G III APPAREL GROUP LTD /DE/ Income Taxes Disclosure

NOTE 10 — INCOME TAXES

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The income tax provision is comprised of the following:

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Effective January 1, 2018, the Tax Cuts and Jobs Act subjects a U.S. parent company to current tax on its Global Intangible Low-Taxed Income (“GILTI”). On July 4, 2025, the One Big Beautiful Bill Act was enacted in the United States, which renamed GILTI to Net Controlled Foreign Corporation Tested Income (“NCTI”). For fiscal 2026, the Company has elected to treat the tax effect of NCTI as a current period expense.

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The significant components of the Company’s net deferred tax liabilities at January 31, 2026 and 2025 are summarized as follows:

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The Company intends to indefinitely reinvest substantially all of the undistributed earnings of its foreign subsidiaries. Upon distribution of these earnings in the form of dividends or otherwise, the Company does not anticipate any material tax costs. As such, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of these undistributed foreign earnings.

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On December 12, 2022, the Council of the European Union (“EU”) announced that EU member states reached an agreement to implement the minimum tax component of the Organization for Economic Co-operation and Development’s (“OECD”) international tax reform initiative, known as Pillar Two. The Pillar Two Model Rules provide for a global minimum tax of 15% for multinational enterprise groups (“MNEs”) and was effective beginning fiscal 2025. On January 5, 2026, the OECD introduced a side-by-side agreement in which U.S.-parented MNEs are exempt from certain aspects of the global minimum tax. This agreement is effective for our fiscal year ending January 31, 2027, but is subject to adoption by each jurisdiction. While these rules did not have a material impact on the Company’s effective tax rate or financial results for fiscal 2026, the Company continues to monitor its operations and evolving tax legislation in the jurisdictions in which it operates.

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The following is a reconciliation of the statutory federal income tax rate to the effective rate reported in the financial statements for the years ended January 31:

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The Company’s effective tax rate increased to 39.1% in fiscal 2026 compared to 28.4% in fiscal 2025. This increase in the Company’s effective tax rate is primarily due to the impairment of the Company’s $20.0 million equity investment in Saks Global and $20.0 million equity investment in Saks Off 5^th.com as a result of the bankruptcy filing by Saks Global in January 2026 that is not expected to be deductible for tax purposes.

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At January 31, 2026, the Company had state net operating loss carryforwards of $3.8 million, of which $2.0 million carryforward indefinitely and the remainder primarily expires in 2036 through 2041. In addition, the Company had foreign net operating loss carryforwards of $38.3 million, with most jurisdictions having indefinite carryforward periods. At January 31, 2026, the Company also had federal foreign tax credit carryforwards of $6.1 million, which expire in 2029 through 2036.

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Valuation allowances represent deferred tax benefits where management is uncertain if the Company will have the ability to recognize those benefits in the future. During the year ended January 31, 2026, the Company recorded an increase to its valuation allowance of $9.8 million against its deferred tax assets, of which $9.3 million related to an increase in the Company’s deferred tax assets and related valuation allowance for the impairment of the Company’s investments in Saks Global and Saks Off 5^th.com, and the remainder related to a net increase in the Company’s deferred tax assets and related valuation allowance for standalone state tax losses and foreign losses.

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Unrecognized Tax Benefits

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A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits, excluding interest and penalties, is as follows:

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The Company accounts for uncertain income tax positions in accordance with ASC 740 — Income Taxes. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of January 31, 2026, there was a net decrease in the unrecognized tax position reserve of $1.5 million primarily related to state and local income tax settlements.

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The Company’s policy on classification is to include interest in interest and financing charges, net, and penalties in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income. The Company and certain of its subsidiaries are subject to U.S. federal income tax as well as the income tax of multiple state, local, and foreign jurisdictions.

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Of the major jurisdictions, the Company and its subsidiaries are subject to examination in the United States and various foreign jurisdictions for fiscal year 2019 and forward. The Company is currently under audit by France for fiscal years 2019 through 2021.

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Income Taxes Paid

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Income taxes paid, net of refunds, were as follows for the years ended January 31:

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State income taxes paid, net of refunds, exceeded five percent of total income taxes paid, net of refunds, for California and New York for the year ended January 31, 2026, California for the year ended January 31, 2025 and California and New Jersey for the year ended January 31, 2024.

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Foreign income taxes paid, net of refunds, exceeded five percent of total income taxes paid, net of refunds, for the Netherlands and Canada for the year ended January 31, 2026 and the Netherlands and Hong Kong for the years ended January 31, 2025 and 2024.