G-III Apparel Group, LTD.

Good day and thank you for standing by. Welcome to the G3 Apparel Group fourth quarter and full year fiscal 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message as your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Neal Mackman. 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 security laws. Forward-looking statements are not guaranteed, and actual results may differ materially from 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 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, Neil, and thank you, everyone, for joining us. Fiscal 2026 was a pivotal year for G3. I'm proud of the results our teams delivered and the meaningful progress we made advancing our long-term strategy despite a tough environment. As we transitioned out of our Calvin Klein and Tommy Hilfiger businesses, we accelerated the strategic transformation of our portfolio, unlocked new growth opportunities, and strengthened the foundation of G3. 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 SACS 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 Vilbercan, collectively delivered mid-single-digit growth, helping offset the impact of the exited PBH licenses. These brands are growing with improving quality of revenue, higher full-price sell-throughs, and increasing global relevance, a 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 SACS 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 30 cents 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 SACS bankruptcy, which negatively impacted earnings by 30 cents. 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 a 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 own 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 four 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 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, G3 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 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're 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 DonnaKaren.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 the 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 licensed 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 brand's 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 a billion-dollar annual G3 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 touchpoints 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 positive comp sales increases across stores and e-com, fueled by over 20% growth on carl.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 Carl'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 a powerful growth runway for Karl Lagerfeld in capturing over a billion dollars in G3'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 digit comp growth, and higher productivity. Notably, sales on DKNY.com increased approximately 40% for the year, reflecting strong consumer engagement with the collections. In 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 two global campaigns, Spring 2025 with Lila Moss and Fall 2025 with Haley Bieber, significantly elevating brand visibility and cultural relevance. Social engagement rose nearly 300% year over year, with fall campaign generating the strongest social performance in a brand's history. Haley returns for spring 2026, supported by a global media plan. Our marketing-led storytelling translated into results. The Paula commuter tote became our number one 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. Brought our high-impact brand moments, including a landmark Burj Khalifa projection in Dubai and a 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 will open a new Shanghai store this spring. We're also seeing opportunity in markets across Asia Pacific and India through new partnerships. With disciplined execution and a clear strategic focus, we're confident in DKNY's billion dollar G3 net sales opportunity. Filbercan, our 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 offerings. 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 Cannes and partner locations in Doha and Crete, with the addition of a fourth partner, a beach operation in Oman. A new rooftop restaurant in Miami is also set to open in the coming weeks. Looking ahead, our strategy remained focused on premium product with higher AURs, creative collaborations to drive global awareness, and hospitality-led distribution and a boutique placement in incremental brand builders. WilberCAN 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 remain the 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 the 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 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 a 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 DonnaKaren.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 assortments 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 engagements and conversions. 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 maintaining a very strong balance sheet. As we enter fiscal 2027, we do so 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 Neil, who will walk you through the financial results of the fourth quarter and full year, as well as our fiscal 2027 outlook.