusion brand as well as the continued maintenance of the Marc Jacobs brand. So nothing really changes except maybe a diffusion brand that becomes distributed to a great integrated scale might come out of the Fusion brand.

Just to add to the margin file, I think it's important to remember when we ran a significantly licensed portfolio, we really ran those at low double-digit operating margins. When we look at the owned businesses, we really run those essentially without the royalty charges that are associated with them. So we run into the mid-teens up to the upper teens from an operating margin standpoint. The portfolio is being recreated. It's got a mix of owned and licensed businesses, both growth. I'd characterize the Marc Jacobs as a hybrid where we're really paying essentially a half royalty. So from an operating margin standpoint, we would expect to get back to some mix of high -- low double-digit operating margin businesses, low double-digit operating margin on the license portfolios and then a mix of higher operating margins on the owned.

Our next question comes from the line of Ashley Owens with KeyBanc Capital Markets.

Maybe just to start, if you could talk about any shifts in what you're hearing from wholesale partners heading into fall, if there's been any changes over the past several weeks, just with the consumer backdrop still choppy and then the conflict in the Middle East kind of dragging on here. Any sense that buyers are still leaning into newness in the own brands? Or are you seeing any signs of caution in some of the [indiscernible] order commitments?

That's a great question, Ashley. We would anticipate greater pushback and greater concern. It seems as if the consumer is shopping. They're maybe more selectively. But in our performance and our retail customers regardless of channel, it seems as if the consumer is finding their way and affording high gas prices traveling and they're buying apparel. I'm not -- we're aware and we're cautious. But if we look at sell-throughs, there are blips on a given week. But overall, I would tell you that the consumer seems to be quite positive on their shopping average. I'm not seeing a major reason based on sell-throughs for concern, yet we are -- this applies to North America, a little bit different in Europe.

Europe is a little bit more cautious. Performance in Europe is a little less than we would like to see from the consumer's point of view. But the -- these are issues that we're not in control of. And as far as the Middle East, we don't have a large business in the Middle East. It's a growing developed developing business, but nothing that happens in the Middle East. It's a chart for us.

Okay. Understood. Maybe -- and then just a follow-up, Neal, I know you called out some of the higher compensation expenses as part of that SG&A increase in the quarter. Just any way to help us think about the magnitude of the comp accrual swing versus some of the planned investments you've alluded to this year with that being people or marketing tech initiatives? I'm just trying to isolate the underlying G&A run rate once you strip out some of that variable comp piece.

Yes. Look, I think the key thing to think about, Ashley, is that while we expect a significant amount of deleverage on the full year, if you look at that rate in each quarter, you'll see that will scale down, and I would expect that would be somewhat consistent for Q2 and 3. And just remember, in Q4, we had a large charge last year. So you'll be up against that as as a reduction just taken into account when you do your modeling.

[Operator Instructions] Showing no further questions, I would like to hand the conference back over to Morris Goldfarb, CEO, for closing remarks.

Thank you all for spending a beautiful Friday morning with us. And we'll have more next quarter, the development of Marc Jacobs, maybe there'll be further disclosure. Hopefully, we can give you a more defined structure in the coming quarter. With that, have a great weekend. Thank you.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the G-III Apparel Group Fourth Quarter and Full Year Fiscal 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Neal Nackman. Please go ahead, sir.

Good morning. and thank you for joining us. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guaranteed and actual results may differ materially from those expressed or implied in forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements. .

In addition, during the call, we will refer to non-GAAP net income, non-GAAP net income per diluted share and adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures to GAAP measures in our press release, which is also available on our website.

I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Thank you, Neal and thank you, everyone, for joining us. Fiscal 2026 was a pivotal year for G-III. I'm proud of the results our team has delivered and the meaningful progress we made advancing our long-term strategy despite a tough environment. As we transition out of our Calvin Klein and Tommy Hilfiger businesses, we accelerated the strategic transformation of our portfolio, unlock new growth opportunities and strengthened the foundation of G-III. The power and global recognition of our brands, combined with our disciplined operating model and strong balance sheet enabled us to deliver compelling product and differentiated brand experiences despite a highly dynamic retail environment, including evolving tariff conditions and cost pressures.

As we reshape the portfolio, we're sharpening our focus on a brand builder and long-term steward of both our owned and licensed brands. At the same time, we've made targeted investments in infrastructure, technology and talent to support the next phase of growth. In the fourth quarter, our underlying results were strong, excluding the impact of the Saks bankruptcy, full year EPS would have exceeded the high end of our guidance. For the full year, our key owned brands, DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin, collectively delivered mid-single-digit growth, helping offset the impact of the exited PVH licenses. These brands are growing with improving quality of revenue higher full price sell-throughs and increasing global relevance, the clear validation of our strategic direction.

With that, I'll now review our fourth quarter and full year fiscal 2026 results. Net sales were $771 million in the fourth quarter and $2.96 billion for the full year. Relative to guidance, sales were negatively impacted by approximately $20 million as we stopped shipments to Saks in December ahead of the bankruptcy filing. Strong margin for the fourth quarter and the full year was ahead of expectations, driven by higher full-price selling and more balanced distribution with less penetration in the off-price channel. We're successfully establishing higher price points with our newer brands and seeing healthy consumer response further supporting our margin expansion opportunity. Non-GAAP earnings per diluted share were $0.30 in the fourth quarter and $2.61 for the full year. In the fourth quarter, we took an approximate $17.5 million bad debt expense associated with the Saks bankruptcy, which negatively impacted earnings by $0.30.

Turning to our balance sheet. Our working capital remains in great shape. We exited the year with clean inventories, down 4% year-over-year on lower units. We ended the year with more than $400 million in cash and over $900 million in total liquidity. This is after returning more than $50 million to shareholders through share repurchases and our new cash dividend. We remain in the strong financial position with ample flexibility to continue investing in our brands and infrastructure to support long-term growth.

Turning to our strategic priorities. Over the past several years, we've been very clear about our strategy, simplifying our portfolio, leaning into our most powerful owned brands and building a company with greater control and long-term growth potential. Fiscal 2026 was another important step in that journey, capturing the long-term potential of our own brands is a top strategic priority. These brands are powerful, sustainable drivers of profitability, delivering higher margins and incremental licensing income. During the year, our own brands demonstrated strong consumer resonance supported by compelling product, disciplined distribution and effective marketing. We saw solid full price sell-throughs, healthy margins and increased brand engagement. Our key owned brands delivered mid-single-digit growth accounting for close to 60% of revenue this year, up from roughly 50% last year.

We're driving this growth through 4 key areas. First, product and consumer engagement. We continue to invest in brand-building initiatives through an always-on marketing strategy that leverages top-tier talent, elevated content and targeted global activations to expand and reach and drive conversion. Second, driving direct-to-consumer. We're focused on strengthening our digital business to boost traffic and conversion across owned and partner sites. Meanwhile, we're executing well on our retail segment turnaround initiatives in North America optimizing the footprint to improve productivity and profitability.

Third, international expansion. With just over 20% of fiscal 2026 net sales generated outside the United States, the opportunity remains significant. We're pursuing global expansion with discipline, prioritizing the right markets, partners and infrastructure to ensure long-term sustainable growth. Fourth, category expansion through licensing. Our partners have helped us expand the lifestyle offerings into complementary categories that broaden our brand reach and deepen consumer connections. In return, G-III earns a highly accretive licensing income stream, the vast majority of which falls directly to our bottom line. We see significant opportunity to grow our brands through new licensing partners over time.

I will now walk you through brand highlights from the year. Donna Karan continues to be one of our most powerful and new-to-market growth engines, delivering strong profitability supported by healthy AURs and sell-throughs. In fiscal 2026, the brand delivered approximately 40% growth, underscoring the strength of the relaunch and the momentum we are seeing across channels. Touching on a few highlights. In North America, we're expanding distribution of key wholesale accounts, supported by consistent sell-throughs that continue to build retailer confidence. We ended the year with approximately 1,900 points of sale with an additional 400 expected for fall. Sales on donnakaran.com grew close to 170% this year, driven by more than 120% increase in traffic. Repeat customers represented close to 20% of sales and we acquired nearly 100,000 new customers during the year. The brand continued to perform well on retailer sites, and we expect digital momentum to continue as we expand our lifestyle offerings online.

Category diversification through licensing and product expansion is broadening the brand's reach. Donna Karan weekend launched in November to strong reception while license categories continue to perform well. The fragrance business grew approximately 20% this year, led by the continued strength of the Cashmere Mist franchise, which remained one of the top products in prestige fragrance. Our new jewelry line is off to a good start and will roll out in select department stores this spring.

Our marketing investments are reinforcing the brands authority and cultural relevance across key markets globally. This year, our campaigns have featured iconic empowered women like [ Kate Moss and Claudia Schiffer ], who embody the brand and bring authenticity to the collection. At the same time, we've seen strong organic momentum with A-list celebrities choosing the brand, underscoring that it continues to capture how women want to dress today with confidence and effortless ease. Looking ahead, as we build on our success in North America, we remain focused on thoughtfully scaling across categories, doors and geographies while protecting its premium positioning and strong brand equity. With increasing brand awareness and multiple growth levers still ahead, we expect strong growth in fiscal 2027 and remain highly confident in Donna Karan's long-term trajectory and $1 billion annual G-III net sales potential.

Karl Lagerfeld delivered another exceptional year growing high single digits. Brand heat was reinforced through our impactful marketing campaigns with Paris Hilton, strengthening consumer engagement at key touch points on a global scale. Building on that momentum, we're continuing our partnership with Paris for spring and summer this year. In North America, sales grew high teens for the year as we broadened the lifestyle assortment and expanded distribution across key accounts. Our footprint in the region grew to approximately 3,000 points of sale with more than 300 new points of sale expected by fall. In our North American direct-to-consumer business, we continue to optimize the retail footprint and enhance digital. This year, the brand saw a positive comp sales increases across stores and e-comm fueled by over 20% growth on karl.com. Internationally, the brand grew mid-single digits with expanding margins despite softer consumer trends in Europe.

The Karl Lagerfeld jeans line remained a primary growth driver, delivering 30% growth for the year, helping to engage a younger consumer. We're prioritizing productivity and improvements in our international operations to drive stronger profitability across channels. With more than 170 Karl Lagerfeld branded freestanding stores worldwide, we're thoughtfully expanding the global retail footprint. This year, 15 new stores were opened in key strategic markets, including Latin America and Mexico through our partners, and we continue to target underpenetrated regions such as Asia Pacific for future growth.

Our licensing and hospitality business continues to reinforce Karl's position as a global lifestyle brand with aspirational relevance. This year, we signed licensing agreements for luxury brand residences in Portugal and the Middle East. In fiscal 2026, the brand generated approximately $630 million in reported net sales and over $1.7 billion in global retail sales. Looking ahead, we're focused on accelerating global expansion, scaling our digital business and engaging a broader consumer through expanded lifestyle offerings and brand activations. These initiatives reinforce our confidence in the powerful growth runway for Karl Lagerfeld and capturing over $1 billion in GIII's net sales opportunity long term.

Turning to DKNY. Our strategy remains focused on investing in how and where the brand shows up with a clear emphasis on driving full price sales. Over the last 12 to 24 months, we've taken a disciplined approach to elevating brand presentation, refining our distribution and deepening engagement with a younger consumer. Our North American direct-to-consumer business improved with stores and [ .com ], delivering double-digit comp growth and higher productivity. Notably, sales on dkny.com, increased approximately 40% for the year, reflecting strong consumer engagement with the collections. North America increased marketing spend and targeted activations resonated with our target audience, driving strong response to fashion and newness. Internationally, brand-building activations across key markets boosted visibility and fueled ready-to-wear growth led by jeans and handbags.

DKNY delivered several standout brand moments. We launched 2 global campaigns, Spring 2025 with [ Laila Mass ] and Fall of '25 with Haley Bieber significantly elevating brand visibility and cultural relevance. Social engagement rose nearly 300% year-over-year with 4 campaigns generating the strongest social performance in the brand's history. Haley returns for Spring 2026 supported by a global media plan. Marketing-led storytelling translated into results. The [ Paula ] commuter tote became our #1 handbag collection for the year, supported by immersive pop-ups and experiential moments that brought the brand's New York City DNA to key markets. Broader high-impact brand moments, including a landmark Burj Khalifa projection in Dubai and 190 screen citywide digital takeover further amplified visibility and brand heat. In fiscal 2026, DKNY delivered approximately $650 million in reported net sales and over $2.4 billion in global retail sales.

As we look to next year, our focus centers on product newness, expanded lifestyle assortments and scaling distribution across North America. Internationally, we're unlocking growth in Europe and China, where we recently onboarded a new licensing partner and we'll open a new Shanghai store this spring. We're also seeing opportunity in markets across the Asia Pacific and India through new partnerships. With disciplined execution and a clear strategic focus, we're confident in DKNY's billion dollar G-III net sales opportunity.

Vilebrequin, a status swimwear brand delivered low single-digit sales growth despite a challenging European backdrop. Demand remained resilient among our aspirational consumer supported by strong global brand awareness and engagement. Growth was driven by higher AURs reflecting the brand's pricing power, premium positioning and continued demand for its luxury swimwear and lifestyle offering. Performance was led by strength in Europe, particularly in France and the Caribbean, along with continued momentum in digital. In hospitality, we're building on strong performance in [ can ] and partner locations in Doha and [ Cree ] with the addition of a fourth partner beach operation in Oman. A new rooftop restaurant in Miami is also set to open in the coming weeks.

Looking ahead, our strategy remains focused on premium product with higher AURs, creative collaborations to drive global awareness and hospitality led distribution at a boutique placement in incremental brand builders. Vilebrequin continues to be a key player in our own portfolio as we unlock its long-term global potential. In addition to owned brands, licensed brands remained a core pillar of our strategy with an enhanced focus on contemporary fashion and sports lifestyle categories. These segments allow us to leverage our core competencies and capture incremental market share and sales. In fiscal 2026, our licensed brands generated mid-single-digit growth excluding our PVH and other exited licensing businesses.

Team sports, led by [ Starter ], continues to expand our reach within the licensed sports marketplace. This division serves a highly engaged sports fan and unlocks additional distribution across stadiums, sporting goods and specialty retail and strategic digital channels. With the addition of Converse, which we launched in the second half of the year and is already contributing to top line sales, this portfolio represents more than $130 million in net sales in fiscal 2026, and we see a path to growth to $500 million over time. In contemporary fashion, we're building a portfolio that complements our own brands and strengthens our presence in modern lifestyle categories.

BCBG launched for Fall 2025 is performing well alongside an increase in door counts this year. In January, we signed a new licensing agreement for a French connection to design and distribute women's and men's apparel and select accessories in North America. This addition enhances our contemporary offering and is expected to contribute revenue beginning this year. In terms of our Calvin Klein and Tommy Hilfiger licenses, we've continued to manage these businesses diligently as the license rolls off. In fiscal 2026, they represented approximately $830 million in revenue, and we expect them to generate approximately $360 million in fiscal 2027 before rolling off in fiscal 2028.

Turning to our next priority of enhancing omnichannel. We're on track to return our North American retail segment to profitability in fiscal 2027. Through management changes, reduced store footprint and better merchandising, we strengthened our execution and improved the brand presence. As a result, we further cut operating losses by more than 50% in fiscal 2026. Digital remained a key growth and profit driver. Sales on our own website grew over 30% this year, led by outsized growth on our donnakaran.com. This momentum reinforces the importance of the channel and our ability to meet consumers wherever they shop. Across our marketplace platforms, including Amazon and Zalando, we delivered strong bottom line profitability and top line performance for our go-forward businesses. This was fueled by advertising efficiencies and promotional discipline driving stronger ROIs on reduced expenses.

We'll continue to expand our brand's presence across platforms through new category launches and assortment extensions. At the same time, we're investing in data and AI capabilities, modernizing our enterprise systems and enhancing digital content and consumer insights to drive higher engagement and conversion. Together, these efforts position us to scale profitably while delivering richer brand experience across channels. In our cost structure, we remain actively focused on driving cost savings and efficiencies across the business, including optimizing our supply channel infrastructure.

As we look forward to fiscal 2027 and the expected volume loss tied to the PVH license givebacks, we're implementing further cost reduction to drive profit improvements over time. As we work to enhance productivity and profitability, this will free up resources to invest further in our highest priority growth initiatives. Thus far, we've identified $25 million of cost savings across supply chain, organizational structure as well as discretionary expenses and expect to achieve this on a run rate basis in fiscal 2028. We'll continue to evaluate our cost structure and seek additional areas where we can unlock savings to further align our go-forward model.

Turning to our outlook. As we continue to transform the business, our outlook reflects an improving margin profile on lower revenues in the near term as the remaining PVH licenses roll off. We're focused on driving gross margin expansion, streamlining our cost structure and operating with greater discipline to enhance profitability and efficiency. At the same time, we remain committed to growing our go-forward brands, generating healthy cash flow and remaining a very strong balance sheet and maintaining a very strong balance sheet. As we enter fiscal 2027, we do sell from a position of strength with brand momentum, expanding margins and the flexibility to invest in both ourselves and in strategic opportunities.

For the year, we expect net sales of approximately $2.71 billion, which reflects an approximate $470 million reduction in our expiring Calvin and Tommy businesses. Meanwhile, our go forward business is expected to grow high single digits driven by continued momentum of our own brands. Non-GAAP diluted earnings per share for the year is expected to be between $2 and $2.10. In closing, I want to thank our global teams for their continued hard work and dedication. Their execution, creativity and commitment are what drive our success. I'll now pass the call to Neal who will walk you through the financial results of the fourth quarter and full year as well as our fiscal 2027 outlook.

Thank you, Morris. Net sales for the fourth quarter ended January 31, 2026, were $771 million down 8% compared to $840 million in the same period last year. Relative to our guidance, sales results were negatively impacted by approximately $20 million as we stopped shipments to Saks in December ahead of the bankruptcy filing. Net sales of our wholesale segment was $737 million compared to $799 million in the previous year. We saw healthy increases in our owned brands and our go-forward license portfolio, offset by lower sales from our Calvin Klein and Tommy Hilfiger licensed businesses. .

Net sales of our retail segment was $63 million for the fourth quarter compared to net sales of $56 million in the previous year's fourth quarter. We achieved strong double-digit comp sales in Karl Lagerfeld Paris, DKNY and Donna Karan. Fourth quarter gross margins were 37% compared to 39.5% in the previous year, reflecting the negative impact of tariffs which was the largest quarter impacted for the year, partially offset by a favorable mix shift towards more full-price sales. The wholesale segment's gross margin percentage was 34.8% and compared to 38.1% in the previous year's quarter. The gross margin percentage in our retail segment was 46.3% compared to 48.3% in the prior year's period.

Non-GAAP SG&A expenses were $260 million in the fourth quarter compared to $244 million in the previous year's fourth quarter. The fourth quarter reflects a $17.5 million bad debt expense associated with the Saks bankruptcy, which drove our SG&A expenses to be higher than planned. Non-GAAP net income for the fourth quarter was $13 million or $0.30 per diluted share compared to $58 million or $1.20 per diluted share in the previous year's fourth quarter. Fourth quarter EPS reflects an approximate $0.30 impact from the Saks bankruptcy filing. Excluding this, our fourth quarter earnings would have been ahead of our internal expectations.

Let's review the full fiscal year ended January 31, 2026. Net sales for the full year were $2.96 billion compared to $3.18 billion in the previous year. Net sales of our wholesale segment were $2.87 billion compared to $3.08 billion in the previous year. The decrease is driven primarily by the $254 million decline in our Calvin Klein and Tommy Hilfiger businesses due largely to the exited licenses. These decreases were partially offset by growth of our go-forward owned and licensed brands, particularly our key owned brands, which grew mid-single digits for the year.

Net sales of our retail segment were $186 million, up approximately 12% from last year's $166 million. The increase was driven by our owned digital business particularly donnakaran.com, we also saw strong comparable store sales increases across our Karl Lagerfeld and DKNY retail stores. Gross margins for the full year were 39.4% compared to 40.8% in the previous year. The year-over-year margin decline reflects approximately $65 million of unmitigated impact from tariffs. While gross margins were down to last year, they actualized ahead of expectations driven by a favorable mix shift towards more full-price sales. Gross margins in the wholesale segment were 37.4% compared to 39.4% in the previous year.

Gross margin in the retail segment were 50.1% compared to 50.4% in the prior year. Non-GAAP SG&A expenses for the year were $975 million or 33% of sales compared to $968 million or 30.4% of sales in the previous year. The increase in SG&A as a percentage of sales was driven primarily by the unplanned increase in bad debt expense as a result of the Saks bankruptcy filing. In the second half of the year, we began to see the benefit of our efforts to optimize warehouse capacity and expect this improvement in efficiency to continue into fiscal 2027. We continue our tight review and control over expenses and were in line with our plan, excluding the Saks fair debt expense. We also continue to invest in infrastructure, technology and talent as well as marketing to support long-term growth of our brands.

Non-GAAP net income for the year was $116 million or $2.61 per diluted share compared to $204 million or $4.42 per diluted share in the previous year. Full year non-GAAP earnings per diluted share would have exceeded the high end of our guidance range, excluding the $0.30 impact from the Saks bad debt expense.

Turning to the balance sheet. We strengthened our balance sheet and liquidity position, ending the year with $407 million in cash and more than $900 million in total liquidity, while returning over $50 million to shareholders through share repurchases and a new cash dividend. As a reminder, we initiated our first ever dividend program in December of last year. Inventories remain in good shape down 4% to $460 million from the previous year's $478 million, reflecting our disciplined approach to inventory management. Unit decreases are down high single digits compared to the prior year. Cost variances to the prior year reflects higher unit costs this year and as a result of the new tariffs. Our strong financial position and ability to generate cash provide us with ample optionality and we remain committed to a balanced capital allocation framework.

First and foremost, we will continue to invest in ourselves to organically grow our business for the long term. Second, we will pursue strategic opportunities, including acquisitions as well as new brand licenses. Third, we will continue to return capital to shareholders through opportunistic share repurchases and quarterly dividends.

Turning to our outlook. For the full fiscal year 2027, we expect net sales of approximately $2.71 billion, down 8% to the prior year. This reflects $470 million of lost sales from Calvin Klein and Tommy Hilfiger products, partially offset by the growth of our go-forward portfolio, which we expect to grow high single digits. Non-GAAP net income for fiscal 2027 is expected to be between $88 million and $92 million or between $2 and $2.10 per diluted share. This compares to non-GAAP net income of $116 million or $2.61 per diluted share for fiscal 2026. Full year adjusted EBITDA is expected to be between $158 million and $162 million compared to $192 million in fiscal 2026.

For the first quarter of fiscal 2027, we expect net sales of approximately $530 million compared to $584 million in the first quarter of fiscal 2026. We expect the net loss in the first quarter of between $13 million and $18 million or $0.30 and $0.40 per share. This compares to non-GAAP net income of $8.4 million or $0.19 per diluted share for the first quarter of fiscal 2026. We are expecting increases in our gross margin percentage of approximately 150 basis points. Our SG&A will be impacted by higher marketing spend due to timing in our spring marketing initiatives.

Now let me discuss a few modeling points. First, on tariffs, our guidance reflects tariff rates effective prior to the recent Supreme Court ruling and assumes the most recent 2025 IEFA trade policies. We have not anticipated any changes to tariff policy or refunds in our outlook. In terms of sales cadence, we expect the first half sales decline to be larger than the second half which reflects several new brand licenses that we expect will scale toward the end of this year. On gross margins, we are expecting as much as 300 basis points of gross margin improvement for the year resulting in significantly higher gross margin percentage than where we have historically been. Margins will benefit from our tariff mitigation efforts as we lap the impact of tariffs in the second half of the year.

Furthermore, margins will benefit from the shift in penetration toward our higher-margin owned brands as the more significant portion of the PVH licenses roll off this year. In the first quarter, we expect less margin growth as compared to the balance of the year. As a reminder, our first quarter of last year was not impacted by last year's tariff increases.

Regarding SG&A, we expect expense deleverage for the full year as our newer businesses scale and as we continue to invest in people, technology and marketing spend to support growth, while the top line is impacted by significant loss Calvin Klein and Tommy Hilfiger sales. We expect the largest amount of deleverage in the first quarter as a result of the timing of spring marketing initiatives and anticipate sequential improvement as we move through the year. Meanwhile, we have identified several cost savings initiatives that we expect will result in $25 million in run rate savings in fiscal 2028. We expect net interest income of approximately $2 million for the full year and estimate our tax rate to be 30%. We expect capital expenditures to be approximately $40 million.

Lastly, we have not anticipated any potential share repurchases for the year in our guidance. Our business remains strongly cash generative and despite our expectation for lower earnings versus fiscal 2026, we anticipate we will generate very healthy free cash flows for the year to further enhance our current strong financial position. That concludes my comments. I will now turn the call back to Morris for closing remarks.

Thank you, Neal, and thank you all for joining us today. I'm incredibly proud of our team and the progress we're making as we build some of the best fashion brands in the world. I also want to thank our partners and shareholders for their continued support as we continue to transform G-III and build value for the long term. Operator, we're now ready to take some questions. .

[Operator Instructions] Our first question will come from the line of Bob Drbul with BTIG LLC.

A couple of questions, Morris. On the first one, in terms of, I guess, your visibility on your own brands for this year, in terms of the way that retailers are ordering, your wholesale partners sort of into the fall, I guess, give great visibility into the spring now, but into the fall. Can you just talk us through how you see inventory levels, how you see the order books and really from like the own brand perspective, I think that would follow in, in terms of the marketing investments that you're making, especially what's happening in the first quarter?

Thanks, Bob. Our own brands, as you heard in our presentation and possibly, as you read, we did well last year. Last year, our businesses in our own brands grew high single digits and the pressure on our company is really the exiting brands and not only the scale of the exiting brands, but also the margin retrieval as you exit brands. There's margin pressure that we didn't anticipate to be as strong as it was. The demand for an exiting brand with uncertainty as to what the future is with those brands put pressure on our ability to move product. So we are really comfortable with our own brands. We're garnering additional space as we stated and one brand, we're anticipating at least 400 more points of sale and the other brands is 300.

So we're excited. Our order book anticipate it. And our inventory is very much in line. We're tempering the level of inventory as you have a conscious effort to change your distribution to more full-price business. You're willing to take less risk on inventory levels and protecting some of your premier brands. So you'll find in the future that our inventory levels will be more controlled with the conscious effort in bringing down our level of [ all ] price selling. And that said, growth is coming from outside of the United States for the first time. We're not fully penetrated in areas of the world that have high demand for the product. There's not a nickel's worth of product other than fragrance for Donna Karan. So that brand will show its face throughout the world in the coming months.

And the marketing spend, as you touched, will be fairly aggressive to support our initiative of growing our own brands. We've done well with marketing. We we've gotten awards from media publications for our efforts in Donna Karan and DKNY and Karl Lagerfeld as well, quite honestly. So our team challenged really for the first time in the last 18 or 24 months is really the first time our marketing team has been aggressive on campaigns because of our need to grow our own brands. And it's worked. It's worked incredibly well. They've achieved notoriety. They've achieved success for our company, and thank you to our marketing team.

I guess could I ask a follow-up, just a different question, but can you guys give us an update on the Converse launch, how that's going, what you've learned and sort of the prospects for that this year?

So we took on Converse. We had an old history with Nike. We -- little known fact is that G-III had a studio that developed the Michael Jordan brand as it was coming to market. So we had a partnership with Nike in the early '90s. Maybe it was 1995. I don't recall the date. So -- and we continue to do a little bit of private label with them and through a partnership with the [ Head Ends ] to do kids Converse with -- they have a great relationship with Nike. We're building the brand globally. Converse gave us the right to expand beyond North America. And we read the same thing that you do a little bit of uncertainty and softness maybe in the brand. And that really doesn't apply to us for the moment. Their strategy hasn't -- their strategy for the brand has not really come out yet.

When I say there is, I would go to Nike and ask what the strategy for the brand is because we're -- again, we're sort of the service to the Lord where Nike wants to take the brand is where we need to follow. There are new accounts that we're opening every day. There is an appetite for the brand. It's an amazing brand. And hopefully, Nike supports the growth of the brand. We're doing our part. And as we've shown, when we have control, we're incredible. Where we have less control, we don't rule. We're guided by the licensor. So it's hard to tell you where the brand goes. I can tell you where we could take it if Nike supports it, I think we have an incredible business.

Our next question comes from the line of Victoria Epistolico with KBC.

I just wanted to hit on acquisitions and licensing. As we enter 2026, how are you prioritizing acquisitions versus new licensing opportunities, particularly given the strength in balance sheet and ongoing shift towards these own brands?

So Victoria, I'm not sure we prioritized. We are looking for an amazing acquisition, and we are, at the same time, looking for amazing licenses. Our balance sheet supports our ability of funding a sizable acquisition and our talent pool support and our balance sheet, again, supports our ability of managing through a great license. So I'm not sure that there's an issue and we can do both, which is exactly what we're doing. We've licensed some amazing brands because that was the opportunity at the moment and the appropriate acquisition had not come up. And we've tapped into our competencies, brands and businesses that we can manage easily.

Okay. Great. And then you've spoken about category expansion and things such as fragrance, eyewear home, hospitality. Which these would you say is furthest along in becoming a meaningful revenue contributor?

So if we look at Karl Lagerfeld, you look at hospitality as a key driver in the last, I'd say, the last 18 months and [ Belbuca ] and alongside of that. When you look at DKNY, it's more consumer driven, and we're assigning global licenses where we've signed deals in Latin America. We have a new deal in China. We're expanding into India and that's for a broad range of product. Some will be distributor based and some will be classification-based. So we're -- the highlights for 2 of the brands are hospitality and DKNY, we're not seeing interest in DKNY as hospitality or food and beverage provider but very strong on the consumer side.

Next question will come from the line of [ Min Fan ] with UBS.

This is Mauricio Serna from UBS. I think the registration got confused. Just a couple of questions first. On Donna Karan, great to see the strong growth in last fiscal year, up 40%. Maybe could you tell -- give us a sense of how big the business is right now? And then on the growth outlook, the go-forward business being up high single digits. Could you maybe break that down? Like how much of that is coming from like the key own brands versus growth from the licenses that you've been launching over the last few years?

So the first -- your first question, the size of Donna Karan, we don't disclose the size of the business. But I could tell you in 18 months of doing business, let's go back to when we started Calvin Klein, which grew to be $1.2 billion in sales. We're bigger and further along in 18 months of Donna Karan than we were with Calvin Klein. So I would say we're very happy with the positioning. We're cautious on the distribution, and it's a very scalable business. It's not intended to be a designer. It's not intended to be boutique. It's intended to fill the racks of department stores that we have our greatest competency in and we're going to scale it an added feature that we did not have with Calvin Klein, we have global rights to our own brands. So there's an opportunity throughout the world to expand this brand. So we're in the early stage. You're going to see great percentage increases. And we're at a point where the percentages do make a difference in the future. It's not -- I'm not -- we're not talking about a $10 million initiative that grew 50%.

Yes. And with respect to the second part of your question, we are seeing and anticipating high single-digit growth in the key owned brands and when you look at the total go-forward portfolio, we're also seeing good strong growth. That go-forward portfolio is going to include the key owned brands, it's going to conclude a few other own brands that we have and then, of course, the license portfolio. So we see, in total, high single-digit growth from all of those pieces.

Great. A quick follow-up just on the commentary on gross margin. I think you mentioned 300 basis point expansion for the year. Just I think doing the math on that, I think it implies, based on what you said on EBITDA or EBIT, like -- it implies SG&A dollars. We're going to be up around 3%. I just want to make sure the math on that is correct. And if that's the case, it's going to be up like around maybe like 2% to 3%. What are the drivers behind that SG&A dollar growth?

Yes, I think you've got the math fairly close. The expansion in SG&A going forward is really primarily maintaining the talent pool that we have. We are going to make some additional investments in our infrastructure. We've been on a path of increasing some of our spend on technology with all the new technology that's out there and just continuing to upgrade the systems that we use. So it's really those 3 components that will continue for us to have investment spend. And of course, when you have such a large fall off the top line, it's hard to leverage that or it's certainly not prudent to leverage that in the near term. We will be looking to, as we mentioned on the call, cost savings initiatives. We've not built that into our plan for fiscal '27. We expect that will roll in, in fiscal '28.

And I would now like to hand the conference back over to Morris Goldfarb for any closing remarks.

Thank you all for spending time with us and hearing our story, and we will talk to you next quarter.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Ladies and gentlemen, thank you for standing by. Welcome to G-III Apparel Group Third Quarter Fiscal 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Neal Nackman, Chief Financial Officer. Neal, please go ahead.

Good morning, and thank you for joining us. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guaranteed, and actual results may differ materially from those expressed or implied in forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements.

In addition, during the call, we will refer to non-GAAP net income, non-GAAP net income per diluted share and adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures to GAAP measures in our press release, which is also available on our website.

I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb.

Thank you, Neal, and thank you, everyone, for joining us. We delivered strong profitability in the third quarter despite the impacts of tariffs, with earnings exceeding the high end of our guidance range. This was driven by the strength of our go-forward portfolio, particularly our owned brands, as well as a healthy mix of full-price sales and our mitigation efforts against tariffs.

Our solid year-to-date performance highlights G-III's ability to effectively manage through a dynamic and often challenging marketplace. Since PVH's unexpected decision to end our long-standing licensing partnership, we've demonstrated significant progress in transforming our business model and accelerating our longer-term strategies.

At its peak, the Calvin Klein and Tommy Hilfiger brands represented over $1.5 billion in annual net wholesale sales. And this year, these brands are expected to generate approximately $800 million. As previously mentioned, the PVH sales decline accelerated quicker than originally anticipated.

Despite this decline, our teams replaced more than 70% of the lost sales volume through organic growth of our go-forward owned and licensed portfolio. Our newer brands, like Donna Karan, have enabled us to command greater pricing power while maintaining healthy price elasticity.

Our balance sheet during this period has strengthened, ending the quarter with a net cash position of $174 million. We remain keenly focused on executing our strategic priorities, making disciplined brand investments and positioning our portfolio to capture market share and long-term growth.

Our third quarter performance reflects healthy consumer demand for our brands. Seasonal weather boosted our cold weather categories, which saw a nice pickup in sell-throughs across brands and channels as we move through the quarter. Within wholesale, we saw meaningful gains in women's outerwear with full price retail sales up nearly 20%.

Our marketing investments have driven a significant increase in consumer engagement as seen in the uptick in traffic across our direct-to-consumer business. In digital, we saw traffic lift over 20% across our owned dot-com, which drove substantial growth in conversion rates and overall sales.

As we exited October, trends continued to improve through the Black Friday period, with Europe posting high single-digit growth and North America up double digits compared to last year. Performance across channels indicates that our product offerings continue to align with consumer preferences.

Demand has been steady across brands during the holiday season, supported by full price sell-throughs. Looking ahead, we remain mindful of the global consumer environment and are taking a prudent approach to our outlook for the remainder of the year.

Now let us review our third quarter fiscal 2026 financial results. Net sales for the quarter were $989 million, generally in line with the expectations. Non-GAAP earnings per diluted share were $1.90, $0.37 above the midpoint of our guidance range. Gross margins were 38.6%, outperforming expectations, driven by a healthy mix of our higher-margin owned brands and solid selling into the full price channel.

Units were down year-to-year as our disciplined inventory management kept inventories nearly flat, up just 3% despite tariffs. We remain in the strong financial position, ending the quarter in a net cash position of $174 million after repurchasing approximately $50 million in stock year-to-date.

As we work to maximize the full potential of our globally recognized brands, we're guided by our strategic priorities. Our growth is powered by an exceptional foundation of experienced leadership, world-class merchant capabilities, a diverse product mix, a reliable supply chain and long-standing retail relationships.

Together, these strengths enable us to bring brands to market and scale them across channels with speed. Our strategy centers on driving both near- and long-term growth. Building brand strength remains a core focus, and our strong seasonal marketing and promotional cadence continue to deliver results. We're also prioritizing investments in technology, infrastructure and talent to enhance our business and improve efficiency.

As we look to the final months of the fiscal year, we remain focused on holiday performance and spring selling. We continue to plan our key brands to grow mid-single digits this year. Capturing the long-term potential of our own brands is a top strategic priority. These brands are powerful, sustainable drivers of profitability, delivering higher margin and incremental licensing income.

We're focused on 4 key pillars. First, product and consumer engagement. We're leveraging each brand's unique DNA to deliver differentiated products across every shopping channel. By extending our core assortments and entering new categories, we're delivering growth in the wholesale channel, particularly in North America.

We will continue to build momentum through impactful marketing campaigns, strategic partnerships and innovative collaborations, ensuring that each of our brands remains firmly at the center of its own culture.

Second, driving direct-to-consumer. Complementing our strong wholesale business, we're enhancing our digital capabilities to boost traffic and conversion on our brand sites and many marketplaces. Meanwhile, we continue to evolve our North American retail segment strategy to deliver profitability and continue to optimize our international retail performance.

Third, international expansion. Our owned brands remain highly underpenetrated internationally. Strategic investments and partnerships, including AWWG, position us to capture the substantial long-term growth opportunity.

Fourth, category expansion through licensing. Our partners have helped us extend into additional categories like fragrance, eyewear and home as well as experiential categories such as hospitality, all deepening consumer connections and broadening brand reach. We believe we have many opportunities to monetize as we grow each brand.

To support our key pillars, we continue to invest in marketing to amplify the global visibility of our brands. We see tremendous potential across all growth avenues, including product, channel, category and geographies.

Now I'll share some brand highlights from the third quarter. Donna Karan outperformed expectations, delivering impressive double-digit sales increases in North America. We expect growth of 40% in fiscal 2026, reinforcing the brand's position as a key growth driver within our portfolio. The brand is leveraging its iconic DNA and aspirational luxury positioning to capture strong consumer demand at higher price points, underscoring its enduring appeal and pricing power.

As we continue to develop the brand into a full lifestyle offering, we're excited about the introduction of Donna Karan Weekend, which hit stores in early November. The collection offers a more casual yet refined aesthetic, and we're already seeing great results across channels. Dresses, denim and knit sets are early standouts so far in the fourth quarter.

Donna Karan Jewelry launched in mid-November, exclusively on donnakaran.com, and will roll out to department and specialty stores in spring 2026. The collection already gained buzz with its signature twisted cuff earning the Accessories Council's 2025 award for design excellence, and we've seen strong sell-throughs through the first few weeks.

In the quarter, donnakaran.com outperformed, with traffic up approximately 150% and average order values increasing over 10%, alongside healthy AURs and strong sell-throughs. Now 1.5 years since launch, we're seeing close to 20% of our sales from repeat customers. This growth was led by dresses, footwear and handbags, with particular strength in our best-selling Baldwin handbag.

Wholesale momentum during the quarter was equally impressive. The brand is currently sold in about 1,700 points of sale, and we expect to add roughly 200 more by spring 2026. We're increasing penetration across better department stores with retailers allocating a greater footprint to the brand in new and existing stores. Premium retailers like Saks, Bloomingdale's and Nordstroms have expanded distribution, both online and in-store this fall, reflecting the brand's ability to enter new accounts while maintaining its aspirational brand positioning.

On the marketing front, we launched our Fall 2025 Campaign, Woman to Woman, in early September, featuring a new cast of talent with deep connections to the brand. The campaign resonated strongly, generating approximately 5.6 billion impressions and over $11 million in earned media value.

We carried that momentum into the holiday season with refreshed campaigns, strategic paid media and VIP partnerships aimed at attracting new audiences to shop. Building on the brand's outstanding domestic success, we've been disciplined in our distribution rollout and see significant opportunities to expand across categories and channels, ultimately capturing the long-term global potential.

Karl Lagerfeld delivered another strong quarter, amplified by the success of our global brand initiative starring the iconic Paris Hilton. Our fall/winter 2025 campaign, From Paris with Love, delivered a high-impact global rollout across our key markets, marking one of our strongest media performances to date. This culminated in the standout cultural moment during Paris Fashion Week.

An exclusive late-night event at the Palais de Tokyo, where Paris Hilton took over the DJ booth in a series of custom Karl Lagerfeld looks. The event drew an extraordinary gathering of fashion leaders, celebrities and global influencers. The campaign was supported by a series of high-impact in-store activations across the globe, driving local visibility and reinforcing the campaign's momentum at retail.

Building on this, we rolled out our holiday campaign, From Karl with Love, with activations designed to emphasize storytelling, retail experiences and wider influencer amplifications.

From a brand perspective, we continue to see strong growth in our women's business in North America outperforming. Our global men's business continues to be a key growth catalyst, complementing our women's business and posting close to 20% growth in the quarter. Karl Lagerfeld jeans, currently sold internationally, is resonating with younger consumers and driving incremental growth, with sales up over 30% in the third quarter.

The Studio Collection continues to reinforce its role as the brand's halo with its fashion-forward design, driving strong press and consumer interest across the campaign and gaining presence in key European retailers.

Specifically, in North America, we saw a healthy performance across wholesale and retail, with strong full price selling and AUR increases. With just over 3,200 domestic points of sale in Fall 2025, we expect to add approximately 100 more by Spring, driven by extended assortments and increased footprint. Our North American direct-to-consumer business saw a positive comp sales increases, showing that our refreshed product is resonating across men's and women's.

Internationally, despite a soft macro environment, the brand continued to perform well, supported by disciplined pricing, which drove strong gross margin improvement amid a more promotionally competitive landscape. Our customer activations led directly to improved traffic and performance.

As cooler weather hit, we saw digital traffic accelerate across our own dot-com as well as digital partners, including marketplace. Looking ahead to spring, our collaboration with Paris will continue for a second season, driving high global visibility across key markets.

In our hospitality business, we're looking forward to sharing some news shortly on a new project. With strong global recognition and momentum behind our expansion initiatives, the brand is well positioned to gain share across North America and Europe, while capturing significant untapped opportunity in Asia, setting the stage for sustained long-term growth.

DKNY, our largest brand, was led by healthy full-price sell-throughs in North America across key categories, reinforcing brand relevance. Our North American direct-to-consumer business also showed solid improvement, with positive comp growth across stores and dkny.com, up 20% on higher conversion.

Internationally, we continued to see solid traction. Fall 2025 deliveries and improving sell-throughs helped meet targets despite softer European markets. Europe showed notable progress led by handbags, our top-performing category, with strong full price sell-throughs. Digital performance at DKNY similar to Karl remains robust, driven by growth at Answear and Zalando.

We hosted pop-ups across 8 major cities for the Paola handbag, featuring localized collaborations and digital first activations, which successfully elevated our hero styles and drove reorders in key markets like Spain and Poland. We're expanding our global footprint with a new license partner in China to reposition the brand for growth there.

Marketing momentum is strong. Our Fall 2025 campaign with Hailey Bieber delivered record results, with 7.9 billion impressions and $15.9 million in earned media value. A major Dubai media takeover amplified awareness across global audiences, with a particular emphasis on driving our Middle East business. We focused investments in product and marketing. We are successfully positioning the brand and laying the groundwork for meaningful growth ahead.

Vilebrequin continued to strengthen its global brand presence by expanding premium lifestyle offerings and creating unique experience for its aspirational customers. While retail softness in Europe and Caribbean weighed on results, growth in France helped offset the pressures.

In July, we revealed a partnership with Fiat on the limited edition Fiat Topolino micro car. The collaboration has generated great global coverage. We also advanced our luxury hospitality strategy with an exclusive boutique at the Hotel Christopher in St. Barths and robust double-digit growth at our Cannes flagship and Beach Club.

Partner-operated clubs in Doha and Crete performed well, and upcoming launches in Oman and Miami Beach alongside curated swimwear lifestyle assortments reinforce confidence in long-term global expansion.

Turning to our omnichannel capabilities. We experienced robust digital performance across North America and Europe, further demonstrating that our efforts here are really paying off. We continue to focus on our DTC business performance, highlighted by our North American segment, which remains on track to be close to breakeven in fiscal 2026. Internationally, we see healthy performance across our DTC business, supported by improved full-price selling and strength across our digital ecosystem.

Our retail footprint saw improved productivity and profitability across stores internationally. As we continue to expand this area, we're making targeted investments to sharpen our global go-to-market execution. From strengthening our data capabilities to extending our Shopify platform across brands and regions, we're positioning the business to capture long-term growth.

We're leveraging deeper consumer insights to guide design and merchandising. At the same time, we're elevating our product presentation across owned and partner sites, enhancing imagery, description and video content to deliver a richer consumer experience at higher conversion.

Digital sales in the quarter delivered nearly 20% growth with outside performance by Donna Karan, highlighting the significant value and long-term potential of this channel. This momentum reinforces our ability to meet consumers wherever they shop.

Expanding our portfolio of strategic licenses remains key to our growth strategy. Licensed brands are capital light way to scale and further diversify through complementary brands that offer unique attributes across varying aesthetics, consumer segments, channels and geographies. Our licensed team sports business continues to gain momentum, delivering a solid quarter with sales up 9%.

We're experiencing a strong NFL season supported by strategic activations around key moments with retail partners. Additionally, through our sublicense agreement with Fanatics, we brought timely L.A. Dodger World Series product to market, reinforcing our agility in capturing demand.

This quarter marked the first shipments of Converse apparel across channels, delivering strong results fueled by consumer enthusiasm for the product. As part of Nike, Inc, the partnership reflects our confidence -- their confidence in our expertise, and expands our ability to reach new consumer globally.

Levi's is our largest men's coat brand and continues to post solid growth. Nautica Jeans is scaling distribution, posting a solid quarter, and Halston and Champion are also performing well after launching just over a year ago. BCBG, one of our newest licenses, launched in the fall across approximately 300 points of sale and is performing our initial expectations with high AURs, and we expect to launch an additional 50 Macy's doors this spring.

As we execute the wind down of our PVH licenses, both Tommy Hilfiger and Calvin Klein continued to perform well at retail. We remain committed to supporting our retail partners and delivering what consumers expect from these brands. Our disciplined approach to inventory and focus on full price selling are helping us maximize profitability as we manage the exit. We anticipate that the remaining PVH brand sales will be approximately $400 million in next year's fiscal 2027.

As licenses expire, we're redeploying talent and resources to accelerate growth in our go-forward brands. Thanks to our agile teams and flexible business model, we've already offset a substantial portion of the PVH sales reduction, and are confident in our ability to sustain long-term success.

While the marketplace is full of brands with high potential, only a few operating companies like ours can help them reach it. As we look ahead, we're deliberate in selecting those that align with our portfolio and support our long-term growth trajectory.

In closing, we delivered a strong third quarter, with gross margins and earnings per diluted share far exceeding expectations despite the impact of tariffs. Our consumers continue to respond to newness and fashion, and we're encouraged by the solid trends we've seen throughout the holiday season to date.

Looking ahead, we're updating our fiscal 2026 guidance to take into consideration our third quarter earnings outperformance, combined with the uncertainties around the consumer environment and tariff-related margin pressures. We now expect net sales to be approximately $2.98 billion, and importantly, we're raising our full year non-GAAP earnings per diluted share guidance to $2.80 to $2.90.

I'm incredibly proud of our teams for executing on our priorities and delivering strong profitability amid uncertainty. With a strong balance sheet and a proven track record, we have the flexibility to drive growth, pursue strategic opportunities, including acquisitions, and return capital to shareholders. As part of this strategy, we're proud to introduce our first-ever dividend program.

I'll now pass the call to Neal to discuss our third quarter financial results as well as our fourth quarter and full year fiscal 2026 guidance.

Thank you, Morris. Net sales for the third quarter ended October 31, 2025, were $989 million compared to $1.09 billion in the same period last year, generally in line with our expectations. Net sales of our wholesale segment were $977 million compared to $1.07 billion last year. The decline in sales compared to the prior year is primarily a result of lower sales from Calvin Klein and Tommy Hilfiger license businesses, due largely to several expired licenses, specifically Calvin Klein jeans and sportswear, which we exited at the end of last year.

Net sales of our retail segment were $46 million for the quarter compared to net sales of $42 million in the prior year despite operating less stores. The increase was driven by solid comp sales increases across our North American DKNY and Karl Lagerfeld Paris stores as well as strong sales growth on our Donna Karan website.

Gross margin was 38.6% in the third quarter of fiscal 2026 compared to 39.8% in the previous year's third quarter. The wholesale segment's gross margin was 36.7% compared to 38.4% in last year's comparable quarter. Gross margin declined 170 basis points this year compared to last year as a result of the impact of tariffs.

Gross margins were better than our expectations, driven by a stronger mix of full price sales. Gross margin in our retail segment was 50.8%, down from 52.3% in the prior year. This decline primarily reflects the liquidation of the G.H. Bass branded product which is transitioning to a license arrangement with the Aldo Group beginning January 2026.

Non-GAAP SG&A expenses were similar to the prior year at $258 million compared to $259 million in the previous year. We continue to stay vigilant with our expense management. We have rightsized our warehouse space and continue to prudently invest in people, marketing and technology to position the company for growth. Non-GAAP net income for the third quarter was $83 million or $1.90 per share compared to $116 million or $2.59 per share in the previous year. These results were significantly better than our expectations.

Turning to the balance sheet. Inventory levels remain in good shape. Inventories modestly increased 3% to $547 million at the end of the quarter from last year's $532 million. We continue to focus on disciplined inventory management with units down year-over-year, and our inventory is well positioned to meet holiday demand.

We remain in a strong financial position, ending the quarter in a net cash position of $174 million after repurchasing approximately $50 million worth of shares year-to-date. This compares to a net debt position of $119 million in the same period of the previous year. Our total availability remains very strong at approximately $875 million. Our financial strength provides us flexibility to invest in our business and other strategic opportunities, including acquisitions to drive future growth.

In addition, our Board has approved a new dividend program to further enhance our returns to stockholders. The Board of Directors has declared an initial quarterly cash dividend of $0.10 per share. The company intends to pay dividends quarterly in the future, subject to market conditions and the approval of the Board of Directors.

Turning to guidance. We now expect fiscal year 2026 net sales of approximately $2.98 billion, a decrease of approximately 6% to last year. We continue to expect our key owned brands, DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin to grow at a mid-single-digit rate this year.

Our updated view is that the gross impact of tariffs will amount to approximately $135 million, and we now estimate the unmitigated impact to be approximately $65 million for fiscal 2026. As a reminder, since we are primarily a North American wholesale business, we were limited in our ability to adjust pricing on inventory already sold into retailers for the fall and holiday seasons.

As a result, we are absorbing a larger share of these costs in this fiscal year to remain competitive and protect market share. Looking ahead, as we move through fiscal 2027, we expect gross margins to normalize and ultimately expand as we exit lower-margin licenses, increased penetration of our higher-margin owned brands and implement targeted price increases. Our owned brands, Donna Karan and Karl Lagerfeld, are well positioned to command greater pricing power in the marketplace.

Non-GAAP net income for fiscal 2026 is expected to be between $125 million and $130 million, or diluted earnings per share between $2.80 and $2.90. This compares to non-GAAP net income of $204 million or diluted earnings per share of $4.42 for fiscal 2025. Adjusted EBITDA for fiscal 2026 is expected to be between $208 million and $213 million compared to adjusted EBITDA of $326 million in fiscal 2025.

Let me add some context around modeling. We now expect gross margins for the full fiscal year 2026 to be down approximately 200 basis points. The fourth quarter gross margin decline will reflect the highest penetration and impact from tariff inventory. We expect interest expense to be approximately $1.5 million for the full year, benefiting from the $400 million debt repayment last year.

We expect capital expenditures of approximately $40 million, principally driven by the build-out of shop-in-shops for our new brand launches, leasehold improvements and technology investments. We are estimating a tax rate of approximately 29.5% for fiscal 2026. We have not anticipated any potential share repurchases for the fourth quarter in our guidance.

That concludes my comments. I will now turn the call back to Morris for closing remarks.

Thank you, Neal, and thank you all for joining us today. I'm proud of our team's work this quarter, and I'm confident in G-III's future as a global leader in fashion. I'd also like to thank our entire organization and many partners and all our stakeholders for their support. Operator, we're now ready to take some questions.

[Operator Instructions] And our first question comes from Bob Drbul with BTIG.

I guess can we unpack the gross margin performance a bit more? When you look at the results and you look at the performance and the upside to it, can you just give us some more color around how you did that, sort of the various buckets? And then I guess when you think about the unmitigated $65 million for this year, when you look at next year in gross margin, do you believe you'll be able to fully mitigate the tariff situation? And I guess just be very curious to hear about pricing.

Thanks, Bob. The -- look, I guess the best way to help frame this is I think if you went back to our expectations at the beginning of the year, we would have expected pre-tariffs to have been up somewhere around 50 basis points in terms of gross margin percentage. And that's, again, driven by what we expect will be continued improvement of the mix of our own brands and higher gross margins.

So now if you play back and extract the impact of tariffs, we're probably expecting to be down about 200 basis points, which comes awfully close to about the $65 million impact that we've been referring to. The majority of that gross margin hit for us now looks like it's going to be in the fourth quarter, but we took a sizable hit for that in the third quarter as well.

One of the reasons that we were better than we had expected for the third quarter gross margins is we did extremely well in the full price selling and had -- and really didn't want to take advantage of heavy discounting in the off-price market. So we probably left some of those sales on the table at the moment. The inventory levels are in good shape. We didn't feel we need to push that out at all.

I think in terms of the last part of your question with respect to getting to where we go on gross margins, early to say if we'll capture all. But certainly going into every market week that we'll have prospectively, we're going to know our costs as opposed to this past year, really not knowing the tariff cost that we have to put into our product. So we'll know that upfront.

And our intent will be to put that into price and achieve normal margins for us, which again should reflect higher margins on the owned businesses, weaker margins in the licensed portfolio and overall a mix that continues to show a higher gross margin going forward.

Bob, we've raised our prices to the level that we believe the consumer will expect and accept. And it's working. There are a couple of areas that we need to make some adjustments. We're seeing a little discontent in a couple of areas, and we're adjusting those prices. So we'll source more efficiently. We'll -- as Neal said, our own brands are more productive.

If you look at the -- we just stated in our peak years, we did approximately $1.5 billion with PVH brands that we paid a royalty and advertising charges for it. So we were out of pocket for royalties for north of $150 million on a reasonable year. That money stays in our company for marketing, for margin enhancements and for building, let's say, better product if needed, as needed. So we have opportunities that we did not have before.

We also have with our own brands, a direct-to-consumer possibility that we never had with licensed with PVH, we were -- we never had a site that we could market through. And we never had global distribution. Our own brands afford us the ability of direct-to-consumer, which in itself is better margin business. And as we get it to scale, it's going to make a difference in our company. And the other piece is, for the first time in over a decade, we're seeing daylight in our own bricks model.

We're very close to breakeven, and there's a slim chance we break even or make a small profit this year. But I think we have the formula right, and we're about ready to grow that sector of our -- so opportunities for margin enhancements are absolutely there. We're launching a more important men's initiative. We've hired talent to help us with the growth of men's and new initiatives.

So it's all looking good. It's not a walk in a park, replacing half of your top line in a short period of time is no small feat with the economics we're faced with, with the tariffs that are thrown at us and all the factors that relate to how we do a business. But not want to complain. This is what we're challenged to do, and this is what we will do. So we're highly confident that we can achieve what we say we can.

Great. And if I could just ask a follow-up. Just as you look at next year, I think you talked about the PVH license business being $400 million, and I think you said margins would be -- gross margins would be up next year. Any other sort of preliminary thoughts around the top line or the bottom line goals that you're thinking about as you look to next year?

We've got a whole bunch of thoughts, quite honestly, and we're working toward executing some of them, which are possible. That might be an acquisition. It might be another license. It might be distribution through another channel. Too early to bring them to our investor group. It's all work in progress. We are not sitting by and bringing our business down to a nonproductive scale.

But that said, there is no rush. We have a strong balance sheet, as you see. We're not desperate to sign on another license or acquisition. As we find it, we'll execute it. And for the moment, we're cautiously looking at the right synergistic action that we're likely to find in the coming months.

And our next question will come from Ashley Owens with KeyBanc.

Maybe just to follow up on PVH really quickly. I know you said it's now expected to come down to about $400 million next year. So effectively, another halving of the business declines accelerating quicker than you initially expected. Just be curious how that reshapes the mix and the residual drag into next year. And from your perspective, does this accelerate the time line for reaching a cleaner base? I think you'll still have another chunk of roll-offs at the end of 2026. So would be curious on your thoughts here.

So the thoughts are really kind of mixed. We're not in control of our own destiny. We have partners. On one side, we have less than a great relationship with PVH. We're at the mercy of where the retailer wants to take our business and their business. Fortunately, for us, we're outperforming expectations with our own brands. And if you track PVH's performance with their own brands, it appears from where I sit, they're not achieving what their goals were on taking in their own brands and producing them and servicing the marketplace.

They highlighted the fact that their business in North America is 2/3 underwear. Well, God bless them, let them produce underwear, and we're in the fashion business. So the lanes that we created for fashion with PVH's brands, I believe, are open to ourselves and other fashion providers that they are not going to fill. So the opportunity to expand our own brands or newly acquired or licensed brands is there, I believe, because of PVH's inability to execute on what they thought they would.

Okay. Got it. Maybe just quickly then on owned brands, especially like Donna Karan, just given the information you've provided us, I think you said up 40% this year, but still early in the broader reset that you executed. Would just be curious as to what the priority levers to keep that momentum going into next year are and where the biggest opportunity is to scale from here?

Well, we've achieved -- I don't want to say perfection, but the launch was great. The -- when you launch a brand, you find flaws in what you've created and you go on, you improve. And every quarter, you get margin enhancements, you get better product, you get customers that have tried your product and become repeat customers. What's beautiful about Donna Karan is we're finding even on our digital side that, as I said, we can track our own today.

We're finding over 20% of our customers is -- are return customers. So they're satisfied customers that are supporting the brand not only in a category that they might have bought, but now they'll expand and say where their first acquisition might have been a dress, they'll say, wow, it came in great, fit. I got lots of compliments on it. I'm buying a handbag. And we're getting lots of that. The strength of the business overpoweringly for the moment is the dress side.

We have a dress business that is not only retailing well, but it's retailing well at a much higher price point than our other brands, and that would be Tommy Hilfiger, Calvin Klein, DKNY, Karl Lagerfeld, Donna Karan is at a premium price point turning as well as the lower price point brands that we're marketing.

So we're finding opportunities in consumer acceptance. And as I stated in the script, we've also expanded distribution to pretty good penetration in Dillard's, Nordstrom's, Bloomingdale's, Saks, Neimans, so we're getting a healthier penetration of, call it, more premium department stores.

And the next question comes from Mauricio Serna with UBS.

Yes, I would like to get -- if you could provide a little bit more detail on what has been the performance from the other parts of your business. You've had several licenses that you're lapping the launches this year. Maybe could you talk a little bit about Nautica? And any initial thoughts about what you've seen with Nike and BCBG, that will be very helpful.

So thank you, Mauricio. I'll start with Nautica. We signed a license with ABG for Nautica as we found one might say surprisingly that PVH was taking back Tommy Hilfiger. So we needed a brand that was close in DNA to Tommy. And Nautica is an American spirited brand and colors of Nautica are similar. They're red, white and blue. And we thought as we were exiting categories with Tommy through our PVH license, as we vacated a classification of product, we would be able to market our newly licensed Nautica brand.

So we're doing exactly that. It's growing nicely. It's not easy finding the appropriate space for it. But as it shipped, it's retailing well and the scale of it is beyond what we expected. So we're happy with Nautica. We had a unique opportunity to invest in Halston that gives us long-term ability to own the brand, and we're carefully marketing the brand in the right venues.

I would not say that was a major success on its first effort. Second effort a little bit better, and our third delivery appears to be really well accepted. We'll be in the middle of shipping it soon. We're excited by what we see, and we believe there's an opportunity there. It's not nothing that I would point to of scale today, but it does have a $250 million to $300 million opportunity in our portfolio. So it merits the actions that we're taking.

I can't give you an income statement on that area just yet. I can tell you that it does cost money to build brands. It does cost money to launch brands. And when you make the right decisions, you prosper after the first couple of years of spending. But it is a capital-light means of growing your business. We did not spend very much money on an acquisition. We spent money on talent, samples, shopping, all the good stuff, showroom, but all very manageable.

BCBG, better. BCBG was -- we first shipped it recently with good door distribution. We know what we've got to do to make it better, same as always. We're in over 300 doors very quickly, working well. Go to Converse and Converse through Nike is a little bit unique. It's global. It's got distributors all over the world that we've -- we're working to understand their needs. They're working very hard. The global distributors are working hard to understand how we can make their business better.

It's a wide open field for us with great cooperation from the Converse organization. So we're excited by it, and it further enhances our -- call it, our active business. It's classified somewhat as skate. We don't have a skate initiative other than this, and we're not cannibalizing our own dollars. This is all new to us, and we're excited by where that goes. So -- and there'll be others.

There'll be 1 or 2 other announcements on licenses that are also scalable. We're not signing licenses that we see a potential of $20 million or $30 million. Those are the pieces that we're cleaning up. I guess our measuring tool would be in a 3-year period if a brand doesn't hit over $100 million in sales, it's really -- it shouldn't be on our radar screen. And we also have a private label initiative that we work hard at.

That's spearheaded through our overseas organization that manages to get private label businesses globally. So we're working harder on that than we've ever worked. So we're conscious of the fact of what we need to do to keep the comfortable scale of our business. And the backdrop is if it doesn't work, we'll be profit-driven and not top line driven. We're doing well on managing our business.

We've not focused on headcount reduction. If some of these things don't work, that will be a necessary evil that we'll have to look at closely. But there are opportunities throughout the company. Hope I answered a little bit of what you're looking for, Mauricio.

Yes, yes, definitely was very helpful. If I could just have a quick follow-up for -- on the gross margin. Maybe just looking at the guidance that you gave, I think it implies for fourth quarter like roughly a little bit over 400 basis points margin contraction.

As we think about spring '26 and the initiatives that you're doing on pricing and so forth, should we expect like a pressure more aligned with Q3? Or I would suppose sequentially better than Q4, but just thinking about whether it could be closer to Q3 or still like meaningful pressure.

Yes. Without getting into the specifics of the quarters for next year, I think, Mauricio, if you're interested generally, where we got impacted by tariffs was a little bit in the second quarter, more significantly in the third quarter and the most in the fourth quarter. So essentially, if you reverse those, that's where we expect to get the pickups into next year.

And the last question comes from Dana Telsey with Telsey Advisory.

Morris, as you think about the wholesale channel of distribution, how have the order trends been changing lately, particularly for your own brands like the Donna Karan and the Karl Lagerfeld? And then, Neal, given the gross margin, excluding the tariff, the complexion coming from your own brands, certainly, what I've been seeing in the stores is the good sell-through of Donna Karan and Karl and have the -- whether it's extended sizing, whether it's handbags, the improvement in retail, are any of these potential additive catalysts that are incremental for 2026 and going forward?

Thank you, Dana. The order trends, sometimes you can almost feel it. You feel it in the air. If you walk outside and it's cold, trends are going to be better this time of the year. So I would tell you, we had a few surprises. As you see, our inventory levels are relatively low. There's a different percentage of off-price to regular retail, full-price retail that we have today.

So demand was significantly higher at the full-price channel for us this year than most years. And if you shop the stores, we're very proud of the way our inventory looks -- the retailers that chased product are prospering. The highlights for us were the coat area and the dress area, and it's not just one brand, it's across the broad. All of our brands are doing well. The sell-throughs are higher than they've been historically.

So it's all said with all of what's been thrown at us, I'd say we had an excellent year and still a little time to go, but we're happy with the consumer. We're happy with our retail partners. And our staff has done an amazing job of managing during this period. I boast about it regularly. So if I've said it one too many times here, I apologize, but it's a great team of people that step up when needed, and this is a period of time that stepping up is essential. We've all done it. And thank you, team, if you're listening. And you had another follow-up on that one on this question that I missed, Dana. Did I?

It's about -- when you think about next year, extended sizing, what you've done with Weekend, what you've done with handbags, what you've done with own retail, how do you think of the incrementality of that of your own brands and the opportunity for contribution, whether to top line or to margin?

Well, pretty much all -- if you look at the new-to-market brands, and I would consider Donna Karan new-to-market, it's not even all the new elements or new classifications that we bring. It's the penetration of the old. It's -- you have a period of time which is proof of -- call it, proof of concept. The dresses have to sell before you get door expansion and penetration within the doors that you've had.

So we're in a good mode. All our initiatives with Donna Karan work. So I'll tell you, our dress business will grow. Our sportswear business will grow. Our handbag business will grow. Our footwear business will grow. So there's -- and the Weekend, which we just shipped, we're very excited about, and we believe that the brand will be a shining star within the retail world. With that, we also have a greater penetration internationally, and we haven't touched international for Donna Karan yet.

So we're about to. We're testing some Donna Karan product in the European market. But we're cautiously distributing it and carefully distributing it into a full-price channel distribution. So that's all working. And with that, Karl Lagerfeld, the same way. Karl Lagerfeld has grown somewhat dramatically this year. we have a greater concentration in calendar 2026 on growing the men's side of Karl Lagerfeld in North America.

So there are -- if your question is targeted to organic growth opportunities, every one of our brands has potential to grow organically. That's what we've basically done to mitigate the PVH givebacks. So -- and there's still plenty of room where -- as I said earlier, we're not under pressure to make an acquisition. We're not under pressure to sign another license.

We have these great assets that have a lot of bandwidth, a lot of ability to grow without pressures on margin. Thank you Dana. With that, I thank you all. I wish you all happy holidays, and thank you for your time and your support of our company.

This concludes today's conference call. Thank you for participating, and you may now disconnect.