Movado Group(MOV) - 2025 Q2 - Quarterly Report

Sales Performance - Net sales for the three months ended July 31, 2024 were $159.3 million, a decrease of$1.1 million or 0.7% compared to the prior year period[76]. - The Watch and Accessory Brands segment net sales were $133.9 million, down$0.2 million or 0.1% from the prior year[77]. - In the United States, net sales for the Watch and Accessory Brands segment increased by $0.6 million or 1.4$46.5 million, driven by online retail growth[78]. - International net sales in the Watch and Accessory Brands segment decreased by $0.8 million or 0.9$87.4 million, impacted by unfavorable sales mix and foreign exchange fluctuations[79]. - Company Stores segment net sales were $25.4 million, a decrease of$0.9 million or 3.4% from the prior year, primarily due to an unfavorable sales mix[80]. - For the six months ended July 31, 2024, net sales decreased by $9.3 million or 3.1$296.0 million compared to the prior year period[93]. - The Watch and Accessory Brands segment net sales for the six months ended July 31, 2024 were $253.3 million, a decrease of$6.4 million or 2.4% from the previous year[94]. - The licensed brands category net sales increased by $1.3 million or 13.1$1.0 million or 2.9%[78]. - Fluctuations in foreign currency exchange rates negatively impacted net sales by $0.6 million compared to the prior year[76]. Profitability - Gross profit for the three months ended July 31, 2024 was$86.4 million, representing 54.2% of net sales, down from 55.7% in the prior year[81]. - The decrease in gross margin percentage was approximately 150 basis points, primarily due to an unfavorable sales mix[81]. - Gross profit for the six months ended July 31, 2024 was $161.9 million, representing 54.7$171.3 million or 56.1% in the prior year[98]. - The Company recorded an operating loss of $0.6 million in the Watch and Accessory Brands segment, a decrease from an operating income of$4.6 million in the same period of 2023, reflecting a change of $5.2 million[83]. - In the U.S. locations of the Watch and Accessory Brands segment, the operating loss improved to$8.6 million for the three months ended July 31, 2024, compared to a loss of $10.4 million in the prior year, driven by a$1.6 million increase in gross profit[84]. - The International locations of the Watch and Accessory Brands segment reported an operating income of $8.0 million for the three months ended July 31, 2024, down from$15.0 million in the prior year, due to a decrease in gross profit of $3.4 million[85]. - The Company recorded operating income of$4.1 million for the six months ended July 31, 2024, down from $7.1 million in the same period of 2023, reflecting a decrease of$3.0 million primarily due to lower sales and higher SG&A expenses[103]. - Net income attributable to Movado Group, Inc. of $3.7 million for the three months ended July 31, 2024, down from$8.0 million in the same period of 2023[90]. - Net income attributable to Movado Group, Inc. was $6.6 million for the six months ended July 31, 2024, compared to$17.2 million for the same period in 2023, indicating a significant decline[105]. Expenses - SG&A expenses increased by $3.7 million or 4.6$83.3 million, mainly due to higher marketing expenses[82]. - SG&A expenses for the six months ended July 31, 2024 increased by $4.8 million or 3.2$155.5 million, primarily due to higher marketing and payroll related expenses[99]. Cash Flow and Financial Position - The Company had cash and cash equivalents of $198.3 million as of July 31, 2024, down from$218.9 million a year earlier, with working capital decreasing to $405.0 million from$412.7 million[106]. - Cash used in operating activities was $35.9 million for the six months ended July 31, 2024, compared to cash provided of$9.2 million in the same period of 2023, largely due to increased investment in inventories and trade receivables[107]. - Cash used in investing activities increased to $8.3 million for the six months ended July 31, 2024, from$6.1 million in the prior year, primarily for long-term investments and capital expenditures[108]. - Cash used in financing activities was $17.7 million for the six months ended July 31, 2024, a decrease from$38.2 million in the same period of 2023, with dividends paid totaling $15.5 million[109]. - The Company repurchased 39,000 shares of its common stock at a total cost of$1.1 million during the six months ended July 31, 2024, with $16.8 million remaining available under the share repurchase program[116]. - The Company had no borrowings under its$100.0 million revolving credit facility as of July 31, 2024, with availability under the facility at $99.7 million[112]. - The Company has no floating rate debt as of July 31, 2024, and 2023, indicating a stable debt position[123]. - There were no weighted average borrowings during the six months ended July 31, 2024, reflecting a conservative financial strategy[123]. Taxation - The effective tax rate for the three months ended July 31, 2024 was 19.5$0.4 million if Swiss Franc forward contracts were settled[121]. - The Company did not hold any future contracts in its gold hedge portfolio as of July 31, 2024, and 2023, meaning gold price fluctuations will directly impact the cost of sales[122].