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Restatement of Previously Issued Consolidated Financial Statements | 6 Months Ended
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Jul. 31, 2025
Accounting Changes and Error Corrections [Abstract] |
Restatement of Previously Issued Consolidated Financial Statements | NOTE 1A – RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS 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 concluded that its historical consolidated financial statements for the fiscal years ended January 31, 2024 and 2023, and the interim periods within fiscal years 2025 and 2024, required restatement to properly record the extent and timing of sales earned and credits issued during the relevant time period. Additionally, the restated interim periods of fiscal 2025 reflected a reduction in operating expenses as a result of the reversal of certain accruals due to the lower adjusted operating results. The misstatements did not impact the Company’s cash flows or compliance with the debt covenants in the Company’s credit agreement. The restatement of the previously issued Consolidated Financial Statements for the years ended January 31, 2024 and January 31, 2023 and for the quarterly periods ended October 31, 2024, July 31, 2024, April 30, 2024, October 31, 2023, July 31, 2023 and April 30, 2023 was reflected in the Company's 2025 Annual Report on Form 10-K, which should be referred to in connection with these interim unaudited financial statements. The Company has included herein its restated unaudited Consolidated Financial Statements at July 31, 2024 and for the three and six month periods ended July 31, 2024. The Company has also included restated impacted amounts within the accompanying footnotes to the Consolidated Financial Statements. On April 28, 2025, the Company received a voluntary request for documents and information relating to that restatement from the Division of Enforcement of the Securities and Exchange Commission (the “SEC”). The Company is cooperating with the SEC in responding to those requests. MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited)
|  | July 31, 2024 |
|  | As Previously Reported |  |  | Adjustment |  |  | As Restated |
ASSETS |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 198,251 |  |  |  | — |  |  | $ | 198,251 |
Trade receivables, net |  |  | 109,784 |  |  |  | (23,075 | ) |  |  | 86,709 |
Inventories |  |  | 176,396 |  |  |  | 6,764 |  |  |  | 183,160 |
Other current assets |  |  | 26,421 |  |  |  | — |  |  |  | 26,421 |
Income taxes receivable |  |  | 13,088 |  |  |  | (397 | ) |  |  | 12,691 |
Total current assets |  |  | 523,940 |  |  |  | (16,708 | ) |  |  | 507,232 |
Property, plant and equipment, net |  |  | 20,315 |  |  |  | — |  |  |  | 20,315 |
Operating lease right-of-use assets |  |  | 85,350 |  |  |  | — |  |  |  | 85,350 |
Deferred and non-current income taxes |  |  | 42,685 |  |  |  | — |  |  |  | 42,685 |
Other intangibles, net |  |  | 6,645 |  |  |  | — |  |  |  | 6,645 |
Other non-current assets |  |  | 80,253 |  |  |  | — |  |  |  | 80,253 |
Total assets |  | $ | 759,188 |  |  | $ | (16,708 | ) |  | $ | 742,480 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 36,769 |  |  |  | — |  |  | $ | 36,769 |
Accrued liabilities |  |  | 45,074 |  |  |  | (500 | ) |  |  | 44,574 |
Accrued payroll and benefits |  |  | 9,778 |  |  |  | (1,625 | ) |  |  | 8,153 |
Current operating lease liabilities |  |  | 18,352 |  |  |  | — |  |  |  | 18,352 |
Income taxes payable |  |  | 8,962 |  |  |  | (2,420 | ) |  |  | 6,542 |
Total current liabilities |  |  | 118,935 |  |  |  | (4,545 | ) |  |  | 114,390 |
Deferred and non-current income taxes payable |  |  | 1,028 |  |  |  | — |  |  |  | 1,028 |
Non-current operating lease liabilities |  |  | 76,314 |  |  |  | — |  |  |  | 76,314 |
Other non-current liabilities |  |  | 56,336 |  |  |  | — |  |  |  | 56,336 |
Total liabilities |  |  | 252,613 |  |  |  | (4,545 | ) |  |  | 248,068 |
Commitments and contingencies |  |  |  |  |  |  |  |  |
Equity: |  |  |  |  |  |  |  |  |
Preferred Stock, $0.01 par value, 5,000,000 shares authorized; no shares issued |  |  | — |  |  |  | — |  |  |  | — |
Common Stock, $0.01 par value, 100,000,000 shares authorized; 29,169,952 shares issued |  |  | 292 |  |  |  | — |  |  |  | 292 |
Class A Common Stock, $0.01 par value, 30,000,000 shares authorized; 6,458,376 shares issued |  |  | 64 |  |  |  | — |  |  |  | 64 |
Capital in excess of par value |  |  | 242,039 |  |  |  | — |  |  |  | 242,039 |
Retained earnings |  |  | 461,382 |  |  |  | (12,036 | ) |  |  | 449,346 |
Accumulated other comprehensive income |  |  | 87,838 |  |  |  | (36 | ) |  |  | 87,802 |
Treasury Stock, 13,408,334 shares, at cost |  |  | (287,499 | ) |  |  | — |  |  |  | (287,499 | )
Total Movado Group, Inc. shareholders' equity |  |  | 504,116 |  |  |  | (12,072 | ) |  |  | 492,044 |
Noncontrolling interest |  |  | 2,459 |  |  |  | (91 | ) |  |  | 2,368 |
Total equity |  |  | 506,575 |  |  |  | (12,163 | ) |  |  | 494,412 |
Total liabilities and equity |  | $ | 759,188 |  |  | $ | (16,708 | ) |  | $ | 742,480 |
MOVADO GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
|  | Three Months Ended July 31, 2024 |  |  | Six Months Ended July 31, 2024 |
|  | As Previously Reported |  |  | Adjustment |  |  | As Restated |  |  | As Previously Reported |  |  | Adjustment |  |  | As Restated |
Net sales |  | $ | 159,313 |  |  | $ | (2,313 | ) |  | $ | 157,000 |  |  | $ | 295,982 |  |  | $ | (4,603 | ) |  | $ | 291,379 |
Cost of sales |  |  | 72,948 |  |  |  | (1,200 | ) |  |  | 71,748 |  |  |  | 134,104 |  |  |  | (897 | ) |  |  | 133,207 |
Gross profit |  |  | 86,365 |  |  |  | (1,113 | ) |  |  | 85,252 |  |  |  | 161,878 |  |  |  | (3,706 | ) |  |  | 158,172 |
Selling, general and administrative |  |  | 83,335 |  |  |  | (725 | ) |  |  | 82,610 |  |  |  | 155,537 |  |  |  | (2,125 | ) |  |  | 153,412 |
Operating income |  |  | 3,030 |  |  |  | (388 | ) |  |  | 2,642 |  |  |  | 6,341 |  |  |  | (1,581 | ) |  |  | 4,760 |
Non-operating income/(expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other income, net |  |  | 1,877 |  |  |  | — |  |  |  | 1,877 |  |  |  | 4,049 |  |  |  | — |  |  |  | 4,049 |
Interest expense |  |  | (110 | ) |  |  | — |  |  |  | (110 | ) |  |  | (228 | ) |  |  | — |  |  |  | (228 | )
Income/(loss) before income taxes |  |  | 4,797 |  |  |  | (388 | ) |  |  | 4,409 |  |  |  | 10,162 |  |  |  | (1,581 | ) |  |  | 8,581 |
Provision/(benefit) for income taxes |  |  | 936 |  |  |  | (93 | ) |  |  | 843 |  |  |  | 3,238 |  |  |  | (362 | ) |  |  | 2,876 |
Net income/(loss) |  |  | 3,861 |  |  |  | (295 | ) |  |  | 3,566 |  |  |  | 6,924 |  |  |  | (1,219 | ) |  |  | 5,705 |
Less: Net income attributable to noncontrolling interest |  |  | 140 |  |  |  | (43 | ) |  |  | 97 |  |  |  | 312 |  |  |  | (91 | ) |  |  | 221 |
Net income/(loss) attributable to Movado Group, Inc. |  | $ | 3,721 |  |  | $ | (252 | ) |  | $ | 3,469 |  |  | $ | 6,612 |  |  | $ | (1,128 | ) |  | $ | 5,484 |
Basic income/(loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted basic average shares outstanding |  |  | 22,303 |  |  |  | — |  |  |  | 22,303 |  |  |  | 22,278 |  |  |  | — |  |  |  | 22,278 |
Net income/(loss) per share attributable to Movado Group, Inc. |  | $ | 0.17 |  |  | $ | (0.01 | ) |  | $ | 0.16 |  |  | $ | 0.30 |  |  | $ | (0.05 | ) |  | $ | 0.25 |
Diluted income/(loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted diluted average shares outstanding |  |  | 22,658 |  |  |  | — |  |  |  | 22,658 |  |  |  | 22,665 |  |  |  | — |  |  |  | 22,665 |
Net income/(loss) per share attributable to Movado Group, Inc. |  | $ | 0.16 |  |  | $ | (0.01 | ) |  | $ | 0.15 |  |  | $ | 0.29 |  |  | $ | (0.05 | ) |  | $ | 0.24 |
MOVADO GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
|  | Six Months Ended July 31, 2024 |
|  | As Previously Reported |  |  | Adjustment |  |  | As Restated |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |
Net income/(loss) |  | $ | 6,924 |  |  | $ | (1,219 | ) |  | $ | 5,705 |
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 4,582 |  |  |  | — |  |  |  | 4,582 |
Transactional gains |  |  | (75 | ) |  |  | — |  |  |  | (75 | )
Provision for inventories and accounts receivable |  |  | 2,292 |  |  |  | — |  |  |  | 2,292 |
Deferred income taxes |  |  | (553 | ) |  |  | — |  |  |  | (553 | )
Stock-based compensation |  |  | 2,855 |  |  |  | — |  |  |  | 2,855 |
Other |  |  | 171 |  |  |  | — |  |  |  | 171 |
Changes in assets and liabilities: |  |  |  |  |  |  |  |  |
Trade receivables |  |  | (6,864 | ) |  |  | 4,603 |  |  |  | (2,261 | )
Inventories |  |  | (31,401 | ) |  |  | (897 | ) |  |  | (32,298 | )
Other current assets |  |  | (8,375 | ) |  |  | — |  |  |  | (8,375 | )
Accounts payable |  |  | 3,493 |  |  |  | — |  |  |  | 3,493 |
Accrued liabilities |  |  | 6,608 |  |  |  | (500 | ) |  |  | 6,108 |
Accrued payroll and benefits |  |  | 2,243 |  |  |  | (1,625 | ) |  |  | 618 |
Income taxes receivable |  |  | 4,126 |  |  |  | 382 |  |  |  | 4,508 |
Income taxes payable |  |  | (22,218 | ) |  |  | (744 | ) |  |  | (22,962 | )
Other non-current assets |  |  | 276 |  |  |  | — |  |  |  | 276 |
Other non-current liabilities |  |  | 6 |  |  |  | — |  |  |  | 6 |
Net cash used in operating activities |  | $ | (35,910 | ) |  | $ | - |  |  | $ | (35,910 | )
The restatement had no impact on investing and financing activities or cash balances. The following amounts (in thousands) were restated in the Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended July 31, 2024.
|  | For the Three Months Ended July 31, 2024 |
|  | As Previously Reported |  |  | Adjustment |  |  | As Restated |
Net income/(loss) |  | $ | 3,861 |  |  | $ | (295 | ) |  | $ | 3,566 |
Other comprehensive income/(loss): |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  | 5,826 |  |  |  | (44 | ) |  |  | 5,782 |
Total other comprehensive income/(loss) |  |  | 5,765 |  |  |  | (44 | ) |  |  | 5,721 |
Comprehensive income/(loss) attributable to noncontrolling interests: |  |  |  |  |  |  |  |  |
Net income/(loss) |  |  | 140 |  |  |  | (43 | ) |  |  | 97 |
Foreign currency translation adjustments |  |  | 11 |  |  |  | - |  |  |  | 11 |
Total comprehensive income/(loss) attributable to noncontrolling interests |  |  | 151 |  |  |  | (43 | ) |  |  | 108 |
Total comprehensive income/(loss) attributable to Movado Group, Inc. |  | $ | 9,475 |  |  | $ | (296 | ) |  | $ | 9,179 |
|  | For the Six Months Ended July 31, 2024 |
|  | As Previously Reported |  |  | Adjustment |  |  | As Restated |
Net income/(loss) |  | $ | 6,924 |  |  | $ | (1,219 | ) |  | $ | 5,705 |
Other comprehensive income/(loss): |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  | (4,513 | ) |  |  | (36 | ) |  |  | (4,549 | )
Total other comprehensive (loss)/income |  |  | (4,497 | ) |  |  | (36 | ) |  |  | (4,533 | )
Comprehensive income/(loss) attributable to noncontrolling interests: |  |  |  |  |  |  |  |  |
Net income/(loss) |  |  | 312 |  |  |  | (91 | ) |  |  | 221 |
Foreign currency translation adjustments |  |  | (12 | ) |  |  | - |  |  |  | (12 | )
Total comprehensive income/(loss) attributable to noncontrolling interests |  |  | 300 |  |  |  | (91 | ) |  |  | 209 |
Total comprehensive income/(loss) attributable to Movado Group, Inc. |  | $ | 2,127 |  |  | $ | (1,164 | ) |  | $ | 963 |
The following amounts (in thousands) were restated in the Consolidated Statement of Changes in Equity for the three and six months ended July 31, 2024.
|  | For the Three Months Ended July 31, 2024 |
|  | As Previously Reported |  |  | Adjustment |  |  | As Restated |
Retained earnings beginning balance |  | $ | 465,435 |  |  | $ | (11,784 | ) |  | $ | 453,651 |
Net income/(loss) attributable to Movado Group, Inc. |  |  | 3,721 |  |  |  | (252 | ) |  |  | 3,469 |
Retained earnings ending balance |  |  | 461,382 |  |  |  | (12,036 | ) |  |  | 449,346 |
Accumulated other comprehensive income beginning balance |  |  | 82,073 |  |  |  | 8 |  |  |  | 82,081 |
Foreign currency translation adjustment |  |  | 5,826 |  |  |  | (44 | ) |  |  | 5,782 |
Accumulated other comprehensive income ending balance |  |  | 87,838 |  |  |  | (36 | ) |  |  | 87,802 |
Noncontrolling interest beginning balance |  |  | 2,308 |  |  |  | (48 | ) |  |  | 2,260 |
Net income attributable to Movado Group, Inc. |  |  | 140 |  |  |  | (43 | ) |  |  | 97 |
Foreign currency translation adjustment |  |  | 11 |  |  |  | - |  |  |  | 11 |
Noncontrolling interest ending balance |  |  | 2,459 |  |  |  | (91 | ) |  |  | 2,368 |
Total equity ending balance |  | $ | 506,575 |  |  | $ | (12,163 | ) |  | $ | 494,412 |
|  | For the Six Months Ended July 31, 2024 |
|  | As Previously Reported |  |  | Adjustment |  |  | As Restated |
Retained earnings beginning balance |  | $ | 470,317 |  |  | $ | (10,908 | ) |  | $ | 459,409 |
Net income/(loss) attributable to Movado Group, Inc. |  |  | 6,612 |  |  |  | (1,128 | ) |  |  | 5,484 |
Retained earnings ending balance |  |  | 461,382 |  |  |  | (12,036 | ) |  |  | 449,346 |
Accumulated other comprehensive income beginning balance |  |  | 92,335 |  |  |  | - |  |  |  | 92,335 |
Foreign currency translation adjustment |  |  | (4,513 | ) |  |  | (36 | ) |  |  | (4,549 | )
Accumulated other comprehensive income ending balance |  |  | 87,838 |  |  |  | (36 | ) |  |  | 87,802 |
Noncontrolling interest beginning balance |  |  | 2,159 |  |  |  | - |  |  |  | 2,159 |
Net income attributable to Movado Group, Inc. |  |  | 312 |  |  |  | (91 | ) |  |  | 221 |
Foreign currency translation adjustment |  |  | (12 | ) |  |  | - |  |  |  | (12 | )
Noncontrolling interest ending balance |  |  | 2,459 |  |  |  | (91 | ) |  |  | 2,368 |
Total equity ending balance |  | $ | 506,575 |  |  | $ | (12,163 | ) |  | $ | 494,412 |

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