Movado Group(MOV) - 2025 Q4 - Annual Report

Sales and Revenue - Jewelry sales accounted for 8.9% of consolidated net sales in fiscal year 2025[33] - The Company's licensed brands accounted for 55.9% of net sales for the fiscal year ended January 31, 2025[123] - The second half of the fiscal years ended January 31 accounted for 55.4%, 54.2%, and 54.0% of the company's net sales for 2025, 2024, and 2023, respectively[56] - Approximately 57.4% of the Company's revenue is generated from international sources[97] - The Company's International operations account for 31.0% of total net sales from Europe, 9.9% from the Americas (excluding the U.S.), 8.9% from Asia, and 7.6% from the Middle East for fiscal 2025[211] Marketing and Advertising - Marketing expenses were 22.4%, 19.4%, and 17.0% of net sales in fiscal years 2025, 2024, and 2023, respectively[48] - The Company focuses on digital marketing and enhancing its online presence through social media and influencer partnerships[48] - The company emphasizes cooperative advertising programs with wholesale customers, enhancing relationships and facilitating new product introductions[58] - Marketing expenditures are strategically aligned to maintain or increase market share in key markets, influenced by global economic conditions[221] Business Segments and Operations - The Company operates primarily in two segments: Watch and Accessory Brands, and Company Stores[49] - The Watch and Accessory Brands segment includes the design, manufacturing, and distribution of quality owned and licensed brands[50] - The Company operates 52 retail outlet locations in the U.S. and four in Canada, along with an online outlet store[54] - The Company operates major distribution centers in New Jersey and Switzerland, and any interruptions at these facilities could materially affect its business operations[147] Supply Chain and Manufacturing - The company employs a flexible manufacturing model relying on independent manufacturers, maintaining quality control through strict standards and inspections[63] - Over 80% of the Company's product unit volume originates from Asia, with the majority coming from China[96] - The Company relies on independent manufacturers for product assembly, and any disruption in their supply chain could adversely affect customer relations and net sales[145] - The Company's cost of sales includes raw materials, component costs, royalties, and logistics management, primarily in Switzerland and Asia[218] Financial Performance and Risks - The Company faces risks related to the increasing costs of digital advertising, which could adversely affect profitability and results of operations[120] - Changes in sales mix towards lower-margin products could adversely impact gross profit margins[124] - An increase in product returns or lost products could negatively impact the Company's operating results and profitability, with recent trends showing an increase in delivery delays and lost packages[144] - The Company may seek to raise prices for products sold in the U.S. due to increased tariffs, which could result in customer loss and harm operating performance[103] Legal and Regulatory Issues - The Company is involved in legal proceedings that may result in significant expenses and reputational damage, with potential settlements exceeding accruals[164] - The Company identified a material weakness in internal controls over financial reporting, leading to restatements of financial statements for the affected periods[168][169] - Remediation of the identified material weakness requires significant resources and could result in future errors in financial statements if not addressed[171] - The Company has established reserves for potential legal claims, including a $5.1 million dispute with U.S. Customs regarding underpaid duties[190] Corporate Governance and Ownership - The Grinberg family controls a majority of the voting power of the Company's stock, potentially influencing key corporate decisions[174] - The Company's stock price may fluctuate due to changes in revenue and operating results, which are influenced by various risk factors[175][176] Cybersecurity and Data Protection - The Company has not experienced any material cybersecurity incidents in the last three fiscal years, indicating effective risk management[183] - The Audit Committee oversees management's strategies for addressing cybersecurity risks, receiving quarterly updates on the status of these risks[184] - A significant privacy breach could lead to costly government enforcement actions and private litigation, adversely impacting sales and operations[163] - The Company is subject to evolving privacy and data protection laws, which could materially affect its operations and financial results[162] Economic and Environmental Factors - Environmental factors and climate change could lead to increased operational expenses and negatively impact profitability[138] - Recent tariff increases on imports by the U.S. government may lead to reciprocal tariffs from foreign jurisdictions, creating greater uncertainty in the global economy[161]