MOV 10-K & 10-Q changes, risk factors and insider trading
Movado Group Inc. (also MOVAA) · NYSE · Watches, Clocks, Clockwork Operated Devices/parts · CIK 72573 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “If the Company identifies a material weakness in its internal control over financial reporting, or if its internal controls are otherwise ineffective, the Company may not be able to accurately report its financial results, which could materially adversely affect the Company’s business, financial condition and results of operations.”
Removed heading “Risks Related to Internal Controls”
Removed heading “Management has identified a material weakness in the Company’s internal control over financial reporting and related weakness in the Company’s disclosure controls and procedures, which could, if not remediated, result in material misstatements in the Company’s interim or annual consolidated financial statements.”
Removed heading “The Company has restated certain of its previously issued consolidated financial statements, which has resulted in unanticipated costs and may raise reputational issues.”
Largest changes
“As discussed in Note 1A - Restatement of Previously Issued Consolidated Financial Statements, the Company has restated its historical consolidated financial statements for the Affected Periods following an investigation that identified that certain employees within the Dubai Branch took actions that resulted in an overstatement of sales, premature recognition of sales and underreporting of credit notes (e.g., sales discounts) owed to customers in the Affected Region. As a result of the restatements, the Company has become subject to additional risks, uncertainties and costs. …”see in full comparison
“Although the Company believes that it has successfully remediated the material weakness in ICFR discussed below in Item 9A. Controls and Procedures, with the passage of time it is possible that additional vulnerabilities related to the matters that gave rise to the previously identified material weakness could emerge, or that inadequacies in the Company’s remediation could be identified. …”see in full comparison
“The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure controls and procedures as defined in Rule 13a-15 under the Exchange Act. In late January 2025, the Company became aware of allegations of misconduct within the Dubai branch (the “Dubai Branch”) of the Company’s Swiss subsidiary, MGI Luxury Group Sárl, related to sales to certain customers in the Middle East, India & Asia Pacific region (the “Affected Region”). …”see in full comparison
“If the Company identifies a material weakness in its internal control over financial reporting, or if its internal controls are otherwise ineffective, the Company may not be able to accurately report its financial results, which could materially adversely affect the Company’s business, financial condition and results of operations.”see in full comparison
“Management has identified a material weakness in the Company’s internal control over financial reporting and related weakness in the Company’s disclosure controls and procedures, which could, if not remediated, result in material misstatements in the Company’s interim or annual consolidated financial statements.”see in full comparison
“As described in Item 9A. Controls and Procedures of this Report, this material weakness resulted in the restatement of the Company’s annual and interim consolidated financial statements. Accordingly, the Company has restated consolidated financial statements for the Affected Periods in this Report. See Note 1A - Restatement of Previously Issued Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data.”see in full comparison
Full comparison: every changed paragraph (35)
Recent escalations in hostilities involving Iran, as well as the risk of a broader regional conflict in the Middle East, have increased geopolitical uncertainty and volatility in the region. The Middle East represents a significant market for the Company, and further deterioration in regional stability could adversely affect consumer confidence, tourism, retail traffic, and overall demand for discretionary consumer products in that market. In addition, expanded military activity, sanctions, trade restrictions, shipping disruptions, port closures, airspace restrictions, or damage to critical infrastructure could disrupt the Company’s distribution channels, supply chain operations, logistics providers, and retail partners in the region.
Escalation of the conflict could also result in higher energy prices, currency volatility, inflationary pressures, or broader global economic instability, any of which could negatively impact consumer spending and the Company’s operating costs. To the extent that hostilities persist or expand, the Company could experience reduced sales, delays in product deliveries, inventory imbalances, increased costs, asset impairment charges, or other adverse effects on its business, financial condition, and results of operations.
Since the Company operates in numerous foreign jurisdictions and relies on distributors, agents, and other third parties, it is subject to anti-corruption and anti-bribery laws, including the U.S. Foreign Corrupt Practices Act and similar laws in other countries. Violations of these laws, whether by the Company or its third-party intermediaries, could result in significant civil or criminal penalties, investigations, reputational harm, and restrictions on the Company’s ability to conduct business in certain markets.
Additional U.S. Specialtariffs Tariffs orand other restrictionstrade placedrestrictions, onalong imports,with retaliatory trade measures taken by other countriescountries, andcould resultingmaterially tradeadversely wars may have a material adverse impact onaffect the Company’s business, financial condition and results of operations.
The United States has imposed, and may in the future impose, additional tariffs and other trade restrictions on imported goods. These measures increase the Company’s product and input costs, disrupt sourcing and logistics, require pricing adjustments that may reduce demand, and adversely affect margins and operating performance. Because the United States is the Company’s single largest market, increases in duties applicable to products imported into the United States could have a disproportionate impact on the Company’s results of operations.
Products the Company sources from China are subject to additional duties under Section 301 of the Trade Act of 1974, which are imposed in addition to ordinary U.S. customs duties. For example, packaging and point-of-sale materials are subject to 25% Section 301 duties, and watch bands (whether as spare parts or as components of complete watches produced in the Far East) and jewelry are subject to 7.5% Section 301 duties. Any increase in these duties, or adverse changes to rules of origin or customs treatment, could materially increase the Company’s costs.
In 2025, the United States imposed additional “reciprocal” and other tariffs under the International Emergency Economic Powers Act (“IEEPA”). The U.S. Supreme Court subsequently ruled that those IEEPA-based tariffs were unlawful. However, uncertainty remains regarding the timing, scope and administrative process for obtaining refunds of tariffs previously paid, as well as the potential financial statement impact of any refunds or denials thereof.
Following the Supreme Court’s decision, the Trump Administration replaced the IEEPA-based tariffs with tariffs imposed under Section 122 of the Trade Act of 1974. As of the date of this Annual Report, Section 122 tariffs impose an incremental 10% ad valorem duty on covered imports, and the Administration has announced its intent to increase this rate to 15%. Section 122 tariffs expire after 150 days absent Congressional approval; however, the Administration has announced plans to conduct investigations into trade practices in order to enable the imposition of tariffs under other statutory authorities. As a result, there can be no assurance that tariff levels will decrease when Section 122 authority expires, or that new or higher duties will not be imposed.
In response to tariff increases, the Company may seek to raise prices, which could reduce demand and result in loss of customers, or may over time attempt to shift sourcing or manufacturing to other countries or suppliers. Such actions may require significant time and expense, cause supply disruption, and increase operational complexity. In addition, further U.S. trade actions could lead to retaliatory tariffs or other measures by China or other countries, potentially resulting in broader trade conflicts that further disrupt supply chains and demand.
Any of the foregoing developments could materially adversely affect the Company’s business, financial condition and results of operations.
Starting in July 2018, the U.S. government announced a series of lists covering thousands of categories of Chinese origin products subject to U.S. special tariffs in addition to the regular tariffs that have historically applied to such products. Most of the Company’s packaging products are made in China and have been subject to a U.S. special 25% tariff since May 2019. In addition, most of the bands used in the production of the Company’s traditional watches, as well as most of the Company's jewelry, are made in China and have been subject to a U.S. special 7.5% tariff since February 2020. In March and April 2025, the Trump Administration announced a series of additional special tariffs, some of which have been temporarily paused. The additional special tariffs already in effect as of the date of this annual report on Form 10-K are tariffs of 10% on most products (including all or substantially all products imported by the Company) from all countries worldwide, and a 145% tariff on substantially all products of Chinese origin. Together with the special tariffs applicable to Chinese products implemented in 2018, the special tariffs on Chinese products implemented in 2025 have increased the total U.S. special tariff on Chinese packaging materials to 170% and on Chinese watch bands and jewelry to 152.5%. In addition, the special 10% tariff applicable to all other countries applies to substantially all other products imported by the Company, including all Swiss watches as well as all watch heads (i.e., the entirety of a watch other than the watch band) produced in the Far East (which generally have Japanese movements and are therefore considered products of Japan for U.S. customs purposes).
As a result of the 2025 increases in the U.S. special tariffs, the Company may seek to raise prices for products sold in the United States, which is the Company’s single largest market, which could result in the loss of customers and harm its operating performance. Alternatively, the Company may seek to shift production outside of China, resulting in significant costs and disruption to the Company’s operations and materially and adversely affecting its, costs, sales and results of operations. Additional tariff increases or trade restrictions imposed by the United States could materially adversely effect the results of operations of the Company's U.S. business. For example, in April 2025, the Trump Administration announced a series of so-called “reciprocal” tariffs on dozens of countries with which the U.S. has a trade deficit, including special incremental tariffs of 32% on Swiss goods, 24% on Japanese goods, and 34% on Chinese goods. On April 9, the Trump Administration a 90-day pause in the implementation of these “reciprocal” tariffs. However, the Company could experience a material adverse effect on its financial condition and results of operations if these incremental tariffs go into effect.
There is also a concern that the imposition of additional tariffs by the United States could result in the adoption of tariffs by China and other countries, leading to a global trade war. For example, in April 2025, China announced tariffs of 125% on all imports from the United States. Trade restrictions implemented by the United States, China or other countries in connection with a global trade war could result in the Company needing to raise prices or make changes to its operations, any of which could result in a material adverse effect on its financial condition and results of operations.
If the Company identifies a material weakness in its internal control over financial reporting, or if its internal controls are otherwise ineffective, the Company may not be able to accurately report its financial results, which could materially adversely affect the Company’s business, financial condition and results of operations.
The Company is required to maintain effective internal control over financial reporting (“ICFR”) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles. Although management regularly evaluates the effectiveness of ICFR, there can be no assurance that the Company will not identify a material weakness or significant deficiency in the future.
A material weakness could result in delays in the preparation or filing of financial statements, the need to restate previously issued financial statements, increased audit and compliance costs, and increased scrutiny from regulators, investors and other stakeholders. The existence of a material weakness could also adversely affect investor confidence in the Company’s financial reporting and the market price of the Company’s securities.
Remediating any identified material weakness may require significant management time and resources and may not be completed in a timely manner, which could further adversely affect the Company’s business, financial condition and results of operations.
Although the Company believes that it has successfully remediated the material weakness in ICFR discussed below in Item 9A. Controls and Procedures, with the passage of time it is possible that additional vulnerabilities related to the matters that gave rise to the previously identified material weakness could emerge, or that inadequacies in the Company’s remediation could be identified. In addition, as a result of the related restatements of financial results, the Company has received and responded to information requests from the SEC and could become subject to inquiries from other regulatory or governmental authorities. These inquiries could result in reputational harm, criminal and civil fines, and penalties. Such outcomes could have a material adverse effect on the Company’s business, financial position and results of operations.
Although the Company is not currently manufacturing new smart watch models, to the extent the Company elects to launch or maintain smart watch offerings, important differences in the way smart watches are designed, sourced, marketed, distributed, and serviced as compared to traditional watches may make it more difficult to compete successfully in the smart watch market, particularly for competitors such as the Company that must rely on the expertise of third parties who are active in this market. For example, smart watches’watches are subject to significant reliance on technology increases the risk of allegations of infringement on the intellectual property rightsinfringement of others. Smart watch product development entailsrisks, greater fixed costs than those for traditional watches, whichand meansthe that higher unit sales of smart watches are generally needed in orderneed to achievesatisfy reasonableconsumer gross margins. In addition, consumers may expect that smart watches, particularly the more expensive models, willexpectations for many years continue to function and be compatiblecompatibility with thethird-party smartphone operating systems with which they were intended to interface, including future updates to such operating systems. Sinceover the Companylife hasof nothe control over such operating system updates, it cannot assure such continued compatibility.watch. If the Company fails to meet consumers’ expectations regarding the long-term functioning of any smart watches that it sells,watches, the CompanyCompany’s may suffer reputational damage that could adversely affect its business,reputation, results of operations and financial condition.condition could be adversely affected.
Favorable brand recognition is an important factor to the future success of the Company. The Company sells its products under a variety of owned and licensed brands. Factors affecting brand recognition are often outside the Company’s control, and the Company’s efforts to create or enhance favorable brand recognition, such as making significant investments in marketing and advertising campaigns (including increased exposure through social media, influencer messaging and other digital advertising channels and retail media platforms operated by key customers), product design and anticipation of fashion trends, may not have their desired effects. Additionally, the Company relies on its licensors to maintain favorable brand recognition of their respective brands, and the Company has little or no control over the brand management efforts of its licensors. Finally, although the Company’s independent distributors are subject to contractual requirements to protect the Company’s brands, it may be difficult to monitor or enforce such requirements, particularly in foreign jurisdictions.
Many governments, regulators, investors, employees, customers, and other stakeholders are focused on the environmental, social and governance (ESG) performance of companies, including climate change, greenhouse gas emissions, product safety, waste management, toxins (including PFAS), human and civil rights, diversity, equity and inclusion initiatives, and supply chain conditions. In addition to the rapidly developing legal obligations imposed by governmental and self-regulatory organizations, a variety of third-party bodies and institutional investors evaluate the performance of companies on ESG topics. Understanding, developing, and acting on ESG matters, complying with legal obligations, and collecting, measuring, validating, and reporting ESG-related information and metrics can be costly, difficult, and time-consuming, especially as requirements and expectations continue to evolve. As a responsible corporate citizen, the Company actively evaluates the impacts, risks and opportunities that ESG issues may present and makes statements about its ESG policies and initiatives through its annual Corporate Responsibility Report and various other communications; however, the Company cannot guarantee that it will achieve any goals it may announce. In addition, the Company could be criticized for the nature and scope of any goals set or not set or for the accuracy, adequacy, or completeness of the Company’s disclosures. Conversely, so-called “anti-ESG” and “anti-DEI” sentiment has also gained momentum across the United States, with several states and federal authorities having enacted or proposed “anti-ESG” policies, legislation or issued executive orders and legal opinions and engaged in related investigations and litigation. Additionally, a regulatory framework that opposes ESG policies and initiatives may also make it harder for the Company to operate across jurisdictions. The Company's failure or perceived failure to comply with any such ESG or “anti-ESG” framework could harm the Company's reputation, adversely impact its ability to attract and retain customers and talent, impair its access to or cost of capital, and expose it to legal and regulatory proceedings and increased scrutiny thereby adversely affecting the Company’s business, results of operations and financial condition.
The Company is also subject to laws and regulations relating to supply chain transparency and forced labor, including laws that may restrict or prohibit the importation of goods manufactured, in whole or in part, in certain regions or under certain labor conditions. Increased regulatory scrutiny or enforcement actions, including shipment detentions, seizures, or import bans, could disrupt the Company’s supply chain, delay product availability, increase compliance costs, and adversely affect results of operations.
The Company operates one distribution facility in New Jersey that is responsible for importing and warehousing products as well as fulfilling and shipping most orders by the Company’s customers in the United States, Canada and the Caribbean and by many of the Company’s customers in Latin America. The Company operates a smaller, similar facilityfacilities in Bienne, Switzerland for the distribution of its Swiss watch brands throughout Europe and the Middle East, and in Australia and India through its joint ventures there. In addition, the Company has contracted with third-party warehouse and fulfillment providers in the Netherlands, Hong Kong, mainland China, Czech Republic, the U.K and Mexico. The complete or partial loss or temporary shutdown of any of the Company’s or third-parties’ warehouse and distribution facilities (including as a result of fire or other casualty or labor or other disturbances) could have a material adverse effect on the Company’s business. In addition, the Company’s New Jersey warehouse and distribution facility is operated in a special purpose sub-zone established by the U.S. Department of Commerce Foreign Trade Zone Board and is highly regulated by U.S. Customs and Border Protection, which, under certain circumstances, has the right to shut down the entire sub-zone and, therefore, the entire warehouse and distribution facility. If that were to occur, the Company’s ability to fill orders for its U.S., Canadian, Latin American and Caribbean customers would be significantly impacted, which could have a material adverse effect on the Company’s results of operations and financial condition.
In adapting to changing economic and industry conditions, the Company may be required to incur severance and relocation expenses, write-offs or write-downs of assets, impairment charges, facilities closure costs or other business optimization costs. These costs will reduce the Company’s operating income and net income (along with the associated per share measures) and could have a material adverse effect on the Company’s results of operations. In addition, the anticipated future cost savings from these initiatives may not materialize.
There are risks associated with the Company’s expansion through acquisitions, license agreements, joint ventures and similar initiatives. New brands may not complement the brands in the Company’s existing portfolio and may not be viewed favorably by the consuming public. In addition, the integration of a new business or licensed brand into the Company’s existing business can strain the Company’s resources and infrastructure,infrastructure and increase inter-brand competition, and there can be no assurance that the integration will be successful or generate sales increases. The inability to successfully implement its growth strategies could adversely affect the Company’s future financial condition and results of operations.
In addition, the Company’s brands are subject to risks from counterfeiting, product diversion, unauthorized resellers, and grey market sales. The availability of counterfeit or unauthorized products, including through online marketplaces and digital platforms, may adversely affect the Company’s brand reputation, pricing integrity, relationships with authorized retailers, and sales, and may increase enforcement and brand protection costs. The Company’s efforts to prevent and mitigate these activities may not be successful in all jurisdictions.
Additionally, the U.S. government has recently enacted tariff increases on imports. These actions may result in reciprocal tariffs or other restrictive trade measures by foreign jurisdictions on U.S. goods. These conditions are causing greater uncertainty in the global economy.
Risks Related to Internal Controls
Management has identified a material weakness in the Company’s internal control over financial reporting and related weakness in the Company’s disclosure controls and procedures, which could, if not remediated, result in material misstatements in the Company’s interim or annual consolidated financial statements.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure controls and procedures as defined in Rule 13a-15 under the Exchange Act. In late January 2025, the Company became aware of allegations of misconduct within the Dubai branch (the “Dubai Branch”) of the Company’s Swiss subsidiary, MGI Luxury Group Sárl, related to sales to certain customers in the Middle East, India & Asia Pacific region (the “Affected Region”). Promptly thereafter, the Company retained outside counsel to conduct an investigation into these allegations. Based on that investigation, the Company has determined that the former managing director of the Dubai Branch, who oversaw the Affected Region, as well as certain employees under his direction, took actions that resulted in an overstatement of sales, premature recognition of sales, and underreporting of credit notes (e.g., sales discounts) owed to customers in the Affected Region. These actions included the use of a third-party warehouse unknown to the Company’s management to facilitate the premature recognition of sales, and the falsification of documents to circumvent internal controls. The conduct occurred over a period of approximately five years (beginning with the Company’s fiscal year ended January 31, 2021). The investigation has not identified any impact to reported sales to customers in other regions, nor has the investigation identified any knowledge of, or participation in, the misconduct by Company employees (whether members of management or otherwise) outside of the Affected Region. The Company has terminated the now former managing director of the Dubai Branch. 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 internal control over financial reporting and its disclosure controls and procedures. As a result of this evaluation, management identified a material weakness in the Company’s internal control over financial reporting and disclosure controls and procedures. Because of such material weakness, management concluded that the Company did not maintain effective internal control over financial reporting and disclosure controls and procedures as of January 31, 2025, 2024 and 2023. Refer to Item 9A, Controls and Procedures, of this Report for further information.
As described in Item 9A. Controls and Procedures of this Report, this material weakness resulted in the restatement of the Company’s annual and interim consolidated financial statements. Accordingly, the Company has restated consolidated financial statements for the Affected Periods in this Report. See Note 1A - Restatement of Previously Issued Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data.
The Company has begun and will continue to implement changes designed to improve its internal control over financial reporting and its disclosure controls and procedures and to remediate the material weakness, including implementing changes to the organizational structure in the Affected Region to mitigate the risk of inappropriate influence being applied to circumvent existing controls. However, the material weakness will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. The Company will monitor the effectiveness of the remediation plan and will refine the remediation plan, as needed. Until remediated, the material weakness could potentially result in future errors to the Company’s financial statements.
Remediation measures are time consuming, require significant costs and place significant demands on the Company’s financial and operational resources. In order to improve the effectiveness of its internal control over financial reporting and disclosure controls and procedures, the Company has expended, and will need to continue to expend, significant resources, including accounting and legal-related costs and significant management oversight. Any failure to remediate the material weakness, or the development of any new material weakness in the Company’s internal control over financial reporting and disclosure controls and procedures, could result in material misstatements in the Company’s financial statements and cause the Company to fail to meet its reporting and financial obligations, which in turn could have a negative impact on its reputation, brand and financial condition.
The Company has restated certain of its previously issued consolidated financial statements, which has resulted in unanticipated costs and may raise reputational issues.
As discussed in Note 1A - Restatement of Previously Issued Consolidated Financial Statements, the Company has restated its historical consolidated financial statements for the Affected Periods following an investigation that identified that certain employees within the Dubai Branch took actions that resulted in an overstatement of sales, premature recognition of sales and underreporting of credit notes (e.g., sales discounts) owed to customers in the Affected Region. As a result of the restatements, the Company has become subject to additional risks, uncertainties and costs. The Company may become subject to investigations or other inquiries by the SEC or other regulatory or governmental authorities, or subject to other legal proceedings related to the restatements, and actions and proceedings could also be brought against the Company’s current and former employees, officers, or directors. These actions, lawsuits or other legal proceedings related to the restatements could result in reputational harm and additional defense and other costs, regardless of the outcome of the lawsuit or proceeding. If the Company does not prevail in any such lawsuit or proceeding, the Company could be subject to substantial damages or settlement costs, criminal and civil fines and penalties, and other forms of relief, including, but not limited to, injunctive relief and disgorgement. As such, the restatements could have a material adverse effect on the Company’s business, financial position and results of operations.
Management's Discussion & Analysis (MD&A)
New heading “One Big Beautiful Bill Act”
Removed heading “RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS”
Removed heading “The Inflation Reduction Act of 2022”
Removed heading “Fiscal 2024 (As Restated) Compared to Fiscal 2023 (As Restated)”
Removed heading “Watch and Accessory Brands Net Sales”
Removed heading “United States Watch and Accessory Brands Net Sales”
Removed heading “International Watch and Accessory Brands Net Sales”
Removed heading “Company Stores Net Sales”
Removed heading “Selling, General and Administrative (“SG&A”)”
Removed heading “Watch and Accessory Brands Operating Income”
Removed heading “U.S. Watch and Accessory Brands Operating Loss”
Removed heading “International Watch and Accessory Brands Operating Income”
Removed heading “Company Stores Operating Income”
Removed heading “Other Non-Operating Income”
Removed heading “Interest Expense”
Removed heading “Net Income Attributable to Movado Group, Inc.”
Largest changes
For fiscal 2026, the Company recorded operating income of $15.0 million in the Watch and Accessory Brands segment which includes $37.7 million of unallocated corporate expenses as well as $66.4 million of certain intercompany profits related to the Company’s supply chain operations. For fiscal 2025, the Company recorded operating income of $7.7 million in the Watch and Accessory Brands segment whichsee in full comparisonincludesincluded $30.0 million of unallocated corporate expenses as well as $67.0 million of certain intercompany profits related to the Company’s supply chain operations.ForThefiscal 2024, the Company recorded operating income of $31.3$7.3 millionin the Watch and Accessory Brands segment which included $30.8 million of unallocated corporate expenses as well as $71.5 million of certain intercompany profits related to the Company’s supply chain operations. The decreaseincrease in operating income was the result ofaandecreaseincrease in gross profit of$6.6$6.7millionmillion, combined withhigherlower SG&A expenses of$17.0$0.6 million when compared to the prioryear.year period. Thedecreaseincrease in gross profit was the result oflowerhigher net salescombinedwhilewith a lowerthe gross margin percentage was unchanged primarily due toanaunfavorablefavorable impact of salesmix,mix and thedecreasedincreased leveraging of certainfixedreduced costsasoverahigherresultsales,ofoffsetlowerbysalesincreasedandU.S. tariffs, a negative impact of fluctuations in foreign exchangerates,ratespartiallyandoffset by decreasedhigher shipping costs. Theincreasedecrease in SG&A expensesof $17.0 millionwas primarily due tothe(i)following factors: higherlower marketing expenses of$16.9$14.2 million, (ii) a decrease in payroll-related expense of $5.7 million (which included a decrease of $3.1 million related to the cost-savings initiative mainly due to a decrease in severance costs) and (iii) a decrease in information technology-related charges of $0.8 million. These decreases were partially offset by an increase in performance-based compensation of $11.7 million, a$2.5$3.6 millionprovisionincreaseforinprofessionalforeignfeesexchange losses mainly due to a highly volatile foreign currency environment, a $1.2 million increase in accounts receivable reserve, an increase in costs of $1.1 million related to the internal investigation of allegations of misconduct within the Dubaibranch of the Company's Swiss subsidiary that resulted in a restatement of previously issued financial statements,branch, an increase inpayrolldonationsrelated expenses of $1.8 million (which included severance and payroll related costs of $4.1 million relatedprimarily to thecost-savingsMovadoinitiative)Groupand an increase in credit card and platform feesFoundation of$0.7 million. These increases in SG&A expenses were partially offset by a decrease in professional fees of $2.8 million, a decrease in the reduction of accruals for donations and doubtful accounts of $1.8$0.9 million and adecrease of $0.5$0.8 million increase inamortizationprofessionalexpenseservicerelated to certain intangible assets being fully amortized.fees.
In the United States locations of the Watch and Accessory Brands segment, for the twelve months ended January 31,see in full comparison2025,2026, the Company recorded an operating loss of$40.1$44.0 million which includes unallocated corporate expenses of$30.0$37.7 million. For the twelve months ended January 31,20242025 the Company recorded an operating loss of$30.0$40.1 million in the United States locations of the Watch and Accessory Brands segment which included unallocated corporate expenses of$30.8$30.0 million. The increase in operating loss was the result ofanaincreasedecrease in gross profit of$2.0$6.5million,million partially offset byanaincreasedecrease in SG&A expenses of$12.1$2.6 million when compared to the prioryear.year period. Theincreasedecrease in gross profit of$2.0$6.5 million was the result of higher net sales offset by ahigherlower gross margin percentage primarily due to increased U.S. tariffs and thefavorablenegative impact ofsalesfluctuationsmixinandforeigndecreasedexchangeshipping costs,rates, partially offset bydecreasedthe increased leveraging of certainfixedreduced costsasovera result of lowerhigher sales. Theincreasedecrease in SG&A expensesof $12.1 millionwas primarily due tothe(i)followingafactors:$7.6highermillion decrease in marketingexpensesexpenses, (ii) a decrease in payroll-related expense of$11.7$3.5 million (which included a decrease of $1.6 million related to the cost-savings initiative mainly due to a decrease in severance costs) and (iii) a decrease in information technology-related charges of $2.6 million. These decreases were partially offset by an increase in performance-based compensation of $8.6 million, a$2.5$0.9 millionprovisionincreaseforinprofessionaldonationsfeesprimarily to the Movado Group Foundation, a $0.7 million increase in accounts receivable reserve, an increase in costs of $0.7 million related to the internal investigation of allegations of misconduct within the Dubai branchof the Company's Swiss subsidiary that resulted inand arestatement$0.6of previously issued financial statements, anmillion increase incredit card and platform fees of $0.7 million, while payroll related expenses remained flat (but included severance and payroll related costs of $1.9 million related to the cost-savings initiative). These increases in SG&A expenses were partially offset by a decrease inprofessionalfeesserviceof $2.4 million and a decrease in the reduction of accruals for donations and doubtful accounts of $2.0 million.fees.
“RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS”see in full comparison
“In response to tariff increases, the Company may seek to raise prices, which could reduce demand and result in loss of customers, or may over time attempt to shift sourcing or manufacturing to other countries or suppliers. Such actions may require significant time and expense, cause supply disruption, and increase operational complexity. In addition, further U.S. trade actions could lead to retaliatory tariffs or other measures by China or other countries, potentially resulting in broader trade conflicts that further disrupt supply chains and demand.”see in full comparison
“Most of the bands used in the production of the Company’s traditional watches, as well as most of the Company’s jewelry, are made in China and have been subject to a U.S. special 7.5% tariff since February 2020. In March and April 2025, the Trump Administration announced a series of additional special tariffs, some of which have been temporarily paused. …”see in full comparison
From time tosee in full comparisontime,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$14.1 million of these commitments through fiscal20242025 and an additional$5.7$3.4 million during fiscal20252026 and may be called upon to satisfy capital calls in respect of the remaining$7.5$4.0 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.OneDuringconsumertheproductsthree-monthcompanyperiod ended July 31, 2025, the Company recorded a non-cash impairment charge of $0.4 million related to one of its investments in a venture capital fund in which the Companymadehasanaequitylimitedinvestmentpartnershipininterest.fiscalTheyearwrite-down2022wassoldaitsresultbusinessofandaassetsdecline in thefirstfairquartervalue offiscalthe2024investment primarily attributable to a deterioration inathetransactionfinancial condition and operating performance of certain of the underlying portfolio companies within the fund thatyieldedwaslittledeterminedreturntoforbeequityotherholders.thanAstemporary.aTheresult,Company will continue to regularly evaluate theCompanycarryingfullyvalueimpairedof its$0.5 million investment in this entity in fiscal 2024.investments.
Full comparison: every changed paragraph (99)
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS
The Company has restated our previously issued Consolidated Financial Statements contained in this Annual Report on Form 10-K. Refer to the "Explanatory Note" preceding Item 1, Business, for background on the restatement, the fiscal periods impacted, control considerations and other information.
In addition, we have restated certain previously reported financial information at January 31, 2024 and for the fiscal years ended January 31, 2024 and January 31, 2023 in this Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, including but not limited to information within the Results of Operations and Liquidity and Capital Resources.
See Note 1A - Restatement of Previously Issued Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data, for additional information related to the restatement, including descriptions of the misstatements and the impacts on our Consolidated Financial Statements.
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® and, beginning spring 2027, Kate Spade New York®.
The Company divides its business into two major geographic locations: United States operations, and International, which includes the results of all other non-U.S. Company operations. The allocation of geographic revenue is based upon the location of the customer. The Company’s International operations in Europe, the Americas (excluding the United States), Asia and the Middle East accountaccounted for 31.0%,34.1%, 9.9%,9.7%, 8.9%7.0% and 7.6%,5.9%, respectively, of the Company’s total net sales for fiscal 2025.2026. A vast majority of the Company’s tangible International assets are owned by the Company’s Swiss and Hong Kong subsidiaries.
Marketing expenditures are based principally on overall strategic considerations relative to maintaining or increasing market share in markets that management considers to be crucial to the Company’s continued success as well as on general economic conditions in the various markets around the world in which the Company sells its products. Marketing expenses include salaries, various forms of media advertising, digital advertising (including social media), customer acquisition costs and co-operativecooperative advertising and retail media network programs with certain wholesale customers and distributors and other point of sale marketing and promotional spending.
Other non-operating income, net consist primarily of interest income and the non-service components of the Company's Swiss pension plan. In addition, for the fiscal year ended January 31, 2026, the Company recorded a $0.4 million impairment related to one of its investments in a venture capital fund in which the Company has a limited partnership interest. The write-down was a result of a decline in the fair value of the investment primarily attributable to a deterioration in the financial condition and operating performance of certain of the underlying portfolio companies within the fund that was determined to be other than temporary. Also, for the fiscal year ended January 31, 2024, the Company recorded ana $0.5 million impairment related to an equity investment in a consumer products company that sold its business and assets in which the Company expects to receive little or no return on its investment.
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. 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, badmarkdown debt,allowances, inventories, income taxes, warranty obligations, useful lives of property, plant and equipment, impairments of long-lived assets,assets and stock-based compensation and contingencies and litigation.compensation. 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. Management believes the following are the critical accounting policies requiring significant judgments and estimates used in the preparation of its Consolidated Financial Statements.
In the wholesale channel, revenue is recognized and recorded when a contract is in place, obligations under the terms of a contract with the customer are satisfied and control is transferred to the customer. Such revenue is measured as the ultimate amount of consideration the Company expects to receive in exchange for transferring goods including variable consideration. The Company has determined that transfer of control passes to the wholesale customer upon shipment or upon receipt depending on the agreement with the customer and shipping terms. Control passes to outlet store customers at the time of sale and to substantially all e-commerce customers upon shipment. Factors considered in the transfer of control include the right to payment, transfer of legal title, physical possession and customer acceptance of the goods and whether the significant risks and rewards for the goods belong with the customer. The Company records estimates of variable consideration, which includes sales returns, markdowns, volume-based programsreturns and sales and cash discountmarkdown allowances as a reduction of revenue in the same period that the sales are recorded. These estimates are based upon the expected value method considering all reasonably available information including historical analysis, customer agreements and/or currently known factors that arise in the normal course of business. Returns,Discounts, discountsreturns and allowances have historically been within the Company’s expectations and the provisions established. The future provisional rates may differ from those experienced in the past. Taxes imposed by governmental authorities on the Company's revenue-producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.
Intangibles
Intangible assets consist primarily of trade names, customer relationships and trademarks. In accordance with applicable guidance, the Company estimates and records the fair value of purchased intangible assets at the time of their acquisition. The fair values of these intangible assets are estimated at the time of acquisition based on independent third-party appraisals. Finite-lived intangible assets are amortized over their respective estimated useful lives, which range from three to ten years, and are evaluated for impairment whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. The Company determined that there was no impairment in fiscal 2025, fiscal 2024 or in fiscal 2023.
Intangible assets consist primarily of trade names, customer relationships and trademarks. In accordance with applicable guidance, the Company estimates and records the fair value of purchased intangible assets at the time of their acquisition. The fair values of these intangible assets are estimated at the time of acquisition based on independent third-party appraisals. Finite-lived intangible assets are amortized over their respective estimated useful lives, typically ten years, and are evaluated for impairment whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. The Company determined that there was no impairment in fiscal 2026, fiscal 2025 or in fiscal 2024.
The Company utilizes the Black-Scholes option-pricing model which requires that certain assumptions be made to calculate the fair value of each option at the grant date. The expected life of stock option grants is determined using historical data and represents the time period during which the stock option is expected to be outstanding until it is exercised. The risk-free interest rate is based on the U.S. treasury note interest rate in effect on the date of grant for the expected life of the stock option. The expected stock price volatility is derived from historical volatility and calculated based on the estimated term structure of the stock option grant. The expected dividend yield is calculated using the Company’s expected average of annualized dividend yields and applied over the expected term of the option. Management monitors stock option exercises and employee termination patterns to estimate forfeitures rates within the valuation model. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes.
In addition to stock options, theThe Company may also grant stock awards to employees and directors. The stock awards are generally in the form of time-vesting restricted stock unit awards (pursuant to which unrestricted shares of Common Stock are issued to the grantee when the award vests) or performance-based awards (under which vesting occurs only if one or more predetermined financial goals are achieved within the relevant performance period); both are subject to the participant’s continued employment (or board service) with the Company through such vesting date. Stock awards generally are cliff-vested after three years from the date of grant (one year in the case of directors’ awards). The fair value of stock awards is generally equal to the closing price of the Company’s publicly-traded common stock on the grant date.
Compensation expense for allthe awards is accrued based on the estimated number of instruments for which the requisite service is expected to be rendered. This estimate is reflected in the period the stock option and stock awards are either granted or canceled. Expense related to stock options and stock awardsaward compensation is recognized on a straight-line basis over the vesting term and only if the performance condition is probable of being achieved.
The United States has imposed, and may in the future impose, additional tariffs and other trade restrictions on imported goods. These measures increase the Company’s product and input costs, disrupt sourcing and logistics, require pricing adjustments that may reduce demand, and adversely affect margins and operating performance. Because the United States is the Company’s single largest market, increases in duties applicable to products imported into the United States could have a disproportionate impact on the Company’s results of operations.
The majority of the Company’s products are sourced from Switzerland, Japan, and China. For U.S. customs purposes, the Company’s Swiss watches are classified as products of Switzerland. Watches produced in the Far East generally consist of watch heads that originate in Japan and bands that originate in China. In addition, most of the Company’s jewelry and packaging is of Chinese origin.
Since February 2020, the Company’s U.S. imports of Chinese-origin watch bands and jewelry have been subject to a special incremental tariff of 7.5% under Section 301 of the Trade Act of 1974, and imports of Chinese-origin packaging have been subject to a 25% Section 301 tariff.
In calendar year 2025, the United States imposed additional “reciprocal” and other tariffs under the International Emergency Economic Powers Act (“IEEPA”). The U.S. Supreme Court subsequently ruled that those IEEPA-based tariffs were unlawful. However, uncertainty remains regarding the timing, scope and administrative process for obtaining refunds of tariffs previously paid, as well as the potential financial statement impact of any refunds or denials thereof.
The Company incurred $12.7 million of IEEPA tariffs in fiscal year 2026. Of this amount, $9.6 million was recognized in cost of sales in the Company’s Consolidated Statements of Operations, and $3.1 million was capitalized as a component of inventory in the Company’s Consolidated Balance Sheets at January 31, 2026. Of the total tariffs incurred, $8.7 million was paid in fiscal year 2026, with the remaining amount recorded as an accrued liability at January 31, 2026.
The Company has not recognized a receivable related to potential tariff refunds, as realization remains uncertain. The ultimate resolution of this matter could have a positive material impact on the Company’s results of operations, financial position, and cash flows in future periods.
Following the Supreme Court’s decision, the Trump Administration replaced the IEEPA-based tariffs with tariffs imposed under Section 122 of the Trade Act of 1974. As of the date of this Annual Report, Section 122 tariffs impose an incremental 10% ad valorem duty on covered imports, and the Administration has announced its intent to increase this rate to 15%. Section 122 tariffs expire after 150 days absent Congressional approval; however, the Administration has announced plans to conduct investigations into trade practices in order to enable the imposition of tariffs under other statutory authorities. As a result, there can be no assurance that tariff levels will decrease when Section 122 authority expires, or that new or higher duties will not be imposed.
In response to tariff increases, the Company may seek to raise prices, which could reduce demand and result in loss of customers, or may over time attempt to shift sourcing or manufacturing to other countries or suppliers. Such actions may require significant time and expense, cause supply disruption, and increase operational complexity. In addition, further U.S. trade actions could lead to retaliatory tariffs or other measures by China or other countries, potentially resulting in broader trade conflicts that further disrupt supply chains and demand.
Most of the bands used in the production of the Company’s traditional watches, as well as most of the Company’s jewelry, are made in China and have been subject to a U.S. special 7.5% tariff since February 2020. In March and April 2025, the Trump Administration announced a series of additional special tariffs, some of which have been temporarily paused. The additional such special tariffs already in effect as of the date of this annual report on Form 10-K include tariffs of 10% on all or substantially all products imported by the Company, and a 145% tariff on substantially all products of Chinese origin. Together with the special tariffs applicable to Chinese products implemented in 2018, the special tariffs on Chinese products implemented in 2025 have increased the total U.S. special tariff on Chinese packaging materials to 170% and on Chinese watch bands and jewelry to 152.5%. In addition, the special 10% tariff applicable to all other countries applies to substantially all other products imported by the Company, including all Swiss watches as well as all watch heads (i.e., the entirety of a watch other than the watch band) produced in the Far East (which generally have Japanese movements and are therefore considered products of Japan for U.S. customs purposes). These actions are expected to increase the Company’s cost of sales. If the additional special tariffs that went into effect in March and April 2025 had been in effect during fiscal 2025, cost of sales would have been approximately $25 million to $30 million higher than the $300.2 million reported, assuming all else remained unchanged. However, the Company is developing plans to lessen the impact of these tariffs, including select price increases at the wholesale and retail levels, as well as possible operational changes that could result in a change in the country of origin for certain of the Company's products. In addition, in April 2025, the Trump Administration announced a series of so-called “reciprocal” tariffs on dozens of countries with which the U.S. has a trade deficit, including special incremental tariffs of 32% on Swiss goods and 24% on Japanese goods. On April 9, 2025, the Trump Administration announced a 90-day pause in the implementation of these “reciprocal” tariffs (other than the reciprocal tariffs on China, discussed above). However, if these additional “reciprocal” tariffs go into effect, the Company will incur substantial additional increases in its cost of sales and sales volumes into the U.S. would likely decline.
During 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. As a result of this initiative, during fiscal year 2025, the Company recorded $4.6 million in accruals for severance and employee-related charges and early lease termination charges ofand whichan additional $1.5 million was recorded in accruals for severance and employee-related charges during fiscal year 2026. Of the total amount recorded, $1.3 million was paid related to severance and employee related charges during fiscal year 2025, and $3.5 million paid related to severance and employee-related charges and $0.5 million of early lease termination related fees and costs were paid/utilized during fiscal year 2026, with the balance expected to be paid during the remainder of fiscal year 2026.2027. The Company expects go-forward annual savings from the cost-savings initiatives of approximately $10.0 million.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law by President Trump. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA did not have a material impact on the Company's Consolidated Financial Statements for fiscal 2026. The Company will continue to evaluate and monitor potential impacts on future periods and does not expect the OBBBA to have a material impact on its Consolidated Financial Statements.
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 Organization for Economic Cooperation and Development ("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 several countries have adopted and enacted changes to their legislation in response to Pillar Two, in January 2025, the President of the United States issued an executive order announcing the United States’ opposition to aspects of these rules. The Company's revenue 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.
The following is a discussion of the results of operations for fiscal 2026 compared to fiscal 2025 along with a discussion of the changes in financial condition during fiscal 2026. For a discussion of our results of operations in fiscal year 2025 compared to fiscal year 2024, please see "Results of Operations" in Item 7 (Management's Discussion and Analysis of Financial Condition and Results of Operations) of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025, filed with the SEC on April 16, 2025.
The following is a discussion of the results of operations for fiscal 2025 compared to fiscal 2024 and fiscal 2024 compared to fiscal 2023 along with a discussion of the changes in financial condition during fiscal 2025. The fiscal year 2024 and 2023 amounts reflect the restatements described in Note 1A - Restatement of Previously Issued Consolidated Financial Statements, in Item 8, Financial Statements and Supplementary Data.
Fiscal 20252026 Compared to Fiscal 2024 (As Restated)2025
Net sales for fiscal 20252026 were $653.4$671.3 million, representing ana $11.0$17.9 million or 1.7%2.7% decreaseincrease from the prior year. Both of the Company's operating segments experienced net sales declines. For fiscal 2025,2026, fluctuations in foreign currency exchange rates negativelypositively impacted net sales by $1.4$11.6 million when compared to the prior year. Excluding this $1.4$11.6 million impact, net sales would have decreasedincreased by 1.5%1.0% as compared to the prior year.
Net sales for fiscal 20252026 in the Watch and Accessory Brands segment were $556.4$568.3 million, belowabove the prior year by $4.1$11.9 million, or 0.7%.2.1%. The decreaseincrease in net sales was primarily due to unfavorable sales mix, mainly in the United States locations, and the negativepositive impact of fluctuations in foreign exchange rates, partially offset by an increase in online retail in the United States locationsrates and increased volumes resulting from higher demand in the Company's wholesale customers, mainlywith an increase in net sales recorded in the Internationallicensed locations.brands category of $26.2 million, or 7.2%, partially offset by a decrease in net sales recorded in the owned brands category of $11.1 million, or 6.1%.
Net sales for fiscal 20252026 in the United States locations of the Watch and Accessory Brands segment were $186.5$193.2 million, belowabove the prior year by $4.8$6.7 million, or 2.5%,3.6%, resulting primarily from unfavorableincreased volumes resulting from higher demand in the Company's wholesale customers. The net sales mix,recorded in the licensed brands category increased $10.9 million, or 22.3%, partially offset by ana increasedecrease in online retail. The net sales recorded in the owned brands category decreasedof $11.2$4.1 million, or 7.7%, partially offset by an increase in net sales recorded in the licensed brand category of $6.8 million, or 16.0%.3.1%.
Net sales for fiscal 20252026 in the International locations of the Watch and Accessory Brands segment were $369.9$375.1 million, above the prior year by $0.7$5.2 million, or 0.2%,1.4%, which included fluctuations in foreign currency exchange rates that negativelypositively impacted net sales by $1.4$11.6 million when compared to the prior year. The increase in net sales was primarily due to the positive impact of fluctuations in foreign exchange rates and increased volumes resulting from higher demand in the licensed brands category in the Company's wholesale customers, partially offset by thelower negative impact of fluctuations in foreign exchange rates. The net sales decrease recordeddemand in the owned brands category was $3.8 million, or 7.1%, due to net sales decreases in Europe, the MiddleCompany's Eastwholesale and the Americas (excluding the United States), partially offset by an increase in Asia.customers. The net sales increase recorded in the licensed brands category was $4.3$15.2 million, or 1.4%,4.8%, primarily due to net sales increases in AsiaEurope and the Americas (excluding the United States), partially offset by net sales decreases in Asia and the Middle EastEast. The net sales decrease recorded in the owned brands category was $7.0 million, or 14.1%, primarily due to net sales decreases in the Middle East, Asia and Europe.Europe, partially offset by a net sales increase in the Americas (excluding the United States).
Net sales for fiscal 20252026 in the Company Stores segment were $97.0$103.0 million, $6.9$6.1 million or 6.7%6.2% belowabove the prior year. The net sales decreaseincrease was primarily due to unfavorableincreased salesvolumes mixmainly due to higher foot traffic in the CompanyCompany's stores, partiallya offsetnew bystore opening and an increase in sales from the Company's online outlet store at www.movadocompanystore.com and a new store opening.www.movadocompanystore.com. As of January 31, 20252026 and 2024,2025, the Company operated 5657 and 5556 retail outlet locations, respectively.
Gross profit for fiscal 20252026 was $353.1$363.6 million or 54.0%54.2% of net sales as compared to $364.2$353.1 million or 54.8%54.0% of net sales in the prior year. The decreaseincrease in gross profit of $11.1$10.5 million was due to lowerhigher net sales combined with a lowerhigher gross margin percentage. The decreaseincrease in the gross margin percentage of approximately 8020 basis points for fiscal 20252026 reflected ana unfavorable impact offavorable sales mix of (approximately 50180 basis points,points) and the decreasedincreased leveraging of certain fixedreduced costs asover a result of lowerhigher sales of (approximately 3040 basis points), andpartially offset by the negative impact due to increased U.S. tariffs (approximately 150 basis points), a negative impact of fluctuations in foreign exchange rates of(approximately 40 basis points) and higher shipping costs (approximately 10 basis points, partially offset by decreased shipping costs of approximately 10 basis points.points).
SG&A expenses for fiscal 20252026 were $333.1$333.8 million, representing an increase from the prior year of $17.4$0.6 million, or 5.5%.0.2%. The increase in SG&A expenses was primarily due to the(i) followingan factors:increase higherin marketingperformance-based expensescompensation of $17.2$12.0 million, (ii) a $2.5$3.6 million provisionincrease forin professionalforeign feesexchange losses mainly due to a highly volatile foreign currency environment, (iii) a $1.2 million increase in accounts receivable reserve, (iv) an increase in costs of $1.1 million related to the internal investigation of allegations of misconduct within the Dubai branch of the Company's Swiss subsidiary that resulted in a restatement of previously issued financial statements, an(v) a $0.9 million increase in payrolldonations related expenses of $2.1 million (which included severance and payroll related costs of $4.1 million relatedprimarily to the cost-savingsMovado initiativeGroup discussedFoundation, above(vi) undera “Recent$0.8 Developmentsmillion increase in professional service fees, and Initiatives”(vii) and an increase in credit card and platform fees of $0.7 million.million in rent-related expenses due to a new store opening. These increases were partially offset by alower decreasemarketing in professional feesexpenses of $2.8$14.1 million, a decrease in thepayroll-related reductionexpense of accruals$5.7 formillion donations(which included a decrease of $3.1 million related to the cost-savings initiative, mainly due to a decrease in severance costs, discussed under "Recent Developments and doubtful accounts of $1.8 millionInitiatives") and a decrease in information technology-related charges of $0.5$0.8 million in amortization expense related to certain intangible assets being fully amortized.million. For the year ended January 31, 2025,2026, fluctuations in foreign currency rates related to the foreign subsidiaries favorablyunfavorably impacted SG&A expenses by $1.5$9.7 million when compared to the prior year.year period.
For fiscal 2026, the Company recorded operating income of $15.0 million in the Watch and Accessory Brands segment which includes $37.7 million of unallocated corporate expenses as well as $66.4 million of certain intercompany profits related to the Company’s supply chain operations. For fiscal 2025, the Company recorded operating income of $7.7 million in the Watch and Accessory Brands segment which includesincluded $30.0 million of unallocated corporate expenses as well as $67.0 million of certain intercompany profits related to the Company’s supply chain operations. ForThe fiscal 2024, the Company recorded operating income of $31.3$7.3 million in the Watch and Accessory Brands segment which included $30.8 million of unallocated corporate expenses as well as $71.5 million of certain intercompany profits related to the Company’s supply chain operations. The decreaseincrease in operating income was the result of aan decreaseincrease in gross profit of $6.6$6.7 millionmillion, combined with higherlower SG&A expenses of $17.0$0.6 million when compared to the prior year.year period. The decreaseincrease in gross profit was the result of lowerhigher net sales combinedwhile with a lowerthe gross margin percentage was unchanged primarily due to ana unfavorablefavorable impact of sales mix,mix and the decreasedincreased leveraging of certain fixedreduced costs asover ahigher resultsales, ofoffset lowerby salesincreased andU.S. tariffs, a negative impact of fluctuations in foreign exchange rates,rates partiallyand offset by decreasedhigher shipping costs. The increasedecrease in SG&A expenses of $17.0 million was primarily due to the(i) following factors: higherlower marketing expenses of $16.9$14.2 million, (ii) a decrease in payroll-related expense of $5.7 million (which included a decrease of $3.1 million related to the cost-savings initiative mainly due to a decrease in severance costs) and (iii) a decrease in information technology-related charges of $0.8 million. These decreases were partially offset by an increase in performance-based compensation of $11.7 million, a $2.5$3.6 million provisionincrease forin professionalforeign feesexchange losses mainly due to a highly volatile foreign currency environment, a $1.2 million increase in accounts receivable reserve, an increase in costs of $1.1 million related to the internal investigation of allegations of misconduct within the Dubai branch of the Company's Swiss subsidiary that resulted in a restatement of previously issued financial statements,branch, an increase in payrolldonations related expenses of $1.8 million (which included severance and payroll related costs of $4.1 million relatedprimarily to the cost-savingsMovado initiative)Group and an increase in credit card and platform feesFoundation of $0.7 million. These increases in SG&A expenses were partially offset by a decrease in professional fees of $2.8 million, a decrease in the reduction of accruals for donations and doubtful accounts of $1.8$0.9 million and a decrease of $0.5$0.8 million increase in amortizationprofessional expenseservice related to certain intangible assets being fully amortized.fees.
In the United States locations of the Watch and Accessory Brands segment, for the twelve months ended January 31, 2025,2026, the Company recorded an operating loss of $40.1$44.0 million which includes unallocated corporate expenses of $30.0$37.7 million. For the twelve months ended January 31, 20242025 the Company recorded an operating loss of $30.0$40.1 million in the United States locations of the Watch and Accessory Brands segment which included unallocated corporate expenses of $30.8$30.0 million. The increase in operating loss was the result of ana increasedecrease in gross profit of $2.0$6.5 million,million partially offset by ana increasedecrease in SG&A expenses of $12.1$2.6 million when compared to the prior year.year period. The increasedecrease in gross profit of $2.0$6.5 million was the result of higher net sales offset by a higherlower gross margin percentage primarily due to increased U.S. tariffs and the favorablenegative impact of salesfluctuations mixin andforeign decreasedexchange shipping costs,rates, partially offset by decreasedthe increased leveraging of certain fixedreduced costs asover a result of lowerhigher sales. The increasedecrease in SG&A expenses of $12.1 million was primarily due to the(i) followinga factors:$7.6 highermillion decrease in marketing expensesexpenses, (ii) a decrease in payroll-related expense of $11.7$3.5 million (which included a decrease of $1.6 million related to the cost-savings initiative mainly due to a decrease in severance costs) and (iii) a decrease in information technology-related charges of $2.6 million. These decreases were partially offset by an increase in performance-based compensation of $8.6 million, a $2.5$0.9 million provisionincrease forin professionaldonations feesprimarily to the Movado Group Foundation, a $0.7 million increase in accounts receivable reserve, an increase in costs of $0.7 million related to the internal investigation of allegations of misconduct within the Dubai branch of the Company's Swiss subsidiary that resulted inand a restatement$0.6 of previously issued financial statements, anmillion increase in credit card and platform fees of $0.7 million, while payroll related expenses remained flat (but included severance and payroll related costs of $1.9 million related to the cost-savings initiative). These increases in SG&A expenses were partially offset by a decrease in professional feesservice of $2.4 million and a decrease in the reduction of accruals for donations and doubtful accounts of $2.0 million.fees.
In the International locations of the Watch and Accessory Brands segment, for the twelve months ended January 31, 2025,2026, the Company recorded operating income of $47.8$59.0 million which includes $67.0$66.4 million of certain intercompany profits related to the Company’s International supply chain operations. For the twelve months ended January 31, 2024,2025, the Company recorded operating income of $61.3$47.8 million in the International locations of the Watch and Accessory Brands segment which included $71.5$67.0 million of certain intercompany profits related to the Company’s supply chain operations. The decreaseincrease in operating income was the result of lowera higher gross profit of $8.7$13.2 million combinedpartially withoffset by higher SG&A expenses of $4.8$2.0 million when compared to the prior year.million. The decreaseincrease in gross profit of $8.7$13.2 million was primarily the result of higher sales and a lowerhigher gross margin percentage primarily due to thea unfavorablefavorable impact of sales mixmix, the increased leveraging of certain reduced costs over higher sales and athe negativepositive impact of fluctuations in foreign exchange rates, partially offset by decreased shipping costs.rates. The increase in SG&A expenses of $4.8 million was primarily due to (i) a $3.6 million increase in foreign exchange losses mainly due to a highly volatile foreign currency environment, (ii) an increase in performance-based compensation of $3.1 million, (iii) an increase in information-technology related charges of $1.8 million, (iv) a $0.5 million increase in accounts receivable reserve, and (v) an increase in costs of $0.4 million related to the followinginternal factors:investigation higherof allegations of misconduct within the Dubai branch. These increases were partially offset by lower marketing expenses of $5.2$6.6 million and ana increasedecrease in payrollpayroll-related related expensesexpense of $1.8$2.2 million (which included severancea and payroll related costsdecrease of $2.2$1.5 million related to the cost-savings initiative).initiative, Thesemainly increases in SG&A expenses were partially offset by a decrease of $0.5 million in amortization expense relateddue to certain intangible assets being fully amortized and a decrease in professionalseverance fees of $0.4 million.costs).
The Company recorded operating income of $12.3$14.8 million and $17.2$12.3 million in the Company Stores segment for fiscal 20252026 and 2024,2025, respectively. The decreaseincrease in operating income of $4.9$2.5 million was primarily related to aan decreaseincrease in gross profit of $4.4$3.7 million,million mainly due to lowerhigher netsales, salespartially combinedoffset with a lower gross margin percentage, andby higher SG&A expenses of $0.5$1.2 million primarily due to an increase in payroll relatedrent-related expenses of $0.3$0.7 million due to a new store opening and higheran marketingincrease expensesin performance-based compensation of $0.3 million. As of January 31, 2025,2026, and 2024,2025, the Company Stores segment operated 5657 and 5556 retail outlet locations, respectively.
Other Non-Operating IncomeIncome, net
The Company recorded other income, net of $5.0 million for the twelve months ended January 31, 2026, primarily due to interest income, partially offset by a non-cash impairment charge of $0.4 million related to one of its investments in a venture capital fund in which the Company has a limited partnership interest. The write-down was a result of a decline in the fair value of the investment primarily attributable to a deterioration in the financial condition and operating performance of certain of the underlying portfolio companies within the fund that was determined to be other than temporary.
For the twelve months ended January 31, 2024, the Company recorded other income, net of $6.0 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.
The effective tax rate for fiscal 2026 was 21.8% and differed from the U.S. statutory tax rate of 21.0% primarily due to nondeductible items, partially offset by the deduction of Foreign-Derived Intangible Income and foreign profits being taxed in lower taxing jurisdictions. The effective tax rate for fiscal 2025 was 27.9% and differed from the U.S. statutory tax rate of 21.0% primarily due to the tax consequences of a foreign currency gain related to an extraordinary intercompany dividend and an increase in valuation allowances against certain foreign losses, partially offset by foreign profits being taxed in lower taxing jurisdictions. The effective tax rate for fiscal 2024 was 21.8% and differed from the U.S. statutory tax rate of 21.0% primarily due to foreign profits being taxed in lower taxing jurisdictions, partially offset by cross-border tax effects and U.S. state and local taxes, net of the federal benefit.
The Company recorded net income attributable to Movado Group, Inc. of $18.4 million and $41.3 million for fiscal 2025 and 2024, respectively.
Fiscal 2024 (As Restated) Compared to Fiscal 2023 (As Restated)
The following are net sales by business segment and geographic location (in thousands):
The following are net sales by category (in thousands):
The following table presents the Company’s results of operations expressed as a percentage of net sales for the fiscal years indicated:
Net sales for fiscal 2024 were $664.4 million, representing a $79.8 million or 10.7% decrease from the prior year. This decrease is attributable to the Watch and Accessory Brands segment and, to a lesser extent, the Company Stores segment. For fiscal 2024, fluctuations in foreign currency exchange rates positively impacted net sales by $8.6 million when compared to the prior year. Excluding this $8.6 million impact, net sales would have decreased by 11.9% as compared to the prior year.
Watch and Accessory Brands Net Sales
Net sales for fiscal 2024 in the Watch and Accessory Brands segment were $560.5 million, below the prior year by $72.2 million, or 11.4%. The decrease in net sales was primarily due to decreased volumes resulting from lower demand in the Company's wholesale customers in both the United States and International locations and a decrease in online retail, partially offset by the positive impact of fluctuations in foreign exchange rates.
United States Watch and Accessory Brands Net Sales
Net sales for fiscal 2024 in the United States locations of the Watch and Accessory Brands segment were $191.3 million, below the prior year by $36.0 million, or 15.8%, resulting primarily from decreased volumes due to lower demand in the Company's wholesale customers in both the owned and licensed brand categories and a decrease in online retail. The net sales recorded in the owned brands category decreased $27.2 million, or 15.8%, and net sales recorded in the licensed brand category decreased $8.7 million, or 17.1%.
International Watch and Accessory Brands Net Sales
What changed in the latest 10-Q
Risk Factors
As of July 31, 2026, there have been no material changes to any of the risk factors previously reported in the Company’s 2026 Annual Report on Form 10-K.
Full comparison: every changed paragraph (1)
As of AprilJuly 30,31, 2026, there have been no material changes to any of the risk factors previously reported in the Company’s 2026 Annual Report on Form 10-K.
Management's Discussion & Analysis (MD&A)
New heading “Results of operations for the six months ended July 31, 2026 as compared to the six months ended July 31, 2025”
New heading “Watch and Accessory Brands Net Sales”
New heading “United States Watch and Accessory Brands Net Sales”
New heading “International Watch and Accessory Brands Net Sales”
New heading “Company Stores Net Sales”
New heading “Selling, General and Administrative (“SG&A”)”
New heading “Watch and Accessory Brands Operating Income/Loss”
New heading “U.S. Watch and Accessory Brands Operating Loss”
New heading “International Watch and Accessory Brands Operating Income”
New heading “Company Stores Operating Income”
New heading “Other Non-Operating Income, net”
New heading “Interest Expense”
New heading “Net Income Attributable to Movado Group, Inc.”
Largest changes
“Upon expiration of the Section 122 surcharge in July 2026, the Administration imposed new tariffs under Section 301 of the Trade Act of 1974 following investigations concerning the failure of certain U.S. trading partners to impose and effectively enforce prohibitions on imports produced with forced labor. …”see in full comparison
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 $17.5 million of these commitments through fiscal 2026 and an additionalsee in full comparison$0.5$1.1 million during the firstthreesix months of fiscal 2027 and may be called upon to satisfy capital calls in respect of the remaining$3.5$2.9 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. During the three-month period ended July 31, 2025, the Company recorded a non-cash impairment charge of $0.4 million related to one of its investments in a venture capital fund in which the Company has a limited partnership interest. The write-down was a result of a decline in the fair value of the investment primarily attributable to a deterioration in the financial condition and operating performance of certain of the underlying portfolio companies within the fund that was determined to be other than temporary. The Company will continue to regularly evaluate the carrying value of its investments. These investments are carried at cost, less any related impairments, adjusted for observable price changes, if any, as fair values are not readily determinable. Other than the additional investments made during the six months ended July 31, 2026, there were no impairment charges or observable price changes related to these investments.
“Following the Supreme Court’s decision, the Trump Administration replaced the IEEPA-based tariffs with tariffs imposed under Section 122 of the Trade Act of 1974. As of the date of this Quarterly Report, Section 122 tariffs impose an incremental 10% ad valorem duty on covered imports. Section 122 tariffs expire after 150 days absent Congressional approval; however, the Administration has launched investigations into trade practices in order to enable the imposition of tariffs under other statutory authorities. …”see in full comparison
“For the six months ended July 31, 2026 the Company recorded operating income of $16.9 million in the Watch and Accessory Brands segment, compared to an operating loss of $0.2 million in the prior period. Operating results for the six months ended July 31, 2026 included $25.4 million of unallocated corporate expenses and $27.5 million of certain intercompany profits related to the Company’s supply chain operations, compared to $18.7 million and $28.6 million, respectively, in the prior year period. …”see in full comparison
“Following the Supreme Court's February 2026 decision invalidating the use of IEEPA by the Trump Administration, the Administration imposed a temporary 10% ad valorem import surcharge under Section 122 of the Trade Act of 1974, subject to certain exemptions, which remained in effect through July 24, 2026. In May 2026, the U.S. Court of International Trade ruled that the Section 122 tariffs were also invalid. …”see in full comparison
“The Company recorded other income, net of $1.2 million for the three months ended July 31, 2025, primarily due to interest income, partially offset by a non-cash impairment charge of $0.4 million related to one of its investments in a venture capital fund in which the Company has a limited partnership interest. The write-down was a result of a decline in the fair value of the investment primarily attributable to a deterioration in the financial condition and operating performance of certain of the underlying portfolio companies within the fund that was determined to be other than temporary.”see in full comparison
Full comparison: every changed paragraph (84)
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: the Company's ability to maintain effective internal control over financial reporting in the future; 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 and 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 increase of tariffs and other trade barriers; the impact of international hostilities, including the Russian invasion of Ukraine and war in the Middle EastEast, 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 including long-lived 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, including cybersecurity risks posed by increasing reliance on cloud services and generative artificial intelligence; complex and quickly-evolving regulations regarding privacy and data protection; regulatory restrictions and a changing marketing environment, including the movement toward a cookieless future and increased digital advertising costs; requirements to meet environmental, social and governance regulations, expectations or standards, including climate change-related risks and regulatory requirements; the impact of current or future cost reduction, streamlining, restructuring or business optimization initiatives; risks associated with laws and regulations relating to supply chain transparency and forced labor; changes to existing laws or regulations, including changes to tax laws or regulations; 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 and the potential imposition of tariffs under alternative statutory authorities), quotas, political and economic stability, anti-corruption and anti-bribery laws, changes to existing laws or regulations, and impacts of currency exchange rate fluctuations and the success of hedging strategies related thereto.
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 discusseddisclosed in the Company's 2026 Annual Report on Form 10-K and are incorporated by reference herein. As of AprilJuly 30,31, 2026, there have been no material changes to any of the Company's critical accounting policies.
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® and, beginning spring 2027, Kate Spade New York®.
In fiscal year 2026, the United States imposed additional “reciprocal” and other tariffs under the International Emergency Economic Powers Act (“IEEPA”). These tariffs were invalidated by the Supreme Court in February 2026. The Company paid approximately $10.0 million in IEEPA tariffs between February 2025 and February 2026. During the second quarter of fiscal 2027, the Company received approximately $3.2 million of refunds of previously paid IEEPA tariffs, which was recognized as a benefit to cost of sales during the quarter. The Company iscontinues evaluatingto pursue potential recoveries of the remaining amounts following recent court rulings and U.S. Customs and Border Protection (“CBP”) guidance. DueThe Company has elected to ongoingapply administrativea andgain legalcontingency uncertainties,model noin receivableaccordance haswith beenASC 450-30, Gain Contingencies, to account for potential recoveries of previously paid IEEPA tariffs. Under this model, a gain contingency is not recognized in the Consolidated Financial Statements until the gain is realized or realizable, which is at Aprilthe 30, 2026. The ultimate resolutionearlier of thiswhen matterCBP could have a material positive impact onaffirms the Company’s resultsrefund ofclaim operations,or financialthe position,refund andis cash flowsreceived in future periods.cash.
Following the Supreme Court's February 2026 decision invalidating the use of IEEPA by the Trump Administration, the Administration imposed a temporary 10% ad valorem import surcharge under Section 122 of the Trade Act of 1974, subject to certain exemptions, which remained in effect through July 24, 2026. In May 2026, the U.S. Court of International Trade ruled that the Section 122 tariffs were also invalid. The Company has not recorded a receivable related to Section 122 tariffs paid by it during the first six months of fiscal 2027 and continues to monitor ongoing litigation related to the potential recovery of these tariffs.
Upon expiration of the Section 122 surcharge in July 2026, the Administration imposed new tariffs under Section 301 of the Trade Act of 1974 following investigations concerning the failure of certain U.S. trading partners to impose and effectively enforce prohibitions on imports produced with forced labor. Of greatest relevance to the Company, the new Section 301 measures generally impose an additional 12.5% duty on covered imports from China and, with respect to covered imports from Switzerland and Japan, impose additional duties designed to bring the combined applicable most-favored-nation duty and the new Section 301 duty to 12.5%. These measures operate in addition to certain other tariffs that remain in effect, including the pre-existing Section 301 tariffs mentioned above that are applicable to certain imports from China. As a result, the aggregate duties applicable to particular Company imports vary depending on the country of origin, tariff classification and applicability of other tariff measures or exemptions.
The Administration has also initiated or continued other trade investigations that could result in additional tariffs or other changes to the duties applicable to the Company's U.S. imports. The ultimate scope, duration and impact of these and any future tariff measures remain uncertain.
Following the Supreme Court’s decision, the Trump Administration replaced the IEEPA-based tariffs with tariffs imposed under Section 122 of the Trade Act of 1974. As of the date of this Quarterly Report, Section 122 tariffs impose an incremental 10% ad valorem duty on covered imports. Section 122 tariffs expire after 150 days absent Congressional approval; however, the Administration has launched investigations into trade practices in order to enable the imposition of tariffs under other statutory authorities. As a result, there can be no assurance that tariff levels will decrease when Section 122 authority expires, or that new or higher duties will not be imposed.
During the first quartersix months of fiscal year 2027, the Company paid $0.3 million related to severance and employee-related costs, with the remaining $0.5 million balance expected to be paid during the remainder of fiscal year 2027.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law by President Trump. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA did not have a material impact on the Company's Consolidated Financial Statements for fiscal 2026 and the first quartersix months of fiscal 2027.
The following is a discussion of the results of operations for the three and six months ended AprilJuly 30,31, 2026 compared to the three and six months ended AprilJuly 30,31, 2025, along with a discussion of the changes in financial condition during the first threesix months of fiscal 2027. The Company’s results of operations for the first threesix months of fiscal 2027 should not be deemed indicative of the results that the Company will experience for the full year of fiscal 2027. 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, 2026 filed with the Securities and Exchange Commission on March 19, 2026.
Results of operations for the three months ended AprilJuly 30,31, 2026 as compared to the three months ended AprilJuly 30,31, 2025
Net sales for the three months ended AprilJuly 30,31, 2026 were $142.4$169.8 million, representing a $10.6$7.9 million or 8.1%4.9% increase from the prior year period. For the three months ended AprilJuly 30,31, 2026, fluctuations in foreign currency exchange rates positively impacted net sales by $4.7$0.7 million when compared to the prior year period. Excluding this $4.7$0.7 million impact, net sales would have increased by 4.5%4.4% as compared to the prior year period.
Net sales for the three months ended AprilJuly 30,31, 2026 in the Watch and Accessory Brands segment were $123.7$142.9 million, above the prior year period by $8.9$7.2 million, or 7.7%.5.3%. The increase in net sales was primarily due to sales mix, increased volumes resulting from higher demand in the Company's wholesale customerscustomers, a favorable sales mix and the positive impact of fluctuations in foreign exchange rates. The net sales in the owned brands category increased $2.5$0.3 million, or 7.5%,0.7%, combined with an increase in net sales recorded in the licensed brands category of $5.3$8.3 million, or 6.5%.9.0%.
Net sales for the three months ended AprilJuly 30,31, 2026 in the United States locations of the Watch and Accessory Brands segment were $41.7$47.5 million, above the prior year period by $3.2$2.7 million, or 8.2%,5.9%, resulting primarily from sales mix and increased volumes resulting from higher demand in the Company's wholesale customers.customers and a favorable sales mix. The net sales recorded in the owned brands category increased $1.4$0.7 million, or 5.3%,2.3%, combined with an increase in net sales recorded in the licensed brands category of $1.9$2.5 million, or 15.6%.21.3%.
Net sales for the three months ended AprilJuly 30,31, 2026 in the International locations of the Watch and Accessory Brands segment were $82.0$95.4 million, above the prior year by $5.7$4.5 million, or 7.5%,5.0%, which included fluctuations in foreign currency exchange rates that positively impacted net sales by $4.7$0.7 million when compared to the prior year period. In addition to the positive impact of fluctuations in foreign exchange rates, the increase in net sales was primarily due to increased volumes resulting from higher demand in the ownedlicensed brands category in the Company's wholesale customers. The net sales increase recorded in the owned brands categoryThere was $1.1 million, or 14.9%, primarily due to a net sales increase in Asia, while Europe, the Americas (excluding the United States) and the Middle East remained relatively flat. The net sales increase recorded in the licensed brands category wasof $3.4$5.7 million, or 5.0%,7.1%, due to net sales increases across all regions. This increase was partially offset by a net sales decrease recorded in the owned brands category of $0.4 million, or 4.5%, primarily due to net sales decreases in Europe and the Middle East, partially offset by net sales increases in Europe, the Americas (excluding the United States) and Asia, partially offset by a net sales decrease in the Middle East.Asia.
Net sales for the three months ended AprilJuly 30,31, 2026 in the Company Stores segment were $18.7$26.9 million, $1.7$0.7 million or 10.2%2.8% above the prior year period. The net sales increase was primarily due to a favorable sales mix, anpartially increaseoffset by a decrease in sales from the Company's online outlet store at www.movadocompanystore.com and a new store opening in the second quarter of the prior year.www.movadocompanystore.com. As of AprilJuly 30,31, 2026 and 2025, the Company operated 57 and 56 retail outlet locations, respectively.locations.
Gross profit for the three months ended AprilJuly 30,31, 2026 was $81.6$100.8 million or 57.3%59.4% of net sales as compared to $71.4$87.6 million or 54.1% of net sales in the prior year period. Gross profit for the three months ended July 31, 2026 included $3.2 million of IEEPA duty refunds received. The increase in gross profit of $10.2$13.3 million was due to higher net sales combined with a higher gross margin percentage. The increase in the gross margin percentage of approximately 320530 basis points for the three months ended AprilJuly 30,31, 2026 reflected a favorable sales mix (approximately 260380 basis points), IEEPA duty refunds received (approximately 190 basis points) and the increased leveraging of certain reduced costs over higher sales (approximately 90 basis points), partially offset by a negativepositive impact of fluctuations in foreign exchange rates (approximately 30 basis points), partially offset by higher shipping costs (approximately 50 basis points) and higher fixed costs net of increased leveraging over higher sales (approximately 20 basis points).
SG&A expenses for the three months ended July 31, 2026 were $85.9 million, an increase from the prior year period of $2.4 million, or 2.9%. The increase in SG&A expenses was primarily driven by (i) an increase in performance-based compensation of $1.8 million, (ii) an increase in marketing expenses of $1.1 million and (iii) a $0.3 million increase in payroll-related expenses. The increase in payroll-related expenses was net of $0.9 million of severance costs incurred in the prior year period in connection with the cost-savings initiative discussed under “Recent Developments and Initiatives”. These increases were partially offset by a $1.1 million decrease in professional fees, which included a decrease of $1.9 million in costs related to the investigation of misconduct within the Dubai branch of the Company's Swiss subsidiary. For the three months ended July 31, 2026, fluctuations in foreign currency rates related to the foreign subsidiaries increased reported SG&A expenses by $1.0 million when compared to the prior year period.
SG&A expenses for the three months ended April 30, 2026 were $74.6 million, an increase from the prior year period of $3.5 million, or 5.0%. The increase in SG&A expenses was primarily driven by (i) higher professional fees of $1.9 million (which included $0.5 million in costs related to the investigation of misconduct within the Dubai branch of the Company's Swiss subsidiary), (ii) an increase in marketing expenses of $1.4 million and (iii) an increase in performance-based compensation of $1.0 million. These increases were partially offset by a $1.2 million decrease in foreign exchange losses reflecting lower transactional foreign currency losses during the period and a decrease in payroll related expenses of $0.2 million (which included the impact of $0.6 million of severance costs in the prior year period related to the cost-savings initiative discussed under "Recent Developments and Initiatives"). For the three months ended April 30, 2026, fluctuations in foreign currency rates related to the foreign subsidiaries unfavorably impacted SG&A expenses by $0.5 million when compared to the prior year period.
For the three months ended AprilJuly 30,31, 2026 the Company recorded operating income of $6.6$10.2 million in the Watch and Accessory Brands segmentsegment, whichcompared includesto $11.5an operating loss of $0.2 million in the prior period. Operating results for the three months ended July 31, 2026 included $13.9 million of unallocated corporate expenses asand well as $12.9$14.6 million of certain intercompany profits related to the Company’s supply chain operations.operations, Forcompared theto three months ended April 30, 2025, the Company recorded operating loss of less than $0.1$10.7 million and $14.6 million, respectively, in the Watchprior andyear Accessoryperiod. BrandsThe segment which included $8.0$10.4 million of unallocated corporate expenses as well as $14.0 million of certain intercompany profits related to the Company’s supply chain operations. The $6.6 million changeimprovement in operating income/loss was the result of an increase in gross profit of $9.4$12.8 million,million (which includes $3.2 million of IEEPA duty refunds received), partially offset by higher SG&A expenses of $2.8$2.4 million when compared to the prior year period. The increase in gross profit was the result of higher net sales combined with a higher gross margin percentage primarily due to a favorable impact of sales mixmix, IEEPA duty refunds received and the increased leveraging of certain reduced costs over higher sales, partially offset by a negativepositive impact of fluctuations in foreign exchange rates.rates, partially offset by higher shipping costs and higher fixed costs net of increased leveraging over higher sales. The increase in SG&A expenses was primarily duedriven toby (i) an increase in performance-based compensation of $1.8 million, (ii) an increase in marketing expenses of $1.4 million and (iii) an increase in payroll related expenses of $0.1 million. The increase in payroll-related expenses was net of $0.9 million of severance costs incurred in the prior year period in connection with the cost-savings initiative. These increases were partially offset by a $1.1 million decrease in professional fees of $1.9 million (which included $0.5a decrease of $1.9 million in costs related to the investigation of misconduct within the Dubai branch), (ii) an increase in marketing expenses of $1.3 million and (iii) an increase in performance-based compensation of $0.9 million. These increases were partially offset by a $1.2 million decrease in foreign exchange losses reflecting lower transactional foreign currency losses during the period and a decrease in payroll related expenses of $0.5 million (which included severance costs in the prior year period of $0.6 million related to the cost-savings initiative discussed under "Recent Developments and Initiatives").
In the United States locations of the Watch and Accessory Brands segment, for the three months ended AprilJuly 30,31, 2026, the Company recorded an operating loss of $4.2$7.7 million, compared to an operating loss of $17.0 million whichin includesthe unallocatedprior corporateperiod. expensesOperating ofresults $11.5 million. Forfor the three months ended AprilJuly 30,31, 2025 the Company recorded an operating loss of $7.0 million in the United States locations of the Watch and Accessory Brands segment which2026 included unallocated corporate expenses of $8.0$13.9 million.million, compared to $10.7 million in the prior period. The decrease in operating loss was the result of an increase in gross profit of $9.7$9.6 million (which includes $3.2 million of IEEPA duty refunds received), partially offset by an increase in SG&A expenses of $6.9$0.4 million when compared to the prior year period. The increase in gross profit of $9.7$9.6 million was the result of higher net sales, combined with a higher gross margin percentage primarily due to a favorable sales mix,mix theand IEEPA duty refunds received, partially offset by higher shipping costs and higher fixed costs net of increased leveraging of certain fixed costs as a result ofover higher sales and the positive impact of fluctuations in foreign exchange rates.sales. The increase in SG&A expenses was primarily due to (i) an increase in certainperformance-based unallocated corporate costscompensation of $2.8$1.5 million,million and (ii) anhigher increasemarketing expenses of $0.3 million. These increases were offset by a $1.0 million decrease in professional fees of $1.4 million (which included $0.4a decrease of $1.9 million in costs related to the investigation of misconduct within the Dubai branch), (iii) an increase in performance-based compensation of $1.3 million and (iv) higher marketing expenses of $1.1 million. These increases were partially offset by a decrease in payroll related expenses of $0.8$0.6 million.million (which included $0.3 million of severance costs incurred in the prior year period in connection with the cost-savings initiative).
In the International locations of the Watch and Accessory Brands segment, for the three months ended AprilJuly 30,31, 2026, the Company recorded operating income of $10.8$18.0 million, compared to operating income of $16.8 million whichin includesthe $12.9prior millionperiod. ofOperating results for the three months ended July 31, 2026 included certain intercompany profits related to the Company’s International supply chain operations. For the three months ended April 30, 2025 the Company recorded operating incomeoperations of $7.0$14.6 million, compared to $14.6 million in the Internationalprior locations of the Watch and Accessory Brands segment which included $14.0 million of certain intercompany profits related to the Company’s supply chain operations.period. The increase in operating income was the result of loweran increase in gross profit of $3.2 million, partially offset by an increase in SG&A expenses of $4.1 million, partially offset by a lower gross profit of $0.3$2.0 million. The decreaseincrease in gross profit of $0.3$3.2 million was primarily the result of higher net sales, offsetcombined bywith a lowerhigher gross margin percentage primarily due to favorable sales mix, the negativepositive impact of fluctuations in foreign exchange rates,rates partially offset byand the increased leveraging of certain reduced costs over higher sales.sales, partially offset by higher shipping costs. The decreaseincrease in SG&A expenses was primarily due to (i) ahigher decreasemarketing in certain allocated corporate costsexpenses of $2.8$1.1 million, (ii) a decrease of $1.3 million in foreign exchange losses reflecting lower transactional foreign currency losses during the period and (iii) a decrease in performance-based compensation of $0.4 million. These decreases were partially offset by an increase in professional fees of $0.5 million (which included $0.1 million in costs related to the investigation of misconduct within the Dubai branch), an increase in payroll related expenses of $0.3$0.7 million (which included the impactincrease in payroll related expenses was net of $0.6 million of severance costs incurred in the prior year period relatedin toconnection with the cost-savings initiative) and (iii) an increase in marketingperformance-based expensescompensation of $0.2$0.3 million.
The Company recorded operating income of $0.4$4.6 million and $0.3$4.2 million in the Company Stores segment for the three months ended AprilJuly 30,31, 2026 and 2025, respectively. The increase in operating income of $0.1$0.4 million was primarily related to an increase in gross profit of $0.8$0.5 million, mainly due to higher sales,sales partiallycombined offset bywith a lowerhigher gross margin percentage. Operating profit was negatively impacted by an increase in SG&A expenses ofremained $0.7relatively millionflat primarilyas duecompared to the prior year period with an increase in payroll related expenses,expenses higheroffset by lower marketing expenses and an increase in rent related expenses mainly due to a new store opening in the second quarter of the prior year.expenses. As of AprilJuly 30,31, 2026, and 2025, the Company Stores segment operated 57 and 56 retail outlet locations, respectively.locations.
The Company recorded other income, net of $2.0 million for the three months ended April 30, 2026, primarily due to interest income and distributions received from a venture capital fund in which the Company holds a limited partnership interest.
The Company recorded other income, net of $1.8$1.3 million for the three months ended AprilJuly 30,31, 2025,2026, primarily due to interest income.
The Company recorded other income, net of $1.2 million for the three months ended July 31, 2025, primarily due to interest income, partially offset by a non-cash impairment charge of $0.4 million related to one of its investments in a venture capital fund in which the Company has a limited partnership interest. The write-down was a result of a decline in the fair value of the investment primarily attributable to a deterioration in the financial condition and operating performance of certain of the underlying portfolio companies within the fund that was determined to be other than temporary.
Interest expense was $0.1 million primarily due to the payment of unused commitment fees for both the three months ended AprilJuly 30,31, 2026 and 2025. There were no borrowings under the Company's revolving credit facility during the three months ended AprilJuly 30,31, 2026 and 2025.
The Company recorded an income tax provision of $1.9$3.5 million and $0.7$2.0 million for the three months ended AprilJuly 30,31, 2026 and 2025, respectively. The effective tax rate was 22.0%22.1% and 34.0%38.5% for the three months ended AprilJuly 30,31, 2026 and 2025, respectively.
The significant components of the effective tax rate for the three month period changed primarily due to excessan increase in the utilization of foreign tax benefitscredits related to stock-basedNet compensationControlled inForeign theCorporation currentTested year as compared to deficiencies in the prior year,Income and changes in jurisdictionalcertain earnings,foreign valuation allowances, partially offset by changes in certainjurisdictional foreign valuation allowances.earnings.
The Company recorded net income attributable to Movado Group, Inc. of $6.9$12.3 million and $1.4$3.0 million for the three months ended AprilJuly 30,31, 2026 and 2025, respectively.
Results of operations for the six months ended July 31, 2026 as compared to the six months ended July 31, 2025
Net Sales: Comparative net sales by business segment were as follows (in thousands):
Comparative net sales by categories were as follows (in thousands):
Net sales for the six months ended July 31, 2026 were $312.2 million, representing an $18.6 million or 6.3% increase from the prior year period. For the six months ended July 31, 2026, fluctuations in foreign currency exchange rates positively impacted net sales by $5.4 million when compared to the prior year period. Excluding this $5.4 million impact, net sales would have increased by 4.5% as compared to the prior year period.
Watch and Accessory Brands Net Sales
Net sales for the six months ended July 31, 2026 in the Watch and Accessory Brands segment were $266.6 million, above the prior year period by $16.1 million, or 6.4%. The increase in net sales was primarily due to increased volumes resulting from higher demand in the Company's wholesale customers, a favorable sales mix and the positive impact of fluctuations in foreign exchange rates. The net sales in the owned brands category increased $2.8 million, or 3.7%, combined with an increase in net sales recorded in the licensed brands category of $13.5 million, or 7.8%.
United States Watch and Accessory Brands Net Sales
Net sales for the six months ended July 31, 2026 in the United States locations of the Watch and Accessory Brands segment were $89.2 million, above the prior year period by $5.8 million, or 7.0%, resulting primarily from increased volumes resulting from higher demand in the Company's wholesale customers and a favorable sales mix. The net sales recorded in the owned brands category increased $2.1 million, or 3.6%, combined with an increase in net sales recorded in the licensed brands category of $4.4 million, or 18.5%.
International Watch and Accessory Brands Net Sales
Net sales for the six months ended July 31, 2026 in the International locations of the Watch and Accessory Brands segment were $177.4 million, above the prior year by $10.3 million, or 6.1%, which included fluctuations in foreign currency exchange rates that positively impacted net sales by $5.4 million when compared to the prior year period. In addition to the positive impact of fluctuations in foreign exchange rates, the increase in net sales was primarily due to increased volumes resulting from higher demand in the licensed brands category in the Company's wholesale customers. The net sales increase recorded in the licensed brands category was $9.1 million, or 6.1%, primarily due to net sales increases in Europe, the Americas (excluding the United States) and Asia, partially offset by a net sales decrease in the Middle East. The net sales increase recorded in the owned brands category was $0.7 million, or 3.9%, primarily due to net sales increases in Asia, the Americas (excluding the United States) and the Middle East, partially offset by a net sales decrease in Europe.
Company Stores Net Sales
Net sales for the six months ended July 31, 2026 in the Company Stores segment were $45.6 million, $2.5 million or 5.7% above the prior year period. The net sales increase was primarily due to a favorable sales mix, an increase in sales from the Company's online outlet store at www.movadocompanystore.com and a new store opening in the second quarter of the prior year. As of July 31, 2026 and 2025, the Company operated 57 retail outlet locations.
Gross Profit
Gross profit for the six months ended July 31, 2026 was $182.4 million or 58.4% of net sales as compared to $158.9 million or 54.1% of net sales in the prior year period. Gross profit for the six months ended July 31, 2026 included $3.2 million of IEEPA duty refunds received. The increase in gross profit of $23.5 million was due to higher net sales combined with a higher gross margin percentage. The increase in the gross margin percentage of approximately 430 basis points for the six months ended July 31, 2026 reflected a favorable sales mix (approximately 330 basis points), IEEPA duty refunds received (approximately 100 basis points) and the increased leveraging of certain reduced costs over higher sales (approximately 20 basis points), partially offset by higher shipping costs (approximately 20 basis points).
Selling, General and Administrative (“SG&A”)
SG&A expenses for the six months ended July 31, 2026 were $160.5 million, an increase from the prior year period of $5.9 million, or 3.8%. The increase in SG&A expenses was primarily driven by (i) an increase in performance-based compensation of $2.7 million, (ii) an increase in marketing expenses of $2.5 million, (iii) higher professional fees of $0.6 million (the increase in professional fees was net of a $1.5 million decrease in costs incurred related to the investigation of misconduct within the Dubai branch) and (iv) an increase in payroll related expenses of $0.1 million. The increase in payroll-related expenses was net of $1.5 million of severance costs incurred in the prior year period in connection with the cost-savings initiative. These increases were partially offset by a $0.7 million decrease in foreign exchange losses reflecting lower transactional foreign currency losses during the period. For the six months ended July 31, 2026, fluctuations in foreign currency rates related to the foreign subsidiaries increased reported SG&A expenses by $1.5 million when compared to the prior year period.
Watch and Accessory Brands Operating Income/Loss
For the six months ended July 31, 2026 the Company recorded operating income of $16.9 million in the Watch and Accessory Brands segment, compared to an operating loss of $0.2 million in the prior period. Operating results for the six months ended July 31, 2026 included $25.4 million of unallocated corporate expenses and $27.5 million of certain intercompany profits related to the Company’s supply chain operations, compared to $18.7 million and $28.6 million, respectively, in the prior year period. The $17.0 million change in operating income/loss was the result of an increase in gross profit of $22.2 million (which includes $3.2 million of IEEPA duty refunds received), partially offset by higher SG&A expenses of $5.2 million when compared to the prior year period. The increase in gross profit was the result of higher net sales combined with a higher gross margin percentage primarily due to a favorable impact of sales mix, IEEPA duty refunds received and the increased leveraging of certain reduced costs over higher sales, partially offset by higher shipping costs. The increase in SG&A expenses was primarily due to (i) an increase in performance-based compensation of $2.7 million, (ii) an increase in marketing expenses of $2.7 million and (iii) an increase in professional fees of $0.6 million. The increase in professional fees was net of a $1.5 million decrease in costs related to the investigation of misconduct within the Dubai branch. These increases were partially offset by a $0.7 million decrease in foreign exchange losses reflecting lower transactional foreign currency losses during the period and a decrease in payroll related expenses of $0.4 million (which included the impact of $1.5 million of severance costs in the prior year period in connection with 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 six months ended July 31, 2026, the Company recorded an operating loss of $12.0 million, compared to an operating loss of $24.0 million in the prior period. Operating results for the six months ended July 31, 2026 included unallocated corporate expenses of $25.4 million, compared to $18.7 million in the prior period.
The decrease in operating loss was the result of an increase in gross profit of $19.3 million (which includes $3.2 million of IEEPA duty refunds received), partially offset by an increase in SG&A expenses of $7.3 million when compared to the prior year period. The increase in gross profit of $19.3 million was the result of higher net sales, combined with a higher gross margin percentage primarily due to a favorable sales mix, IEEPA duty refunds received and the increased leveraging of certain fixed costs as a result of higher sales, partially offset by higher shipping costs. The increase in SG&A expenses was primarily due to (i) an increase in performance-based compensation of $2.8 million, (ii) an increase in certain unallocated corporate costs of $2.8 million, (iii) higher marketing expenses of $1.4 million and (iv) an increase in professional fees of $0.5 million. The increase in professional fees was net of a $1.5 million decrease in costs related to the investigation of misconduct within the Dubai branch). These increases were partially offset by a decrease in payroll related expenses of $1.4 million (which included the impact of $0.3 million of severance costs in the prior year period 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 six months ended July 31, 2026, the Company recorded operating income of $28.8 million, compared to operating income of $23.8 million in the prior period. Operating results for the six months ended July 31, 2026 included $27.5 million of certain intercompany profits related to the Company’s International supply chain operations, compared to $28.6 million in the prior period. The increase in operating income was the result of a higher gross profit of $2.9 million combined with lower SG&A expenses of $2.1 million. The increase in gross profit of $2.9 million was primarily the result of higher net sales, partially offset by a lower gross margin percentage primarily due to an unfavorable sales mix, partially offset by the increased leveraging of certain reduced costs over higher sales. The decrease in SG&A expenses was primarily due to (i) a decrease in certain allocated corporate costs of $2.8 million and (ii) a decrease of $0.7 million in foreign exchange losses reflecting lower transactional foreign currency losses during the period. These decreases were partially offset by higher marketing expenses of $1.3 million and an increase in payroll related expenses of $1.0 million. The increase in payroll-related expenses was net of $1.2 million of severance costs incurred in the prior year period in connection with the cost-savings initiative.
Company Stores Operating Income
The Company recorded operating income of $5.0 million and $4.4 million in the Company Stores segment for the six months ended July 31, 2026 and 2025, respectively. The increase in operating income of $0.6 million was primarily related to an increase in gross profit of $1.3 million, mainly due to higher sales, partially offset by a lower gross margin percentage. Operating profit was negatively impacted by an increase in SG&A expenses of $0.7 million primarily due to an increase in payroll related expenses and an increase in rent related expenses mainly due to a new store opening in the second quarter of the prior year. As of July 31, 2026, and 2025, the Company Stores segment operated 57 retail outlet locations.
Other Non-Operating Income, net
The Company recorded other income, net of $3.2 million for the six months ended July 31, 2026, primarily due to interest income and distributions received from a venture capital fund in which the Company holds a limited partnership interest.
The Company recorded other income, net of $3.0 million for the six months ended July 31, 2025, primarily due to interest income, partially offset by a non-cash impairment charge of $0.4 million related to one of its investments in a venture capital fund in which the Company has a limited partnership interest. The write-down was a result of a decline in the fair value of the investment primarily attributable to a deterioration in the financial condition and operating performance of certain of the underlying portfolio companies within the fund that was determined to be other than temporary.
Interest Expense
MOV insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-23 | Grinberg Efraim |
Shares withheld for tax | 36,713 | $38.69 | $1.4M |
| 2026-06-23 | Grinberg Efraim |
Option exercise | 50,000 | $16.87 | $843.5K |
| 2026-06-22 | Sussis Mitchell Cole |
Option exercise | 7,980 | $23.35 | $186.3K |
| 2026-06-22 | Sussis Mitchell Cole |
Shares withheld for tax | 6,245 | $39.26 | $245.2K |
| 2026-06-18 | Demarsilis Sallie A |
Shares withheld for tax | 11,005 | $38.38 | $422.4K |
| 2026-06-18 | Demarsilis Sallie A |
Option exercise | 13,660 | $23.35 | $319.0K |
| 2026-04-16 | Grinberg Efraim |
Shares withheld for tax | 80,817 | $27.08 | $2.2M |
| 2026-04-16 | Grinberg Efraim |
Option exercise | 100,000 | $16.87 | $1.7M |
Well-known investors holding MOV (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 360,725 | $14.2M | 0.0% | Added 11% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 140,276 | $5.5M | 0.0% | Added 84% |
| Two Sigma Investments | 2026-06-30 | 81,364 | $3.2M | 0.0% | Added 19% |
| Millennium Management (Israel Englander) | 2026-06-30 | 40,168 | $1.6M | 0.0% | New position |
| Renaissance Technologies | 2026-06-30 | 29,700 | $1.2M | 0.0% | Reduced 79% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 28,937 | $1.1M | 0.0% | New position |
| D. E. Shaw & Co. | 2026-06-30 | 12,468 | $490.1K | 0.0% | Reduced 57% |