G-III Apparel Group, Ltd. Price & Performance (GIII)

Thank you, Neil.

And thank you everyone for joining us. Good morning.

As noted in our press release, our outstanding fourth quarter results outperformed expectations. For the year, we brought to market compelling products driving remarkable top line growth of our own and new launches. Our own brands and our new launches. Which more than offset anticipated net sales declines of $188,000,000 for the Calvin Klein and Tommy Hilfiger business [indiscernible] and $40,000,000 for the guest brand exit. Our world class teams have consistently executed and delivered bottom line growth and record non GAAP earnings per share of $4.42 in fiscal twenty twenty five. An increase of 9% over last year exceeding our forecast. These results are in light of what was and continues to be a very challenging operating environment. I want to recognize this achievement and thank our global teams for their efforts. Touching on highlights from the year, first, we powered global growth with annual net sales increasing 2.7% We to $3,180,000,000 driven by over 20% growth of our key owned brands DKNY, Karl Lagerfeld, Donna Karan and Villebrechtan. While expanding gross margins as well. Second, our Calvin Klein and Tommy Hilfiger businesses now collectively represent the approximately 34% of our total sales down from over fifty percent two years ago.

And we expect a further decline to approximately 25% by the end of fiscal twenty twenty six. Third, we brought to market four new brands which contributed sizably to our top line growth. Our Donna Karan relaunch was extremely successful outpacing our internal expectations and delivering strong profitability with high AURs and sell through. Our launches of Nautica, Halston and Champion outerwear also performed well for their first year and together these four launches represent a significant growth opportunity. Fourth, our retail segment turnaround in North America is working. As we cut our losses in half. Fifth, our approximate 20% investment in All We Wear Group or AWWG will accelerate our international growth. AWWG is a premier platform for brands generating over $650,000,000 in revenues across 3,500 points of sale and over 86 countries. They are owners of iconic European brands Hackett, Pepe Jeans and Fasanabe, and managed the Iberian business for PVH. AWWG will expand DKNY Donna Karren and Karl Lagerfeld, the across Spain and Portugal. While we work to build their brands in North America. 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 enhance operational capability.

Now let us review the progress we've made on our strategic priority. Number one is drive growth of our own brands. Our top priority is driving the growth of our own brands Own brands now represent just over half of our total net sales. With full control over design, production, global distribution and marketing, these brands are a sustainable long term profit driver generating higher operating margins and providing an accretive licensing income stream. 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 brand's full potential. I also want to expand on the licensing income that our own brands generate. We license our own brands to best in class partners with expertise in specific categories such as fragrance, men's, home, kids, optical, jewelry and watches, as well as unique experiential categories like luxury beach clubs, hotels and residences. In return, G3 earns a highly accretive licensing income stream the vast majority of which falls directly to our bottom line. This strategy expands our brand's global reach drives top line sales and even further bolsters profitability. This year, our own brands generated over $80,000,000 in licensing royalty income.

A 10% increase from last year.

Now let me walk you through highlights from the fourth quarter and full year. Donna Karan, fiscal twenty twenty five marked the epic relaunch of our iconic Donna Karen brand, as we developed a comprehensive lifestyle collection and expanded distribution across premier North American department stores.

We identified a significant opportunity within the Ash strategically positioning the brand at higher AURs resulting in robust sell throughs and making it our most profitable launch to date. The brand's return was further amplified by our award winning marketing campaigns which captivated global audiences and garnered substantial media and celebrity attention. For spring twenty twenty five, our marketing campaign unveiled supermodel Kate Moss a fashion and cultural icon whose timeless elegance perfectly embodies the essence of Donna Karan. Looking ahead to the coming year, we will continue building the brand in North America by first the retail footprint following our remarkable success in fiscal twenty twenty five, our retail partners are expanding floor space. [indiscernible] We concluded the year with over 1,500 points of sale anticipate exceeding 1,700 by spring twenty twenty five. With further expansion planned for the fall.

Additionally, the brand performed well on our retail partners sites and our own donnakaren.com. Which should drive a nice sales lift this coming year. Second, lifestyle integration. Our goal is to dress our consumer for more occasions in her life. This year, we're enhancing our social occasion wear focusing on dresses and building our footwear and handbag collection. We will further emphasize these categories through targeted marketing efforts and see additional opportunities in casual wear. Third, category diversification. We are broadening our aspirational appeal and global reach through licensed partnerships. Donna Karan's iconic Cashmere Mist fragrance is celebrating its thirtieth anniversary and remains top selling fragrance in North America. Building on this success, Interparfume our fragrance partner is unveiling a new scent, We are also excited to launch a jewelry line with our partner this fall. With the success of our relaunch and brand building efforts, we expect more licensing opportunities to quickly follow. Additionally, as we build as we build out a comprehensive collection of the brand here in North America, we will look to expand globally beginning in fiscal twenty twenty seven. We believe Donna Karim has over $1,000,000,000 in annual reported net sales potential. DKNY achieving mid teen growth led by strong performance in North America.

I will touch on a few highlights in the region. We broadened our DKNY genes performance and sportswear offerings which were well received by consumers driving market share market share gains and contributing to the over a thousand points of sale added this year. These three categories combined grew over 50% to last year. Our direct to consumer business also showed sequential improvement with storesand.com delivering double digit comp sales growth and improved productivity. The DKNY brand is supported by a Our fragrance partner launched the new DKNY 24x7 fragrance this year driving strong awareness and consumer engagement globally. Internationally, we launched brand building activations at across premier department stores in London, Madrid and Milan, boosting brand visibility In China, we closed all our DKNY stores to eliminate operational losses. The brand remains available digitally while we evaluate and redefine our go forward strategy in this key market. Our increased marketing investments drove powerful brand awareness and engagements globally. We leveraged storytelling tied to New York City to enhance the brand's cultural relevance and deepen our connection with consumers. We're excited to have Lila Moss as the new face of the brand for spring twenty twenty five. Keeping us helping us reach a younger fashion forward and socially connected audience.

We expect growth in fiscal twenty twenty six to be powered by a few key drivers.

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 wear and accessories resulting in over 400 new points of sale this spring. With further expansion planned for fall twenty twenty five. Second, internationally, the brand's global growth Our marketing efforts along with European events have created additional brand recognition and demand. Premier department stores in Europe are looking to expand lifestyle, product assortments providing international consumer a fuller brand experience. We are just starting to see the benefits of our AWWG partnership and expect to gain traction in fiscal twenty twenty five. We also see growth and other key international partners with assortments centered around handbags and footwear and longer term opportunities in Asia In fiscal twenty twenty five, the brand delivered approximately $675,000,000 in reported net sales, including our licensees global retail sales were over $2,400,000,000 In fiscal twenty twenty six, DKNY is expected to grow double digits and we see over $1,000,000,000 in annual reported net sales for Karl Lagerfeld had an outstanding year increasing over 20% to last year. 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 Suits, Sheppers, and enhancements of our sportswear and dress categories.

Contributing to the nearly 600 new points of sale this year. We did well increasing our digital penetration. We saw exceptional strength in handbags and accessories, 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. 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. Our brand building experience has resonated with global audience elevating our position in aspirational luxury. We strengthened our omni channel 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 on pure play platforms. In 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. 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.

Further, the power of extend into additional categories as well as the unique experiential licenses with partners. Currently, the brand has a luxury hotel in Macau and villas being built in Marbella. Looking ahead to fiscal twenty twenty six, in North America, we will build on our momentum and expand within each category. Internationally, we see additional wholesale distribution opportunities with growth in Western Europe supported by AWG and Latin America with our partner opening six new stores. In fiscal twenty twenty five, the brand delivered approximately $580,000,000 in and including our licensees global retail to consumers, were over $1,400,000,000 In fiscal twenty twenty six, Karl Lagerfeld is expected to grow double digits and we see over $1,000,000,000 in annual net sales potential over the long term. VILBRICKAN, our status swimwear brand achieved solid results despite a tough year that impacted key markets. The brand which caters to an aspirational consumer continues to demonstrate strong global awareness and engagement. We are enhancing its status appeal through lifestyle products as we increase the penetration of premium product with higher AURs and launched several creative collaborations throughout the year. Further expanding extending the brand's lifestyle appeal we expanded into beach clubs and premium seaside vacation destinations.

Our company owned Beach Club in Cannes is performing well in its second year delivering over 20% growth since launch. Validating the success concept successful concept we created and it's the support in our brand positioning and status. Our first franchisee club opened last September at the St. Regis in Doa is performing well and our first rooftop pool restaurant and bar will soon open in Miami. Moving forward, we will continue to broaden our lifestyle product assortment to extend our consumer reach. We are also rolling out a specialized training program for our sales associates to provide in-depth brand training which is expected to improve conversion and lift sales. We expect to double the business over time. Our next strategic priority is to build out our complementary portfolio of licensed brands. In addition to our own brands, licensed assets are a key component of our go forward strategy. As they are capital light and capital light way to grow. Each brand offers unique attributes that diversify our portfolio across product, aesthetic, distribution channel and consumer segment. For example, our sports licensing business and now Converse target a differentiated consumer and distribution network. Including Big Box, Sports Specialty, and sporting goods stores, where we have little to no presence in our fashion brands will seek significant presentation.

Of penetration. [indiscernible] We've built a powerful corporate platform that enables us to bring brands to market in an efficient and scalable manner. This corporate platform consists of our well developed sourcing and supply chain infrastructure, [indiscernible] 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. We launched three new licenses in fiscal twenty twenty five which contributed nicely to our top line sales for the year. We launched Nautica Jeans in spring twenty twenty four and in the fall, we launched Halston as well as Champion outerwear. All performing well for their first year. We're building on these brands' early momentum with its expanded distribution and product offerings. Our newly signed licenses for Converse and BCBG will launch in fall twenty twenty five. [indiscernible] Product is well underway and the brand's first marketing shows strong early appetite and a growing order book. Our licensed team business has strong double digit growth this year.

We expanded the rights of our NFL and MLB license which will support double digit growth next year. On December 31, our PVH licenses for Calvin Klein genes and sportswear expired. These two licenses represented approximately $175,000,000 of our total revenue of fiscal twenty twenty five. [indiscernible] Looking ahead to fiscal twenty six and beyond, we're committed to maximizing sell throughs and profitability for Calvin Klein and Tommy Hilfiger. [indiscernible] 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 positions us as the vendor of choice that fill the gap. Thereby capturing market share and strengthening our go forward brands positioning in North America. Turning to our next strategic priority of enhancing our omni channel [indiscernible] North America, we delivered on our retail segment turnaround. Which included management changes, reducing our store footprint and rebasing our merchandising strategy to present a better brand experience. We cut losses in half [indiscernible] adding over $15,000,000 to our bottom line with further improvement expected in fiscal twenty twenty six. We've invested in infrastructure to support our digital ecosystem. We made upgrades to our own brands websites to enhance consumer experience, improve site performance and increase conversion.

Sales from our own digital sites grew over 20% this year. We strengthened our brand's presence across retailer websites and expanded pure play partnerships with Amazon and Zalando among others. We expect a nice lift to digital sales in fiscal twenty twenty six. As we further capture market share across these channels and platforms. As we look ahead, to fiscal twenty twenty six and beyond, we plan to invest in technology and infrastructure to support our long term growth.

We also expect to gain efficiencies from our operational improvement. Specifically, we're investing in systems to increase supply chain transparency, improve digital technologies for our omnichannel business and leverage AI tools 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 businesses. As we transition out of the Calvin and Tommy Hilfiger brands.

We're streamlining our supply chain infrastructure to optimize our logistical flows and by the end of fiscal twenty twenty six, we will have exited four warehouse facilities, This is one part of our strategy to ensure that we have dynamic warehousing network to maximize capacity and utilization as we also emphasize our direct to consumer capability. In conclusion, fiscal twenty twenty five was an incredible year marked by our robust top and bottom line growth driven by the progress made on our strategic initiatives. Looking ahead to 2026, while we expect the environment to remain unpredictable, I'm confident in our ability to successfully navigate through challenges as we've done in the past. Accordingly, we expect approximately $3,140,000,000 with sales down approximately 1% compared to 2025. We're confident in the strong underlying growth of our go forward brands which this past year delivered $2,100,000,000 in revenue and is expected to reach over $5,000,000,000 in annual net sales over the long term. We expect non GAAP diluted earnings per share between $4.15 to $4.25 We will continue to market our brands while making additional investments in technology and infrastructure to drive future growth with our transforming business model.

Our strong balance sheet and credit profile provides flexibility to make strategic investments to fuel growth.

Our investments in AWWG give us further optionality to expand ownership over time from existing shareholders. We will also consider opportunistically returning capital to shareholders through stock repurchases. G3 is undergoing an incredible transformation and we're committed to delivering long term growth and shareholder value. I'll now pass the call to Neil who will walk you through the financial results for fiscal twenty twenty five and provide guidance for the first quarter and full year 2026.

Thank you, Morris. Net sales for the fourth quarter ended 01/31/2025 were $840,000,000 up 10% compared to $765,000,000 in the same period last year. Net sales of our wholesale segment were $799,000,000 compared to $729,000,000 in the previous year. We had good sales increases in our owned brands, and our go forward license portfolio. Net sales of our retail segment were $56,000,000 for the fourth quarter compared to net sales of $51,000,000 in the previous year's fourth quarter. [indiscernible] gross margin percentage was 39.5% in the fourth quarter of fiscal twenty twenty five, compared to 36.9% in the previous period. The wholesale segment's gross margin percentage was 38.1% compared to 35.6% in the previous year's quarter. The 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. Additionally, sales of our license portfolio significant improvement in gross margin rate primarily driven by a more favorable outerwear performance. The gross margin percentage in our retail operation 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. Non GAAP SG and A expenses were $244,000,000 compared to $219,000,000 in the previous year's quarter.

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. In addition, reported a $6,000,000 increase to our bad debt reserve in the quarter. Non GAAP net income for the fourth quarter was $58,000,000 or $1.27 per diluted share, compared to $36,000,000 or $0.76 per diluted share in the previous year's quarter. This is driven by higher sales and improvements in gross margins. Now let us review results for the full fiscal year ended 01/31/2025, [indiscernible] Net sales for the fiscal year 2025 were $3,180,000,000 an increase of 2.7% from $3,100,000,000 in fiscal twenty twenty four. Led by an over 20% growth of our key owned fashion brands DKNY, Donna Karan Karl Lagerfeld and Dilbertron, well as new launches [indiscernible] Jeans, Olsten and Champion outerwear. This growth was offset by approximately $188,000,000 or 15% decrease in the Calvin Klein and Tommy Hilfiger brands. Net sales of our Wholesale Operations segment increased to $3,080,000,000 or 2.5% from $3,010,000,000 dollars Net sales of our retail operations segment for the year were $106,000,000 compared to the previous year of $148,000,000 We experienced strong double digit comparable store sales growth in our DKNY and Karl Lagerfeld stores.

Full fiscal year 2025 gross margin percentage expanded approximately 70 basis points to 40.8% The Wholesale segment gross margin percentage was 39.4% compared to 38.9%. The gross margin percentage in the current year's period was positively impacted by greater sales penetration of our higher margin owned brands as well as product mix. The gross margin percentage in our retail operations segment was 50.4% compared to 48.1% in the prior year. This is a result of merchandising changes. Non GAAP SG and A expenses for the year were $968,000,000 compared to $917,000,000 in the previous year. [indiscernible] The full year SG and A as a percentage of sales was 30.4% compared to 29.6%. This increase in SG and A is associated with the planned higher investment in expenses primarily associated with the marketing for Donna Karan and DKNY and the expansion of our operational capabilities through talent and technology investments. Offset by a decrease in royalty advertising expenses associated with our decrease in license revenue. [indiscernible] Full year non GAAP net income was $2.00 $4,000,000 compared to $190,000,000 or $4.42 per diluted share up 9% to the previous year's $4.04 per diluted share. 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 $400,000,000 senior secured secured notes offset by the investments in SG and A I just outlined.

Turning to the balance sheet. We ended the year in a solid position with respect to our inventory levels. Inventory decreased approximately 8% to $78,000,000 at the end of the year from last year's $520,000,000 Our inventory levels are well aligned to support future sales. We ended the year with an improved net cash position of approximately $175,000,000 compared to a net cash position of $90,000,000 in the previous year. During the fiscal year twenty twenty five, we paid down $400,000,000 in senior secured notes and repurchased $60,000,000 of our own shares. We also made $100,000,000 in strategic investments led by our AWG investment. [indiscernible] believe that our healthy balance sheet 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. As for our guidance, for fiscal year twenty twenty six, our key owned brands DKNY, Donacaron, Karl Lagerfeld and Zilbruckon are expected to continue to grow at a double digit rate. The growth in these key owned brands along with the rest of our Go Forward portfolio will almost entirely offset the declines of the Calvin Klein genes and sportswear licenses that expired 12/31/2024, Accordingly, for the full fiscal year 2026, we expect net sales of $3,140,000,000 a decrease of approximately 1%.

On a non GAAP basis, we expect net income for fiscal twenty twenty six of between $192,000,000 and $197,000,000 or between $4.15 $4.25 per diluted share. This compares to non GAAP net income of $2.00 $4,000,000 or $4.42 per diluted share for fiscal twenty twenty five, Full year fiscal twenty twenty six adjusted EBITDA expected to be between $310,000,000 and $315,000,000 compared to $326,000,000 in the previous year. For the first quarter of fiscal year twenty twenty six, we expect net sales of approximately $580,000,000 in the same period of fiscal twenty twenty five. We expect a non GAAP net income for the first quarter of fiscal twenty twenty six to be between $2,000,000 and $7,000,000 or between $0.05 to $0.15 per diluted share. This compares to non GAAP net income of $5,800,000 or $0.12 per diluted share for the first quarter of fiscal twenty twenty five. Let me discuss a few key points in modeling related to our guidance. Regarding the recently completed 20% China tariffs, we believe we can mitigate a vast majority of the impact Our long standing and important relationships with our manufacturing partners enable us to negotiate partial cost offsets. Furthermore, a large portion of our product sourced from China is outerwear which has higher AURs.

We believe we have more elasticity to lift prices in the outerwear category and we will also look across the other categories for selective price increases. Additionally, we will continue to seek strategies to further diversify our sourcing away from China. As a reminder, we do not have exposure to sourcing from Mexico or Canada. Regarding our sales cadence, we expect the first half of the year to decline and the second half to show modest growth, which will benefit from our new initiatives. As for 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. [indiscernible] Regarding SG and 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 technology and infrastructure to support long term growth. Further, we will continue to support our marketing efforts in line with the previous year. Overall, we anticipate just under 100 basis points of increase in SG and A. We expect interest expense to be approximately $9,000,000 for full year benefiting from the $400,000,000 debt repayment. We expect capital expenditures of approximately $50,000,000 principally driven by the build outs of shop in shops for our new brand launches and new technology to support our transforming business model.

We are estimating a tax rate of 28.5% for fiscal twenty twenty six. We have not anticipated any potential share repurchases in our guidance. That concludes my comments. I will now turn the call back to Morris for closing remarks.

Thank you, Neil. Thank you all for joining us today. I'm proud of our team's work this quarter and I'm confident in G3's future as a global leader in fashion. 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.

Our first question comes from Ashley Owens with KeyBanc Capital Your line is open.

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's a greater roll off of some of the PBH 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, but any impact from that on non outerwear categories? And then any additional color you could provide us thus far on exit rates into February and how trends have fared so far into March? Thanks.

Sure, Ashley. With respect to the prior year, the fall of the Calvin Klein businesses, approximately $200,000,000 which we significantly offset. And in fact more than offset last year. And as I mentioned in my prepared remarks with respect to tariffs, the way we summarize it just to be a to give you a little more refinement, 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 very limited exposure there. Tariffs 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. The single biggest exposure we have is in the second quarter. As you know, these tariffs came about very quickly. So those are the ones that we'll have to scurry the most to try to figure out answers to. We believe we've got that all rolled into our forecasting. Specifically with respect to Adewear, as I mentioned, it is the highest priced item that we sell. 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, as it relates to trends in business in February and early March, clearly, we have full visibility on February was tough for the retailer. It was very cold and I can remember last quarter talking about how warm it was and how it impacted our coat business, I guess February, I'd have to say it was very cold and it impact our spring business.

In spite of that, our guidance is out there for first quarter. Which has that factored in. And our business is good. And early March is good. Retail is fine and we're we're looking forward to a good retail year Unfortunately, there are many issues that don't relate to us stable retail environment that we're dealing with.

And very difficult to anticipate. But in spite of that, we've given you the best guidance we could provide for year end. Which indicates pretty good year and going forward.

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 ninety 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 within AI?

Well, we're evaluating it all. It's coming at us so fast. Changes are being looked at. We're using AI for areas of our business which believe it or not also include design in sectors of our business, We're using AI in the entry point of Converse, which is which is great. We have a blank canvas that we can utilize the best there is. There's no systems in place. For for Converse and it'll be as futuristic as the market has to offer and we anticipate a good deal of help through utilization of AI, but we're evaluating all the opportunities and we'll implement the components that are that are appropriate for our business.

Okay, great. I'll pass it along. Thank you.

One moment. Thank you, Ashley.

One moment for our next question. Your next question comes from Mauricio Serna with UBS. Your line is open.

Great. Good morning and thanks for taking my questions. Just wanted to make sure on the Q4 outperformance, want to make sure there wasn't like any type of like shift in wholesale shipments or anything like that coming out of Q1 because like just looking at the initial guidance, I thought maybe that was the reason, but it seems like it was more like outperformance than what you were expecting. So I wanted to check on just double check on that. And then on the the decline that you saw on PVH revenues in in fiscal year twenty twenty five, I think it was like a little bit less than anticipated. So just was wondering what drove that like higher than anticipated, I guess, sales from from that from those brands. And then lastly, could you provide some details around like what is like the current size of the Donna Karan business? Thank you.

So as it relates to Q4, nothing unique. As a matter of fact, I guess maybe there is a unique Hudson Bay affected us the bankruptcy of Hudson Bay affected us negatively. We've adjusted for that. So had Hudson Bay not filed for the equivalent of Chapter 11, we would have shown you better numbers So if anything, our numbers were were anticipated at at better than than we we gave you because of the quick adjustment of a Bay. And that said, we've adjusted the go forward fiscal twenty twenty six numbers as it relates to doing far less business with Hudson Bay should they not go into liquidation and remain in business. So the adjustment was recently made, which maybe is the result of the anticipated 1% down for the year. [indiscernible] Mauricia, that was pretty much significantly what we anticipated. We knew we'd have significant fall off this year. And we did and that's again without any licenses really falling off this year. Next year again we do have Calvin Klein jeans and sportswear that fall off. And in addition to that, we're expecting some fall off in the rest of the portfolio where we do continue to have life It's not only the fall off go forward, it's the year that you're in you project your business out conservatively so you can manage your inventory in the exit of a license category.

So in spite of all that, I think it's remarkable that we're guiding the way we are with [indiscernible] what we buy and when we buy it for. So, I think we're I think we're in a great position [indiscernible] We don't disclose the segmented pieces of our business. I'll tell you it's the best launch that we've had. And we anticipate growth that approaches 40% go forward and the margins on Don and Karen are the best in the company. With not touching the global side of the business There's no distribution outside of North America. And it's concise, tailored, better distribution than our better [indiscernible] [indiscernible] Understood. Nice to hear that. Just last last one. Maybe could you talk a little bit more about [indiscernible] the gross margin in Q4 like pre performance. I know you mentioned a little bit about the details there in the prepared remarks, but just more if you provide a little bit more insight that will be great. Thank you.

Yes. So we've been seeing strong stronger margins obviously from the businesses that we own. We don't pay a royalty on those businesses. That's a component.

Overall, a lot of the portfolio performed stronger than the prior year. While I wouldn't characterize it as a strong coat year, it was certainly stronger than the coat year in the prior year. And coat margins were strong. If you look at the prior year, Mauricio, 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 result 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.

Understood.

Thank you, Mauricio.

One moment for our next question. Our last question comes from Dana Telsey with Advisory Group. Your line is open.

Hi, good morning everyone and congratulations on the very nice fourth quarter. As you think about the growing of your own brands and you talked in your initial remarks Morris, about the extended categories for Donaccaren or DKNY. How do you see that developing and coming into the pick What are you seeing overall in terms of wholesale order trends? Especially with your largest customer? And when you think about your own DTC, particularly in North America, how do you see that developing? Thank you.

Thanks for your questions, Dana.

The Donna Karan brand is as I've stated before and I guess our retailers will attest to it, it was an amazing launch We We created fabulous product. A lot of it is stemming from the archives of Donna herself. The quality of what we delivered was excellent. That doesn't happen often in a launch. Maybe we were lucky, maybe we were good, maybe everybody cared a little bit more about this one. But at the end of the day, it worked seamlessly The opportunities are huge. Clearly, in your first year out, you're forget about added classifications that will tack on to the brand. But your penetration is not what an existing brand Donna Karan, Carlagerfeld, those brands are around with us for five, six, seven, eight years. And we've matured with it and we've built scale with it. With [indiscernible] the level of inventory that we carry to support was not very high because it was a launch. We were cautious on the buy.

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 our customer stores. And it was a chase to maximize the business through the course of the year. And we I won't give you the total number, but it was the single biggest launch that we've had [indiscernible] anything that we've ever tackled. So and on top of it, we're forecasting internally close to a 40% increase in the size of the business go forward. It wasn't a fluke thing. We got commitments from our retailers Our digital business had a hiccup when we first launched. We've solved it So our direct to consumer digital is planned at being more than 60% this year. Comp to our launch year. So all good things, there is an appetite in Europe We are questioning whether we're ready for Europe with appropriate marketing. We have an aggressive budget on marketing as it we see that it takes quite a bit to create the customer awareness and win that customer. So all things are in really good shape Our getting away from Donna for the moment. We will launch a more casual element of Donna Go Forward.

And we will open some stores in North America going forward, which just not ready for the store launch. And we will touch on the more casual piece this year. For fourth quarter, it will be in the stores. So that's extending the brand's presence We've We have a very very proud group that is limiting the distribution to the appropriate retail partners and it's it's great. We have succeeded I think the jury came in and applauded the effort.

With respect to order trends, Dana, they're pretty similar to what we experienced last year. This time of year, we have about 50% of our order book done. We've We've shown for fall. And certainly have the spring order book. So very similar to where we were last year. And in support of really what our initial forecast look like.

Okay, DTC.

Yes. We're focused on the exit [indiscernible] DTC where We're adjusting quick response needs throughout warehouses As I stated, we're closing warehouses this year and making the ones that are responsible for direct to consumer more accountable for immediate service to that consumer who pretty much demands it. Again, with with Donna Karan, as I said, we had a glitch We fixed it. We fixed the marketing side of it. And we're seeing an amazing difference Our business February, March has more than doubled what we had a year ago. [indiscernible] redefined leadership in our digital side of the business as well. So we've done a lot of work Our team is ready to go and ready to post numbers that will make a difference for our company. Thank you. Thank you for your questions. Thank you for your support. With that, I appreciate everybody's interest in joining us today and I hope you enjoy your spring season. Thank you.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.