# Movado Group Inc: Form 10-Q for the period ended Oct 31, 2024

- Company: [Movado Group Inc](/companies/mov.md) (CIK 72573)
- Form: 10-Q
- Filed: 2024-12-05
- Accepted by EDGAR: Dec 5, 2024, 14:41 ET
- Period: 2024-10-31
- Accession: 0000950170-24-133544
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/72573/000095017024133544/mov-20241031.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/72573/000095017024133544/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-10-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-08-01 to 2024-10-31 | $182.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-02-01 to 2024-10-31 | $478.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-08-01 to 2024-10-31 | $84.3m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-02-01 to 2024-10-31 | $218.4m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-08-01 to 2024-10-31 | $98.4m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-02-01 to 2024-10-31 | $260.3m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-08-01 to 2024-10-31 | $91.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-02-01 to 2024-10-31 | $247.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-08-01 to 2024-10-31 | $6.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-02-01 to 2024-10-31 | $12.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-08-01 to 2024-10-31 | $144.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-02-01 to 2024-10-31 | $372.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-08-01 to 2024-10-31 | $2.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-02-01 to 2024-10-31 | $5.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-08-01 to 2024-10-31 | $5.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-02-01 to 2024-10-31 | $11.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-08-01 to 2024-10-31 | $0.22 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-02-01 to 2024-10-31 | $0.52 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-08-01 to 2024-10-31 | $0.23 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-02-01 to 2024-10-31 | $0.52 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-08-01 to 2024-10-31 | 22,559,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-02-01 to 2024-10-31 | 22,627,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-02-01 to 2024-10-31 | −$40.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-02-01 to 2024-10-31 | $6.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2024-02-01 to 2024-10-31 | $23.3m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2024-02-01 to 2024-10-31 | $2.6m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-10-31 | $181.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-10-31 | $520.2m | us-gaap:AssetsCurrent |
| Total assets | at 2024-10-31 | $765.9m | us-gaap:Assets |
| Current liabilities | at 2024-10-31 | $121.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-10-31 | $259.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-10-31 | $503.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,955 characters.

### FORWARD-LOOKING STATEMENTS

Statements in this Quarterly Report on Form 10-Q, including, without limitation, statements under Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as statements in future filings by the Company with the Securities and Exchange Commission (the “SEC”), in the Company’s press releases and oral statements made by or with the approval of an authorized executive officer of the Company, which are not historical in nature, are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates, forecasts and projections about the Company, its future performance, the industry in which the Company operates and management’s assumptions. Words such as “expects”, “anticipates”, “targets”, “goals”, “projects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “will”, “should” and variations of such words and similar expressions are also intended to identify such forward-looking statements. The Company cautions readers that forward-looking statements include, without limitation, those relating to the Company’s future business prospects, projected operating or financial results, revenues, working capital, liquidity, capital needs, inventory levels, plans for future operations, expectations regarding capital expenditures, operating efficiency initiatives and other items, cost-savings initiatives, and operating expenses, effective tax rates, margins, interest costs, and income as well as assumptions relating to the foregoing. Forward-looking statements are subject to certain risks and uncertainties, some of which cannot be predicted or quantified. Actual results and future events could differ materially from those indicated in the forward-looking statements, due to several important factors herein identified, among others, and other risks and factors identified from time to time in the Company’s reports filed with the SEC, including, without limitation, the following: general economic and business conditions which may impact disposable income of consumers in the United States and the other significant markets (including Europe) where the Company’s products are sold; uncertainty regarding such economic and business conditions, including inflation, elevated interest rates; increased commodity prices and tightness in the labor market; trends in consumer debt levels and bad debt write-offs; general uncertainty related to geopolitical concerns; the impact of international hostilities, including the Russian invasion of Ukraine and war in the Middle East, on global markets, economies and consumer spending, on energy and shipping costs, and on the Company's supply chain and suppliers; supply disruptions, delivery delays and increased shipping costs; defaults on or downgrades of sovereign debt and the impact of any of those events on consumer spending; evolving stakeholder expectations and emerging complex laws on environmental, social and governance matters; changes in consumer preferences and popularity of particular designs, new product development and introduction; decrease in mall traffic and increase in e-commerce; the ability of the Company to successfully implement its business strategies, competitive products and pricing, including price increases to offset increased costs; the impact of “smart” watches and other wearable tech products on the traditional watch market; seasonality; availability of alternative sources of supply in the case of the loss of any significant supplier or any supplier’s inability to fulfill the Company’s orders; the loss of or curtailed sales to significant customers; the Company’s dependence on key employees and officers; the ability to successfully integrate the operations of acquired businesses without disruption to other business activities; the possible impairment of acquired intangible assets; risks associated with the Company's minority investments in early-stage growth companies and venture capital funds that invest in such companies; the continuation of the Company’s major warehouse and distribution centers; the continuation of licensing arrangements with third parties; losses possible from pending or future litigation and administrative proceedings; the ability to secure and protect trademarks, patents and other intellectual property rights; the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis; the ability of the Company to successfully manage its expenses on a continuing basis; information systems failure or breaches of network security; complex and quickly-evolving regulations regarding privacy and data protection; the continued availability to the Company of financing and credit on favorable terms; business disruptions; and general risks associated with doing business internationally including, without limitation, import duties, tariffs (including retaliatory tariffs), quotas, political and economic stability, changes to existing laws or regulations, and impacts of currency exchange rate fluctuations and the success of hedging strategies related thereto.

These risks and uncertainties, along with the risk factors discussed under Item 1A. “Risk Factors” in the Company’s 2024 Annual Report on Form 10-K, should be considered in evaluating any forward-looking statements contained in this report or incorporated by reference herein. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are qualified by the cautionary statements in this section. The Company undertakes no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report.

### Critical Accounting Policies and Estimates

The Company’s Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States and those significant policies are more fully described in Note 1 to the Company’s Consolidated Financial Statements and contained in the Company's 2024 Annual Report on Form 10-K and are incorporated by reference herein. The preparation of these financial statements and the application of certain critical accounting policies require management to make judgments based on estimates and assumptions that affect the information reported. On an on-going basis, management evaluates its estimates and judgments, including those related to sales discounts and markdowns, product returns, bad debt, inventories, income taxes, warranty obligations, useful lives of property, plant and equipment, impairments of long-lived assets, stock-based compensation and contingencies and litigation. Management bases its estimates and judgments about the carrying values of assets and liabilities that are not readily apparent from other sources on historical experience, contractual commitments and on various other factors that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

Critical accounting policies are those that are most important to the portrayal of the Company’s financial condition and the 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. The Company's most critical accounting policies have been discussed in the Company's 2024 Annual Report on Form 10-K and are incorporated by reference herein. As of October 31, 2024, there have been no material changes to any of the Company's critical accounting policies.

### Overview

The Company conducts its business in two operating segments: Watch and Accessory Brands and Company Stores. The Company’s Watch and Accessory Brands segment includes the designing, manufacturing and distribution of watches and, to a lesser extent, jewelry and other accessories, of owned and licensed brands, in addition to revenue generated from after-sales service activities and shipping. The Company Stores segment includes the Company’s retail outlet business in the United States and Canada. The Company also operates in two major geographic locations: United States and International, the latter of which includes the results of all non-U.S. Company operations.

The Company divides its watch and accessory business into two principal categories: the owned brands category and the licensed brands category. The owned brands category consists of the Movado®, Concord®, EBEL®, Olivia Burton® and MVMT® brands. Products in the licensed brands category include the following brands manufactured and distributed under license agreements with the respective brand owners: Coach®, Tommy Hilfiger®, Hugo Boss®, Lacoste® and Calvin Klein®.

Gross margins vary among the brands included in the Company’s portfolio and also among watch models within each brand. Watches in the Company’s owned brands category generally earn higher gross margin percentages than watches in the licensed brands category. The difference in gross margin percentages within the licensed brands category is primarily due to the impact of royalty payments made on the licensed brands. Gross margins in the Company’s e-commerce business generally earn higher gross margin percentages than those of the traditional wholesale business. Gross margins in the Company’s outlet business are affected by the mix of product sold and may exceed those of the wholesale business since the Company earns margins on its outlet store sales from manufacture to point of sale to the consumer.

### Recent Developments and Initiatives

### Cost-Savings Initiative

During the third quarter of fiscal year 2025, in light of the ongoing challenging consumer-spending environment, the Company committed to a cost-savings initiative to reduce operating expenses through headcount reductions, bringing them more in line with sales and recorded $2.7 million in severance and payroll related charges. The Company expects the severance and payroll related expenses to be paid out within the next twelve months; $0.3 million of which was paid during the third quarter of fiscal year 2025. The Company expects go-forward annual savings from the cost-savings initiatives of approximately $6.5 million.

### The Inflation Reduction Act of 2022

In August 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into law by President Biden. Among other things, the IR Act implemented a 1% excise tax on the fair market stock repurchases by covered corporations, a 15% minimum tax based on adjusted financial statement income of certain large corporations, and several tax incentives to promote clean energy. Although the Company is continuing to evaluate the IR Act and its potential impact on future periods, to date, the IR Act has not had a material impact on its Consolidated Financial Statements.

The OECD has issued Pillar Two model rules implementing a new global minimum tax of 15%, which was intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, several other countries have adopted and enacted changes to their legislation in response to Pillar Two. The Company's turnover currently does not meet the minimum requirements that were set by OECD inclusive framework and rules. Although the Company will continue to evaluate and monitor the enactments of Pillar Two, to the extent that Pillar Two becomes applicable, the Company does not expect a material impact on its Consolidated Financial Statements.

### Results of Operations Overview

The following is a discussion of the results of operations for the three and nine months ended October 31, 2024 compared to the three and nine months ended October 31, 2023, along with a discussion of the changes in financial condition during the first nine months of fiscal 2025. The Company’s results of operations for the first nine months of fiscal 2025 should not be deemed indicative of the results that the Company will experience for the full year of fiscal 2025. See “Recent Developments and Initiatives” above. See also “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended January 31, 2024 filed with the Securities and Exchange Commission on March 26, 2024.

### Results of operations for the three months ended October 31, 2024 as compared to the three months ended October 31, 2023

*Net Sales:* Comparative net sales by business segment were as follows (in thousands):

| Watch and Accessory Brands: | Three Months Ended October 31, 2024 | 2023 |
| --- | ---: | ---: |
| United States | $51,596 | $55,295 |
| International | 110,267 | 109,844 |
| Total Watch and Accessory Brands | 161,863 | 165,139 |
| Company Stores: |  |  |
| United States | 19,551 | 21,280 |
| International | 1,313 | 1,267 |
| Total Company Stores | 20,864 | 22,547 |
| Net Sales | $182,727 | $187,686 |

Comparative net sales by categories were as follows (in thousands):

| Watch and Accessory Brands: | Three Months Ended October 31, 2024 | 2023 |
| --- | ---: | ---: |
| Owned brands category | $50,389 | $55,416 |
| Licensed brands category | 111,402 | 107,355 |
| After-sales service and all other | 72 | 2,368 |
| Total Watch and Accessory Brands | 161,863 | 165,139 |
| Company Stores | 20,864 | 22,547 |
| Net Sales | $182,727 | $187,686 |

#### Net Sales

Net sales for the three months ended October 31, 2024 were $182.7 million, representing a $5.0 million or 2.6% decrease from the prior year period. Both of the Company's operating segments experienced net sales declines. For the three months ended October 31, 2024, fluctuations in foreign currency exchange rates positively impacted net sales by $1.7 million when compared to the prior year period. Excluding this $1.7 million impact, net sales would have decreased by 3.5% as compared to the prior year period.

#### Watch and Accessory Brands Net Sales

Net sales for the three months ended October 31, 2024 in the Watch and Accessory Brands segment were $161.9 million, below the prior year period by $3.3 million, or 2.0%. The decrease in net sales was primarily due to unfavorable sales mix and decreased volumes resulting from lower demand in the Company's wholesale customers, mainly in the United States locations, partially offset by an increase in online retail in the United States locations and the positive impact of fluctuations in foreign exchange rates.

#### United States Watch and Accessory Brands Net Sales

Net sales for the three months ended October 31, 2024 in the United States locations of the Watch and Accessory Brands segment were $51.6 million, below the prior year period by $3.7 million, or 6.7%, resulting primarily from unfavorable sales mix and decreased volumes resulting from lower demand in the Company's wholesale customers, partially offset by an increase in online retail. The net sales recorded in the owned brands category decreased $5.4 million, or 13.1%, partially offset by an increase in net sales recorded in the licensed brands category of $2.8 million, or 20.6%.

#### International Watch and Accessory Brands Net Sales

Net sales for the three months ended October 31, 2024 in the International locations of the Watch and Accessory Brands segment were $110.3 million, above the prior year by $0.4 million, or 0.4%, which included fluctuations in foreign currency exchange rates that positively impacted net sales by $1.7 million when compared to the prior year period. The increase in net sales was primarily due to the positive impact of fluctuations in foreign exchange rates, partially offset by unfavorable sales mix. The net sales increase recorded in the owned brands category was $0.3 million, or 2.3%, due to net sales increases in Asia and Europe, partially offset by net sales decreases in the Middle East and the Americas (excluding the United States). The net sales increase recorded in the licensed brands category was $1.3 million, or 1.3%, primarily due to net sales increases in the Americas (excluding the United States), Asia and the Middle East, partially offset by a net sales decrease in Europe.

#### Company Stores Net Sales

Net sales for the three months ended October 31, 2024 in the Company Stores segment were $20.9 million, $1.7 million or 7.5% below the prior year period. The net sales decrease was primarily due to unfavorable sales mix in the Company stores, partially offset by an increase in sales from the Company's online outlet store at www.movadocompanystore.com. As of October 31, 2024 and 2023, the Company operated 56 and 55 retail outlet locations, respectively.

#### Gross Profit

Gross profit for the three months ended October 31, 2024 was $98.4 million or 53.8% of net sales as compared to $102.3 million or 54.5% of net sales in the prior year period. The decrease in gross profit of $3.9 million was due to lower net sales combined with a lower gross margin percentage. The decrease in the gross margin percentage of approximately 70 basis points for the three months ended October 31, 2024 reflected an unfavorable impact of sales mix of approximately 40 basis points, the decreased leveraging of certain fixed costs as a result of lower sales of approximately 20 basis points and a negative impact of fluctuations in foreign exchange rates of approximately 10 basis points.

#### Selling, General and Administrative (“SG&A”)

SG&A expenses for the three months ended October 31, 2024 were $91.8 million, representing an increase from the prior year period of $10.2 million, or 12.5%. The increase in SG&A expenses was primarily due to the following factors: higher marketing expenses of $5.8 million and an increase in payroll related expenses of $3.0 million (which included severance and payroll related costs of $2.7 million related to the cost-savings initiative discussed above under the "Recent Developments and Initiatives"). For the three months ended October 31, 2024, fluctuations in foreign currency rates related to the foreign subsidiaries unfavorably impacted SG&A expenses by $0.9 million when compared to the prior year period.

#### Watch and Accessory Brands Operating Income

For the three months ended October 31, 2024 the Company recorded operating income of $5.3 million in the Watch and Accessory Brands segment which includes $11.9 million of unallocated corporate expenses as well as $20.5 million of certain intercompany profits related to the Company’s supply chain operations. For the three months ended October 31, 2023, the Company recorded operating income of $18.5 million in the Watch and Accessory Brands segment which included $14.3 million of unallocated corporate expenses as well as $22.9 million of certain intercompany profits related to the Company’s supply chain operations. The decrease in operating income of $13.2 million was the result of a decrease in gross profit of $2.8 million combined with higher SG&A expenses of $10.4 million when compared to the prior year period. The decrease in gross profit was the result of lower net sales combined with a lower gross margin percentage primarily due to an unfavorable impact of sales mix, the decreased leveraging of certain fixed costs as a result of lower sales and a negative impact of fluctuations in foreign exchange rates. The increase in SG&A expenses of $10.4 million was primarily due to the following factors: higher marketing expenses of $5.7 million and an increase in payroll related expenses of $2.9 million (which included severance and payroll related costs of $2.7 million related to the cost-savings initiative).

#### U.S. Watch and Accessory Brands Operating Loss

In the United States locations of the Watch and Accessory Brands segment, for the three months ended October 31, 2024, the Company recorded operating loss of $16.0 million which includes unallocated corporate expenses of $11.9 million. For the three months ended

October 31, 2023 the Company recorded an operating loss of $7.3 million in the United States locations of the Watch and Accessory Brands segment which included unallocated corporate expenses of $14.3 million. The increase in operating loss was the result of a decrease in gross profit of $2.7 million combined with an increase in SG&A expenses of $6.0 million when compared to the prior year period. The decrease in gross profit of $2.7 million was the result of lower net sales combined with a lower gross margin percentage primarily due to the unfavorable impact of sales mix and the decreased leveraging of certain fixed costs as a result of lower sales. The increase in SG&A expenses of $6.0 million was primarily due to the following factors: higher marketing expenses of $5.1 million and an increase in payroll related expenses of $0.7 million (which included severance and payroll related costs of $1.5 million related to the cost-savings initiative).

#### International Watch and Accessory Brands Operating Income

In the International locations of the Watch and Accessory Brands segment, for the three months ended October 31, 2024, the Company recorded operating income of $21.3 million which includes $20.5 million of certain intercompany profits related to the Company’s International supply chain operations. For the three months ended October 31, 2023 the Company recorded operating income of $25.8 million in the International locations of the Watch and Accessory Brands segment which included $22.9 million of certain intercompany profits related to the Company’s supply chain operations. The decrease in operating income was the result of lower gross profit of $0.2 million combined with higher SG&A expenses of $4.3 million. The decrease in gross profit of $0.2 million was primarily the result of a lower gross margin percentage primarily due to an unfavorable impact of sales mix and a negative impact of fluctuations in foreign exchange rates. The increase in SG&A expenses of $4.3 million was primarily due to the following factors: an increase in payroll related expenses of $2.2 million (which included severance and payroll related costs of $1.2 million related to the cost-savings initiative) and higher marketing expenses of $0.6 million.

#### Company Stores Operating Income

The Company recorded operating income of $1.3 million and $2.2 million in the Company Stores segment for the three months ended October 31, 2024 and 2023, respectively. The decrease in operating income of $0.9 million was primarily related to a decrease in gross profit of $1.1 million, due to lower sales combined with a lower gross margin percentage, partially offset by lower SG&A expenses of $0.2 million. As of October 31, 2024, and 2023, the Company Stores segment operated 56 and 55 retail outlet locations, respectively.

#### Other Non-Operating Income, net

The Company recorded other income, net of $1.5 million and $1.6 million for the three months ended October 31, 2024 and October 31, 2023, respectively, primarily due to interest income.

#### Interest Expense

Interest expense was $0.1 million primarily due to the payment of unused commitment fees for both the three months ended October 31, 2024 and 2023. There were no borrowings under the Company's revolving credit facility during the three months ended October 31, 2024 and 2023.

#### Income Taxes

The Company recorded an income tax provision of $2.5 million and $4.5 million for the three months ended October 31, 2024 and 2023, respectively.

The effective tax rate was 31.5% and 20.4% for the three months ended October 31, 2024 and 2023, respectively. The significant components of the effective tax rate changed primarily due to the tax consequences of a foreign currency gain related to an extraordinary intercompany dividend, an increase in valuation allowances against certain foreign losses and a limitation on a portion of the foreign tax credits and deductions related to the tax on Global Intangible Low-Taxed Income ("GILTI").

#### Net Income Attributable to Movado Group, Inc.

The Company recorded net income attributable to Movado Group, Inc. of $5.1 million and $17.4 million for the three months ended October 31, 2024 and 2023, respectively.

### Results of operations for the nine months ended October 31, 2024 as compared to the nine months ended October 31, 2023

*Net Sales:* Comparative net sales by business segment were as follows (in thousands):

| Watch and Accessory Brands: | Nine Months Ended October 31, 2024 | 2023 |
| --- | ---: | ---: |
| United States | $137,218 | $141,918 |
| International | 277,971 | 282,900 |
| Total Watch and Accessory Brands | 415,189 | 424,818 |
| Company Stores: |  |  |
| United States | 60,068 | 64,684 |
| International | 3,452 | 3,479 |
| Total Company Stores | 63,520 | 68,163 |
| Net Sales | $478,709 | $492,981 |

Comparative net sales by categories were as follows (in thousands):

| Watch and Accessory Brands: | Nine Months Ended October 31, 2024 | 2023 |
| --- | ---: | ---: |
| Owned brands category | $135,802 | $149,436 |
| Licensed brands category | 274,359 | 272,012 |
| After-sales service and all other | 5,028 | 3,370 |
| Total Watch and Accessory Brands | 415,189 | 424,818 |
| Company Stores | 63,520 | 68,163 |
| Net Sales | $478,709 | $492,981 |

#### Net Sales

Net sales for the nine months ended October 31, 2024 were $478.7 million, representing a $14.3 million or 2.9% decrease from the prior year period. Both of the Company's operating segments experienced net sales declines. For the nine months ended October 31, 2024, fluctuations in foreign currency exchange rates had positively impacted net sales by $1.7 million when compared to the prior year period. Excluding this $1.7 million impact, net sales would have decreased by 3.2% as compared to the prior year period.

#### Watch and Accessory Brands Net Sales

Net sales for the nine months ended October 31, 2024 in the Watch and Accessory Brands segment were $415.2 million, below the prior year period by $9.6 million, or 2.3%. The decrease in net sales was primarily due to unfavorable sales mix and decreased volumes resulting from lower demand in the Company's wholesale customers, mainly in the United States locations, partially offset by an increase in online retail in the United States locations and the positive impact of fluctuations in foreign exchange rates.

#### United States Watch and Accessory Brands Net Sales

Net sales for the nine months ended October 31, 2024 in the United States locations of the Watch and Accessory Brands segment were $137.2 million, below the prior year period by $4.7 million, or 3.3%, resulting primarily from unfavorable sales mix and decreased volumes due to lower demand in the Company's wholesale customers, partially offset by an increase in online retail. The net sales recorded in the owned brands category decreased $9.2 million, or 8.4%, partially offset by an increase in net sales recorded in the licensed brand category of $4.2 million, or 13.3%.

#### International Watch and Accessory Brands Net Sales

Net sales for the nine months ended October 31, 2024 in the International locations of the Watch and Accessory Brands segment were $278.0 million, below the prior year by $4.9 million, or 1.7%, which included fluctuations in foreign currency exchange rates that positively impacted net sales by $1.7 million when compared to the prior year period. The decrease in net sales was primarily due to unfavorable sales mix in the Company's wholesale customers, partially offset by the positive impact of fluctuations in foreign exchange rates. The net sales decrease recorded in the owned brands category was $4.5 million, or 10.9%, due to net sales decreases in the Middle East, Europe and the Americas (excluding the United States), partially offset by an increase in Asia. The net sales decrease in the licensed brands category was $1.9 million, or 0.8%, primarily due to net sales decreases in Europe, the Middle East and the Americas (excluding the United States), partially offset by a net sales increase in Asia.

#### Company Stores Net Sales

Net sales for the nine months ended October 31, 2024 in the Company Stores segment were $63.5 million, $4.6 million or 6.8% below the prior year period. The net sales decrease was primarily due to unfavorable sales mix in the Company stores, partially offset by an increase in sales from the Company's online outlet store at www.movadocompanystore.com. As of October 31, 2024 and 2023, the Company operated 56 and 55 retail outlet locations, respectively.

#### Gross Profit

Gross profit for the nine months ended October 31, 2024 was $260.3 million or 54.4% of net sales as compared to $273.6 million or 55.5% of net sales in the prior year period. The decrease in gross profit of $13.3 million was due to lower net sales combined with a lower gross margin percentage. The decrease in the gross margin percentage of approximately 110 basis points for the nine months ended October 31, 2024 reflected an unfavorable impact of sales mix of approximately 80 basis points, the decreased leveraging of certain fixed costs as a result of lower sales of approximately 20 basis points and a negative impact of fluctuations in foreign exchange rates of approximately 10 basis points.

#### Selling, General and Administrative (“SG&A”)

SG&A expenses for the nine months ended October 31, 2024 were $247.4 million, representing an increase from the prior year period of $15.0 million, or 6.5%. The increase in SG&A expenses was primarily due to the following factors: higher marketing expenses of $11.1 million and an increase in payroll related expenses of $4.5 million (which included severance and payroll related costs of $2.7 million related to the cost-savings initiative). These increases in SG&A expenses were partially offset by a decrease of $0.5 million in amortization expense related to certain intangible assets being fully amortized and a decrease in performance-based compensation of $0.4 million. For the nine months ended October 31, 2024, fluctuations in foreign currency rates related to the foreign subsidiaries unfavorably impacted SG&A expenses by $0.8 million when compared to the prior year period.

#### Watch and Accessory Brands Operating Income

For the nine months ended October 31, 2024 the Company recorded operating income of $7.5 million in the Watch and Accessory Brands segment which includes $30.0 million of unallocated corporate expenses as well as $48.8 million of certain intercompany profits related to the Company’s supply chain operations. For the nine months ended October 31, 2023, the Company recorded operating income of $31.9 million in the Watch and Accessory Brands segment which included $36.0 million of unallocated corporate expenses as well as $55.4 million of certain intercompany profits related to the Company’s supply chain operations. The decrease in operating income was the result of a decrease in gross profit of $10.2 million combined with higher SG&A expenses of $14.2 million when compared to the prior year period. The decrease in gross profit was the result of lower net sales combined with a lower gross margin percentage primarily due to an unfavorable impact of sales mix, the decreased leveraging of certain fixed costs as a result of lower sales and a negative impact of fluctuations in foreign exchange rates. The increase in SG&A expenses of $14.2 million was primarily due to the following factors: higher marketing expenses of $10.8 million and an increase in payroll related expenses of $4.1 million (which included severance and payroll related costs of $2.7 million related to the cost-savings initiative). These increases in SG&A expenses were partially offset by a decrease in performance-based compensation of $0.5 million and a decrease of $0.5 million in amortization expense related to certain intangible assets being fully amortized.

#### U.S. Watch and Accessory Brands Operating Loss

In the United States locations of the Watch and Accessory Brands segment, for the nine months ended October 31, 2024, the Company recorded an operating loss of $34.1 million which includes unallocated corporate expenses of $30.0 million. For the nine months ended October 31, 2023 the Company recorded an operating loss of $26.7 million in the United States locations of the Watch and Accessory Brands segment which included unallocated corporate expenses of $36.0 million. The increase in operating loss was the result of a decrease in gross profit of $1.2 million combined with an increase in SG&A expenses of $6.2 million when compared to the prior year period. The decrease in gross profit of $1.2 million was the result of lower net sales, partially offset by a higher gross margin percentage primarily due to the favorable impact of sales mix, partially offset by the decreased leveraging of certain fixed costs as a result of lower sales. The increase in SG&A expenses of $6.2 million was primarily due to the following factors: higher marketing expenses of $5.9 million and an increase in payroll related expenses of $1.3 million (which included severance and payroll related costs of $1.5 million related to the cost-savings initiative). These increases in SG&A expenses were partially offset by a decrease in performance-based compensation of $0.5 million.

#### International Watch and Accessory Brands Operating Income

In the International locations of the Watch and Accessory Brands segment, for the nine months ended October 31, 2024, the Company recorded operating income of $41.6 million which includes $48.8 million of certain intercompany profits related to the Company’s International supply chain operations. For the nine months ended October 31, 2023 the Company recorded operating income of $58.6 million in the International locations of the Watch and Accessory Brands segment which included $55.4 million of certain intercompany profits related to the Company’s supply chain operations. The decrease in operating income was the result of lower gross profit of $9.0 million combined with higher SG&A expenses of $8.0 million. The decrease in gross profit of $9.0 million was the result of lower net sales, combined with a lower gross margin percentage primarily due to an unfavorable impact of sales mix, the decreased leveraging of certain fixed costs as a result of lower sales and a negative impact of fluctuations in foreign exchange rates. The increase in SG&A expenses of $8.0 million was primarily due was primarily due to the following factors: higher marketing expenses of $4.9 million and an increase in payroll related expenses of $2.8 million (which included severance and payroll related costs of $1.2 million related to the cost-savings initiative). These increases in SG&A expenses were partially offset by a decrease of $0.5 million in amortization expense related to certain intangible assets being fully amortized.

#### Company Stores Operating Income

The Company recorded operating income of $5.4 million and $9.3 million in the Company Stores segment for the nine months ended October 31, 2024 and 2023, respectively. The decrease in operating income of $3.9 million was primarily related to a decrease in gross profit of $3.2 million, mainly due to lower sales combined with a lower gross margin percentage, and higher SG&A expenses of $0.7 million primarily due to an increase in payroll related expenses of $0.4 million and higher marketing expenses of $0.3 million. As of October 31, 2024, and 2023, the Company Stores segment operated 56 and 55 retail outlet locations, respectively.

#### Other Non-Operating Income, net

The Company recorded other income, net of $5.6 million primarily due to interest income for the nine months ended October 31, 2024.

For the nine months ended October 31, 2023, the Company recorded other income, net of $4.2 million primarily due to interest income, partially offset by a $0.5 million impairment related to an equity investment in a consumer products company that sold its business and assets in a transaction that yielded little return for equity holders.

#### Interest Expense

Interest expense was $0.4 million primarily due to the payment of unused commitment fees for both the nine months ended October 31, 2024 and 2023. There were no borrowings under the Company's revolving credit facility during the nine months ended October 31, 2024 and 2023.

#### Income Taxes

The Company recorded an income tax provision of $5.7 million and $9.9 million for the nine months ended October 31, 2024 and 2023, respectively.

The effective tax rate was 31.7% and 22.0% for the nine months ended October 31, 2024 and 2023, respectively. The significant components of the effective tax rate changed primarily due to the tax consequences of a foreign currency gain related to an extraordinary intercompany dividend, a limitation on a portion of the foreign tax credits and deductions related to the tax on GILTI and an increase in valuation allowances against certain foreign losses.

#### Net Income Attributable to Movado Group, Inc.

The Company recorded net income attributable to Movado Group, Inc. of $11.7 million and $34.6 million for the nine months ended October 31, 2024 and 2023, respectively.

### LIQUIDITY AND CAPITAL RESOURCES

At October 31, 2024 and October 31, 2023, the Company had $181.5 million and $201.0 million, respectively, of cash and cash equivalents. Of this total, $68.3 million and $130.5 million, respectively, consisted of cash and cash equivalents at the Company's foreign subsidiaries.

At October 31, 2024 the Company had working capital of $398.4 million as compared to $412.1 million at October 31, 2023. The decrease in working capital was primarily the result of a decrease in cash and an increase in accounts payable, partially offset by an increase in trade receivables and a decrease in income taxes payable. The Company defines working capital as the difference between current assets and current liabilities.

The Company had $40.6 million of cash used in operating activities for the nine months ended October 31, 2024 as compared to $7.4 million of cash provided by operating activities for the nine months ended October 31, 2023. Cash used in operating activities for the nine months ended October 31, 2024 included net income of $12.4 million, positively adjusted by $14.8 million related to non-cash items. Cash used in operating activities for the nine months ended October 31, 2024 included a $37.0 million increase in trade receivables due to timing of receipts and change in sales mix during the quarter, a $24.7 million increase in investment in inventories primarily due to timing of receipts to align with sales levels and increases in net payments related to taxes, other current assets, accrued liabilities, accrued payroll and benefits and accounts payable totaling $2.9 million primarily due to timing. Cash provided by operating activities for the nine months ended October 31, 2023 included net income of $35.1 million, positively adjusted by $15.5 million related to non-cash items. Cash provided by operating activities for the nine months ended October 31, 2023 included an increase in accrued liabilities of $12.3 million primarily as a result of timing of payments and a $10.8 million decrease in investment in inventories primarily due to timing of receipts to align with sales levels, partially offset by an increase of $42.0 million in trade receivables a a result of timing of receipts and change in sales mix, a change in income taxes of $14.5 million primarily due to timing of payments, a decrease in accounts payable of $7.5 million primarily due to timing of payments and a decrease in accrued payroll and benefits of $7.0 million primarily as a result of payments of performance-based compensation.

Cash used in investing activities was $11.9 million for the nine months ended October 31, 2024 as compared to cash used in investing activities of $8.8 million for the nine months ended October 31, 2023. The cash used in the nine months ended October 31, 2024 was primarily related to capital expenditures of $6.4 million mainly due to expenditures related to Company stores and shop-in-shops and $5.5 million of long-term investments. Cash used in investing activities for the nine months ended October 31, 2023 included $6.6 million of capital expenditures and $2.0 million of long-term investments.

Cash used in financing activities was $27.0 million for the nine months ended October 31, 2024 as compared to cash used in financing activities of $48.6 million for the nine months ended October 31, 2023. The cash used in the nine months ended October 31, 2024 included $23.3 million in dividends paid, $2.6 million in stock repurchased in the open market and $1.2 million of shares repurchased as a result of the surrender of shares by employees in connection with the vesting of certain stock awards. Cash used in financing activities for the nine months ended October 31, 2023 included $45.4 million in dividends paid, which included a special cash dividend of $1.00 per share, and $2.3 million in stock repurchased in the open market.

The Company and its U.S. and Swiss subsidiaries (collectively, the "Borrowers") are parties to an Amended and Restated Credit Agreement originally dated October 12, 2018 (as subsequently amended, the “Credit Agreement”) with the lenders party thereto and Bank of America, N.A. as administrative agent (in such capacity, the “Agent”). The Credit Agreement provides for a $100.0 million senior secured revolving credit facility (the “Facility”) and has a maturity date of October 28, 2026. The Facility includes a $15.0 million letter of credit subfacility, a $25.0 million swingline subfacility and a $75.0 million sublimit for borrowings by the Swiss Borrower, with provisions for uncommitted increases to the Facility of up to $50.0 million in the aggregate subject to customary terms and conditions. The Credit Agreement contains affirmative and negative covenants binding on the Company and its subsidiaries that are customary for credit facilities of this type, including, but not limited to, restrictions and limitations on the incurrence of debt and liens, dispositions of assets, capital expenditures, dividends and other payments in respect of equity interests, the making of loans and equity investments, mergers, consolidations, liquidations and dissolutions, and transactions with affiliates (in each case, subject to various exceptions).

The borrowings under the Facility are joint and several obligations of the Borrowers and are also cross-guaranteed by each Borrower, except that the Swiss Borrower is not liable for, nor does it guarantee, the obligations of the U.S. Borrowers. In addition, the Borrowers' obligations under the Facility are secured by first priority liens, subject to permitted liens, on substantially all of the U.S. Borrowers' assets other than certain excluded assets. The Swiss Borrower does not provide collateral to secure the obligations under the Facility.

As of both October 31, 2024, and October 31, 2023, there were no amounts of loans outstanding under the Facility. Availability under the Facility was reduced by the aggregate number of letters of credit outstanding, issued in connection with retail and operating facility leases to various landlords and for Canadian payroll to the Royal Bank of Canada, totaling approximately $0.3 million at both October 31, 2024 and October 31, 2023. At October 31, 2024, the letters of credit have expiration dates through June 2, 2025. As of both October 31, 2024, and October 31, 2023, availability under the Facility was $99.7 million. For additional information regarding the Facility, see Note 6 - Debt and Lines of Credit to the Consolidated Financial Statements.

The Company had weighted average borrowings under the Facility of zero during both the three and nine months ended October 31, 2024 and 2023, respectively.

The Company's Swiss subsidiary maintains unsecured lines of credit with a Swiss bank that are subject to repayment upon demand. As of October 31, 2024, and 2023, these lines of credit totaled 6.5 million Swiss Francs for both periods, with a dollar equivalent of $7.5 million and $7.1 million, respectively. As of October 31, 2024, and 2023, there were no borrowings against these lines. As of October 31, 2024 and 2023, two European banks had guaranteed obligations to third parties on behalf of two of the Company’s foreign subsidiaries in the dollar equivalent of $1.4 million and $1.5 million, respectively, in various foreign currencies, of which $0.8 million and $0.8 million ($0.1 million was refunded in November 2023), respectively, was a restricted deposit as it relates to lease agreements.

Cash paid for interest, including unused commitments fees, was $0.2 million for both the nine month periods ended October 31, 2024 and October 31, 2023, respectively.

From time to time the Company may make minority investments in growth companies in the consumer products sector and other sectors relevant to its business, including certain of the Company's suppliers and customers, as well as in venture capital funds that invest in companies in media, entertainment, information technology and technology-related fields and in digital assets. During fiscal 2022, the Company committed to invest up to $21.5 million in such investments. The Company funded approximately $8.4 million of these commitments through fiscal 2024 and an additional $5.5 million during the first nine months of fiscal 2025 and may be called upon to satisfy capital calls in respect of the remaining $7.7 million in such commitments at any time during a period generally ending ten years after the first capital call in respect of a given commitment. One consumer products company in which the Company made an equity investment in fiscal year 2022 sold its business and assets in the first quarter of fiscal 2024 in a transaction that yielded little return for equity holders. As a result, the Company fully impaired its $0.5 million investment in this entity in the first quarter of fiscal 2024.

During the nine months ended October 31, 2024, the Company has declared and paid a total of three separate cash dividends of $0.35 per share aggregating to $23.3 million. During the nine months ended October 31, 2023, the Company declared and paid three separate cash dividends of $0.35 per share and a special cash dividend of $1.00 per share aggregating to $45.4 million. Although the Company currently expects to continue to declare cash dividends in the future, the decision of whether to declare any future cash dividend, including the amount of any such dividend and the establishment of record and payment dates, will be determined, in each quarter, by the Board of Directors, in its sole discretion.

On November 23, 2021, the Board approved a share repurchase program under which the Company is authorized to purchase up to $50.0 million of its outstanding common stock through November 23, 2024, depending on market conditions, share price and other factors. On December 5, 2024, the Board approved an additional share repurchase program under which the Company is authorized to purchase up to $50.0 million of its outstanding common stock through December 5, 2027, depending on market conditions, share price and other factors. Under both share repurchase programs, the Company is permitted to purchase shares of its common stock from time to time through open market purchases, repurchase plans, block trades or otherwise. During the nine months ended October 31, 2024, the Company repurchased a total of 120,000 shares of its common stock at a total cost of $2.6 million, or an average of $21.90 per share. During the nine months ended October 31, 2023, the Company repurchased a total of 85,722 shares of its common stock at a total cost of $2.3 million, or an average of $27.40 per share. At October 31, 2024, $15.2 million remains available for purchase under the Company's November 23, 2021 repurchase program and all $50.0 million remains available for purchase under the Company's December 5, 2024 repurchase program.

### Off-Balance Sheet Arrangements

The Company does not have off-balance sheet financing or unconsolidated special-purpose entities.

### Accounting Changes and Recent Accounting Pronouncements

See Note 2- Recent Accounting Pronouncements to the accompanying unaudited Consolidated Financial Statements for a description of recent accounting pronouncements which may impact the Company’s Consolidated Financial Statements in future reporting periods.

## Market risk

As filed, 4,748 characters.

### Foreign Currency Exchange Rate Risk

The Company’s primary market risk exposure relates to foreign currency exchange risk (see Note 7 – Derivative Financial Instruments to the Consolidated Financial Statements). A significant portion of the Company’s purchases are denominated in Swiss Francs and, to a lesser extent, the Japanese Yen. The Company also sells to third-party customers in a variety of foreign currencies, most notably the Euro, Swiss Franc and the British Pound. The Company reduces its exposure to the Swiss Franc, Euro, British Pound, Chinese Yuan and Japanese Yen exchange rate risk through a hedging program. Under the hedging program, the Company manages most of its foreign currency exposures on a consolidated basis, which allows it to net certain exposures and take advantage of natural offsets. In the event these exposures do not offset, from time to time the Company uses various derivative financial instruments to further reduce the net exposures to currency fluctuations, predominately forward and option contracts. Certain of these contracts meet the requirements of qualified hedges. In these circumstances, the Company designates and documents these derivative instruments as a cash flow hedge of a specific underlying exposure, as well as the risk management objectives and strategies for undertaking the hedge transactions. Changes in the fair value of hedges designated and documented as a cash flow hedge and which are highly effective, are recorded in other comprehensive income until the underlying transaction affects earnings, and then are later reclassified into earnings in the same account as the hedged transaction. The earnings impact is mostly offset by the effects of currency movements on the underlying hedged transactions. To the extent that the Company does not engage in a hedging program, any change in the Swiss Franc, Euro, British Pound, Chinese Yuan and Japanese Yen exchange rates to local currency would have an equal effect on the Company’s earnings.

From time to time the Company uses forward exchange contracts, which do not meet the requirements of qualified hedges, to offset its exposure to certain foreign currency receivables and liabilities. These forward contracts are not designated as qualified hedges and, therefore, changes in the fair value of these derivatives are recognized in earnings in the period they arise, thereby offsetting the current earnings effect resulting from the revaluation of the related foreign currency receivables and liabilities.

As of October 31, 2024, the Company’s entire net forward contracts hedging portfolio consisted of 7.3 million Chinese Yuan equivalent, 30.0 million Swiss Francs equivalent, 29.6 million U.S. dollars equivalent, 33.0 million Euros equivalent (including 9.0 million Euros designated as cash flow hedges) and 4.8 million British Pounds equivalent with various expiry dates ranging through April 10, 2025, compared to a portfolio of 20.7 million Chinese Yuan equivalent, 28.0 million Swiss Francs equivalent, 24.7 million U.S. dollars equivalent, 27.6 million Euros equivalent (including 3.0 million Euros designated as cash flow hedges) and 5.8 million British Pounds equivalent with various expiry dates ranging through April 4, 2024, as of October 31, 2023. If the Company were to settle its Swiss Franc forward contracts at October 31, 2024, the result would be a $0.1 million gain. If the Company were to settle its Euro forward contracts at October 31, 2024, the result would be a $0.2 million gain. As of October 31, 2024, the Company’s British Pound, Chinese Yuan and US Dollar forward contracts had no gain or loss.

### Commodity Risk

The Company considers its exposure to fluctuations in commodity prices to be primarily related to gold used in the manufacturing of the Company’s watches. Under its hedging program, the Company can purchase various commodity derivative instruments, primarily futures contracts. When held, these derivatives are documented as qualified cash flow hedges, and the resulting gains and losses on these derivative instruments are first reflected in other comprehensive income, and later reclassified into earnings, partially offset by the effects of gold market price changes on the underlying actual gold purchases. The Company did not hold any future contracts in its gold hedge portfolio as of October 31, 2024 and 2023; thus, any changes in the gold purchase price will have an equal effect on the Company’s cost of sales.

### Debt and Interest Rate Risk

Floating rate debt at October 31, 2024 and 2023 was zero for both periods. During the nine months ended October 31, 2024, the Company had no weighted average borrowings. The Company does not hedge these interest rate risks.

## Controls and procedures

As filed, 1,392 characters.

### Evaluation of Disclosure Controls and Procedures

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, it should be noted that a control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that its objectives will be met and may not prevent all errors or instances of fraud.

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such terms are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective at a reasonable assurance level as of the end of the period covered by this report.

### Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended October 31, 2024, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 156 characters.

As of October 31, 2024, there have been no material changes to any of the risk factors previously reported in the Company’s 2024 Annual Report on Form 10-K.

Filed Dec 5, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-133544. Last ingested by Listed: Oct 24, 2026, 14:53 ET. No prices; not investment advice.