G-III APPAREL GROUP, LTD. Unless the context otherwise requires, "G-III," "us," "we" and "our" refer toG-III Apparel Group, Ltd. and its subsidiaries. References to fiscal years refer to the year ended or ending onJanuary 31 of that year. For example, our fiscal year endedJanuary 31, 2022 is referred to as "fiscal 2022." We consolidate the accounts of all of our wholly-owned subsidiaries.Fabco Holding B.V. ("Fabco") is a Dutch joint venture limited liability company that was 49% owned by us throughNovember 30, 2020 . EffectiveDecember 1, 2020 , we increased our ownership interest in Fabco to 75%. As a result, Fabco is treated as a consolidated majority-owned subsidiary.KL North America B.V. ("KLNA") is a Dutch joint venture limited liability that is 49% owned by us. KLNA operates the Karl Lagerfeld business inthe United States ,Mexico andCanada and Fabco operates theDKNY /Donna Karan business inChina through its subsidiary.Karl Lagerfeld Holding B.V . ("KLH") is a Dutch limited liability company that is 19% owned by us. KLH holds the worldwide rights to the Karl Lagerfeld brand. We account for these two investments using the equity method of accounting. Our Vilebrequin subsidiary, KLNA, KLH and Fabco report results on a calendar year basis rather than on theJanuary 31 fiscal year basis used by G-III. Accordingly, the results of Vilebrequin, KLNA, KLH and Fabco are and will be included in our financial statements for the year ended or ending closest to G-III's fiscal year. For example, for G-III's fiscal year endedJanuary 31, 2022 , the results of Vilebrequin, KLNA, KLH and Fabco are included for the year endedDecember 31, 2021 . The Company's retail stores report results on a 52/53-week fiscal year for the retail operations segment. For fiscal 2021 and 2022, the retail operations segment reported based on a 52-week fiscal year.
The following presentation of management's discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our financial statements, the accompanying notes and other financial information appearing elsewhere in this Report.
A discussion with respect to a comparison of the results of operations of fiscal 2021 compared to the fiscal year endedJanuary 31, 2020 ("fiscal 2020"), other financial information related to fiscal 2020 and information with respect to Liquidity and Capital Resources atJanuary 31, 2020 and for fiscal 2020 is contained under the headings "Results of Operations" and "Liquidity and Capital Resources" in Item 7 of our Annual Report on Form 10-K for the fiscal year
endedJanuary 31, 2021 . Overview
G-III designs, sources and markets an extensive range of apparel, including outerwear, dresses, sportswear, swimwear, women's suits and women's performance wear, as well as women's handbags, footwear, small leather goods, cold weather accessories and luggage. G-III has a substantial portfolio of more than 30 licensed and proprietary brands, anchored by five global power brands:DKNY ,Donna Karan ,Calvin Klein ,Tommy Hilfiger andKarl Lagerfeld Paris . We are not only licensees, but also brand owners, and we distribute our products through multiple channels. Our own proprietary brands includeDKNY ,Donna Karan , Vilebrequin,G.H. Bass , Eliza J,Jessica Howard ,Andrew Marc , Marc New York, Wilsons Leather andSonia Rykiel . We sell products under an extensive portfolio of well-known licensed brands, includingCalvin Klein ,Tommy Hilfiger ,Karl Lagerfeld Paris , Levi's, Guess?,Kenneth Cole ,Cole Haan ,Vince Camuto and Dockers. Through our team sports business, we have licenses with theNational Football League ,National Basketball Association , MajorLeague Baseball ,National Hockey League and over 150 U.S. colleges and universities. We also source and sell products to major retailers under their private retail labels. Our products are sold through a cross section of leading retailers such as Macy's, including itsBloomingdale's division, Dillard's, Hudson'sBay Company , including theirSaks Fifth Avenue division, Nordstrom, Kohl's, TJX Companies, Ross Stores andBurlington . We also sell our products using digital channels through retail partners such as macys.com, 44
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nordstrom.com and dillards.com, each of which has a substantial online business. In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando andZappos . We also distribute apparel and other products directly to consumers through our ownDKNY andKarl Lagerfeld Paris retail stores, as well as through our digital channels for theDKNY ,Donna Karan ,Karl Lagerfeld Paris ,G.H. Bass ,Andrew Marc , Wilsons Leather andSonia Rykiel businesses. In fiscal 2021, we restructured our retail operations and completed the closing of our Wilsons Leather,G.H. Bass andCalvin Klein Performance stores. This restructuring enabled us to reduce our losses in our retail operations segment and re-position our retail operations with a goal of becoming a profitable contributor to our business. We operate in fashion markets that are intensely competitive. Our ability to continuously evaluate and respond to changing consumer demands and tastes, across multiple market segments, distribution channels and geographic areas is critical to our success. Although our portfolio of brands is aimed at diversifying our risks in this regard, misjudging shifts in consumer preferences could have a negative effect on our business. Our success in the future will depend on our ability to design products that are accepted in the marketplace, source the manufacture of our products on a competitive basis, and continue to diversify our product portfolio and the markets we serve. We believe that consumers prefer to buy brands they know, and we have continually sought to increase the portfolio of name brands we can offer through different tiers of retail distribution, for a wide array of products at a variety of price points. We have increased the portfolio of brands we offer through licenses, acquisitions and joint ventures. Consumer recognition of our five power brands, two of which we own and three of which we license, is worldwide and very strong. It is our objective to continue to expand our product offerings and we are continually discussing new licensing opportunities with brand owners and seeking to acquire established brands.
Recent Developments
Impact of COVID-19
The COVID-19 pandemic has affected businesses around the world since the first quarter of fiscal 2021. Federal, state and local governments inthe United States and around the world, as well as private entities, mandated various restrictions, including closing of retail stores and restaurants, travel restrictions, restrictions on public gatherings, stay at home orders and advisories, and quarantining of people who may have been exposed to the virus. The response to the COVID-19 pandemic negatively affected the global economy, disrupted global supply chains and created significant disruption of the financial and retail markets, including a disruption in consumer demand for apparel and accessories. The COVID-19 pandemic continues to impact the global economy. During fiscal 2022, consumer demand for apparel and accessories, as well as other consumer discretionary spending, increased as compared to the comparable quarters in fiscal 2021. While businesses reopened as stay at home orders were lifted and various restrictions on the operation of retail businesses were loosened, the continued economic impact of the COVID-19 pandemic remains uncertain. The spread of additional variants could result in the reimposition of restrictions on commercial and social activities that would adversely impact our business. We have experienced significant improvements in our results of operations for fiscal 2022 as compared to fiscal 2021. However, the COVID-19 pandemic could continue to adversely impact our business operations and results of operations. The continued impact of the COVID-19 pandemic on our business operations remains uncertain and cannot be predicted. The extent to which COVID-19 impacts our results will depend on continued developments in the public and private responses to the pandemic and the success and efficacy of efforts inthe United States and around the world to vaccinate people against COVID-19. New information may emerge concerning the severity of the outbreak and the spread of variants, including the Delta and Omicron variants, of the COVID-19 virus in locations that are important to our business. Actions taken to contain COVID-19 or treat its impact may change or become more restrictive if additional waves of infections occur. 45 Table of Contents Inter Parfums InSeptember 2021 , we entered into a long-term global licensing agreement with Inter Parfums, Inc. for the creation, development and distribution of fragrances and fragrance-related products under theDKNY and Donna Karan brands. Inter Parfums, Inc. will become the exclusive licensee for these products effectiveJuly 1, 2022 with the initial term of the license extending throughDecember 31, 2032 . We believe the fragrance category enables our brands to connect more broadly with global consumers.
InOctober 2021 , we purchased European luxury fashion brandSonia Rykiel .Sonia Rykiel , who created this iconic brand, was one of the leading figures of Parisian fashion. We plan to accelerate the relaunch of the brand inFrance in the fall of 2022, and then expand intoEurope and other areas. We believe this purchase further enables us to expand into the luxury space and that there is untapped potential for this brand.Sonia Rykiel is a wholly-owned operating subsidiary that reports results on a calendar year basis rather than theJanuary 31 fiscal year basis used by the Company. Accordingly, the results ofSonia Rykiel are included in our consolidated financial statements beginning in the fourth quarter of fiscal 2022.
Change in Accounting Principle
EffectiveFebruary 1, 2021 , we elected to change our method of accounting for retail inventories from the lower of cost or market as determined by the retail inventory method to the lower of cost or net realizable value using the weighted average cost method. We believe the new method is preferable as it provides better matching of cost of goods sold with revenue, improves the precision of inventory valuation at the balance sheet dates, and more closely aligns with the valuation methods used throughout the rest of the Company. In addition, the change in inventory valuation better aligns with the way we manage our business with a focus on the actual margin realized. We determined that it was impractical to apply this change in accounting principle retrospectively due to a lack of available information. As a result, we applied the change prospectively as ofFebruary 1, 2021 . The cumulative adjustment as ofFebruary 1, 2021 was a decrease in both inventories and retained earnings of$0.3 million . The change in accounting principle did not have a material effect on our consolidated financial statements as of and for the fiscal year endedJanuary 31, 2022 .
Segments
We report based on two segments: wholesale operations and retail operations.
Our wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin business. Wholesale revenues also include royalty revenues from license agreements related to our owned trademarks includingDKNY ,Donna Karan , Vilebrequin,G.H. Bass andAndrew Marc . Our retail operations segment consists primarily of direct sales to consumers through our company-operated stores and through digital channels. In fiscal 2021, we restructured our retail operations, including the closure of our Wilsons Leather,G.H. Bass andCalvin Klein Performance stores. After completion of the restructuring, our retail operations segment consists of ourDKNY andKarl Lagerfeld Paris stores, as well as the digital channels forDKNY ,Donna Karan ,Karl Lagerfeld Paris ,G.H. Bass ,Andrew Marc and Wilsons Leather. 46 Table of Contents Trends Industry Trends Significant trends that affect the apparel industry include retail chains closing unprofitable stores, an increased focus by retail chains and others on expanding digital sales and providing convenience-driven fulfillment options, the continued consolidation of retail chains and the desire on the part of retailers to consolidate vendors supplying them. We sell our products online through retail partners such as macys.com, nordstrom.com and dillards.com, each of which has a substantial online business. As digital sales of apparel continue to increase, we are developing additional digital marketing initiatives on our websites and through social media. We are investing in digital personnel, marketing, logistics, planning, distribution and other strategic opportunities to expand our digital footprint. Our digital business consists of our own web platforms at www.dkny.com, www.donnakaran.com, www.ghbass.com, www.vilebrequin.com, www.andrewmarc.com, www.wilsonsleather.com and www.soniarykiel.com. We also sellKarl Lagerfeld Paris products on our website, www.karllagerfeldparis.com. In addition, we sell to leading online retail partners such as Amazon, Fanatics, Zalando andZappos and have made a minority investment in an e-commerce retailer. A number of retailers have experienced financial difficulties, which in some cases have resulted in bankruptcies, liquidations and/or store closings. The financial difficulties of a retail customer of ours could result in reduced business with that customer. We may also assume higher credit risk relating to receivables of a retail customer experiencing financial difficulty that could result in higher reserves for doubtful accounts or increased write-offs of accounts receivable. We attempt to mitigate credit risk from our customers by closely monitoring accounts receivable balances and shipping levels, as well as the ongoing financial performance and credit standing of customers. Retailers are seeking to differentiate their offerings by devoting more resources to the development of exclusive products, whether by focusing on their own private label products or on products produced exclusively for a retailer by a national brand manufacturer. Exclusive brands are only made available to a specific retailer, and thus customers loyal to their brands can only find them in the stores of that retailer. Consumers have shifted their apparel purchases based on their adjusted lifestyle needs resulting from changes to the work environment and leisure activities caused by the COVID-19 pandemic. We revised our product offerings in response to this shift toward casual and comfortable work-from-home clothing, as well as to activewear and leisure attire. We continue to revise our product lines to satisfy the needs of our retail customers and consumers. There has been an increase in demand for day and occasion dresses, as well as career wear such as suit separates, as businesses reopen offices and restrictions on social gatherings are loosened. We are working diligently to satisfy this demand from our retail partners and consumers. We have attempted to respond to general trends in our industry by continuing to focus on selling products with recognized brand equity, by attention to design, quality and value and by improving our sourcing capabilities. We have also responded with the strategic acquisitions made by us and new license agreements entered into by us that added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines and expanding distribution channels. We believe that our broad distribution capabilities help us to respond to the various shifts by consumers between distribution channels and that our operational capabilities will enable us to continue to be a vendor of choice for our retail partners. Inflationary pressures have impacted our industry. During the current fiscal year, we have experienced inflationary pressures, most significantly related to our freight costs as discussed below under "Supply Chain". We expect inflationary pressures to continue to impact our business beyond fiscal 2022. We have implemented selected price increases on our products. We believe we can continue to do so in an effort to mitigate higher costs. The impact of price increases on consumer demand and on our business and results of operations
is
uncertain.
Supply Chain
The effects of the COVID-19 pandemic on the shipping industry have negatively
impacted our ability to import our products in a manner that allows for timely
delivery to our customers. Congestion at ports of loading and ports of entry
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have caused significant delays in deliveries and changes to the itineraries of our steamship carriers. Use of alternate routes or delivery methods would require additional trucking for us and our customers. Truck driver shortages, shortages of truck equipment and the inability of ports to provide reliable pick up times, have also negatively impacted our ability to timely receive goods. Contractual shipping rates have increased as a result of increased demand for container space and the logistical delays experienced by the shipping industry. Our costs have increased as a result of higher contractual shipping rates and the need to purchase additional container space on the secondary market at higher spot rates. Terminals are also now imposing additional fees on importers not picking up containers on time, even when equipment and labor shortages negatively affect the ability of importers to pick up in a timely manner. Our longstanding relationships with our steamship carriers have facilitated our ability to secure space on vessels as demand for apparel increases, although at rates that are significantly higher than in the past. We believe that the strength of our portfolio of global power brands will allow us to selectively raise prices to largely offset higher freight costs. These supply chain challenges continued during our fourth fiscal quarter and, as a result, the receipt of a significant amount of goods ordered has been delayed until our first fiscal quarter of 2023. We have not as yet experienced order cancellations as a result of these delays due to the strong demand for our products from our customers. We anticipate that the current supply chain conditions will continue to cause our freight costs to be inflated and continue to cause delays in receipt of goods for at least the next three fiscal quarters. We have recently executed new contracts with two of our long-term steamship carrier partners and are continuing to pursue new carrier relationships for additional capacity. We expect that our existing carriers will manage the demand in a more efficient manner in fiscal 2023, and as a result, our reliance on the secondary market will be reduced. We are actively managing shipments based on delivery dates to better utilize contracted cargo space and further reduce our reliance on the secondary market. We have also accelerated production schedules to allow for longer lead times in anticipation of the aforementioned delays.
Critical Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Significant accounting policies employed by us, including the use of estimates, are presented in the notes to our consolidated financial statements. Critical accounting policies are those that are most important to the portrayal of our financial condition and our results of operations, and require management's most difficult, subjective and complex judgments, as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our most critical accounting estimates, discussed below, pertain to revenue recognition, accounts receivable, inventories, income taxes, goodwill and intangible assets, impairment of long-lived assets and equity awards. In determining these estimates, management must use amounts that are based upon its informed judgments and best estimates. We continually evaluate our estimates, including those related to customer allowances and discounts, product returns, bad debts and inventories, and carrying values of intangible assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.
Revenue Recognition
We recognize revenue in accordance with Accounting Standard Codification ("ASC")
Topic 606 - Revenue From Contracts With Customers ("ASC 606"). Under ASC 606,
wholesale revenue is recognized when control transfers to the customer. We
consider control to have been transferred when we have transferred physical
possession of the product, we have a right to payment for the product, the
customer has legal title to the product and the customer has the significant
risks and rewards of the product. Wholesale revenues are adjusted by variable
considerations arising from implicit or explicit obligations. Variable
consideration includes trade discounts, end of season markdowns, sales
allowances,
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cooperative advertising, return liabilities and other customer allowances. We estimate the anticipated variable consideration and record this estimate as a reduction of revenue in the period the related product revenue is recognized.
Variable consideration is estimated based on historical experience, current contractual and statutory requirements, specific known events and industry trends. The reserves for variable consideration are recorded under customer refund liabilities. Historical return rates are calculated on a product line basis. The remainder of the historical rates for variable consideration are calculated by customer by product lines.
We recognize retail sales when the customer takes possession of the goods and tenders payment, generally at the point of sale. Digital revenues from customers through our digital platforms are recognized when the customer takes possession of the goods. Our sales are recorded net of applicable sales taxes.
Both wholesale revenues and retail store revenues are shown net of returns, discounts and other allowances. We classify cooperative advertising as a reduction of net sales.
Licensing revenue is recognized at the higher of royalty earned or guaranteed minimum royalty.
Accounts Receivable In the normal course of business, we extend credit to our wholesale customers based on pre-defined credit criteria. Accounts receivable, as shown on our consolidated balance sheet, are net of an allowance for doubtful accounts. In circumstances where we are aware of a specific customer's inability to meet its financial obligation (such as in the case of bankruptcy filings, extensive delay in payment or substantial downgrading by credit sources), a specific reserve for bad debts is recorded against amounts due to reduce the net recognized receivable to the amount reasonably expected to be collected. For all other wholesale customers, an allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectability based on historical trends and an evaluation of the impact of economic conditions. Our financial instruments consist of trade receivables arising from revenue transactions in the ordinary course of business. We consider our trade receivables to consist of two portfolio segments: wholesale and retail trade receivables. Wholesale trade receivables result from credit we extend to our wholesale customers based on pre-defined criteria and are generally due within 30 to 60 days. Retail trade receivables primarily relate to amounts due from third-party credit card processors for the settlement of debit and credit card transactions and are typically collected within 3 to 5 days.
Inventories
Wholesale inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value, which comprises a significant portion of our inventory. EffectiveFebruary 1, 2021 , we elected to change our method of accounting for retail inventories from the lower of cost or market as determined by the retail inventory method to the lower of cost or net realizable value using the weighted average cost method. We believe the new method is preferable as it provides better matching of cost of goods sold with revenue, improves the precision of inventory valuation at the balance sheet dates, and more closely aligns with the valuation methods used throughout the rest of the Company. In addition, the change in inventory valuation better aligns with the way we manage our business with a focus on the actual margin realized. Vilebrequin inventories are stated at the lower of cost (determined by the weighted average method) or net realizable value. We continually evaluate the composition of our inventories, assessing slow-turning, ongoing product as well as fashion product from prior seasons. The net realizable value of distressed inventory is based on historical sales trends of our individual product lines, the impact of market trends and economic conditions, expected permanent retail markdowns and the value of current orders for this type of inventory. A provision is recorded to reduce the cost of inventories to the estimated net realizable values, if required. 49 Table of Contents Income Taxes
As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax expense, together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet.
ASC Topic 350 - Intangibles -Goodwill and Other ("ASC 350") requires that goodwill and intangible assets with an indefinite life be tested for impairment at least annually and are required to be written down when impaired. We perform our test in the fourth fiscal quarter of each year, or more frequently, if events or changes in circumstances indicate the carrying amount of such assets may be impaired.Goodwill and intangible assets with an indefinite life are tested for impairment by comparing the fair value of the reporting unit with its carrying value. We have identified two reporting units, which are wholesale operations and retail operations. Fair value is generally determined using discounted cash flows, market multiples and market capitalization. Significant estimates used in the fair value methodologies include estimates of future cash flows, future short-term and long-term growth rates, weighted average cost of capital and estimates of market multiples of the reportable unit. If these estimates or their related assumptions change in the future, we may be required to record impairment charges for our goodwill and intangible assets with an indefinite life. We perform our annual test for goodwill as ofJanuary 31 of each year. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. The evaluation consists of either using a qualitative approach to determine whether it is more likely than not that the fair value of the assets is less than their respective carrying values or a quantitative impairment test, if necessary. In performing a qualitative evaluation, we consider many factors in evaluating whether the carrying value of goodwill may not be recoverable, including declines in our stock price and market capitalization in relation to our book value and macroeconomic conditions affecting our business. In performing a quantitative evaluation, our first step in the goodwill impairment review is to compare the fair value of the wholesale operations reporting unit to our carrying value. If the fair value of the reporting unit exceeds our carrying value, goodwill is not impaired and no further testing is required. To estimate the fair value of a reporting unit for the purposes of our annual or periodic analyses, we make estimates and judgments about the future cash flows of that reporting unit. Although our cash flow forecasts are based on assumptions that are consistent with our plans and estimates we are using to manage the underlying businesses, there is significant exercise of judgment involved in determining the cash flows attributable to a reporting unit over its estimated remaining useful life. In addition, we make certain judgments about allocating shared assets to the estimated balance sheets of our reporting units. We also consider our and our competitor's market capitalization on the date we perform the analysis. Changes in judgment on these assumptions and estimates could result in a goodwill impairment charge. We also perform our annual test for intangible assets with indefinite lives as ofJanuary 31 of each year using a qualitative evaluation or a quantitative test using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. Critical estimates in valuing intangible assets include future expected cash flows from license agreements, trade names and customer relationships. In addition, other factors considered are the brand awareness and market position of the products sold by the acquired companies and assumptions about the period of time the brand will continue to be used in the combined company's product portfolio. Management's estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. If we did not appropriately allocate these components or we incorrectly estimate the useful lives of these components, our computation of amortization expense may not appropriately reflect the actual impact of these costs over future periods, which may affect our results of operations.
Trademarks having finite lives are amortized over their estimated useful lives and measured for impairment when events or circumstances indicate that the carrying value may be impaired.
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We have allocated the purchase price of the companies we acquired to the tangible and intangible assets acquired and liabilities we assumed, based on their estimated fair values. These valuations require management to make significant estimations and assumptions, especially with respect to intangible assets. The fair values assigned to the identifiable intangible assets acquired were based on assumptions and estimates made by management using unobservable inputs reflecting our own assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available. We performed our annual tests of our wholesale reporting unit and our indefinite-lived trademarks as ofJanuary 31, 2022 , 2021 and 2020 and determined that no impairment existed at those dates. The results of our annual tests determined that the estimated fair values of our wholesale reporting unit and our indefinite-lived trademarks were substantially in excess of their carrying values.
Our indefinite-lived trademark balance is primarily composed of the
The fair value of our goodwill and indefinite-lived intangible assets are considered a Level 3 valuation in the fair value hierarchy.
Impairment of Long-Lived Assets
All property and equipment and other long-lived assets are reviewed for potential impairment when events or changes in circumstances indicate that the asset's carrying value may not be recoverable. If such indicators are present, it is determined whether the sum of the estimated undiscounted future cash flows attributable to such assets are less than the carrying value of the assets. A potential impairment has occurred if projected future undiscounted cash flows are less than the carrying value of the assets. In fiscal 2022, we recorded a$1.5 million impairment charge primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certainDKNY ,Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. In fiscal 2021, we recorded a$20.1 million impairment charge primarily related to operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather andG.H. Bass stores, primarily due to the retail restructuring, as well as at certainDKNY and Vilebrequin stores as a result of the performance at these stores. In fiscal 2020, we recorded a$21.8 million impairment charge primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain of our Wilsons Leather,G.H. Bass andDKNY stores as a result of the performance at these stores. Equity Awards Restricted Stock Units Restricted stock units ("RSU's") are time based awards that do not have market or performance conditions and either (i) cliff vest after three years or (ii) vest over a three year period. The grant date fair value for RSU's are based on the quoted market price on the date of grant. Compensation expense for RSU's is recognized in the consolidated financial statements on a straight-line basis over the service period based on their grant date fair value.
Performance Based Restricted Stock Units
Performance based restricted stock units consist of both performance based restricted stock units ("PRSU's") and performance stock units ("PSU's").
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PRSU's were granted to executives prior to fiscal 2020 and included (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company's stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target. PRSU's generally vest over a two to five year period. For restricted stock units with market conditions, the Company estimates the grant date fair value using a Monte Carlo simulation model. This valuation methodology utilizes the closing price of the Company's common stock on grant date and several key assumptions, including expected volatility of the Company's stock price, and risk-free rates of return. This valuation is performed with the assistance of a third party valuation specialist. PRSU's are expensed over the service period under the accelerated attribution method. PSU's were granted to executives in fiscal 2022 and 2020 and vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur. PSU's granted in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer shares for two years subsequent to the date of vesting. PSU's are expensed over the service period under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals.
Results of Operations
The following table sets forth our operating results both in dollars and as a percentage of our net sales for the fiscal years indicated below:
Year Ended January 31,
2022 2021
(In thousands, except for percentage of net sales amounts)
Net sales $ 2,766,538 100.0 % $ 2,055,146 100.0 %
Cost of goods sold 1,778,349 64.3 1,310,704 63.8
Gross Profit 988,189 35.7 744,442 36.2Selling, general and administrative expenses 648,015 23.4 605,102 29.4 Depreciation and amortization 27,626 1.0 38,625 1.9 Asset impairments, net of gain on lease terminations 1,455
0.1 17,873 0.9
Operating profit 311,093 11.2 82,842 4.0
Other income (loss) 9,549 0.3 3,238 0.2Interest and financing charges, net (49,666) (1.8) (50,354) (2.5) Income before income taxes 270,976
9.7 35,726 1.7
Income tax expense 70,875 2.6 12,203 0.6
Net income 200,101 7.1 23,523 1.1Less: Loss attributable to noncontrolling interests (492) - (22) - Net income attributable to G-III Apparel Group, Ltd. $ 200,593 7.1 %$ 23,545 1.1 %
Year ended
Net sales for fiscal 2022 increased to
Net sales of our wholesale operations segment increased to$2.71 billion from$1.92 billion in the comparable period last year. This increase is primarily the result of a$207.9 million increase in net sales of ourDKNY andDonna Karan products, a$193.6 million increase in net sales ofCalvin Klein products, a$109.0 million increase in net sales ofTommy Hilfiger products and a$73.1 million increase in net sales ofKarl Lagerfeld Paris products. In the prior year period, we experienced a significant decrease in net sales across substantially all of our brands primarily due to the effects of restrictions that began inMarch 2020 on business and personal activities imposed by governments in connection with the COVID-19 pandemic. As a result, most of our retail partners closed their stores inNorth America , beginning inmid-March 2020 . Most of our retail partners began to reopen a majority of their stores inNorth America beginning inJune 2020 with a majority of these stores operating under government mandated limitations. The governmental restrictions imposed in connection with the COVID-19 pandemic resulted in significant increases in unemployment, a reduction in business activity and a reduction in consumer spending on apparel and accessories, all of which contributed to the reduction of our 52 Table of Contents
net sales which occurred during the majority of fiscal 2021. During fiscal 2022 substantially all stores operated by our retail partners were open and governmental restrictions were eased in most regions ofthe United States due to the reduction of the severity of the COVID-19 pandemic. The lessening of COVID-19 restrictions has resulted in an increase in business activity which has contributed to an increase in consumer spending on apparel and accessories. Governmental restrictions could be reimposed as a result of the spread of additional variants of COVID-19. Net sales of our retail operations segment decreased to$117.7 million from$170.4 million in the same period last year. This decrease is primarily due to the significant reduction in our store count as a result of the restructuring of our retail operations segment that resulted in the closure of 150 Wilsons,G.H. Bass andCalvin Klein Performance stores during fiscal 2021. We operated 282 stores as ofJanuary 31, 2020 , 50 stores as ofJanuary 31, 2021 and 60 stores as ofJanuary 31, 2022 . Wilsons andG.H. Bass stores contributed$91.8 million of net sales during the year endedJanuary 31, 2021 . Net sales from ourDKNY andKarl Lagerfeld Paris stores, which constitute our retail operations segment, increased by$39.1 million during the year endedJanuary 31, 2022 compared to last year. Gross profit was$988.2 million , or 35.7% of net sales, for fiscal 2022 and compared to$744.4 million , or 36.2% of net sales, last year. The gross profit percentage in our wholesale operations segment was 34.2% for the year endedJanuary 31, 2022 as compared to 35.9% for the year endedJanuary 31, 2021 . The gross profit percentage in the prior year was positively impacted by the reversal of previously anticipated markdown accruals that were no longer necessary due to the reduction in sales to our retail customers. The gross profit percentage in the current year benefitted from less promotional activity and strategic price increases, partially offset by increased freight costs. The gross profit percentage in our retail operations segment was 50.9% for the year endedJanuary 31, 2022 compared to 33.6% for the same period last year. The gross profit percentage in our retail operations segment was negatively impacted in the prior year by increased promotional activity due to the COVID-19 pandemic and the restructuring of our retail operations segment which resulted in the liquidation of inventory. For the year endedJanuary 31, 2020 , the gross profit percentage for our wholesale operations segment was 32.7% and for our retail operating segment was 46.7%. Both segments experienced increased gross profit percentages compared to the pre-pandemic fiscal year endedJanuary 31, 2020 due to less promotional activity and strategic price increases in the current period, partially offset by increased freight costs. Selling, general and administrative expenses increased to$648.0 million in fiscal 2022 from$605.1 million in fiscal 2021. The increase in expenses was primarily due to an increase of$43.1 million in compensation expense, primarily from bonus and stock compensation. As a result of the adverse effect of the COVID-19 pandemic on our operating results, the prior year had a lower bonus accrual. The increase in expenses was also due to a$30.6 million increase in contractual advertising and a$15.1 million increase in third-party warehouse expenses related to increased sales. These increases were partially offset by a$36.6 million decrease in facility expenses primarily related to the retail restructuring that occurred in the prior year period. In addition, there was a$13.8 million decrease in bad debt expense primarily related to allowances recorded against the outstanding receivables of certain department store customers in the prior year. Depreciation and amortization expense was$27.6 million in fiscal 2022 and$38.6 million in fiscal 2021. The decrease primarily relates to a reduction in capital expenditures as a result of the COVID-19 pandemic. In addition, the prior year also experienced higher depreciation and amortization due to write-offs taken in connection with the reduction in the number of retail stores operated by us and store asset disposals as a result of the retail restructuring. In fiscal 2022, we recorded a$1.5 million impairment charge, net of gain on lease terminations, related to leasehold improvements, furniture and fixtures and operating lease assets at certainDKNY ,Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores. In fiscal 2021, we recorded a$17.9 million impairment charge, net of gain on lease terminations, related to operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather andG.H. Bass stores, primarily due to the retail restructuring, as well as at certainDKNY and Vilebrequin stores as a result of the performance at these stores. Other income was$9.5 million in fiscal 2022 compared to other income of$3.2 million in fiscal 2021. This change is primarily due to other income of$8.1 million in income from unconsolidated affiliates during fiscal 2022 compared to$0.6 million in income from unconsolidated affiliates in fiscal 2021, as well as other income of$2.4 million from non-refundable European government-backed grants received by Vilebrequin for COVID-19 relief and other income of$1.6 million from the change in fair value of certain equity investments during fiscal 2022. Other income was offset in part by 53
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our recording of
Interest and financing charges, net for fiscal 2022, were$49.7 million compared to$50.4 million for fiscal 2021. The decrease is primarily due to a$6.5 million charge to interest expense in the prior year as a result of extinguishing debt issuance costs upon the repayment of our prior term loan facility and amendment of our revolving credit facility, partially offset by the senior secured notes outstanding in the current period having a higher principal balance and interest rate than the term loan that was outstanding in the majority of the prior year. Income tax expense for fiscal 2022 was$70.9 million compared to$12.2 million for the prior year. Our effective tax rate was 26.2% in fiscal 2022 compared to 34.2% in the prior year. This decrease in our effective tax rate is primarily the result of the significantly lower pretax book income in the prior year, as well as foreign taxable losses in the prior year having s smaller tax benefit as a result of lower income tax rates. We believe that our current income tax rate is more representative of what we expect our prospective effective rate will be based on our current income and applicable federal, state and foreign income tax rates.
Liquidity and Capital Resources
Cash Availability
We rely on our cash flows generated from operations, cash and cash equivalents and the borrowing capacity under our revolving credit facility to meet the cash requirements of our business. The cash requirements of our business are primarily related to the seasonal buildup in inventories, compensation paid to employees, payments to vendors in the normal course of business, capital expenditures, interest payments on debt obligations and income tax payments. As ofJanuary 31, 2022 , we had cash and cash equivalents of$466.0 million and availability under our revolving credit facility in excess of$560.0 million . As ofJanuary 31, 2022 , we were in compliance with all covenants under our senior secured notes and revolving credit facility.
Senior Secured Notes
InAugust 2020 , we completed a private debt offering of$400 million aggregate principal amount of our 7.875% Senior Secured Notes due 2025 (the "Notes). The terms of the Notes are governed by an indenture, dated as ofAugust 7, 2020 (the "Indenture"), among us, the guarantors party thereto andU.S. Bank, National Association , as trustee and collateral agent (the "Collateral Agent"). The net proceeds of the Notes have been used (i) to repay the$300 million that was outstanding under our prior term loan facility due 2022 (the "Term Loan"), (ii) to pay related fees and expenses and (iii) for general corporate purposes. The Notes bear interest at a rate of 7.875% per year payable semi-annually in arrears onFebruary 15 andAugust 15 of each year, commencing onFebruary 15, 2021 . The Notes are unconditionally guaranteed on a senior-priority secured basis by our current and future wholly-owned domestic subsidiaries that guarantee any of our credit facilities, including our ABL facility (the "ABL Facility") pursuant to the ABL Credit Agreement, or certain future capital markets indebtedness of ours or the guarantors.
The Notes and the related guarantees are secured by (i) first priority liens on our Cash Flow Priority Collateral (as defined in the Indenture), and (ii) a second-priority lien on our ABL Priority Collateral (as defined in the Indenture), in each case subject to permitted liens described in the Indenture.
In connection with the issuance of the Notes and execution of the Indenture, we
and the Guarantors entered into a pledge and security agreement (the "Pledge and
Security Agreement"), among us, the Guarantors and the Collateral Agent.
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The Notes are subject to the terms of the intercreditor agreement which governs the relative rights of the secured parties in respect of the ABL Facility and the Notes (the "Intercreditor Agreement"). The Intercreditor Agreement restricts the actions permitted to be taken by the Collateral Agent with respect to the Collateral on behalf of the holders of the Notes. The Notes are also subject to the terms of the LVMH Note subordination agreement which governs the relative rights of the secured parties in respect of the LVMH Note, the ABL Facility and the Notes. At any time prior toAugust 15, 2022 , we may redeem some or all of the Notes at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date plus a "make-whole" premium, as described in the Indenture. On or afterAugust 15, 2022 , we may redeem some or all of the Notes at any time and from time to time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time prior toAugust 15, 2022 , we may redeem up to 40% of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at the redemption price set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time prior toAugust 15, 2022 , during any twelve month period, we may redeem up to 10% of the aggregate principal amount of the Notes at a redemption price equal to 103% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. If we experience a Change of Control (as defined in the Indenture), we are required to offer to repurchase the Notes at 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The Indenture contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, incur restrictions on the ability of our restricted subsidiaries that are not guarantors to pay dividends or make certain other payments, create or incur certain liens, sell assets and subsidiary stock, impair the security interests, transfer all or substantially all of our assets or enter into merger or consolidation transactions, and enter into transactions with affiliates. The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in the Indenture, failure to pay certain other indebtedness, failure of certain guarantees to be enforceable, failure to perfect certain collateral securing the Notes failure to pay certain final judgments, and certain events of bankruptcy or insolvency. We incurred debt issuance costs totaling$8.5 million related to the Notes that will be amortized over the term of the Notes. In accordance with ASC 835, the debt issuance costs have been deferred and are presented as a contra-liability, offsetting the outstanding balance of the Notes, and are amortized over the remaining life of the Notes. In addition, we had unamortized debt issuance costs of$6.1 million associated with the Term Loan. Upon repayment of the Term Loan, these debt issuance costs were fully extinguished and charged to interest expense in our results of operations.
Second Amended and Restated ABL Credit Agreement
InAugust 2020 , our subsidiaries,G-III Leather Fashions, Inc. ,Riviera Sun, Inc. ,CK Outerwear, LLC ,AM Retail Group, Inc. andThe Donna Karan Company Store LLC (collectively, the "Borrowers"), entered into the second amended and restated credit agreement (the "ABL Credit Agreement") with the Lenders named therein and withJPMorgan Chase Bank, N.A ., as Administrative Agent. The ABL Credit Agreement is a five year senior secured credit facility subject to a springing maturity date if, subject to certain conditions, the LVMH Note is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. The ABL Credit Agreement provides for borrowings in the aggregate principal amount of up to$650 million . We and our subsidiaries, G-III Apparel Canada ULC,Gabrielle Studio, Inc. ,Donna Karan International Inc. andDonna Karan Studio LLC (the "Guarantors"), are Loan Guarantors under the ABL Credit Agreement. The ABL Credit Agreement refinanced, amended and restated the Amended Credit Agreement, dated as ofDecember 1, 2016 (as amended, supplemented or otherwise modified from time to time prior toAugust 7, 2020 , the "Prior Credit Agreement"), by and among the Borrowers and the Loan Guarantors (each as defined therein) party thereto, the lenders from time to time party thereto, andJPMorgan Chase Bank, N.A ., in its capacity as the administrative agent thereunder. The Prior Credit Agreement provided for borrowings of up to$650 million and was due to expire inDecember 2021 . The 55
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ABL Credit Agreement extended the maturity date toAugust 2025 , subject to a springing maturity date if, subject to certain conditions, the LVMH Note is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder. Amounts available under the ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the ABL Credit Agreement. Borrowings bear interest, at the Borrowers' option, at LIBOR plus a margin of 1.75% to 2.25% or an alternate base rate margin of 0.75% to 1.25% (defined as the greatest of (i) the "prime rate" ofJPMorgan Chase Bank, N.A . from time to time, (ii) the federal funds rate plus 0.5% and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 1.00%, with the applicable margin determined based on Borrowers' availability under the ABL Credit Agreement. The ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors. In addition to paying interest on any outstanding borrowings under the ABL Credit Agreement, we are required to pay a commitment fee to the lenders under the credit agreement with respect to the unutilized commitments. The commitment fee accrues at a tiered rate equal to 0.50% per annum on the average daily amount of the available commitments when the average usage is less than 50% of the total available commitments and decreases to 0.35% per annum on the average daily amount of the available commitments when the average usage is greater than or equal to 50% of the total available commitments. The revolving credit facility contains covenants that, among other things, restrict our ability, subject to specified exceptions, to incur additional debt; incur liens; sell or dispose of certain assets; merge with other companies; liquidate or dissolve the Company; acquire other companies; make loans, advances, or guarantees; and make certain investments. In certain circumstances, the revolving credit facility also requires us to maintain a fixed charge coverage ratio, as defined in the agreement, not less than 1.00 to 1.00 for each period of twelve consecutive fiscal months of the Company. As ofJanuary 31, 2022 , the Company was in compliance with these covenants. As ofJanuary 31, 2022 , we had no borrowings outstanding under the ABL credit agreement. The ABL Credit Agreement also includes amounts available for letters of credit. As ofJanuary 31, 2022 , there were outstanding trade and standby letters of credit amounting to$10.0 million and$4.0 million , respectively. At the date of the refinancing of the Prior Credit Agreement, we had$3.3 million of unamortized debt issuance costs remaining from the Prior Credit Agreement. We extinguished and charged to interest expense$0.4 million of the prior debt issuance costs and incurred new debt issuance costs totaling$5.1 million related to the ABL Credit Agreement. We have a total of$8.0 million debt issuance costs related to our ABL Credit Agreement. As permitted under ASC 835, the debt issuance costs have been deferred and are presented as an asset which is amortized ratably over the term of the ABL Credit Agreement.
LVMH Note
We issued to LVMH, as a portion of the consideration for the acquisition ofDKNY andDonna Karan , a junior lien secured promissory note in favor of LVMH in the principal amount of$125 million (the "LVMH Note") that bears interest at the rate of 2% per year.$75 million of the principal amount of the LVMH Note is due and payable onJune 1, 2023 and$50 million of such principal amount is due and payable onDecember 1, 2023 . Based on an independent valuation, it was determined that the LVMH Note should be treated as having been issued at a discount of$40 million in accordance with ASC 820 - Fair Value Measurements. This discount is being amortized as interest expense using the effective interest method over the term of the LVMH Note. In connection with the issuance of the LVMH Note, LVMH entered into (i) a subordination agreement providing that our obligations under the LVMH Note are subordinate and junior to our obligations under the revolving credit facility and Term Loan and (ii) a pledge and security agreement with us and our subsidiary, G-III Leather, pursuant to which we and G-III Leather granted to LVMH a security interest in specified collateral to secure our payment and performance of our obligations under the LVMH Note that is subordinate and junior to the security interest granted by us with respect to our obligations under the revolving credit facility and Term Loan. 56 Table of Contents Unsecured Loans During fiscal 2020 and fiscal 2021, T.R.B International SA ("TRB"), a subsidiary of Vilebrequin, borrowed funds under several unsecured loans. A portion of the unsecured loans were to provide funding for operations in the normal course of business, while other unsecured loans were various European state backed loans as part of COVID-19 relief programs. Additionally,Sonia Rykiel borrowed funds under European state backed loans that were part of COVID-19 relief programs. In the aggregate, the Company is currently required to make quarterly installment payments of €0.2 million. Interest on the outstanding principal amount of the unsecured loans accrues at a fixed rate equal to 0% to 2.0% per annum, payable on either a quarterly or monthly basis. As ofJanuary 31, 2022 , the Company had an aggregate outstanding balance of €7.4 million ($8.4 million ) under these various unsecured loans. Overdraft Facilities During fiscal 2021, TRB entered into several overdraft facilities that allow for applicable bank accounts to be in a negative position up to a certain maximum overdraft. TRB entered into an uncommitted overdraft facility with HSBC Bank allowing for a maximum overdraft of €5 million. Interest on drawn balances accrues at a fixed rate equal to the Euro Interbank Offered Rate plus a margin of 1.75% per annum, payable quarterly. The facility may be cancelled at any time by TRB or HSBC Bank. As part of a COVID-19 relief program, TRB and its subsidiaries have also entered into several state backed overdraft facilities withUBS Bank inSwitzerland for an aggregate ofCHF 4.7 million at varying interest rates of 0% to 0.5%. As ofJanuary 31, 2022 , TRB had an aggregate €2.6 million ($2.9 million ) drawn under these various facilities.
Outstanding Borrowings
Our primary operating cash requirements are to fund our seasonal buildup in inventories and accounts receivable, primarily during the second and third fiscal quarters each year. Due to the seasonality of our business, we generally reach our peak borrowings under our asset-based credit facility during our third fiscal quarter. The primary sources to meet our operating cash requirements have been borrowings under this credit facility and cash generated from operations. We had no borrowings outstanding under our ABL Credit Agreement at each ofJanuary 31, 2022 andJanuary 31, 2021 . We had$400 million in borrowings outstanding under the Notes at each ofJanuary 31, 2022 andJanuary 31, 2021 . Our contingent liability under open letters of credit was approximately$14.0 million atJanuary 31, 2022 and$10.5 million atJanuary 31, 2021 . In addition to the amounts outstanding under these two loan agreements, atJanuary 31, 2022 and 2021, we had$125.0 million of face value principal amount outstanding under the LVMH Note. We had an aggregate of €7.4 million ($8.4 million ) and €7.4 million ($9.1 million ) outstanding under the Company's various unsecured loans as ofJanuary 31, 2022 andJanuary 31, 2021 , respectively. We also had €2.6 million ($2.9 million ) and €2.5 million ($3.0 million ) outstanding under Vilebrequin's overdraft facilities as ofJanuary 31, 2022 andJanuary 31, 2021 , respectively. Share Repurchase Program Our Board of Directors authorized a share repurchase program of 5,000,000 shares. Pursuant to this program, during fiscal 2022 we acquired 656,213 of our shares of common stock for an aggregate purchase price of$17.3 million and during fiscal 2020 we acquired 1,327,566 of our shares of common stock for an aggregate purchase price of$35.2 million . No shares of common stock were acquired pursuant to this program during fiscal 2021. The timing and actual number of shares repurchased, if any, will depend on a number of factors, including market conditions and prevailing stock prices, and are subject to compliance with certain covenants contained in our loan agreement. Share repurchases may take place on the open market, in privately negotiated transactions or by other means, and would be made in accordance with applicable securities laws. As ofJanuary 31, 2022 , we had 2,293,149 authorized shares remaining under this program. InMarch 2022 , the Board increased the number of authorized shares under this program to 10,000,000. As ofMarch 23, 2022 , we had approximately 47,915,388 shares of common stock outstanding.
Cash from Operating Activities
At
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primarily to depreciation and amortization of $27.6 million , deferred income
taxes of $21.1 million and share-based compensation of $17.4 million . We also
generated cash from operating activities from an increase of $124.6 million in
accounts payable and accrued expenses. These items were offset, in part, by
increases of $112.8 million in accounts receivable and $95.7 million in
inventories, as well as decreases of $12.6 million in customer refund
liabilities.
At January 31, 2021 , we had cash and cash equivalents of $351.9 million . We
generated $74.8 million of cash from operating activities in fiscal 2021,
primarily as a result of our net income of $23.5 million , and non-cash charges
in the aggregate amount of $136.5 million relating primarily to operating lease
costs ($71.4 million ), depreciation and amortization ($38.6 million ), asset
impairment charges ($20.4 million ) and share-based compensation ($6.1 million ).
We also generated cash from operating activities from decreases of $143.5
million in inventories, $38.9 million in accounts receivable and $24.5 million
in prepaid expenses and other current assets. These items were offset, in part,
by decreases of $136.4 million in customer refund liabilities, $94.2 million in
accounts payable and accrued expenses and $86.4 million in operating lease
liabilities.
Cash from Investing Activities
In fiscal 2022, we used$51.5 million of cash in investing activities. We used$25.0 million for a minority investment in an e-commerce retailer. We subsequently sold a portion of that investment for$5.0 million . In addition, we also had$18.3 million in capital expenditures primarily related to infrastructure and information technology expenditures and additional fixturing costs at department stores. In addition, we used$13.2 million for our investment in connection with a brand acquisition. In fiscal 2021, we used$20.1 million of cash in investing activities for capital expenditures and initial direct costs of operating lease assets. Capital expenditures in the period primarily related to information technology expenditures and additional fixturing costs at department stores. Operating lease assets initial direct costs in the period primarily related to payments of key money and broker fees.
Cash from Financing Activities
In fiscal 2022, we used$23.4 million of cash in financing activities. We used$17.3 million of cash to repurchase 656,213 shares of our common stock under our share repurchase program and$4.3 million for taxes paid in connection with net share settlements of stock grants that have vested. In fiscal 2021, we generated$94.8 million of cash from financing activities primarily as a result of the proceeds of$400 million from the issuance of our Notes partially offset by the$300 million repayment of our term loan facility from the proceeds of the Notes. We also made payments of$13.6 million in financing costs related to the issuance of our Notes and entering into the
ABL Credit Agreement. Financing Needs We believe that our cash on hand and cash generated from operations, together with funds available under the ABL Credit Agreement, are sufficient to meet our expected operating and capital expenditure requirements. We may seek to acquire other businesses in order to expand our product offerings. We may need additional financing in order to complete one or more acquisitions. We cannot be certain that we will be able to obtain additional financing, if required, on acceptable terms or at all.
Recent Accounting Pronouncements
See Note 1.19 - Effects of Recently Adopted and Issued Accounting Pronouncements
in the accompanying notes to our Consolidated Financial Statements in this
Annual Report on Form 10-K for a description of recently adopted accounting
pronouncements and issued accounting pronouncements that we believe may have an
impact on our Consolidated Financial Statements when adopted.
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Tabular Disclosure of Contractual Obligations
As ofJanuary 31, 2022 , our contractual obligations were as follows (in millions): Payments Due By Period Less Than More Than Contractual Obligations Total 1 Year 1-3 Years 4-5 Years 5 Years Operating lease obligations$ 231.4 $ 55.8 $ 81.9 $ 53.3 $ 40.4 Minimum royalty payments (1) 269.4 118.0 124.5 26.9 -
Long-term debt obligations (2) 536.3 4.2 129.1
402.7 0.3
Purchase obligations (3) 10.0 10.0 - - -
Total $ 1,047.1 $ 188.0 $ 335.5 $ 482.9 $ 40.7 (1) Includes obligations to pay minimum scheduled royalty, advertising and other
required payments under various license agreements.
(2) Includes: (a)
(b)
payable in 2023, (c) $8.4 million in our various unsecured loans which have
maturity dates ranging from 2025 through 2027 and requires us to make
quarterly installment payments of €0.2 million and (d)
various overdraft facilities. We had no borrowings outstanding under our
revolving credit facility as of
(3) Includes outstanding trade letters of credit, which represent inventory
purchase commitments, which typically mature in less than six months.
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