G-III Apparel Group, LTD.

Good day. Thank you for standing by. Welcome to the G3 Apparel Group's second quarter fiscal 2026 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host. Neil Nagman, the Company Chief Financial Officer. 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 for diluted share, and adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures two gap 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.

Good morning. Thank you, Neil, and welcome, everyone. In the second quarter, we exceeded our expectations across both net sales and earnings. Net sales benefited from retailers responding to consumer demand for newness and fashion as we transitioned seasons. Sales momentum in the quarter was driven by our go-forward portfolio, specifically our key-owned brands, DKNY, Donna Karan, Karl Lagerfeld, and Vilbercan. Gross margins in the quarter were impacted by higher-than-expected tariff costs, driven primarily by a greater volume of tariffed inventory shipments than initially forecasted. We're actively mitigating these pressures through a combination of vendor participation, selective sourcing shifts, and targeted price increases. In the near term, we're absorbing a portion of these costs to remain competitive and capture market share. Looking ahead, we anticipate gross margins will largely normalize and ultimately expand as we exit licenses, as the penetration of our own brands increases and as we continue to take selected price increases. As we look to the second half of the year, our retail partners are increasingly cautious on their inventory buys in anticipation of tariff increases becoming more pronounced. Additionally, we've seen a disproportionate reduction in open-to-buys specifically for the Calvin Klein and Tommy Hilfiger business. During the transition, we're responsibly exiting these business and staying disciplined in our inventory position based on the increased cost pressures and narrower selling period. In response to the latest tariffs, including those affecting India, we've proactively adjusted our inventory positions, prioritizing margin over sales. Accordingly, fiscal 2026 guidance we provided this morning reflects all of these factors. Now let us review our second quarter fiscal 2026 financial results. Net sales for the quarter were $613 million, well ahead of our guidance. Our GAAP earnings per diluted share were 25 cents, also well above the top end of our guidance range. Inventory levels were up 5% versus last year's, reflecting our planned acceleration of inventory receipts due to tariffs. We remain in a strong financial position, ending the quarter in a net cash position of $286 million after repurchasing $25 million in shares this past quarter, compared to last year's net neutral cash position. Turning to our strategic priorities, we're actively working to maximize the full potential of our globally recognized brands. To drive growth, we've built a robust corporate foundation anchored by an experienced leadership team, world-class merchant capabilities, strength across lifestyle categories, a well-developed supply chain, and long-term relationships with retail partners. This foundation has enabled us to consistently launch and scale brands with speed. To support our long-term strategy, we're streamlining our go-to-market approach, including investments in technology and infrastructure. In North America, we're optimizing network capability and implementing process improvements to drive productivity and reduce costs across materials, labor, and freight. We're consolidating our warehouse network, exiting four facilities, and reducing associated staff by year end, which is expected to generate significant savings. In parallel, we're investing in systems to support product creation all the way through to our speed to market and consumer engagement strategies. As part of our technology transformation, we're advancing digital tools such as 3D design, AI automation, and other innovations to help gain efficiencies. We're further realigning the organization as we transition our business to unlock additional savings in fiscal 2027 and beyond. Capturing the long-term potential of our own brands is one of our top priorities. Owned brands represent an important and sustainable long-term profit driver as they generate higher operating margins and provide an accretive licensing income stream. Our strategy centers on leveraging each brand's iconic DNA to deliver differentiated product to a wide array of consumers in their shopping channel of choice. We are rapidly scaling each brand's full lifestyle product offering by extending existing assortments while expanding into new categories. This has enabled us to unlock accelerated growth across the wholesale channel, particularly in North America. Through our licensing partners, the brands have expanded into complementary categories such as fragrance, eyewear, and home. as well as experiential categories like hospitality, culinary, and refined leisure, all broadening consumer touchpoints and deepening brand affinity. We're investing in a brand's e-commerce presence. Importantly, our own brands remain highly underpenetrated internationally, presenting a significant opportunity for long-term expansion. We are continuing to invest in marketing to amplify our brand's global reach. This year, in addition to Donna Karan and DKNY, we're also investing in Karl Lagerfeld. With an always-on marketing approach, we're focused on top-tier talent with authentic brand resonance, enriched content, and global market activations to connect with new and existing consumers and drive conversions. This will come to life through local influencer programs, pop-up experience, and in-store events, all designed to bring our brands closer to the consumer. We see substantial potential across all growth avenues, including product, channel, categories, and geographies. We're confident in our ability to scale each of our own brands into the largest women's fashion brands over time. I'll now review brand highlights from the second quarter. This year marks four decades since Donna Karan revolutionized the way women dress. The brand's unwavering spirit has transcended time, providing cross-generational women with a daily wardrobe that is effortless, sensual, and timeless. A strategy centers on leveraging the brand's iconic DNA with classic silhouettes, cultured hardware, and sophisticated designs, while infusing it with fresh contemporary interpretation. Its aspirational luxury positioning allows us to establish higher price points and capture premium full price distribution in the US. The brand's AURs and sell-throughs remain the strongest across our portfolio. As a result, Donna Karan has tapped into a white space opportunity, not only within our portfolio, but also in the crowded marketplace. In the second quarter, the brand delivered strong results across its lifestyle offering, led by continuous strength and dresses. Our accessories business is gaining traction with premium handbags commanding AURs upward of $500, with several styles emerging as standouts, including the Baldwin, the Glenwood, and the Amagansett. As we continue to develop the Donna Karan lifestyle, we're expanding into new and existing categories with a current focus on social occasion wear, and now entering more casual offerings through the upcoming launch of our Donna Karan Weekend Collection. DonnaKaran.com is outperforming expectations, driven by engaging content and great product that is boosting conversion and top-line growth. Digital sales are gaining strong traction with affluent neighborhoods, which are emerging as top-performing markets, further reinforcing the brand's aspirational luxury positioning. We're optimizing customer acquisition costs while investing in retention to drive loyalty through compelling products and a seamless shopping experience, ultimately enhancing the customer lifetime value. Turning to marketing, a fall 2025 campaign launched yesterday and directs our focus to five icons who embody the essence of the brand. The campaign, entitled Women to Women, feature an authentic cast that have a rich history with the brand, including Claudia Schiffer, Irina Shayk, and Aman Ham, among others. The fall media plan will roll out across key U.S. markets with outdoor placements, robust digital and social programming, and high-caliber VIP social partnerships to maintain brand aspiration and relevance. In its first 24 hours, the campaign has already exceeded our expectations. Looking ahead to the second half of the year, we look forward to the soft launch of Donna Karan Weekend for Holiday 2025, with a more robust collection spanning an impressive 200 points of sale in Spring 2026. The newest lifestyle line will feature relaxed, sophisticated looks complemented by the addition of casual handbag silhouettes. This brand extension opens up opportunities for further growth in traditional channels as well as new distribution like leisure destination shops. We just signed a licensing agreement for fashion jewelry collection with price points ranging from $125 to $350. As a reminder, Donna Karan is currently distributed in the U.S., where we expect the brand to grow over 40% this year. We see outside global growth potential in fiscal 2027 and beyond. Karl Lagerfeld is building momentum globally, delivering another quarter of strong growth led by North America. In the region, sales grew over 30%, driven by outperformance across the lifestyle offerings with margin expansion. Notably, men's sales grew approximately 20% to last year. For the fall, we expect to add approximately 150 domestic points of sale driven by extended assortments in suit separates, handbags, and footwear, as well as men's sportswear. Additionally, a North American retail business saw high single-digit comp increases driven by traffic and AUR growth. The brand delivers broad-based growth across all channels and product categories, as well as margin expansion, despite a challenging macro backdrop. The wholesale business has accelerated, supported by curated product assortments to better deliver core essentials. We've also seen steady growth in our digital ecosystem. A couple of years ago, we bought our Karl Lagerfeld site in-house, which has facilitated expansion of the product offerings and distribution capabilities. We are further investing in upgrading the platform to drive conversion and capture back-end cost efficiencies. Turning to marketing, on August 27, we unveiled our fall-winter 2025 global brand campaign from Paris with Love, featuring cultural icon Paris Hilton. The campaign is another major investment in the brand, designed for high visibility to drive momentum across each touchpoint of the Karl Lagerfeld universe. Paris Hilton brings her unmistakable charisma to our collection, celebrating confidence, individuality, and attitude qualities that reflect the irreverent spirit and sharp sophistication of Carl himself. The collection highlights studio pieces, structured tailoring, and timeless accessories with the K autograph handbag line in the heart of the campaign. In just one week, the campaign has already garnered over 1.5 billion impressions, driving strong engagements globally. The rollout includes high-impact activations across our key global markets, from an immersive pop-up at Galleries Lafayette in Paris and unmistakable billboards in New York's Times Square and Los Angeles' Sunset Boulevard, to major media features, branded taxis in Las Vegas, and a strong local influencer presence worldwide. Digital storytelling also plays a central role with bold social first activations to connect with new audiences. The momentum will build toward a high profile Paris Fashion Week event with Paris Hilton in the center of an unforgettable late night party as well as store events planned for London, Berlin, Paris, and Munich during each city's fashion week. These efforts further solidify a cultural impact and a global presence. We're capturing further market share in Europe and North America, as well as building out our business in Asia, where today the brand has a small presence. DKNY draws inspiration from the energy and attitude of New York offering a modern wardrobe designed to seamlessly transition from day to night, appealing to a younger consumer seeking contemporary assortments. The brand delivered a solid second quarter led by North America. Out of Wear saw outsized growth with sales nearly doubling. Our North American retail business experienced positive comp sales increases driven by AUR growth, showing that our refreshed product is resonating. Internationally, the brand is gaining traction. In Europe, we experienced nice wholesale expansion across DKNYGs and accessories. We're pleased with the improving sell-through trends despite the challenging consumer environment. In the Middle East, our business is mostly accessories, where we saw solid sell-throughs. This year, we will open three new DKNY monobranded boutiques in the Middle East. We're excited about our fall marketing campaign, launched September 2nd, with global style icon Hailey Bieber. Born in New York, Hailey has an authentic connection and affinity for the brand and comes with a highly engaged global fan base of over 72 million social followers. Rooted in New York street style and redefined through Haley's lens, the collection is timeless, versatile, and effortlessly cool. In just 24 hours, the campaign has already delivered an overwhelmingly positive response, garnering over 2.3 billion impressions and reaching over 22 million users over social media. As we enter the second half of the year, our expanding product assortments, including extended sizing, are well positioned to capture an incremental market share across premier North American department stores. DKNY will roll out a series of global pop-ups and activations to promote its best-selling handbags, which are expected to drive traffic and conversion. We deepened our relationship with the New York Yankees with a limited edition collaboration featuring fashion-forward sports apparel. Drawing inspiration from the Yankees' game day gear, each piece has subtle hints of embroidery, as well as DKNY and Yankee co-branding. This collaboration is an extension of DKNY's strategy to build brand visibility and connect with a broader audience in new ways, while also leveraging our well-developed sports licensing capabilities. Internationally, we're focused on brand expansion through new and existing partners across wholesale, digital, and franchise stores to increase global accessibility and awareness of the brand. We see outsized growth potential for the brand globally. VILPRACAM, possibly the world's most recognized men's swimwear brand, showed solid improvement in the second quarter with positive sales growth this summer season, driven by Europe and the Caribbean. Our flagship store in Cannes, where we also opened our first-ever beach club, has become the most productive store in our fleet. Several of our other stores are breaking all-time weekly records. To celebrate the start of this summer season in style, we teamed up with Fiat to create the Fiat Topolino Bilberkang Collection edition, which sold out. The special version of the most coveted microcar is a celebration of style, spontaneity, and that timeless sensation of never-ending summer by the sea, and a fabulous example of the brand's lifestyle reach. Vilperkamp Beach Clubs further extend the brand's lifestyle offerings, seamlessly blending beach culture elevated culinary experiences, and refined leisure. After launching our first-ever beach club in Cannes over two years ago, we've perfected the beach club concept and developed a successful license model. Through a licensed partner, we opened our second beach club at the St. Regis in Doha, which is doing well. This summer, a third beach club launched in Crete. bringing Riviera charm and radiant sophistication to one of the Mediterranean's most exclusive resorts, the Domes El Oanda. We have two more exciting launches in the pipeline this year in Miami and Oman. Coming out of a strong summer season, we see many more opportunities to further drive the business in the summer of 2026 and beyond. with significant global potential for the brand over the long term. Investing in and expanding our complementary portfolio of licensed brands continues to be a key driver of our long-term strategy. We take a thoughtful approach to partnering with brands, ensuring that each new addition complements our existing portfolio while offering unique propositions that strengthen our business. Licensed brands are also a capital light way to grow and leverage our powerful corporate foundation. A team sports business is growing with the expanded rights for several of our major sports league licenses. This business historically limited us to just outerwear. With our newly negotiated renewals, we'll expand our offerings to include activewear and athleisure as well as kits. We have several other exciting initiatives in the pipeline for next year. Nautica, Halston, and Champion, which launched last year, delivered solid results in the second quarter. Our newest licenses for Converse and BCBG are just hitting stores, and we're excited to see the product building memento. BCBG launched here in North America with over 300 points of sale and is doing well. Converse also accesses a differentiated consumer and distribution network where our fashion brands have little or no presence. This includes big box, sports specialty, and sporting goods stores, as well as internationally and in Western Europe and through the brand's global network, Converse Stores. For North America, our launch spans across a rapidly growing wholesale business in addition to existing Converse brick and mortar online stores and online stores. Internationally, we've partnered with Converse partners throughout Europe, Latin America, and Southeast Asia, enabling us to service both Converse stores as well as wholesale partners in those regions. Launch is already exceeding our expectations. Looking ahead to fiscal 2027, we're proactively preparing for the expiration of several key PBH licenses, including Calvin Klein Outerwear and athleisure, and Tommy Hilfiger Outerwear, Sportswear, and Athleisure. At peak, we built Calvin Klein and Tommy Hilfiger into $1.5 billion business in reported wholesale sales. After this year, following the expiration of the categories that I just mentioned, we expect remaining PBH sales to represent approximately $400 million in fiscal 2027. As PVH transitions these categories to themselves or new licensees, we strongly believe this will create a meaningful product void in the market, which we see as a strategic opportunity to capture additional market share while continuing to deepen our partnerships with retailers. Our own brands, along with our growing license portfolio, will help offset lost sales from the PVH brands. With a solid balance sheet, we're poised to unlock our global growth potential and pursue future license and acquisition opportunities aligned with our long-term growth strategy. We're focused on enhancing our omnichannel capabilities by improving our North American retail segment store operations and strengthening our digital ecosystem. In North America, we've made significant progress in our turnaround efforts. We remain on track to almost break even this year, eliminating approximately $10 million in operating losses. On the digital front, in the second quarter our global digital business was up mid-single digits. As our digital business continues to expand, we're strategically investing in our team technology and processes to enhance and streamline our global go-to-market capabilities. We remain focused on delivering a more robust and visually compelling product catalog across our owned and third-party partner sites. By elevating the quality of imagery, descriptors, and video content, we aim to provide an enriched consumer experience that drives conversion. Our owned websites delivered strong double-digit growth this quarter, underscoring the significant value and long-term potential of the channel. This momentum further enables consumers to engage with our brand seamlessly wherever they choose to shop. In closing, we delivered solid second quarter results as we executed on our strategic priorities. Looking ahead, we provided fiscal 2026 guidance to reflect the current macro environment, a more cautious outlook from our retail partners that affected most of our portfolio, especially Calvin Klein and Tommy Hilfiger ahead of the transition, as well as the impact of tariffs on our top and bottom lines. We now expect net sales of approximately $3.02 billion and non-GAAP diluted earnings per share between $2.55 and $2.75. With a clear strategic path, we're confident in our ability to unlock the full potential of our go-forward portfolio of globally recognized brands. while successfully navigating a difficult environment. A strong balance sheet and dynamic business model provides flexibility to invest in our brands as well as pursue strategic opportunities. We will also consider opportunistically returning capital to our shareholders through stock repurchases. I'm incredibly excited about the transformation journey we're on. driven by our commitment to delivering long-term growth and shareholder value. I'll now pass the call to Neil, who will walk through the financial results for the second quarter and provide guidance for the third and full year of 2026.