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Movado Group(MOV) - 2024 Q4 - Annual Report
MOVMovado Group(MOV)2024-03-26 13:53
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Sales and Revenue - Jewelry sales accounted for 7.5% of consolidated net sales in fiscal year 2024[28] - For the fiscal year ended January 31, 2024, licensed brands represented 53.9% of the Company's net sales[111] - The second half of each fiscal year accounted for 54.6%, 54.0%, and 57.9% of the Company's net sales for the years ended January 31, 2024, 2023, and 2022, respectively[113] - The Company’s e-commerce sales, while historically a minority, are expected to continue growing, indicating a shift in sales strategy[119] - The Company operates 51 retail outlet locations in the U.S. and four in Canada, with sales influenced by peak tourist seasons[190] - 56.8% of the Company's total sales are derived from international markets, with Europe accounting for 30.5% of total net sales for fiscal 2024[187][188] Marketing and Branding - Marketing expenses were 19.2%, 16.8%, and 16.3% of net sales in fiscal years 2024, 2023, and 2022, respectively[43] - The Company focuses on digital marketing and enhancing its online presence, including social media and influencer partnerships[43] - The Company has developed a strong brand-building reputation through strategic acquisitions and license agreements since its inception[15] - The Company’s sales strategy includes cooperative advertising programs with wholesale customers, enhancing relationships and facilitating new product introductions[53] - Marketing expenditures are strategically aligned to maintain or increase market share, with a focus on digital advertising and customer acquisition costs[197] Acquisitions and Licensing - The Company has a portfolio of owned brands including Movado, Concord, EBEL, Olivia Burton, and MVMT, as well as licensed brands such as Coach, Tommy Hilfiger, Hugo Boss, Lacoste, and Calvin Klein[14][18] - The Company completed its acquisition of MVMT in October 2018, targeting the millennial consumer with a direct-to-consumer business model[16] - The Company is highly selective in its licensing strategy, entering long-term agreements with powerful brands[17] - The Company has exclusive worldwide licenses for several brands, including COACH and TOMMY HILFIGER, with agreements set to expire between 2024 and 2031, allowing for continued brand expansion[63][64][66] Operational Efficiency - The Watch and Accessory Brands segment includes the design, manufacturing, and distribution of watches and jewelry, while the Company Stores segment encompasses the retail outlet business[45] - The Company emphasizes a flexible manufacturing model, relying on independent manufacturers to meet market demand, ensuring quality control through strict standards[58] - The Company operates a distribution facility in New Jersey that fulfills most orders for the U.S., Canada, and Latin America, and any disruption could materially affect its business[134] - The Company has a web-based system for retail partners to track repair status and service orders, improving customer service and operational efficiency[57] Workforce and Employment - As of January 31, 2024, the Company employed a total of 1,548 individuals globally, with 1,089 full-time employees, indicating a diverse workforce[74] - Approximately 29% of the Company's non-retail employees have been with the Company for over 10 years, reflecting employee retention efforts[75] - The Company maintains a strong focus on diversity and inclusion, with women representing approximately 62% of its global workforce and underrepresented minorities making up about 55% of U.S. employees[83] Financial Performance and Risks - The Company had unfilled orders of 41.0millionasofMarch20,2024,comparedto41.0 million as of March 20, 2024, compared to 40.7 million in 2023 and 60.9millionin2022,indicatingaslightincreaseyear−over−yearbutadecreasefromtwoyearsago[52]−Adverseeconomicconditions,includingdeclinesinconsumerconfidenceandspending,couldmateriallyaffecttheCompany′soperatingresults,particularlyfordiscretionaryitems[91][92]−TheCompany′swholesalebusinessmaybenegativelyimpactedbytheshifttowardsonlineshoppingandconsolidationintheretailindustry,affectingsalestomajorjewelrystorechainsanddepartmentstores[101][102]−TheCompanyfacesintensecompetitioninthewatchindustry,includingfromsmartwatches,whichmayadverselyimpactitsresultsofoperationsandfinancialcondition[103][104]−TheCompany’sinventorymanagementiscritical,asmisjudgingdemandcouldleadtohighinventorylevelsandadverselyaffectprofitability[124][125]ComplianceandLegalMatters−TheCompanyissubjecttocomplexandevolvinglawsandregulationsregardingprivacyanddataprotection,whichcouldresultinincreasedcostsandlegalclaims[85]−TheCompanyisinvolvedinlegalproceedingsthatcouldresultinsignificantexpensesandreputationaldamage,impactingcashflows[150]−AsignificantprivacybreachcouldleadtocostlyenforcementactionsanddamagetheCompany′sreputation,adverselyaffectingsales[148]ShareholderandStockInformation−TheGrinbergfamilycontrolsamajorityofthevotingpoweroftheCompany′sstockthroughtheirsignificantholdingsofclassAcommonstock,influencingshareholdervotes[154]−TheCompanyrepurchasedatotalof111,722sharesofitscommonstockatatotalcostof60.9 million in 2022, indicating a slight increase year-over-year but a decrease from two years ago[52] - Adverse economic conditions, including declines in consumer confidence and spending, could materially affect the Company's operating results, particularly for discretionary items[91][92] - The Company's wholesale business may be negatively impacted by the shift towards online shopping and consolidation in the retail industry, affecting sales to major jewelry store chains and department stores[101][102] - The Company faces intense competition in the watch industry, including from smart watches, which may adversely impact its results of operations and financial condition[103][104] - The Company’s inventory management is critical, as misjudging demand could lead to high inventory levels and adversely affect profitability[124][125] Compliance and Legal Matters - The Company is subject to complex and evolving laws and regulations regarding privacy and data protection, which could result in increased costs and legal claims[85] - The Company is involved in legal proceedings that could result in significant expenses and reputational damage, impacting cash flows[150] - A significant privacy breach could lead to costly enforcement actions and damage the Company's reputation, adversely affecting sales[148] Shareholder and Stock Information - The Grinberg family controls a majority of the voting power of the Company's stock through their significant holdings of class A common stock, influencing shareholder votes[154] - The Company repurchased a total of 111,722 shares of its common stock at a total cost of 3.1 million, averaging 27.89pershareduringthefiscalyearendedJanuary31,2024[176]−TheCompanyhasasharerepurchaseprogramauthorizedforupto27.89 per share during the fiscal year ended January 31, 2024[176] - The Company has a share repurchase program authorized for up to 50 million through November 23, 2024, depending on market conditions[176] - The cumulative total shareholder return for Movado Group, Inc. was 104.56 as of January 31, 2024, compared to 146.49 for the S&P SmallCap 600 Index, indicating underperformance relative to the index over the five-year period[182] Cybersecurity and IT - The Company has not experienced any material cybersecurity incidents in the last three fiscal years, indicating effective risk management strategies[162] - The Company maintains a Breach Response Team to oversee cybersecurity incident responses, ensuring a structured approach to managing potential threats[160] - The Company is migrating many IT systems to the cloud, which entails risks and could lead to disruptions affecting business operations and sales[136] Economic and Market Conditions - The Company faces risks related to increasing privacy regulations, which may raise operational costs and impact financial results[120] - Changes in consumer discretionary spending and travel factors can significantly affect customer foot traffic and sales at retail outlets[115] - Changes in laws and regulations could impose new requirements and costs, potentially placing the Company at a competitive disadvantage[145]