Q4 2025 G-III Apparel Group Ltd Earnings Call
Thank you.
Speaker Change: Good day and thank you for standing by. Welcome to the G-III Apparel Group 4th quarter and full fiscal year 2025 earnings call. At this time, offer participants are in a listen only mode. After the speaker's presentation, they'll be a question and answer session. To ask the question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.
Speaker Change: 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.
Speaker Change: I will now turn the call over to our chairman and Chief Executive Officer Morris Goldfarb.
Morris Goldfarb: Thank you Neil and thank you everyone for joining us.
Speaker Change: Good morning.
Speaker Change: As noted in our press release.
Speaker Change: Outstanding fourth quarter results outperformed expectations.
Speaker Change: For the year, we brought to market compelling product driving remarkable topline growth of our own and new launches our own brands.
Speaker Change: Our new launches, which more than offset anticipated net sales declines of $188 million for the Calvin Klein and Tommy Hilfiger businesses and $40 million for the guess brand exits.
Speaker Change: Our world class teams have consistently executed and delivered bottom line growth and record non-GAAP earnings per share of $4 42.
Speaker Change: Fiscal 2025, an increase of 9% over last year exceeding our forecast.
Speaker Change: These results are in light of what was and continues to be a very challenging operating environment I want to recognize.
Speaker Change: <unk> is this achievement and thank our global teams for their efforts.
Speaker Change: Touching on highlights from the year.
Speaker Change: We powered global growth with annual net sales increasing two 7%.
Speaker Change: <unk> three <unk>, one 8 billion driven by over 20% growth of our key owned brands.
Speaker Change: And why Karl Lagerfeld, Donna Karan and BELBUCA.
Speaker Change: While expanding gross margins as well.
Speaker Change: Second our Calvin Klein and Tommy Hilfiger businesses now collectively represent approximately 34% of our total sales down from over 50% two years ago, and we expect a further decline to approximately 25% by the end of fiscal 2026.
Speaker Change: Third we brought to market for new brands, which contributed a sizable lead to our top line growth. Our Donna Karan relaunch was extremely successful I'll pass outpacing our internal expectations and delivering strong profitability with high AUR.
Speaker Change: Sell throughs.
Speaker Change: Our launches of non ACA, Austin and champion Outerwear also performed well for their first year and together. These four launches represent a significant growth opportunity.
Speaker Change: Fourth our retail segment turnaround in North America is working as we cut our losses in half.
Speaker Change: Fifth.
Speaker Change: Our approximate 20% investment in all we were group or AWD WG, we will accelerate our international growth.
Speaker Change: WWE <unk> is the premier platform for brands generating over $650 million in revenues across 3500 points of sale and over 86 countries.
Speaker Change: They are owners of iconic European brands Hackett.
Speaker Change: Gains in fashion outlet and.
Speaker Change: And manage the Iberian business for PVH.
Speaker Change: AWD WG will expand DKNY, Donna Karan and Karl Lagerfeld across Spain, and Portugal, while we work to build their brands in North America.
Speaker Change: Lastly, we made sizable investments in marketing to drive growth of DKNY and Donna Karan as evidenced in the strong sales and earnings for the two brands as well as technology and talent to enhanced operational capabilities.
Speaker Change: Now, let US review the progress we've made on our strategic priorities.
Speaker Change: Number one is drive growth of our own brands, our top priority is driving the growth of our own brands owned brands now represent just over half of our total net sales.
Speaker Change: With full control over design production and global distribution and marketing. These brands are sustainable long term profit driver generating higher operating margins and providing an accretive licensing income stream.
Speaker Change: With only 20% of our net sales generated outside of the United States, We see a tremendous long term opportunity to capture market share globally as we work to unlock our brands' full potential.
Speaker Change: I also want to expand on the licensing income that our owned brands generate we licensed or owned brands to best in class partners with expertise in specific categories such as fragrance.
Speaker Change: Mens home kids optical jewelry and watches as well as unique experiential categories like luxury beach clubs hotels and residences.
Speaker Change: And return G III earns a highly accretive licensing income stream.
<unk> majority of which was directly to our bottom line.
Speaker Change: This strategy expands our brand's global reach drives top line sales and even further bolsters profitability.
Speaker Change: This year, our own brands generated over $80 million and licensing royalty income a 10% increase from last year.
Speaker Change: Now, let me walk you through highlights from the fourth quarter and full year.
Speaker Change: Donna Karan fiscal 2025, Mark the epic re launch of our iconic Donna Karan brand as we develop a comprehensive lifestyle collection and expanded distribution across Premier North American Department stores.
We identified a significant opportunity within the aspirational luxury segment strategically positioning the brand at higher AUR is resulting in robust sell throughs and making it our most profitable launch to date.
Speaker Change: The brand's return was further amplified by our award winning marketing campaigns, which captivated global audiences and garnered substantial median celebrity attention.
Speaker Change: For spring 2025, our marketing campaign unveiled supermodel, Kate Moss of fashion and cultural icon, who.
Speaker Change: Who is timeless allergan perfectly embodies the essence of Donna Karan.
Speaker Change: Yes.
Speaker Change: Looking ahead to the coming year, we will continue building the brand in North America by first the retail footprint.
Speaker Change: Following a remarkable success in fiscal 2025, our retail partners are expanding floor space.
Speaker Change: We concluded the year with over 500 points of sale and anticipate exceeding <unk> hundred by spring 2025 with further expansion planned for the fall.
Speaker Change: Additionally, the brand performed well on our retail partners sites and our own Donna Karan Dot com, which should drive a nice sales lift this coming year.
Speaker Change: Second lifestyle integration.
Speaker Change: Our goal is to address our consumer for more occasions in her life.
Speaker Change: This year, we're enhancing our social occasion, we're focusing on dresses and building our footwear and handbag collections.
Speaker Change: We will further emphasize these categories through targeted marketing efforts and see additional opportunities and casual wear.
Speaker Change: Third category diversification.
Speaker Change: We are broadening our aspirational appeal and global reach through licensed partnerships.
Speaker Change: Donna Karan's iconic cashmere missed fragrance is celebrating its <unk> anniversary and remains a top selling fragrance in North America.
Speaker Change: Building on this success into perfume.
Speaker Change: Fragrance partner is unveiling a new scent.
Speaker Change: We are also excited to launch a jewelry line with our partner this fall with the success of our re launch and brand building efforts, we expect more licensing opportunities to quickly file.
Speaker Change: Additionally, as we build.
Speaker Change: As we build out a comprehensive collection of the brand here in North America, we will look to expand globally beginning in fiscal 2027.
Speaker Change: We believe Donna Karan has over a $1 billion in annual reported net sales potential.
Speaker Change: DKNY had an exceptional year.
Speaker Change: Achieving mid teen growth led by strong performance in North America.
Speaker Change: I will touch on a few highlights in the region.
Speaker Change: We broadened our DKNY jeans performance and sportswear offerings, which were well received by consumers driving market share.
Speaker Change: <unk> share gains and contributing to the over 1000 points of sale added this year.
Speaker Change: These three categories combined grew over 50% to last year.
Speaker Change: Our direct to consumer business also showed sequential improvement with stores and dotcom delivering double digit comp sales growth and improved productivity.
Speaker Change: The DKNY brand is supported by a comprehensive lifestyle offering.
Speaker Change: Fragrance partner launched the new DKNY $24 seven fragrance this year driving strong awareness and consumer engagement globally.
Speaker Change: Internationally, we launched brand building Activations across Premier Department stores in London, Madrid, and Milan.
Speaker Change: <unk> brand visibility.
Speaker Change: In China, we closed all our DKNY stores to eliminate operational losses.
Speaker Change: Rand remains available digitally while we evaluate and redefine our go forward strategy in this key market.
Speaker Change: Our increased marketing investments drove powerful brand awareness and engagement globally.
Speaker Change: We leverage storytelling tied to New York city to enhance the brands cultural relevance and deepen our connection with consumers.
We're excited to have Leila Moss as the new face of the brand for spring 2025.
Speaker Change: Keeping us.
Speaker Change: Helping us reach a younger fashion forward and socially connected audience.
Speaker Change: We expect growth in fiscal 2026 to be powered by a few key drivers.
Speaker Change: First in North America, we expect to continue taking market share as we extend our category offerings and see significant opportunity in outerwear as well as further growth in jeans dresses career, where and accessories, resulting in over 400 new points of sale. This spring.
Speaker Change: With further expansion planned for fall 2025.
Speaker Change: Second internationally, the brand's global growth potential remains largely untapped.
Speaker Change: Our marketing efforts along with European events have created additional brand recognition and demand.
Speaker Change: Premier Department stores in Europe, we're looking to expand lifestyle product assortments.
Speaker Change: Providing international consumer a fuller brand experience.
Speaker Change: We are just starting to see the benefits of our AWD WG partnership and expect to gain traction in fiscal 2025.
Speaker Change: We also see growth in other key international partners.
Speaker Change: With assortment centered around handbags, and footwear and longer term opportunities in Asia Pacific.
Speaker Change: In fiscal 2025, the brand delivered approximately $675 million in reported net sales, including our licensees global retail sales were over $2 4 billion.
In fiscal 2026, DKNY is expected to grow double digits, and we see over a $1 billion in annual reported net sales potential over the mid term.
Speaker Change: Karl Lagerfeld had an outstanding year, increasing over 20% to last year.
Speaker Change: The strong performance was fueled by outsized growth in North America, which grew approximately 35% as we extended our lifestyle product assortment with the launch of suit separates.
Speaker Change: And enhancements of our sportswear and dress categories.
Speaker Change: Contributing to the nearly 600 new points of sale this year.
Speaker Change: We did well increasing our digital penetration.
Speaker Change: We saw exceptional strength in handbags and accessories.
Speaker Change: Our north American direct to consumer business showed solid improvement with positive comp sales growth for stores and E com as well as increased productivity productivity.
Speaker Change: Internationally the brand generated high single digit sales growth as we extended our reach by building our aspirational offering drawing on the brand's iconic DNA to engage consumers.
Speaker Change: Our brand building experience has resonated with global audience.
Speaker Change: Elevating our position and aspirational luxury.
Speaker Change: We strengthened our omnichannel presence optimizing our retail store base in Europe, while driving continued momentum in our digital business with solid growth for the holiday season, as we expanded the brand pure play platforms.
Speaker Change: And wholesale growth was driven by our key European accounts as well as distributors in markets like Eastern Europe, and the middle East as well as our new Latin American distributor, who opened five new stores.
Speaker Change: We continue to develop Karl lagerfeld into a full lifestyle brand our men's business is gaining traction complementing our women's offering and now accounts for over 15% of the global brand sales this year.
Speaker Change: Further the power of the Karl Lagerfeld name has enabled us to extend into additional categories as well as the unique experiential licenses with partners. Currently the brand has a luxury hotel in Macau and Villa is being built in Marburg.
Speaker Change: Looking ahead to fiscal 2026 in North America, we will build on our momentum and expand within each category.
Speaker Change: Internationally, we see additional wholesale distribution opportunities with.
Speaker Change: Growth in Western Europe supported by AWS G in Latin America, with our partner opening six new stores.
Speaker Change: In fiscal 2025.
Speaker Change: The brand delivered approximately $580 million in reported net sales and including our licensees global retail to consumers.
Speaker Change: Over one 4 billion.
Speaker Change: In fiscal 2026, Karl Lagerfeld is expected to grow double digits, and we see over a $1 billion.
Speaker Change: Annual net sales potential over the long term.
Speaker Change: <unk> our status swimwear brand achieved solid results, despite a tough year that impacted key markets.
Speaker Change: The brand, which caters to an aspirational consumer continues to demonstrate strong global awareness and engagement.
Speaker Change: Our enhancing its status appeal through lifestyle product as we increase the penetration of premium products with higher AUR and launched several creative collaborations throughout the year.
Speaker Change: Further extending extending the brand's lifestyle appeal, we expanded into beach clubs and premium seat size vacation destinations.
Speaker Change: Our company owned Beach club and Con is performing well in its second year delivering over 20% growth since launch validating the success concept.
<unk> concept, we created and its support and our brand positioning and status.
Speaker Change: Our first franchisee club.
Speaker Change: Opened last September at the St Regis in Delaware.
Speaker Change: Performing well and our first group rooftop pool restaurant and bar will soon open in Miami.
Speaker Change: Moving forward, we will continue to broaden our lifestyle product assortment to extend our consumer reach.
Speaker Change: We are also rolling out our specialized training program for our sales associates to provide in depth brand training, which is expected to improve conversion and lift sales.
Speaker Change: We expect to double the business over time.
Speaker Change: Our next strategic priorities to build out our complementary portfolio of licensed brands.
Speaker Change: In addition to our own brands licensed assets are a key component of our go forward strategy as they are capital light.
Speaker Change: Capital light way to grow each brand offers unique attributes that diversify our portfolio across product aesthetic distribution channel and consumer segment.
Speaker Change: For example.
Speaker Change: Our sports licensing business and now Comverse.
Speaker Change: Targeted differentiated consumer and distribution network, including Big box sports specialty and sporting goods stores, where we have little to no presence and our fashion brands, we will seek significant presentation.
Speaker Change: Penetration.
Speaker Change: We've built a powerful corporate platform that enables us to bring brands to market in an efficient and scalable manner.
Speaker Change: This corporate platform consists of our well developed sourcing and supply chain infrastructure.
Speaker Change: Merchant expertise in product development, and our experienced senior leadership team, who have a proven track record of growing high potential brands into significant businesses.
Speaker Change: We launched three new licenses in fiscal 2025, which contributed nicely to our top line sales for the year.
Speaker Change: We launched nautica genes in spring 2024, and then the fall, we launched Austin as well as champion outerwear.
Speaker Change: All performing well for their first year. We're building on these brands early momentum with expanded distribution and product offerings.
Speaker Change: Our newly signed licenses with Comverse NBC BG will launch in fall 2025.
Speaker Change: Product is well underway and the brand's first marketing shows strong early appetite and a growing order book.
Speaker Change: Our license team business.
Speaker Change: Has strong double digit growth. This year, we expanded the rights of our NFL and MLB licenses.
Speaker Change: Which will support double digit growth next year.
Speaker Change: On December 31st.
Speaker Change: Our PVH licenses for Calvin Klein jeans, and sportswear expired.
These two licenses represented approximately $175 million of our total revenue in fiscal 2025.
Speaker Change: Looking ahead to fiscal 2026 and beyond we are committed to maximizing sell throughs in profitability for Calvin Klein and Tommy Hilfiger.
Speaker Change: Further as our PVH licenses continue to expire we anticipate this will create a significant product void for our retailers. We believe that our long established credibility and successful execution of retail positions us as the vendor of choice to fill the gap.
Speaker Change: Thereby capturing market share and strengthening our go forward brands positioning in North America.
Speaker Change: Turning to our next strategic priority of enhancing our omni channel capabilities.
Speaker Change: In North America, we delivered on our retail segment turnaround, which included management changes, reducing our store footprint and re basing our merchandising strategy to present, a better brand experience.
Speaker Change: We cut losses in half.
Adding over $15 million to our bottom line with further improvement expected in fiscal 2026.
Speaker Change: We've invested in infrastructure to support our digital ecosystem, we made upgrades to our own brands websites to enhance consumer experience improved site performance and increase conversion.
Sales from our own digital sites grew over 20% this year.
Speaker Change: We strengthened our brands presence across retailer websites and expanded pure play partnerships with Amazon in Orlando among others.
Speaker Change: We expect a nice lift to digital sales in fiscal 2026, as we as we further capture market share across these channels and platforms.
Speaker Change: As we look ahead to fiscal 2026 and beyond we plan to invest in technology and infrastructure to support our long term growth.
Speaker Change: We also expect to gain efficiencies from our operational improvements spin.
Speaker Change: Specifically, we are investing in systems to increased supply chain transparency.
Speaker Change: Group digital technologies for our Omnichannel business.
Speaker Change: And leverage AI tools to streamline to streamline operations, while phasing out less useful technology.
And on the efficiency front last year, we focused on realigning our organization to better serve our future business as we transition out of the Calvin and Tommy.
Speaker Change: Hilfiger brands.
Speaker Change: We're streamlining our supply chain infrastructure to optimize our logistical flows and by the end of fiscal 2026, we will have exited four warehouse facilities.
Speaker Change: Is one part of our strategy to ensure that we have a dynamic warehousing network to maximize capacity utilization as we also emphasize a direct to consumer capabilities.
Speaker Change: In conclusion.
Speaker Change: Fiscal 2025 was an incredible year.
Speaker Change: Marked by a robust top and bottom line growth driven by the progress made on our strategic initiatives.
Speaker Change: Looking ahead to 2026, while we expect the environment to remain unpredictable I am confident in our ability to successfully navigate through challenges as we've done in the past.
Speaker Change: Accordingly, we expect fiscal 2026 net sales of approximately $3, one 4 billion with sales down approximately 1% compared to 2025.
Speaker Change: We're confident in the strong underlying growth of our go forward brands.
Speaker Change: This past year delivered $2 $1 billion in revenues and is expected to reach over $5 billion in annual net sales over the long term.
Speaker Change: We expect non-GAAP diluted earnings per share between $4 15.
Speaker Change: The $4 25.
We will continue to market our brands, while making additional investments in technology and infrastructure to drive future growth without transforming business model.
Speaker Change: Our strong balance sheet and credit profile provides flexibility to make strategic investments to fuel growth.
Speaker Change: Our investments in AWD WG give us further optionality to expand ownership over time from existing shareholders.
Speaker Change: We will also consider opportunistically returning capital to shareholders through stock repurchases.
Speaker Change: <unk> III is undergoing an incredible transformation and we're committed to delivering long term growth and shareholder value.
Speaker Change: I'll now pass the call to Neil who will walk you through the financial results for fiscal 2025 and provide guidance for the first quarter and full year 2026.
Neil: Thank you Morris net sales for the fourth quarter ended January 31, 2025, $840 million up 10% compared to $765 million in the same period last year.
Speaker Change: Net sales of our wholesale segment were $799 million.
Neil: Compared to $729 million in the previous year.
Neil: We had good sales increases in our owned brands and our go forward license portfolio.
Neil: Net sales of our retail segment were $56 million for the fourth quarter compared to net sales of $51 million in the previous year's fourth quarter.
Our gross margin percentage was 39, 5% in the fourth quarter of fiscal 2025 compared to 36, 9% in the previous period.
Neil: The wholesale segment gross margin percentage was 38, 1% compared to 35, 6% in the previous year's quarter.
Neil: Gross margin percentage in the current year's period was positively impacted by the higher penetration and performance of our owned brands compared to last year's fourth quarter.
Neil: Additionally, sales of our licensed portfolio. So a significant improvement in gross margin rate, primarily driven by a more favorable outerwear performance.
Neil: The gross margin percentage in our retail operations segment was 48, 3% compared to 44, 2% a significant improvement driven by our merchandising and execution initiatives as part of our retail segment turnaround strategy.
Neil: non-GAAP SG&A expenses were $244 million compared to $219 million in the previous year's quarter.
Neil: This year's increases are partially correlated to the 10% sales increase in the quarter as well as the planned investments in marketing technology and talent that we have discussed throughout the year.
Neil: In addition, we recorded a $6 million increase to our bad debt reserve in the quarter.
Neil: non-GAAP net income for the fourth quarter was $58 million or $1 27 per diluted share compared to $36 million or <unk> 76 per diluted share in the previous year's quarter.
Neil: This is driven by higher sales and improvements in gross margins.
Neil: Now, let's review results for the full fiscal year ended January 31 2025.
Neil: Net sales for the fiscal year 2025, with $3, one 8 billion in.
Neil: An increase of two 7% from $3 1 billion in fiscal 2024 led by an over 20% growth of our key owned fashion brands DKNY, Donna Karan Karl Lagerfeld, <unk> as well as new launches the nautical genes halston and champion outerwear.
Neil: This growth was offset by approximately $188 million or 15% decrease in the Calvin Klein and Tommy Hilfiger brands.
Neil: Net sales of our wholesale operations segment increased to $3 8 billion or two 5% from $3 1 billion.
Neil: Net sales of our retail operations segment for the year were $166 million compared to the previous year of $148 million.
Neil: We experienced strong double digit comparable store sales growth in our DKNY and Karl Lagerfeld stores.
Neil: Full fiscal year 2025, gross margin percentage expanded approximately 70 basis points to 48% compared to 41% from the prior year.
Neil: Wholesale segment gross margin percentage was 39, 4% compared to 38, 9%.
Neil: The gross margin percentage in the current period was positively impacted by greater sales penetration of our higher margin owned brands as well as product mix.
Neil: The gross margin percentage in our retail operations segment was 54% compared to 48, 1% in the prior year.
Neil: This is a result of merchandising changes.
Neil: non-GAAP SG&A expenses for the year with $968 million.
Neil: Compared to $917 million in the previous year.
Neil: The full year SG&A as a percentage of sales was 34% compared to 29, 6%.
Neil: This increase in SG&A is associated with the planned higher investments and expenses, primarily associated with the marketing to Donna Karan and DKNY and the expansion of our operational capabilities to talent and technology investments.
Neil: Set by a decrease in royalty advertising expenses associated with our decrease in license revenue.
Neil: Full year non-GAAP net income was $204 million compared to $190 million or $4 42 per diluted share up 9% to the previous year's $4 <unk> per diluted share.
Neil: The increase was driven by the expansion of our gross margin rate as well as interest expense savings generated from the early retirement of the $400 million senior secured secured notes offset by the investments in SG&A I just outlined.
Neil: Turning to the balance sheet, we ended the year in a solid position with respect to our inventory levels inventory decreased approximately 8% to $478 million at the end of the year from last year's $520 million.
Neil: Inventory levels are well aligned to support future sales.
Neil: We ended the year with an improved net cash position of approximately $175 million.
Neil: Compared to a net cash position of $90 million.
Neil: In the previous year.
Neil: During the fiscal year 2025, we paid down $400 million in senior secured notes and repurchased $60 million of our own shares.
Neil: Only about $100 million in strategic.
Neil: Strategic investments led by our AWD WG investment.
Neil: We believe that our healthy balance sheet and strong credit profile provide us the financial flexibility to invest in our future growth take advantage of strategic opportunities in the marketplace and Opportunistically return capital to shareholders.
Neil: As for our guidance for fiscal year 2026, our key owned brands DKNY, Donna Donna Karan Karl Lagerfeld, and silver Con are expected to continue to grow at a double digit rate.
The growth in these key owned brands along with the rest of our global portfolio were almost entirely offset the declines of the Calvin Klein jeans, and sportswear licenses that expired December 31 2024.
Neil: Accordingly.
Neil: Full fiscal year 2026, we expect net sales of $3 1 million a decrease of approximately 1%.
On a non-GAAP basis, we expect net income for fiscal 2026 of between $192 million and $197 million or between $4 15, and $4 25 per diluted share.
Neil: This compares to non-GAAP net income of $204 million or.
Neil: A $4 42 per diluted share for fiscal 2025.
Neil: Full year fiscal 2026, adjusted EBITDA is expected to be between 310 and $315 million compared to $326 million in the previous year.
Neil: For the first quarter of fiscal year 2026, we expect net sales of approximately $580 million compared to $610 million in the same period of fiscal 2025.
Neil: We expect a non-GAAP net income for the first quarter of fiscal 2026 to be between $2 $7 million or between <unk> to <unk> 15 per diluted share.
Neil: This compares to non-GAAP net income of $5 8 million was <unk> 12 per diluted share for the first quarter of fiscal 2025.
Neil: Let me discuss a few key points and modeling related to our guidance.
Neil: Regarding the recently completed 20% China tariffs, we believe we can mitigate the vast majority of the impact our longstanding and important relationships with our manufacturing partners enabled us to negotiate partial cost offsets.
Neil: More a large portion of our product sourced from China is outerwear, which has higher AUR.
Neil: We believe we are more or less <unk> to lift prices in the outerwear category and we will also look across the other categories for selective price increases.
Neil: Additionally, we will continue to seek strategies to further diversify our sourcing away from China.
Neil: As a reminder, we do not have exposure to sourcing from Mexico or Canada.
Neil: Regarding our sales cadence, we expect the first half of the year to decline in the second half to show modest growth, which will benefit from our new initiatives.
Neil: And so the gross margin rate, we expect full fiscal year 2026 to see slight gross margin rate expansion supported by the growth of our higher margin owned brands.
Neil: Regarding SG&A, we continue to evaluate our infrastructure and are focused on aligning our warehouse footprint and capacity to our needs and are making the appropriate investments in technology and infrastructure to support long term growth.
Neil: Further we will continue to support our marketing efforts in line with the previous year.
Neil: Overall, we anticipate just under 100 basis points of increase in SG&A.
Neil: We expect interest expense to be approximately $9 million for the full year benefiting from the 400 million debt repayment.
Neil: We expect capital expenditures of approximately $50 million, principally driven by the build outs of shop in shops for new brand launches and new technology to support our transforming business model.
Neil: We are estimating a tax rate of 28, 5% for fiscal 2026.
Neil: We have not anticipated any potential share repurchases in our guidance.
That concludes my comments I will now turn the call back to <unk> for closing remarks.
Neil: Thank you Neil.
Speaker Change: And thank you all for joining us today I am proud of our team's work this quarter and I'm confident in <unk> future as a global leader in fashion.
Speaker Change: I'd also like to thank our entire organization, our many partners and all our stakeholders for their support.
Operator, we're now ready to take some questions.
Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone.
Speaker Change: Question has been answered you were seeing with yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.
Our first question comes from Ashley <unk> with Keybanc capital markets. Your line is open.
Ashley <unk>: Hi, good morning, and thanks for taking our questions. So first off maybe just help us with some of the context on the headwinds I know you mentioned in your prepared remarks, there is a greater role off on some of the PVH licenses. This year. So how much did each of these impact the full year guide and then Additionally, I know you made comments on tariffs.
Speaker Change: The impact from that on non outerwear categories.
And any additional color you could provide us thus far on exit rates in February how trends have fared so far into March.
Speaker Change: So Ashley argument with respect to the prior year as if the flow of the Calvin Klein businesses were approximately $200 million.
Speaker Change: Which we significantly offset.
Speaker Change: That more than offset last year and as I.
Speaker Change: I mentioned in my prepared remarks with respect to tariffs.
Speaker Change: <unk>.
Speaker Change: The way we summarize it.
Speaker Change: Just to give you a little more refinement.
Speaker Change: If you look at our current inventory position, we certainly have a good inventory position going into the first quarter. So I think tariffs with respect to the first the first quarter, we feel pretty comfortable with having.
Speaker Change: Very limited exposure there.
Speaker Change: Towers with respect to the second half of the year. Obviously, we have more time to prepare to have our negotiations with both our customers and our vendors probably the single biggest exposure. We have is in the second quarter and as you know these tariffs came about very quickly. So those are the ones that we will have to scope. The most to try to figure out answers too.
Speaker Change: We believe we've got that all rolled into our forecasting specifically with respect to outerwear as I mentioned it is the highest priced item that we sell and therefore, we feel like there's good elasticity with respect to being able to increase prices there, but we'll look across the whole portfolio for places that we can have increases.
Ashley <unk>: Ashley as it relates to trends in business in February and early March.
Ashley <unk>: Clearly we have full visibility on February.
February was tough for the.
Speaker Change: The retailer who.
Speaker Change: It was very cold than I can remember last quarter talking about how warm it was and how it impacted our coat business I guess February.
Speaker Change: I'd have to say it was very cold and it impacted our spring business.
Inside of that.
Speaker Change: Our guidance is out there for first quarter, which has that factored in and our business is good.
Speaker Change: Early March as good.
Retail is fine.
Speaker Change: And we are.
Speaker Change: <unk>.
Speaker Change: We're looking forward to a good retail year. Unfortunately, there are many issues that don't.
Speaker Change: Related to a stable retail environment that we're dealing with and very difficult to anticipate but in spite of that.
Speaker Change: We've given you the best guidance, we can provide for for year end, which indicates pretty.
Speaker Change: Good year and going forward.
Speaker Change: Okay got it and then quickly as well I know you mentioned AI in the prepared remarks as being an area of investment you'll be focusing on to streamline operations. This year with AI. It seems like it's one of those items that is changing pretty quickly so would be curious in the past.
Speaker Change: 90 days or so if you've seen any new opportunities or just any additional thoughts about some of the new initiatives that you'll be working on with an AI.
But where we're evaluating at all its coming at us sell fast changes.
Speaker Change: <unk>.
Speaker Change: Being looked at.
Speaker Change: We're using AI for.
Speaker Change: Areas of our business, which believe in and that also include design in sectors of our business.
Speaker Change: Using AI.
Speaker Change: <unk>.
Speaker Change: The entry point of converse.
Is which is great.
Speaker Change: Have.
Speaker Change: A blank canvas that we can utilize the best there is no no systems in place for four of Comverse and it'll be as futuristic as the market has to offer and we anticipate.
Speaker Change: A good deal of help through utilization of AI, but we're evaluating all the opportunities and we will implement the components that are.
Speaker Change: That are appropriate for our business.
Speaker Change: Okay I'll pass it along thank you.
Speaker Change: One of them. Thank you actually one moment for our next question.
Speaker Change: Our next question comes from <unk> <unk> with <unk>.
Your line is open.
Speaker Change: Great Good morning, and thanks for taking my questions.
Speaker Change: Just wanted to make sure on the Q4 outperformance.
Speaker Change: Just want to make sure there wasn't like any type of bonds.
Speaker Change: Shift in wholesale shipments or anything like that coming out of Q1, Mike just looking at the initial guidance I thought maybe that wasn't the reason, but it seems like it was more like.
Speaker Change: Outperformance in what you were expecting so I wanted to check on I'll, just double check on that and then on though.
Speaker Change: Klein that you saw on PVH revenues in fiscal year 'twenty five I think it was like a little bit less than anticipated.
Speaker Change: Wondering.
Speaker Change: What drove that higher than anticipated payoffs from from that from those brands and then lastly could you provide some details around what is the current size of the Donna Karan business. Thank you.
Speaker Change: So as it relates to Q4.
Speaker Change: Nothing unique as a matter of fact.
Speaker Change: I guess, maybe there is a unique component hubs.
Speaker Change: Hudson Bay affected as the bankruptcy of Hudson Bay affected us negatively.
Speaker Change: We've adjusted for that so had Hudson Bay not filed for the equivalent of chapter 11.
Speaker Change: We would have shown you better numbers.
So if anything.
The.
Speaker Change: Our numbers were.
Speaker Change: We're anticipating that.
Speaker Change: Better than that.
Speaker Change: Then we.
Speaker Change: We gave you because of the quick adjustment.
Speaker Change: Hudson Bay and that said.
We've adjusted.
Speaker Change: The go forward.
Speaker Change: Fiscal 2026 numbers as it relates to doing far less business with Hudson Bay should they not go into liquidation and remain in business.
Speaker Change: The adjustments.
<unk> recently made which.
Speaker Change: Maybe as a result.
Speaker Change: Anticipated, 1% down for the year.
The.
Speaker Change: Okay.
In terms of the H nearly the PVH falloff.
Moshe that was pretty much significantly what we anticipated we knew we'd have significant all of this year.
Speaker Change: And we did and Thats again without any license is really falling off this year next year again, we do have Calvin Klein jeans sportswear that fall off and in addition to that we're expecting some pools and the rest of the portfolio, where we do continue to add licenses that go beyond the end of 'twenty four.
Speaker Change: It's not only in the falloff go forward.
Speaker Change: The year that you are in you project your business out conservatively. So you can manage your inventory.
Speaker Change: And the exit of a license category.
So in spite of all that I think it's remarkable.
Speaker Change: No.
Speaker Change: We're guiding the way we are with Jefferies.
Speaker Change: Yes.
Speaker Change: What we buy and when we buy it for so I think I think we are.
Speaker Change: I think we're in a great position.
Speaker Change: Got it got it.
Speaker Change: The question of our Donna Karan.
Speaker Change: We don't we don't disclose.
The segmented pieces of our business I will tell you. It's the best launch that we've had.
Speaker Change: We anticipate growth that approaches 40% go forward.
Speaker Change: The margins on Donna Karan are.
Speaker Change: The best in the company with not touching.
Speaker Change: Global side of the business is no distribution outside of North America and it's.
Speaker Change: Concise tailored better distribution then are better.
Speaker Change: Then.
Speaker Change: Yes.
Speaker Change: Thank you Caroline just last month on maybe could you talk a little bit more about.
Speaker Change: Gross margin in Q4 like <unk> outperformance.
Speaker Change: And a little bit about the details there.
Speaker Change: The prepared remarks, but just wondering if you can.
Speaker Change: I'll provide a little bit more impact that will be great. Thank you.
Speaker Change: Yes.
Speaker Change: Been seeing strong stronger margins, obviously from the businesses that we own we don't think a royalty on those businesses that's a component overall.
Speaker Change: Lot of the portfolio performed stronger than the prior year.
Speaker Change: While I wouldn't characterize it as a as a strong whole year. It was certainly stronger than the <unk> in the prior year.
Margins were strong.
Speaker Change: If you look at the prior year Maurizio you'd also see that was probably our lowest gross margin. So I think all of those components lead towards what was a very strong gross margin results and somewhat consistent with what we had forecasted from the beginning of the year, which was a slight improvement to gross margins from the previous year.
Speaker Change: Understood. Thank you so much for all the time and congratulations on that.
Speaker Change: Thank you Mauricio.
One moment for our next question.
Speaker Change: Our last question comes from Dana Telsey with Telsey Advisory Group. Your line is open.
Dana Telsey: Hi, good morning, everyone and congratulations on a very nice fourth quarter as you think about the growing up your own brands and you talked in your <unk>.
Speaker Change: Initial remarks.
Speaker Change: Tomorrow about the extended categories, the Donna Karan and DKNY, how do you see that developing and coming into the picture. What are you seeing overall in terms of wholesale order trends.
Speaker Change: Especially with your largest customer.
Speaker Change: Think about your own DTC, particularly in North America, how do you see that developing thank you.
Thanks for your questions Dana.
Speaker Change: The Donna Karan.
Speaker Change: <unk> brand is.
As I've stated before and.
Speaker Change: I guess, our retailers will attest to it was an amazing launch.
Speaker Change: We we created.
Speaker Change: Fabulous product.
Speaker Change: A lot of it does stemming from the archives of Donna herself.
Speaker Change: The quality of what we delivered was.
Speaker Change: Excellent.
Speaker Change: It doesn't happen often in our launch.
Speaker Change: Maybe we were lucky maybe we're good maybe everybody cared a little bit more about this one.
Speaker Change: But at the end of the day.
Speaker Change: Work seamlessly.
Speaker Change: The opportunities are huge clearly in your first year at year end.
Speaker Change: Forget about.
Speaker Change: Added classifications that will tack onto the brand, but your penetration is not what.
The existing brand.
Speaker Change: Donna Karan Karl Lagerfeld, those brands are around for with us.
Speaker Change: 45678 years, and we've matured with it and we've built scale with it.
Donna Karan.
Speaker Change: The level of inventory that we carry to support it was not very high because it was a launch we were cautious on the bi.
Speaker Change: The retailers were a little bit cautious on the initial purchases, but as the product hit it just blew out of all our stores all of our customers stores.
Speaker Change: And it was a chase.
Speaker Change: To maximize the business through the course of the year and we.
Speaker Change: I won't give you the total number but it was the single biggest launch that we've had.
Speaker Change: Anything that we've ever tackled.
Speaker Change: And on top of it we're forecasting.
Speaker Change: <unk> close to a 40% increase in the size of the business going forward.
Speaker Change: Wasn't a fluke thing.
Speaker Change: We've got commitments from our retailers.
Speaker Change: Our digital business had a hiccup when we first launch.
Speaker Change: Solve it so.
Speaker Change: Sure.
Speaker Change: Direct to consumer digital as planned that being.
Speaker Change: More than 60% this year comp to two.
Speaker Change: Our launch year. So all good things there is an appetite in Europe.
Speaker Change: We are.
Speaker Change: <unk>, whether we're ready for Europe with the appropriate marketing.
Speaker Change: We have an aggressive budget on marketing is it.
Speaker Change: We see that it takes quite a bit to create the customer awareness and win that customer. So all things are.
Speaker Change: In really good shape.
Speaker Change: Our.
Speaker Change:
Speaker Change: Getting away from Dana for the moment, we will launch.
Speaker Change: More casual element of dawn of go forward and we will open some stores in North America.
Speaker Change: Going forward.
Just not ready for the store launch.
Speaker Change: And we will touch on more casual piece.
Speaker Change: This year.
Speaker Change: Fourth quarter, it will be will be in the stores.
Speaker Change: So that's extending the brand's presence.
Speaker Change: We.
Speaker Change: We have a very.
Speaker Change: Very proud group that is limiting the distribution to the appropriate retail partners.
Speaker Change: And it's.
Speaker Change: Great.
Speaker Change: <unk>.
Speaker Change: We have succeeded.
Speaker Change: I think the jury came in and.
Speaker Change: What is the effort.
Speaker Change: The.
Dana Telsey: With respect to order trends Dana they're pretty similar to what we experienced last year at this time of year, we have about 50% of our order book done we've shown.
Speaker Change: Shown before.
Speaker Change: And.
Certainly as the spring order book, So very similar to where we will last year and in support of really what our initial forecast look like.
Speaker Change: Thank you.
Yes.
Speaker Change: Yes.
Speaker Change: We're focused on the execution.
Speaker Change: DTC.
Speaker Change: We are.
Speaker Change: We are adjusting.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Quick response needs throughout warehouses as I stated.
Speaker Change: Sure.
Speaker Change: We're closing warehouses, this year and making the ones that.
Speaker Change: Our responsible for direct to consumer more accountable for.
Speaker Change: Immediate service to the consumer.
Speaker Change: Pretty much demands it.
Again with.
Speaker Change: With Donna Karan as I said, we had a glitch.
Speaker Change: We fixed it we fixed fee.
Speaker Change: On the marketing side of it and we are seeing an amazing difference our business.
Speaker Change: February and March.
Speaker Change: As more than doubled.
Speaker Change: Sure.
Speaker Change: What we had a year ago.
Speaker Change: <unk>.
Speaker Change: We've.
Redefined.
Speaker Change: <unk> leadership in the digital side of the business as well so we've done a lot of work.
Speaker Change: Our team is ready to go and ready to post numbers that.
Speaker Change: We will make a difference for our company.
Speaker Change: Thank you Dana Thank you for your questions and thank you for your support.
Speaker Change: With that.
I appreciate everybody's interest in joining us today and I hope you enjoy your spring season. Thank you.
Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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