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What changed in MOVADO GROUP INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MOVADO GROUP INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+314 added−384 removedSource: 10-K (2023-03-23) vs 10-K (2022-03-24)

Top changes in MOVADO GROUP INC's 2023 10-K

314 paragraphs added · 384 removed · 253 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

69 edited+12 added−17 removed45 unchanged
Biggest changeNon-management employees may also receive bonuses for referring prospective new employees. Benefits vary by location and are designed to meet or exceed local legal requirements and to be competitive in the marketplace. Employee Education, Training and Development The Company encourages employees to be responsible for managing their own career goals and provides support and resources to aid employee progression.
Biggest changeOther financial benefits available to eligible employees include financial wellness planning and pre-retirement workshops, discounts on insurance and other products and services, and friends and family sales. Non-management employees may also receive bonuses for referring prospective new employees. Benefits vary by location and are designed to meet or exceed local legal requirements and to be competitive in the marketplace.
These watches typically are made with either 14 or 18 karat gold, stainless steel, ceramic or a combination of gold and stainless steel, and are occasionally set with precious gems. Luxury watches are primarily manufactured in Switzerland.
These watches typically are made with either stainless steel, ceramic, 14 or 18 karat gold, or a combination of gold and stainless steel, and are occasionally set with precious gems. Luxury watches are primarily manufactured in Switzerland.
Ebel successfully relaunched its most iconic collection, the Ebel Sports Classic in 2017, which is renowned for its iconic bracelet design with signature wave-shaped links that helped to establish the sport-chic category in the late 70’s. Ebel continues to create timepieces that embody luxury and contemporary elegance.
In 2017 Ebel successfully relaunched its most iconic collection, the Ebel Sports Classic, which is renowned for its iconic bracelet design with signature wave-shaped links that helped to establish the sport-chic category in the late 70’s. Ebel continues to create timepieces that embody luxury and contemporary elegance.
The Company is highly selective in its licensing strategy and chooses to enter into long-term agreements with only powerful brands which we deem to have strong positions in their respective businesses. The following table sets forth the brands licensed by the Company and the year in which the Company launched each licensed brand for watches.
The Company is highly selective in its licensing strategy and chooses to enter into long-term agreements with only powerful brands which we deem to have strong positions in their respective businesses. 2 The following table sets forth the brands licensed by the Company and the year in which the Company launched each licensed brand for watches.
The Company’s jewelry and other accessories are designed by in-house design teams in cooperation with outside sources and are manufactured by independent contractors in Asia and, to a lesser extent, the United States. 5 MARKETING The Company’s marketing strategy is to communicate a consistent, brand-specific message to the consumer.
The Company’s jewelry and other accessories are designed by in-house design teams in cooperation with outside sources and are manufactured by independent contractors in Asia and, to a lesser extent, the United States. MARKETING The Company’s marketing strategy is to communicate a consistent, brand-specific message to the consumer.
Watch and Accessory Brands Business in International Markets Internationally, the Company’s brands are sold to department stores, jewelry chains, independent jewelers and third-party e-commerce retailers, as well as directly to consumers through the Company’s owned e-commerce websites, such as www.oliviaburton.com and www.mvmt.com .
Watch and Accessory Brands Business in International Markets Internationally, the Company’s brands are sold to department stores, jewelry chains, independent jewelers and third-party e-commerce retailers, as well as directly to consumers through the Company’s owned e-commerce websites, such as www.oliviaburton.com .
Multiple companies, however, compete with Movado Group with respect to one or more of its watch brands. Certain of these companies have, and other companies that may enter the Company’s markets in the future may have, greater financial, distribution, marketing and advertising resources than the Company.
Multiple companies, however, compete with Movado Group with respect to one or more of its brands. Certain of these companies have, and other companies that may enter the Company’s markets in the future may have, greater financial, distribution, marketing and advertising resources than the Company.
Customs regulations generally do not, however, protect against the unauthorized importation of genuine products. COMPETITION The markets for each of the Company’s watch brands are highly competitive. With the exception of Swatch Group, Ltd., a large Swiss-based competitor, no single company directly competes with the Company across all of its brands.
Customs regulations generally do not, however, protect against the unauthorized importation of genuine products. COMPETITION The markets for each of the Company’s watch and jewelry brands are highly competitive. With the exception of Swatch Group, Ltd., a large Swiss-based competitor, no single company directly competes with the Company across all of its brands.
Watch and Accessory Brands market primarily to department stores, such as Macy’s and Nordstrom; major jewelry store chains, such as Signet Jewelers, Ltd. and Helzberg Diamonds Corp.; independent jewelers; and third-party e-commerce retailers, such as Amazon; as well as directly to consumers through the Company’s owned e-commerce websites, such as www.movado.com and www.mvmtwatches.com .
Watch and Accessory Brands market primarily to department stores, such as Macy’s and Nordstrom; major jewelry store chains, such as Signet Jewelers, Ltd. and Helzberg Diamonds Corp.; independent jewelers; and third-party e-commerce retailers, such as Amazon; as well as directly to consumers through the Company’s owned e-commerce websites, such as www.movado.com and www.mvmt.com .
The Company aims to expand the diversity of its workforce, especially among senior leadership. To help achieve this objective, the Company signed the parity pledge, demonstrating its intention to interview at least one woman and one underrepresented minority for each open position, Vice President and above, going forward.
The Company aims to expand the diversity of its workforce, especially among senior leadership. To help achieve this objective, the Company signed the parity pledge, demonstrating its intention to interview at least one woman and one underrepresented minority for each open position, Vice President and above.
OPERATING SEGMENTS The Company conducts its business primarily in two operating segments: Watch and Accessory Brands and Company Stores. For operating segment data and geographic segment data for the years ended January 31, 2022, 2021 and 2020, see Note 20 to the Consolidated Financial Statements regarding Segment and Geographic Information.
OPERATING SEGMENTS The Company conducts its business primarily in two operating segments: Watch and Accessory Brands and Company Stores. For operating segment data and geographic segment data for the years ended January 31, 2023, 2022 and 2021, see Note 20 to the Consolidated Financial Statements regarding Segment and Geographic Information.
The Company is a leader in the design, development, marketing and distribution of watch brands sold in almost every major category comprising the watch industry. The Company also designs, sources, markets and distributes jewelry and other accessories under certain of its brands.
The Company is a leader in the design, development, marketing and distribution of watch brands sold in almost every major category comprising the watch industry. The Company also designs, sources, markets and distributes jewelry and other accessories under most of its brands.
Tommy Hilfiger Watches and Jewelry Reflecting the fresh, fun all-American style for which Tommy Hilfiger is known, Tommy Hilfiger watches are water resistant and feature quartz, digital or analog-digital movements, with stainless steel, aluminum, silver-tone, two-tone or gold-tone cases and bracelets. Straps feature genuine leather, vegan leather, fabric, plastic, silicone or recycled plastics.
Tommy Hilfiger Watches and Jewelry Reflecting the fresh, fun all-American style for which Tommy Hilfiger is known, Tommy Hilfiger watches are water resistant and feature quartz, digital or analog-digital movements, with stainless steel, aluminum, gold plated or two-tone cases and bracelets. Straps feature genuine leather, vegan leather, fabric, silicone or recycled plastics.
Its portfolio of watch brands is currently comprised of owned brands MOVADO ® , CONCORD ® , EBEL ® , OLIVIA BURTON ® and MVMT ® as well as licensed brands COACH ® , TOMMY HILFIGER ® , HUGO BOSS ® , LACOSTE ® , CALVIN KLEIN ® and SCUDERIA FERRARI ® .
Its portfolio of watch brands is currently comprised of owned brands MOVADO ® , CONCORD ® , EBEL ® , OLIVIA BURTON ® and MVMT ® as well as licensed brands COACH ® , TOMMY HILFIGER ® , HUGO BOSS ® , LACOSTE ® and CALVIN KLEIN ® .
Brands Exclusive $10,000 and over — Luxury $1,300 to $9,900 Concord and Ebel Accessible Luxury $500 to $3,295 Movado Moderate and Fashion $75 to $595 Coach, Hugo Boss, Lacoste, Olivia Burton, MVMT, Scuderia Ferrari, Tommy Hilfiger and Calvin Klein Mass Market Less than $75 — Exclusive Watches Exclusive watches are usually made of precious metals, including 18 karat gold or platinum, and are often set with precious gems.
Brands Exclusive $10,000 and over — Luxury $1,300 to $9,900 Concord and Ebel Accessible Luxury $500 to $3,995 Movado Moderate and Fashion $75 to $595 Coach, Hugo Boss, Lacoste, Olivia Burton, MVMT, Tommy Hilfiger and Calvin Klein Mass Market Less than $75 — Exclusive Watches Exclusive watches are usually made of precious metals, including 18 karat gold or platinum, and are often set with precious gems.
The Tommy Hilfiger License Agreement expires December 31, 2024 and may be extended by the Company for an additional five years ending on December 31, 2029, subject to the satisfaction of minimum sales requirements and approval of a new business plan in the licensor’s reasonable discretio n.
The Tommy Hilfiger License Agreement expires December 31, 2024 and may be extended by the Company for an additional five years ending on December 31, 2029, subject to the satisfaction of minimum sales requirements and approval of a new business plan in the licensor’s reasonable discretion.
In addition, the committee charters for the audit committee, the compensation committee and the nominating, governance and corporate responsibility committee of the Board of Directors of the Company and the Company’s corporate governance guidelines have been posted on the Company’s website.
In addition, the committee charters for the Audit Committee, the Compensation and Human Capital Committee and the Nominating, Governance and Corporate Responsibility Committee of the Board of Directors of the Company and the Company’s corporate governance guidelines have been posted on the Company’s website.
REGULATION We are subject to laws and regulations regarding customs (including tariffs and retaliatory tariffs), tax, employment, privacy, truth-in-advertising, consumer product safety, zoning and occupancy and other laws and regulations that regulate and/or govern the importation, promotion and sale of consumer products and our corporate, retail and distribution operations.
REGULATION We are subject to laws and regulations regarding customs (including tariffs and retaliatory tariffs), tax, employment, privacy, truth-in-advertising, consumer product safety, waste management, zoning and occupancy and other laws and regulations that regulate and/or govern the importation, packaging, promotion, sale and disposal of consumer products and our corporate, retail and distribution operations.
(the “Lacoste License Agreement”), extending the term and making certain other changes to the license agreement originally entered into by the parties in 2006, under which the Company received a worldwide exclusive license to use the LACOSTE ® name and the distinctive “crocodile” logo to design, produce, market and distribute watches.
(the “Lacoste License Agreement”), extending the term and making certain other changes to the license agreement originally entered into by the parties in 2006 as previously extended in 2014, under which the Company received a worldwide exclusive license to use the LACOSTE ® name and the distinctive “crocodile” logo to design, produce, market and distribute watches.
Company advertising is placed in magazines and other print media, on radio and television, online, including websites and social media platforms, in catalogs, on outdoor signs and through other promotional materials. Marketing expenses totaled 16.3%, 16.9%, and 19.3% of net sales in fiscal 2022, 2021 and 2020, respectively.
Company advertising is placed in magazines and other print media, on radio and television, online, including websites and social media platforms, in catalogs, on outdoor signs and through other promotional materials. Marketing expenses totaled 16.8%, 16.3%, and 16.9% of net sales in fiscal 2023, 2022 and 2021, respectively.
The Company divides its business into two major geographic locations: United States operations, and International, which includes the results of all non-U.S. Company operations. The vast majority of the Company’s tangible International assets are owned by the Company’s Swiss and Hong Kong subsidiaries.
The Company Stores segment includes the Company’s retail outlet business. 6 The Company divides its business into two major geographic locations: United States operations, and International, which includes the results of all non-U.S. Company operations. The vast majority of the Company’s tangible International assets are owned by the Company’s Swiss and Hong Kong subsidiaries.
Major selling seasons in certain international markets center on significant local holidays that occur in late winter or early spring. The second half of each of the fiscal years ended January 31, 2022, 2021 and 2020 accounted for 57.9 % , 68.8% and 56.6% of the Company’s net sales, respectively.
Major selling seasons in certain international markets center on significant local holidays that occur in late winter or early spring. The second half of each of the fiscal years ended January 31, 2023, 2022 and 2021 accounted for 54.0%, 57.9% and 68.8% of the Company’s net sales, respectively.
Item 1. Business GENERAL In this Form 10-K, all references to the “Company” or “Movado Group” include Movado Group, Inc. and its subsidiaries, unless the context requires otherwise. The Company’s common stock is traded on the NYSE under the trading symbol MOV. Movado Group designs, sources, markets and distributes quality watches globally.
Item 1. Business GENERAL In this Form 10-K, all references to the “Company,” “Movado Group,” "we," "us" or "our" include Movado Group, Inc. and its subsidiaries, unless the context requires otherwise. The Company’s common stock is traded on the NYSE under the trading symbol MOV. Movado Group designs, sources, markets and distributes quality watches globally.
Approximately 33% of the Company’s non-retail employees have been with the Company for more than 10 years, and approximately 51 % have been with the Company for at least five years.
Approximately 31% of the Company’s non-retail employees have been with the Company for more than 10 years, and approximately 48% have been with the Company for at least five years.
The first half of fiscal year 2021 was negatively impacted by the COVID-19 pandemic. BACKLOG At March 21, 2022, the Company had unfilled orders of $60.9 million compared to $46.0 million at March 22, 2021 and $45.0 million at March 23, 2020.
The first half of fiscal year 2021 was negatively impacted by the COVID-19 pandemic. BACKLOG At March 20, 2023, the Company had unfilled orders of $40.7 million compared to $60.9 million at March 21, 2022 and $46.0 million at March 22, 2021.
As an extension of the brand, Coach watches offer a fresh and compelling assortment of timepieces for women and men, with a wide variety of metal bracelets and genuine Coach leather straps.
With an expanding presence globally, the Coach brand exemplifies modern luxury. As an extension of the brand, Coach watches offer a fresh and compelling assortment of timepieces for women and men, with a wide variety of metal bracelets and genuine Coach leather straps.
As the consumer footprint continues to evolve, the Company is increasingly focused on its digital marketing and online reach, including expanding and improving its social media channels and its messaging through individuals with significant social media followings (i.e., “influencers”).
As the consumer footprint continues to evolve, the Company is increasingly focused on its digital marketing and online reach, including expanding and improving its social media channels and its messaging through individuals with significant social media followings (i.e., “influencers”), as well as elevating its customers’ digital experience globally through innovative technologies and consumer-facing initiatives.
The Company’s Watch and Accessory Brands segment includes the designing, manufacturing and distribution of watches and, to a lesser extent, jewelry and other accessories, of quality owned and licensed brands, in addition to revenue generated from after-sales service activities and shipping. The Company Stores segment includes the Company’s physical retail outlet locations in the United States and Canada.
The Company’s Watch and Accessory Brands segment includes the designing, manufacturing and distribution of watches and, to a lesser extent, jewelry and other accessories, of quality owned and licensed brands, in addition to revenue generated from after-sales service activities and shipping.
Under an amended and restated license agreement with Tommy Hilfiger Licensing LLC entered into on March 20, 2020 and effective as of January 1, 2020 (the “Tommy Hilfiger License Agreement”), the Company has the exclusive license to use the trademark TOMMY HILFIGER ® and related trademarks in connection with the manufacture, marketing, advertising, sale and distribution of watches and jewelry worldwide (excluding sales to certain accounts in Japan).
The Company licenses the trademark COACH ® and related trademarks on an exclusive worldwide basis for use in connection with the manufacture, distribution, advertising and sale of watches pursuant to an amended license agreement with Tapestry, Inc. which is scheduled to expire on June 30, 2025. 8 Under an amended and restated license agreement with Tommy Hilfiger Licensing LLC entered into on March 20, 2020 and effective as of January 1, 2020 (the “Tommy Hilfiger License Agreement”), the Company has the exclusive license to use the trademark TOMMY HILFIGER ® and related trademarks in connection with the manufacture, marketing, advertising, sale and distribution of watches and jewelry worldwide (excluding sales to certain accounts in Japan).
Movado is a hallmark of some of the most famous timepieces ever created, most notably, the Movado Museum® Watch. Designed in 1947 by Bauhaus-influenced artist Nathan George Horwitt, the watch dial defined by a solitary dot at 12 o’clock, symbolizing the sun at high noon, has been acclaimed for purity of design unrivaled in the history of time-keeping.
Designed in 1947 by Bauhaus-influenced artist Nathan George Horwitt, the watch dial defined by a solitary dot at 12 o’clock, symbolizing the sun at high noon, has been acclaimed for purity of design unrivaled in the history of time-keeping.
On March 28, 2014, the Company entered into an amended and restated license agreement with Lacoste S.A., Sporloisirs S.A. and Lacoste Alligator S.A.
On August 30, 2022, the Company entered into an amended and restated license agreement with Lacoste S.A., Sporloisirs S.A. and Lacoste Alligator S.A.
Moderate and fashion watches are manufactured primarily in Asia and Switzerland. In addition to the Company’s Calvin Klein, Coach, Hugo Boss, Lacoste, Olivia Burton, MVMT, Scuderia Ferrari, and Tommy Hilfiger brands, well-known brand names of watches in the moderate and fashion category include Anne Klein, Bulova, Citizen, Fossil, Guess, Seiko, Michael Kors, Daniel Wellington and Swatch.
In addition to the Company’s Calvin Klein, Coach, Hugo Boss, Lacoste, Olivia Burton, MVMT and Tommy Hilfiger brands, well-known brand names of watches in the moderate and fashion category include Anne Klein, Bulova, Citizen, Fossil, Guess, Seiko, Michael Kors, Daniel Wellington and Swatch. Market leaders for smartwatches include Apple, Samsung and Garmin.
A passion for innovation and excellence in watch design has always been at the heart of the Ebel brand. Ebel was founded in 1911 by husband and wife Eugène Blum and Alice Lévy, in La Chaux-de-Fonds, Switzerland. Since its inception, Ebel has remained true to its core values, manufacturing fine Swiss watches that marry beauty and function.
Ebel was founded in 1911 by husband and wife Eugène Blum and Alice Lévy, in La Chaux-de-Fonds, Switzerland. Since its inception, Ebel has remained true to its core values, manufacturing fine Swiss watches that marry beauty and function.
Movado (with the exception of certain Movado collections), Ebel and Concord watches, as well as certain Calvin Klein watch styles, are manufactured in Switzerland by independent third-party assemblers using Swiss movements and other parts sourced by the Company’s Swiss operations.
The Company generally does not have long-term supply commitments with any of its component parts suppliers. Movado (with the exception of certain Movado collections), Ebel and Concord watches, as well as certain Calvin Klein watch styles, are manufactured in Switzerland by independent third-party assemblers using Swiss movements and other parts sourced by the Company’s Swiss operations.
With strong supply chain organizations predominantly in Switzerland, Mainland China and Hong Kong, the Company maintains control over the quality of its products, wherever they are manufactured.
With strong supply chain organizations predominantly in Switzerland, Mainland China and Hong Kong, the Company maintains control over the quality of its products, wherever they are manufactured. Compliance is monitored with strictly enforced quality control standards, including on-site quality inspections.
A list of authorized service centers can be accessed online at www.mgiservice.com . In order to maintain consistency and quality at its service facilities and authorized independent service centers, the Company conducts training sessions and distributes technical information and updates to repair personnel.
In order to maintain consistency and quality at its service facilities and authorized independent service centers, the Company conducts training sessions and distributes technical information and updates to repair personnel.
When Horwitt’s dial was selected for the permanent design collection of the Museum of Modern Art, New York, in 1960, it became the first watch dial ever awarded this distinction. This legendary dial is regarded as an icon of Modernism. A trademarked and award-winning design, the celebrated single dot dial now distinguishes a wide range of Movado timepieces.
When Horwitt’s dial was selected for the permanent design collection of the Museum of Modern Art, New York, in 1960, it became the first watch dial ever awarded this distinction. This legendary dial is regarded as an icon of Modernism.
Market leaders for smartwatches include Apple, Samsung and Garmin. Mass Market Watches Mass market watches typically consist of digital watches and analog watches made from stainless steel, brass and/or plastic and are manufactured in Asia. Well-known brands include Casio, Pulsar, Seiko and Timex.
Mass Market Watches Mass market watches typically consist of digital watches and analog watches made from stainless steel, brass and/or plastic and are manufactured in Asia. Well-known brands include Casio, Pulsar, Seiko and Timex. The Company does not compete in the mass market watch category.
Demographics The following table summarizes the Company’s global workforce as of January 31, 2022: Full-Time Employees Part-Time Employees Temporary Employees Total Global 940 306 51 1,297 Americas 573 279 42 894 Asia-Pacific 133 - 2 135 Europe, Middle East & Africa 234 27 7 268 Attraction and Retention of Employees The Company strives to attract and retain a highly talented and engaged workforce and believes that its supportive culture, dedication to employee safety and well-being, competitive compensation and benefits programs, employee development and training offerings, diversity and inclusion initiatives, and philanthropic and community engagement help in this endeavor.
Demographics The following table summarizes the Company’s global workforce as of January 31, 2023: 9 Full-Time Employees Part-Time Employees Temporary Employees Total Global 992 379 86 1,457 Americas 602 355 74 1,031 Asia-Pacific 143 - 4 147 Europe, Middle East & Africa 247 24 8 279 Attraction and Retention of Employees The Company strives to attract and retain a highly talented and engaged workforce and believes that its supportive culture, dedication to employee safety and well-being, competitive compensation and benefits programs, employee development and training offerings, diversity and inclusion initiatives, and philanthropic and community engagement help in this endeavor.
The knot signifies the brand’s foundation through harmonious unity and its laudable technical achievements and distinctive designs. The current Mariner SL watch captures this spirit and helps carry on Concord’s strong legacy. Ebel Ebel’s success has been built upon the fusion of technical excellence and a passion for aesthetically daring and timeless, distinctive design.
The current Mariner SL watch captures this spirit and helps carry on Concord’s strong legacy. Ebel Ebel’s success has been built upon the fusion of technical excellence and a passion for aesthetically daring and timeless, distinctive design. A passion for innovation and excellence in watch design has always been at the heart of the Ebel brand.
Products that are returned under warranty to the Company are generally serviced by the Company’s employees at its service facilities. The Company retains adequate levels of component parts to facilitate both the manufacturing of its watches as well as the after-sales service of its watches for an extended period of time after the discontinuance of the manufacturing of such watches.
The Company retains adequate levels of component parts to facilitate both the manufacturing of its watches as well as the after-sales service of its watches for an extended period of time after the discontinuance of the manufacturing of such watches.
The Company divides the watch market into five principal categories as set forth in the following table. Market Category Suggested Retail Price Range Primary Category of Movado Group, Inc.
INDUSTRY OVERVIEW The largest markets for watches are North America, Europe, the Middle East, Latin America and Asia. The Company divides the watch market into five principal categories as set forth in the following table. Market Category Suggested Retail Price Range Primary Category of Movado Group, Inc.
As of January 31, 2022, women represented approximately 63% of the Company's global employees, and underrepresented minorities (defined as those who identify as Black/African American, Hispanic/Latinx, Native American, Asian, Pacific Islander and/or two or more races) represented approximately 54% of the Company's U.S. employees. 10 Community Engagement The Company is committed to engaging with and giving back to its communities.
As of January 31, 2023, women represented approximately 64% of the Company's global employees, and underrepresented minorities (defined as those who identify as Black/African American, Hispanic, Native American, Asian, Pacific Islander and/or two or more races) represented approximately 55% of the Company's U.S. employees.
MVMT The MVMT brand was founded in a Southern California apartment in 2013 by two entrepreneurs. Originally empowered by crowdfunding and built digitally with a community of social media followers, their philosophy was to create a brand offering quality, sleek watches that are accessible to young consumers.
Originally empowered by crowdfunding and built digitally with a community of social media followers, their philosophy was to create a brand offering quality, sleek watches that are accessible to young consumers. MVMT’s designs and messaging embody the spirit of adventuring, creating, and daring to disrupt the norm.
The Coach brand stands for authenticity, innovation, and relevance, as well as effortless New York style. It is an integral part of the American luxury landscape. With an expanding presence globally, the Coach brand exemplifies modern luxury.
Licensed Brands Below is a description of the Company’s licensed brands. Coach Watches Coach watches reflect the Coach brand image and classic American style. The Coach brand stands for authenticity, innovation, and relevance, as well as effortless New York style. It is an integral part of the American luxury landscape.
These resources vary by location and generally include annual development reviews, ongoing courses and resources, corporate development programs, and departmental development programs. The Company also partners with local colleges to promote deeper learning on specific topics. Tuition reimbursement is available to full-time employees in the United States.
The Company also partners with local colleges to promote deeper learning on specific topics. Tuition reimbursement is available to full-time employees in the United States.
The Company continues to present programs that educate its employees on diversity, inclusion and belonging, to participate in the CEO Action for Diversity & Inclusion and the Open to All campaign and to support external organizations' efforts in these areas.
The Company continues to present programs that educate its employees on diversity, inclusion and belonging, to participate in the CEO Action for Diversity & Inclusion and the Open to All campaign and to support external organizations' efforts in these areas. 10 As of January 31, 2023, the Company had an eight-member Board of Directors, including two female Board members and multiple Board members from underrepresented minorities.
Brand Licensor Calendar Year Launched COACH Tapestry, Inc. 1999 TOMMY HILFIGER Tommy Hilfiger Licensing LLC 2001 HUGO BOSS Hugo Boss Trade Mark Management GmbH & Co 2006 LACOSTE Lacoste S.A., Sporloisirs S.A. and Lacoste Alligator S.A. 2007 SCUDERIA FERRARI Ferrari Brand S.p.A. 2013 CALVIN KLEIN Calvin Klein, Inc. 2022 2 INDUSTRY OVERVIEW The largest markets for watches are North America, Europe, Latin America and Asia.
Brand Licensor Calendar Year Launched COACH Tapestry, Inc. 1999 TOMMY HILFIGER Tommy Hilfiger Licensing LLC 2001 HUGO BOSS Hugo Boss Trade Mark Management GmbH & Co 2006 LACOSTE Lacoste S.A., Sporloisirs S.A. and Lacoste Alligator S.A. 2007 CALVIN KLEIN Calvin Klein, Inc. 2022 From 2013 through December 2022, the Company's licensed brands portfolio included the Scuderia Ferrari brand pursuant to a license agreement with Ferrari S.p.A.
In addition to a majority of the Company’s Ebel and Concord watches, well-known brand names of luxury watches include Baume & Mercier, Breitling, Cartier, Omega and TAG Heuer.
In addition to a majority of the Company’s Ebel and Concord watches, well-known brand names of luxury watches include Baume & Mercier, Breitling, Cartier, Omega and TAG Heuer. Accessible Luxury Watches The majority of accessible luxury watches are quartz-analog watches, occasionally including connected technology for transmitting data wirelessly between the watch and a smartphone or other device.
The term of the Agreement continues until December 31, 2026 and may be renewed by the Company for an additional five years, subject to certain conditions, including the achievement of specified minimum sales. 8 The Company also owns, and has pending applications for, a number of design patents in the United States and internationally for various watch designs, as well as designs of watch dials, cases, bracelets and jewelry.
The term of the Agreement continues until December 31, 2026 and may be renewed by the Company for an additional five years, subject to certain conditions, including the achievement of specified minimum sales.
The Company does not compete in the mass market watch category. 3 BRANDS The Company designs, develops, sources, markets and distributes products under the following watch brands: Owned Brands Concord Concord was founded through the harmonious collaboration of five Swiss visionaries in 1908.
BRANDS The Company designs, develops, sources, markets and distributes products under the following brands: Owned Brands Concord Concord was founded through the harmonious collaboration of five Swiss visionaries in 1908. In 1979, Concord spearheaded the Swiss quartz revolution with one of the most important watches of the twentieth century: the Concord Delirium.
Calvin Klein Watches and Jewelry The Calvin Klein collection of watches and jewelry was created with the modern customer in mind. Featuring timeless, minimalist designs that highlight Calvin Klein's globally-recognized aesthetic, the collection of men's and women's accessories reflects the sensuality and boldness that has come to define the brand for over 50 years.
Featuring timeless, minimalist designs that highlight Calvin Klein's globally-recognized aesthetic, the collection of men's and women's accessories reflects the sensuality and boldness that has come to define the brand for over 50 years. 5 DESIGN AND PRODUCT DEVELOPMENT The Company’s offerings undergo two phases before they are produced for sale to customers: design and product development.
All watches sold by the Company come with limited warranties covering the movement against defects in material and workmanship for periods ranging from two to three years from the date of purchase. In addition, the warranty period is five years for the gold plating on certain Movado watch cases and bracelets.
All watches sold by the Company come with limited warranties covering the movement against defects in material and workmanship for periods ranging from two to three years from the date of purchase. Products that are returned under warranty to the Company are generally serviced by the Company’s employees at its service facilities.
Olivia Burton Olivia Burton is a brand founded by two friends who started out as fashion buyers who recognized a gap in the market for unique and feminine women’s watch styles. Inspired by vintage, fashion trends and nature, the Olivia Burton design team blends contemporary and vintage styles to conceive new collections periodically.
The brand’s design catalogue has since expanded into more than 20 unique watch collections, sunglasses, blue light eyewear and jewelry. Olivia Burton Olivia Burton is a brand founded by two friends who started out as fashion buyers who recognized a gap in the market for unique and feminine women’s watch styles.
In addition, as part of its long-term incentive plan for executives and key employees, the Company provides share-based compensation to foster its pay-for-performance culture and to attract, retain, and motivate participants. Other financial benefits available to eligible employees include financial wellness planning and pre-retirement workshops, discounts on insurance and other products and services, and friends and family sales.
The Company also offers defined contribution savings plans to eligible employees. In addition, as part of its long-term incentive plan for executives and key employees, the Company provides stock-based compensation to foster its pay-for-performance culture and to attract, retain, and motivate participants.
CUSTOMER SERVICE, WARRANTY AND REPAIR The Company assists in the retail sales process of its wholesale customers by monitoring their sales and inventories by product category and style. The Company also assists in the conception, development and implementation of customers’ marketing vehicles. The Company places considerable emphasis on cooperative advertising programs with its wholesale customers.
The Company also assists in the conception, development and implementation of customers’ marketing vehicles. The Company places considerable emphasis on cooperative advertising programs with its wholesale customers. The Company’s assistance in the retail sales process has resulted in close relationships with its principal customers, often allowing for influence on the mix and quantity.
Along with its long, rich heritage of design innovation, the Movado brand experience is also defined by a close, enduring association with the arts. Expressions of Movado’s commitment to the fine and cultural arts encompass commissioned watch designs by famed artists, affiliations with talented brand ambassadors, sponsorship of major arts institutions and support of emerging artists.
Expressions of Movado’s commitment to the fine and cultural arts encompass commissioned watch designs by famed artists, affiliations with talented brand ambassadors, sponsorship of major arts institutions and support of emerging artists. MVMT The MVMT brand was founded in a Southern California apartment in 2013 by two entrepreneurs.
In 1979, Concord spearheaded the Swiss quartz revolution with one of the most important watches of the twentieth century: the Concord Delirium. This was the first watch ever produced to be less than one millimeter thick – a world record to this day. To mark its 110 th anniversary, Concord introduced a new logo depicting a knot.
This was the first watch ever produced to be less than one millimeter thick – a world record to this day. To mark its 110 th anniversary, Concord introduced a new logo depicting a knot. The knot signifies the brand’s foundation through harmonious unity and its laudable technical achievements and distinctive designs.
As well as innovative timepieces, including vegan, eco-friendly and unisex collections, Olivia Burton has a growing collection of jewelry styles that exhibit the same attention to detail seen in its watches. 4 Licensed Brands Below is a description of the Company’s licensed brands. Coach Watches Coach watches reflect the Coach brand image and classic American style.
Inspired by vintage, fashion trends and nature, the Olivia Burton design team blends contemporary and vintage styles to conceive new collections periodically. As well as innovative timepieces, including vegan, eco-friendly and unisex collections, Olivia Burton has a large and growing collection of jewelry styles that exhibit the same attention to detail seen in its watches.
Coach, Hugo Boss, Lacoste, Olivia Burton, MVMT, Scuderia Ferrari, Tommy Hilfiger and most Calvin Klein watches are manufactured by independent contractors in Asia.
All of the Company’s products are manufactured using components obtained from third party suppliers. Certain Movado collections of watches are manufactured by independent contractors in Asia using Swiss movements. Coach, Hugo Boss, Lacoste, Olivia Burton, MVMT, Tommy Hilfiger and most Calvin Klein watches are manufactured by independent contractors in Asia.
The Company obtains other watch components for all of its brands, including, cases, hands, dials, bracelets, straps and non-Swiss movements from a number of other suppliers. The Company generally does not have long-term supply commitments with any of its component parts suppliers.
The Swiss watch movements used in the manufacture of Movado, Ebel and Concord watches are purchased from three suppliers, with all mechanical movements coming from a single supplier. The Company obtains other watch components for all of its brands, including, cases, hands, dials, bracelets, straps and non-Swiss movements from a number of other suppliers.
A majority of the Company’s arrangements with its international distributors are long-term, generally require certain minimum purchases and minimum advertising expenditures and impose restrictions on the distributor’s sale of competitive products. 6 Company Stores The Company’s subsidiary, Movado Retail Group, Inc., operates 47 retail outlet locations in outlet centers across the United States and four r etail outlet locations in outlet centers in Canada, as well as an online outlet store at www.movadocompanystore.com.
Company Stores The Company’s subsidiary, Movado Retail Group, Inc., operates 51 retail outlet locations in outlet centers across the United States and four retail outlet locations in outlet centers in Canada, as well as an online outlet store at www.movadocompanystore.com.
Accessible Luxury Watches The majority of accessible luxury watches are quartz-analog watches, some of which may also include connected technology for transmitting data wirelessly between the watch and a smartphone or other device. These watches typically are made with gold finish, stainless steel, ceramic or a combination of gold finish and stainless steel.
In addition to a majority of the Company’s Movado watches, well-known brand names of accessible luxury watches include Gucci, Rado, Michele and Raymond Weil. 3 Moderate and Fashion Watches Most moderate and fashion watches are quartz-analog watches, some of which may also included connected technology for transmitting data wirelessly between the watch and a smartphone or other device.
Effective January 1, 2022, the Company has also been authorized to produce and sell jewelry under the LACOSTE brand name. The term of the Lacoste License Agreement continues through December 31, 2022. The parties are in the process of finalizing an agreement to extend the license through December 31, 2031.
The amended Lacoste License Agreement, which has an effective date of January 1, 2022, continues through December 31, 2031 and authorizes the Company to produce and sell jewelry in addition to watches. Effective August 19, 2020, the Company and Calvin Klein, Inc.
The Company is the corporate sponsor of The Movado Group Foundation, a nonprofit organization that supports philanthropic campaigns in the United States with particular emphasis on sustaining the arts. Programs and support vary by year, need and available resources.
Community Engagement The Company is committed to engaging with and giving back to its communities and facilitates opportunities for its employees to donate time and make monetary contributions to charitable organizations. The Company is the corporate sponsor of The Movado Group Foundation, a nonprofit organization that supports philanthropic campaigns in the United States with particular emphasis on sustaining the arts.
Unfilled orders include both confirmed orders and orders that the Company believes will be confirmed based on the historical experience with the customers. It is customary for many of the Company’s customers not to confirm their future orders with formal purchase orders until shortly before their desired delivery dates.
Unfilled orders include both confirmed orders and orders that the Company believes will be confirmed based on the historical experience with the customers.
The Company permits the return of damaged or defective products. In addition, although the Company generally has no obligation to do so, it accepts other returns from customers in certain instances. The Company has service facilities around the world, including four Company-owned service facilities and a number of independent service centers which are authorized to perform warranty repairs.
The Company believes that customers’ familiarity with its sales approach has facilitated, and should continue to facilitate, the introduction of new products through its distribution network. The Company permits the return of damaged or defective products. In addition, although the Company generally has no obligation to do so, it accepts other returns from customers in certain instances.
The Company uses a combination of fixed and variable pay including base salary, bonus, commissions, and merit increases that vary across the business. The Company also offers defined contribution savings plans to eligible employees.
Programs vary by location and are designed to meet or exceed local laws and to be competitive in the marketplace. Compensation and Financial Benefits The Company strives to offer competitive compensation packages. The Company uses a combination of fixed and variable pay including base salary, bonus, commissions, and merit increases that vary across the business.
Moderate and Fashion Watches Most moderate and fashion watches are quartz-analog watches, some of which may also include connected technology for transmitting data wirelessly between the watch and a smartphone or other device. These watches typically are made with gold finish, stainless steel, brass, plastic or a combination of gold finish and stainless steel.
These watches typically are made with stainless steel, brass, plastic, gold plating, or a combination of gold plating and stainless steel. Moderate and fashion watches are manufactured primarily in Asia and Switzerland.
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Accessible luxury watches are manufactured primarily in Switzerland, although some are manufactured in Asia. In addition to a majority of the Company’s Movado watches, well-known brand names of accessible luxury watches include Gucci, Rado, Michele and Raymond Weil.
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These watches typically are made with stainless steel, ceramic, gold plating or a combination of gold plating and stainless steel. Accessible luxury watches are manufactured primarily in Switzerland, although some are manufactured in Asia.
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Innovative in design and materials, Movado BOLD is for the fashion-savvy, on-trend, young at heart consumer. The Movado Heritage collection launched in the spring of 2016 and is inspired by Movado’s rich history dating back before the iconic Museum dial. The collection includes new designs that are modern and relevant today by utilizing Movado’s archives.
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Jewelry and Other Fashion Accessories In addition to its core watch business, the Company also designs, sources, markets and distributes jewelry and, to a lesser extent, other fashion accessories such as sunglasses. The Company’s jewelry offerings consist mostly of fashion jewelry, although some fine jewelry pieces are also included in certain collections.
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MVMT’s designs and messaging embody the spirit of adventuring, creating, and daring to disrupt the norm. The brand’s design catalogue has since expanded into more than 20 unique watch collections, sunglasses, blue light eyewear and jewelry.
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We generally market our fashion accessories through the same distribution channels as our watches and use similar marketing approaches. Sales of jewelry accounted for 6.7% of our consolidated net sales in fiscal year 2023.
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Scuderia Ferrari Watches Asserting Scuderia Ferrari’s proud racing heritage and Italian pedigree, Movado Group’s Scuderia Ferrari watch collection offers stylish timepieces for adults and youths, bringing the excitement and distinctive style of the time-honored racing team to fans around the world.
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The Movado jewelry collection reflects the same timeless modern design aesthetic as its watches. Movado is a hallmark of some of the most famous timepieces ever created, most notably, the Movado Museum® Watch.
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The Company's collaboration with Scuderia Ferrari will end on June 30, 2022, although the Company has the right to sell any then-remaining inventory through December 31, 2022. DESIGN AND PRODUCT DEVELOPMENT The Company’s offerings undergo two phases before they are produced for sale to customers: design and product development.
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A trademarked and award-winning design, the celebrated single dot dial now distinguishes a wide range of Movado timepieces. 4 Along with its long, rich heritage of design innovation, the Movado brand experience is also defined by a close, enduring association with the arts.
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In 2018, the Company established a Digital Center of Excellence to help elevate its customers’ digital experience globally through innovative technologies and consumer-facing initiatives.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, the Company has contracted with third-party warehouse and fulfillment providers as follows: in the Netherlands for the distribution of its licensed brands in Europe; in Hong Kong for the distribution of its licensed brands in Asia; in the U.K. for the distribution of a significant portion of Olivia Burton brand sales; in Mexico for the distribution of the Company’s products to customers in that country; and in the State of Kentucky for the distribution of MVMT brand products directly to consumers primarily in the United States.
Biggest changeIn addition, the Company has contracted with third-party warehouse and fulfillment providers in the Netherlands, Hong Kong, mainland China, Czech Republic, the U.K, Mexico and the United States.
The Company faces intense competition in the worldwide watch industry not only from competitors selling traditional watches but also from those selling smart watches and other smart wearables.
The Company faces intense competition in the worldwide watch industry not only from competitors selling traditional watches but also from those selling smart watches and other wearables.
These and other existing and proposed privacy and data protection laws and regulations around the world result and may continue to result in significant compliance risks, operating costs, diverted resources from other initiatives and projects, marketing restrictions, limitations on service offerings, and negative publicity for the Company and may subject it to remedies that may harm its business, including fines, regulatory penalties, orders to modify or cease existing business practices, and significant legal liability.
Existing and proposed privacy and data protection laws and regulations around the world result and may continue to result in significant compliance risks, operating costs, diverted resources from other initiatives and projects, marketing restrictions, limitations on service offerings, and negative publicity for the Company and may subject it to remedies that may harm its business, including fines, regulatory penalties, orders to modify or cease existing business practices, and significant legal liability.
Stay-at-home orders and social distancing practices resulting from the COVID-19 pandemic have accelerated the trend toward online purchases. In addition, a large portion of the Company’s U.S. wholesale business is based on sales to major jewelry store chains and department stores. The retail industry has experienced changes in ownership, contraction and consolidations.
Stay-at-home orders and social distancing practices resulting from the COVID-19 pandemic accelerated the trend toward online purchases. In addition, a large portion of the Company’s U.S. wholesale business is based on sales to major jewelry store chains and department stores. The retail industry has experienced changes in ownership, contraction and consolidations.
In addition, consumers may expect that smart watches, particularly the more expensive models, will for many years continue to function and be compatible with the smartphone operating systems with which they were intended to interface, including future updates to such operating systems. Since the Company has no control over such operating system updates, it cannot assure such 14 continued compatibility.
In addition, consumers may expect that smart watches, particularly the more expensive models, will for many years continue to function and be compatible with the smartphone operating systems with which they were intended to interface, including future updates to such operating systems. Since the Company has no control over such operating system updates, it cannot assure such continued compatibility.
Changes in U.S. federal, state and international tax laws and regulations, including changes suggested by the new U.S. presidential administration, could have an adverse impact on our tax liabilities and effective tax rate. In addition, the overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty around taxation in many jurisdictions.
Changes in U.S. federal, state and international tax laws and regulations, including changes suggested by the U.S. presidential administration, could have an adverse impact on our tax liabilities and effective tax rate. In addition, the overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty around taxation in many jurisdictions.
Impairment may result from any number of factors, including adverse changes in assumptions used for valuation purposes, such as actual or projected net sales, growth rates, profitability 20 or discount rates, or other variables. If testing indicates that impairment has occurred, we are required to record a non-cash impairment charge.
Impairment may result from any number of factors, including adverse changes in assumptions used for valuation purposes, such as actual or projected net sales, growth rates, profitability or discount rates, or other variables. If testing indicates that impairment has occurred, we are required to record a non-cash impairment charge.
These transactions might include proxy contests, tender offers, mergers or other purchases of shares of common stock that could give stockholders the opportunity to realize a premium over the then-prevailing market price for shares of the Company’s common stock. The Company’s stock price could fluctuate and possibly decline due to changes in revenue, operating results and cash flows.
These transactions might include proxy contests, tender offers, 23 mergers or other purchases of shares of common stock that could give stockholders the opportunity to realize a premium over the then-prevailing market price for shares of the Company’s common stock. The Company’s stock price could fluctuate and possibly decline due to changes in revenue, operating results and cash flows.
Failure to properly judge consumer demand and properly manage inventory could have a material adverse effect on profitability and liquidity. If the Company were to lose its relationship with any of its key customers or distributors or any of such customers or distributors were to experience financial difficulties, there may be a significant loss of revenue and operating results.
Failure to properly judge consumer demand and properly manage inventory could have a material adverse effect on profitability and liquidity. 18 If the Company were to lose its relationship with any of its key customers or distributors or any of such customers or distributors were to experience financial difficulties, there may be a significant loss of revenue and operating results.
Conversely, if consumer demand is higher than expected, insufficient inventory levels could result in unfilled customer orders, loss of revenue and an unfavorable impact on customer relationships. In particular, volatility and uncertainty related to macro-economic factors make it difficult for the Company to forecast customer demand in its various markets.
Conversely, if consumer demand is higher than expected, insufficient inventory levels could result in unfilled customer orders, loss of revenue and an unfavorable impact on customer relationships. Volatility and uncertainty related to macro-economic factors make it difficult for the Company to forecast customer demand in its various markets.
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. 19 The Company depends on its information systems to run its business and any significant breach of or disruption to those systems could materially disrupt the Company’s business.
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. The Company depends on its information systems to run its business and any significant breach of or disruption to those systems could materially disrupt the Company’s business.
For example, in June 2021, the European Commission adopted new standard contractual clauses (“SCCs”) for the transfer of personal data to non-EU countries whose data privacy regimes have not been deemed adequate, including the Unites States. The UK Information Commissioner’s Office is in the process of finalizing UK equivalents 21 to the European SCCs.
For example, in June 2021, the European Commission adopted new standard contractual clauses (“SCCs”) for the transfer of personal data to non-EU countries whose data privacy regimes have not been deemed adequate, including the Unites States. The UK Information Commissioner’s Office is in the process of finalizing UK equivalents to the European SCCs.
Moreover, the laws of some foreign countries, including some in which the Company sells its products, do not protect intellectual property rights to the same extent as do the laws of the United States, which could make it more difficult to successfully defend such challenges to them.
Moreover, the laws of some foreign countries, including some in which the Company sells its products, do not protect intellectual property rights to the same extent as do the laws of the United States, which could make it more difficult to 21 successfully defend such challenges to them.
Any of the foregoing could materially adversely affect the Company’s results of operations and financial condition. If the Company were to experience a significant privacy breach, it could be subject to costly government enforcement actions and private litigation and suffer significant negative publicity which could materially and adversely affect the Company’s results of operations.
Any of the foregoing could materially adversely affect the Company’s results of operations and financial condition. 22 If the Company were to experience a significant privacy breach, it could be subject to costly government enforcement actions and private litigation and suffer significant negative publicity which could materially and adversely affect the Company’s results of operations.
Any material disruption or slowdown of the Company’s information systems could result in the loss of critical data, the inability to process and properly record transactions and the material impairment of the Company’s ability to conduct business, leading to cancelled orders and lost sales.
Any material disruption or slowdown of the Company’s information systems could result in the loss of critical data, the inability to process and properly record transactions and the 20 material impairment of the Company’s ability to conduct business, leading to cancelled orders and lost sales.
Although the Company believes it has taken reasonable and appropriate actions to protect the security of this information, if the Company were to experience a security breach, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events, it could result in government enforcement actions and private litigation, attract a substantial amount of media attention, and damage the Company’s reputation and its relationships with its customers and employees, materially adversely affecting the Company’s sales and results of operations.
Although the Company believes it has taken reasonable and appropriate actions to protect the security of this information, if the Company were to experience a security breach, acts of vandalism, ransomware attacks, computer viruses, misplaced or lost data, programming and/or human errors or other similar events, it could result in government enforcement actions and private litigation, attract a substantial amount of media attention, and damage the Company’s reputation and its relationships with its customers and employees, materially adversely affecting the Company’s sales and results of operations.
The Company contractually obligates its independent manufacturers to adhere to the Company’s vendor code of conduct and similar codes of conduct adopted by the Company’s trademark licensors, and the Company monitors compliance with those codes by conducting periodic factory audits.
The Company contractually obligates its independent manufacturers to adhere to the Company’s vendor code of conduct and similar codes of conduct adopted by the Company’s trademark licensors, and the Company monitors compliance with those codes by conducting 19 periodic factory audits.
Changes to existing laws and regulations or new laws and regulations could impose new requirements and additional costs on the Company and its suppliers, making the Company’s products more costly to produce, forcing the Company to change its existing business practices.
Changes to existing laws and regulations or new laws and regulations could impose new requirements and additional costs on the Company and its suppliers, making the Company’s products or packaging more costly to produce, forcing the Company to change its existing business practices.
There can be no assurance, however, that all of the Company’s manufacturers and licensors will consistently comply with labor and other laws and operate in accordance with ethical standards.
There can be no assurance, however, that all of the Company’s manufacturers will consistently comply with labor and other laws and operate in accordance with ethical standards.
Many of these companies have significantly greater financial, distribution, advertising and marketing resources than does the Company. The sale of these new smart products could materially adversely impact the traditional watch market and the Company’s results of operations and financial condition unless the Company is able to effectively compete in this new product area.
Many of these companies have significantly greater financial, distribution, advertising and marketing resources than does the Company. The sale of these new smart products could materially adversely impact the traditional watch market and the Company’s results of operations and financial condition unless the Company elects to compete in this new product area and is able to do so effectively.
If events or circumstances were to occur that negatively impact consumer spending during such holiday seasons, it could have a material adverse effect on the Company’s sales, profitability and results of operations. Sales in the Company’s retail outlet locations are dependent upon customer foot traffic.
If events or circumstances were to occur that negatively impact consumer spending during such holiday seasons, it could have a material adverse effect on the Company’s sales, profitability and results of operations. Sales in the Company’s retail outlet locations are dependent upon customer foot traffic and average order size.
In addition, events such as war, terrorism, natural disasters or outbreaks of disease may further suppress consumer spending on discretionary items. For example, Russia's recent invasion of Ukraine and the subsequent retaliatory measures taken by the U.S., NATO and other countries may negatively impact our revenue derived from sales to this region.
In addition, events such as war, terrorism, natural disasters or outbreaks of disease may further suppress consumer spending on discretionary items. For example, Russia's invasion of Ukraine and the subsequent retaliatory measures taken by the U.S., NATO and other countries have negatively impacted our revenue derived from sales to this region.
If the Company fails to meet consumers’ expectations regarding the long-term functioning of its smart watches, the Company may suffer reputational damage that could adversely affect its business, results of operations and financial condition. Maintaining favorable brand recognition is essential to the Company’s success, and failure to do so could materially and adversely affect the Company’s results of operations.
If the Company fails to meet consumers’ expectations regarding the long-term functioning of any smart watches that it sells, the Company may suffer reputational damage that could adversely affect its business, results of operations and financial condition. 14 Maintaining favorable brand recognition is essential to the Company’s success, and failure to do so could materially and adversely affect the Company’s results of operations.
In addition, a small number of large digital advertising companies control a majority of the digital advertising market in many countries, and continued consolidation in the industry could further increase those companies' market share. Digital advertising has become more expensive in recent years and further industry consolidation could accelerate this trend.
In addition, a small number of large digital advertising companies control a majority of the digital advertising market in many countries, and continued consolidation in the industry could further increase those companies' market share. Digital advertising has become more expensive in recent years and further industry consolidation or the tightening of regulatory restrictions could accelerate this trend.
Starting in July 2018, the Trump Administration announced a series of lists covering thousands of categories of Chinese origin products subject to potential U.S. special tariffs of 10% to 25% of import value, in addition to the regular tariffs that have historically applied to such products.
Starting in July 2018, the Trump Administration announced a series of lists covering thousands of categories of Chinese origin products subject to potential U.S. special tariffs in addition to the regular tariffs that have historically applied to such products.
Customs and Border Patrol (“CBP”) originally took the position that this U.S. special 15% tariff applies broadly to China-sourced cases and bands on watches assembled in China and other countries. CBP later revised its position to exclude China-sourced cases from the special tariff so long as the associated watch movement was not sourced in China.
Customs and Border Patrol (“CBP”) originally took the position that the U.S. special 15% tariff applies broadly to China-sourced cases and bands on traditional watches wherever assembled. CBP later revised its position to exclude China-sourced cases from the special tariff so long as the associated watch movement was not sourced in China.
Any resulting costs increases could place the Company at a competitive disadvantage as compared to other watch brands and sales of its products could decline, adversely affecting its financial condition and results of operations. Changes to tax laws or regulations could have a material adverse effect on the Company’s financial condition and results of operations.
Any resulting costs increases could place the Company at a competitive disadvantage and sales of its products could decline, adversely affecting its financial condition and results of operations. Changes to tax laws or regulations could have a material adverse effect on the Company’s financial condition and results of operations.
The Company also generates approximately 52.7 % of its revenue from international sources. 12 Factors that could affect this business activity vary by region and market and generally include, without limitation: • instability or changes in social, political, public health and/or economic conditions that could disrupt the trade activity in the countries where the Company’s manufacturers, suppliers and customers are located; • supply chain disruptions related to global, regional or local circumstance that fall outside of the Company's control; • the imposition of additional duties, taxes and other charges on imports and exports; • changes in foreign laws and regulations; • inflation and increases in commodity prices (including energy); • the adoption or expansion of trade sanctions; • recessions in foreign economies; and • a significant change in currency valuation in specific countries or markets.
Factors that could affect this business activity vary by region and market and generally include, without limitation: • instability or changes in social, political, public health and/or economic conditions that could disrupt the trade activity in the countries where the Company’s manufacturers, suppliers and customers are located; • supply chain disruptions related to global, regional or local circumstance that fall outside of the Company's control; • the imposition of additional duties, taxes and other charges on imports and exports; • changes in foreign laws and regulations; • inflation and increases in commodity prices (including energy); • the adoption or expansion of trade sanctions; • recessions in foreign economies; and • a significant change in currency valuation in specific countries or markets.
Certain of the Company’s packaging products became subject to a U.S. special 10% tariff in September 2018, which was increased to 25% effective May 10, 2019. In addition, all of the Company’s smart watches became subject to a U.S. special 15% tariff on September 1, 2019, and in a third-party ruling, U.S.
Certain of the Company’s packaging products became subject to a U.S. special 10% tariff in September 2018, which was increased to 25% effective May 10, 2019. In addition, smart watches became subject to a U.S. special 15% tariff on September 1, 2019. In addition, U.S.
The second half of each of the fiscal years ended January 31, 2022, 2021 and 2020 accounted for 57.9 % , 68.8% and 56.6% of the Company’s net sales, respectively. The first half of fiscal year 2021 was significantly negatively impacted by the COVID-19 pandemic.
The second half of each of the fiscal years ended January 31, 2023, 2022 and 2021 accounted for 54.0%, 57.9% and 68.8% of the Company’s net sales, respectively. The first half of fiscal year 2021 was significantly negatively impacted by the COVID-19 pandemic.
It is not possible to predict the broader consequences of this conflict, but the continuation or escalation of the conflict, along with any expansion to surrounding areas, could have a significant effect on our results of operations. The Company’s business is subject to foreign currency exchange rate risk.
Although our historical sales to the region have been immaterial, it is not possible to predict the broader consequences of this conflict, although the continuation or escalation of the conflict, along with any expansion to surrounding areas, could have a significant effect on our results of operations. The Company’s business is subject to foreign currency exchange rate risk.
If the technology-based systems that give the Company’s customers the ability to shop online do not function effectively, the Company’s operating results could be materially adversely affected. Customers shop with the Company through its online platforms. Increasingly, customers use mobile devices to shop online and to do comparison shopping.
If the technology-based systems that give the Company’s customers the ability to shop online do not function effectively, the Company’s operating results could be materially adversely affected. Many customers shop with the Company through its online platforms, often through mobile devices.
The current tightening of monetary policies of countries throughout the world in response to inflationary pressures could result in interest rate increases and reduced availability of credit. An increase in product returns could negatively impact the Company’s operating results and profitability.
The current tightening of monetary policies of countries throughout the world in response to inflationary pressures have resulted in interest rate increases and could reduce availability of credit. An increase in product returns or lost product could negatively impact the Company’s operating results and profitability.
For example, Russia’s recent invasion of Ukraine and the subsequent retaliatory measures taken by the U.S., NATO and other countries may negatively impact our revenue to the extent the conflict and the sanctions significantly impact the economic conditions in or our ability to sell products to customers in the affected region.
For example, Russia’s invasion of Ukraine in 2022 and the subsequent retaliatory measures taken by the U.S., NATO and other countries have negatively impacted our revenue to the extent the conflict and the sanctions impacted economic conditions and our ability to sell products to customers in the affected region.
The Company operates a smaller, similar facility in Bienne, Switzerland for the distribution of its Swiss watch brands throughout Europe and the Middle East.
The Company operates a smaller, similar facility 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.
Additional risks which the Company does not presently consider material, or of which it is not currently aware, may also have an adverse impact on the business. Please also see “Forward-Looking Statements” on page 1.
Additional risks which the Company does not presently consider material, or of which it is not currently aware, may also have an adverse impact on the business.
Any failure on the Company’s part to provide attractive, effective, reliable, user-friendly e-commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers could place the Company at a competitive disadvantage, result in the loss of e-commerce and other sales, harm the Company’s reputation with customers, and have a material adverse impact on the growth of the Company’s e-commerce business globally and its results of operations.
Any failure on the Company’s part to provide attractive, effective, reliable, user-friendly e-commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers could place the Company at a competitive disadvantage, result in the loss of e-commerce and other sales, harm the Company’s reputation with customers, and have a material adverse impact on the growth of the Company’s e-commerce business globally and its results of operations. 17 Furthermore, the Company’s e-commerce operations subject the Company to risks related to the computer systems that operate the Company’s websites and related support systems, such as system failures, viruses, computer hackers and similar disruptions.
In addition, any failure by the Company to comply with the various covenants contained in its corporate credit facility, including financial maintenance covenants, could result in the termination of the facility and the acceleration of the Company’s repayment obligations thereunder, which could have a material adverse effect on the Company’s financial condition and liquidity. 22 Risks Related to an Investment in our Common Stock The Grinberg family owns a majority of the voting power of the Company’s stock.
In addition, any failure by the Company to comply with the various covenants contained in its corporate credit facility, including financial maintenance covenants, could result in the termination of the facility and the acceleration of the Company’s repayment obligations thereunder, which could have a material adverse effect on the Company’s financial condition and liquidity.
In response to the invasion, the Company decided in March 2022 to suspend all sales to Russia and Belarus. In addition, the conflict could have broader implications on economies outside the region, such as the global inflationary impact of a potential boycott of Russian oil and gas by other countries.
In response to the invasion, the Company decided in March 2022 to suspend all sales to Russia and Belarus. In addition, the conflict has had broader implications on economies outside the region, such as the global inflationary 12 impact of boycotts of Russian oil and gas by other countries and the blockade of Ukrainian grain exports.
Any significant increase in damaged or defective products or expected returns could have a material adverse effect on the Company’s operating results for the period or periods in which such returns materialize. The Company relies on independent parties to manufacture its products.
In addition, future return rates may differ from those experienced in the past. Any significant increase in damaged or defective products, expected returns or carrier-related losses could have a material adverse effect on the Company’s operating results for the period or periods in which such returns materialize. The Company relies on independent parties to manufacture its products.
Under CBP's current position, most of the bands used in the production of the Company’s traditional watches imported into the 13 U.S. became subject to the U.S. special 15% tariff effective September 1, 2019, although the tariff rate was decreased to 7.5% effective February 14, 2020 in connection with the “Phase One” trade agreement between the United States and China signed on January 15, 2020.
Under CBP's current position, most of the bands used in the production of the Company’s traditional watches imported into the U.S. became subject to the U.S. special 15% tariff effective September 1, 2019, although the tariff rate was decreased to 7.5% effective February 14, 2020.
For the fiscal year ended January 31, 2022, the Company's licensed brands represented 50.3 % of the Company’s net sales. While the Company is not substantially dependent on any one licensed brand, the loss of a single licensed brand could have a material adverse effect on the Company’s results of operations and financial condition.
While the Company is not substantially dependent on any one licensed brand, the loss of a single licensed brand could have a material adverse effect on the Company’s results of operations and financial condition.
The Company currently has the right to produce, market and distribute watches and, in certain cases, jewelry, under the brand names of Coach, Tommy Hilfiger, Hugo Boss, Lacoste, Calvin Klein and, through June 30, 2022, Scuderia Ferrari pursuant to license agreements with the respective owners of those trademarks.
The Company currently has the right to produce, market and distribute watches and, in certain cases, jewelry, under the brand names of Coach, Tommy Hilfiger, Hugo Boss, Lacoste and Calvin Klein pursuant to license agreements with the respective owners of those trademarks. There are certain minimum royalty payments as well as other requirements associated with the Company’s license agreements.
If any of these events should occur or intensify, the Company’s future sales could decline and the Company’s results of operations could be materially adversely affected. This could also result in the potential for impairment surrounding our long-lived assets.
If any of these events should occur or intensify, the Company’s future sales could decline and the Company’s results of operations could be materially adversely affected. This could also result in the potential for impairment surrounding our long-lived assets. We depend on a variety of U.S. and multi-national financial institutions to provide us with banking services.
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 do not have significant experience with similar consumer technology products.
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.
This risk has increased with the sale of the Company’s smart watches, which collect and transmit personal data about the consumers who purchase and use them, and with the Company’s increased focus on direct-to-consumer sales. From time to time the Company is subject to legal proceedings that could result in significant expenses, fines and reputational damage.
This risk has increased with the Company’s increased focus on direct-to-consumer sales and increased reliance on cloud services. From time to time the Company is subject to legal proceedings that could result in significant expenses, fines and reputational damage.
A significant portion of the Company’s business is conducted outside of the United States. Many factors affecting business activities outside the United States could adversely impact this business. Over 80% of the Company's products originate from Asia, with the vast majority coming from China. Substantially all of the remaining products originate from Europe.
Many factors affecting business activities outside the United States could adversely impact this business. Over 80% of the Company's product unit volume originates from Asia, with the vast majority coming from China. Substantially all of the remaining products originate from Europe. The Company also generates approximately 55.6% of its revenue from international sources.
In April 2021, Apple released changes to its operating system asking users if they want to opt-out of apps tracking them across the Internet. In January 2020, Google announced plans to phase out Third-Party Cookies on Chrome, the most-used desktop browser, in 2022.
In April 2021, Apple released changes to its operating system asking users if they want to opt-out of apps tracking them across the Internet.
The intensifying effects of climate change present physical, liability, and transition risks with both macro and micro implications for companies and financial markets. Public sentiment is shifting, as more consumers expect the products they buy to be more sustainable. Extreme weather events may cause shipping delays, result in property damage, and affect supply chains.
Environmental factors, including climate change, and related regulatory action and consumer response, could substantially and negatively affect the Company's financial results. The intensifying effects of climate change present physical, liability, and transition risks with both macro and micro implications for companies and financial markets. Public sentiment is shifting, as more consumers expect the products they buy to be more sustainable.
As countries seek to address risks associated with climate change, laws and regulations may be adopted or strengthened.
Extreme weather events may cause shipping delays, result in property damage, and affect supply chains. As countries seek to address risks associated with climate change, laws and regulations may be adopted or strengthened.
Each share of common stock of the Company is entitled to one vote per share while each share of class A common stock of the Company is entitled to ten votes per share.
Risks Related to an Investment in our Common Stock The Grinberg family owns a majority of the voting power of the Company’s stock. Each share of common stock of the Company is entitled to one vote per share while each share of class A common stock of the Company is entitled to ten votes per share.
Such closures adversely affected our results of operations. Future closures of the Company’s retail stores or reductions in foot traffic could have a material adverse effect on retail sales and the profitability of the Company Stores segment.
Future closures of the Company’s retail stores or reductions in foot traffic could have a material adverse effect on retail sales and the profitability of the Company Stores segment. The success of the Company’s retail outlet locations is also dependent, to a certain extent, upon the average order size at our outlet stores.
Such factors include the price and supply of fuel, travel concerns and restrictions (including those due to disease outbreaks), international instability, terrorism and inclement weather. For example, the COVID-19 pandemic led to travel restrictions and a reduction in voluntary travel. As a result, the Company experienced temporary closures of all of its retail outlets for portions of fiscal 2021.
Such factors include the price and supply of fuel, travel concerns and restrictions (including those due to disease outbreaks such as COVID 19), international instability, terrorism and inclement weather.
The Company depends on its technology vendors to manage “up time” of the front-end e-commerce stores, manage the intake of orders, and export orders for fulfillment.
The Company depends on its technology vendors to manage “up time” of the front-end e-commerce stores, manage the intake of orders, and export orders for fulfillment. Any failure on the part of the Company’s third-party e-commerce vendors or in the Company’s ability to transition third-party services effectively could result in lost sales and harm the Company’s brands.
There are certain minimum royalty payments as well as other requirements associated with the Company’s license agreements. Failure to meet any of these requirements could result in the loss of the license. Additionally, after the term of any license agreement has concluded, the licensor may decide not to renew with the Company.
Failure to meet any of these requirements could result in the loss of the license. Additionally, after the term of any license agreement has concluded, the licensor may decide not to renew with the Company. For the fiscal year ended January 31, 2023, the Company's licensed brands represented 53.1% of the Company’s net sales.
These risks may increase as the Company continues to expand its reliance on cloud services. The Company’s information systems could experience system failures, viruses, security breaches, power outages, network and telecommunications failures, usage errors by our employees, or other events which could disable or significantly impair the systems’ functionality.
The Company’s information systems could also experience system failures, viruses, power outages, network and telecommunications failures, usage errors our employees, or other events which could disable or significantly impair the systems’ functionality. Additionally, the Company’s systems may fail to operate properly or effectively, experience problems transitioning to upgraded or replacement systems or difficulties in integrating new systems.
In June 2021, Google announced that these plans would be delayed until mid-2023 as Google continues to work with regulators to identify new technologies to replace Third-Party Cookies. Other web browsers have begun implementing certain cookie-blocking measures. This shift to a “cookieless future” is changing how the Company markets to and engages with consumers.
In January 2020, Google announced plans to phase out Third-Party Cookies on Chrome, the most-used desktop browser, in 2022 and has since announced that these plans have been delayed until at least 2024 as Google continues to work with regulators to identify new technologies to replace Third-Party Cookies. Other web browsers have begun implementing certain cookie-blocking measures.
Any of these events could have a material adverse effect on the Company’s results of operations and financial condition or could result in the Company’s products not achieving market acceptance or becoming obsolete. The design, sourcing, marketing, distribution and after-sales servicing of smart watches involve additional challenges to those applicable to traditional watches.
The design, sourcing, marketing, distribution and after-sales servicing of smart watches involve additional challenges to those applicable to traditional watches.
Increased advertising costs could materially and adversely affect the Company's profitability and results of operations. 15 If the Company loses any of its license agreements, there may be significant loss of revenues and a negative effect on business.
The Company's failure or perceived failure to achieve such goals or to meet the environmental, social and governance expectations of other stakeholders could harm the Company's reputation, adversely impact its ability to attract and retain customers and talent, and expose it to legal and regulatory proceedings and increased scrutiny, thereby adversely affecting the Company’s business, results of operations and financial condition. 15 If the Company loses any of its license agreements, there may be significant loss of revenues and a negative effect on business.
In addition, reinstitution of stay-at-home orders could reduce demand for our products as customers may have fewer occasions to use and wear our products. Adverse economic conditions in key markets, and the resulting declines in consumer confidence and spending, could have a material adverse effect on the Company’s operating results.
Please also see “Forward-Looking Statements” on page 1. 11 Risks Related to Macroeconomic Conditions and our International Operations Adverse economic conditions in key markets, and the resulting declines in consumer confidence and spending, could have a material adverse effect on the Company’s operating results.
Such measures have also adversely impacted our supply chain, resulted in late deliveries and have increased shipping costs. The reinstitution, continuation or tightening of such containment and mitigation measures could continue or exacerbate the adverse effect on our results of operations and financial condition.
Although the impact of the pandemic has largely receded in recent quarters, the reinstitution or tightening of containment and mitigation measures, whether in response to the emergence of new variants or strains of the virus, waning immunity, or otherwise, could exacerbate the adverse effect on our results of operations and financial condition.
The COVID-19 pandemic and related public health measures have materially affected how we and our customers and suppliers are operating our business and have adversely affected our operating results.
The COVID-19 pandemic and related public health measures materially affected the Company’s and its customers’ and suppliers’ businesses, particularly during fiscal 2021.
Removed
Risks Related to Macroeconomic Conditions and our International Operations The COVID-19 pandemic has materially affected how we and our customers and suppliers operate, and the duration and extent to which COVID-19, new strains or variants, or other public health threats and epidemics will impact our future results of operations and overall financial performance remains uncertain.
Added
The default or failure of one or more of the financial institutions that we rely on may adversely affect our business and financial condition. The Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits.
Removed
Various containment and mitigation measures that have at times been imposed by governmental and other authorities around the world (such as quarantines and other social distancing requirements) have adversely affected sales of our products, given that those sales are heavily dependent on customer traffic in traditional retail stores, such as those of our wholesale partners, and our Company stores.
Added
Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all.
Removed
These trends could worsen if either COVID-19 infections increase as new variants and strains emerge or treatments and vaccines are not as effective as expected. 11 Adverse general economic conditions arising from the COVID-19 outbreak could also adversely affect consumer spending and result in an increase in bankruptcies or insolvencies involving our suppliers and wholesale customers, which could also have a materially adverse effect on our operations and financial condition.
Added
Any inability to access or delay in accessing these funds could adversely affect our business and financial condition.
Removed
The impact of the outbreak of COVID-19 on the Company’s liquidity, revenues and results of operations cannot be predicted at this time due to the high level of uncertainty, unknown future developments and duration of containment measures. The foregoing risks which apply to COVID-19 would also arise from any future outbreak of infectious disease.
Added
Moreover, any default or failure of any U.S. or multi-national financial institutions may cause an impact on wholesale and retail customers' actual or perceived wealth and could reduce actual or perceived disposable income, which may cause a material adverse effect on our business and financial condition. A significant portion of the Company’s business is conducted outside of the United States.
Removed
In keeping with health and safety recommendations, during the fiscal year 2021 the Company first implemented remote work policies while temporarily closing offices and/or encouraging employees to work remotely whenever feasible. Although all of the Company's offices were reopened before or during fiscal 2022, certain of these policies and practices have continued into the current fiscal year.
Added
The Company's inability to successfully recover from a natural disaster or other development impacting business continuity or sales opportunities could result in loss of human capital, revenue, reputational harm or legal liability, any of which could materially harm its financial condition and results or operations. The Company has a complex global supply chain and distribution network.
Removed
The increase in remote work may exacerbate the cybersecurity and data privacy concerns discussed elsewhere in this Item 1A and may cause strain for, and may adversely impact the productivity of, certain employees, and these conditions may persist and harm our business, including future operating results.
Added
If the Company were to experience a local or regional natural disaster or other development impacting business continuity, such as an earthquake, tsunami, terrorist attack, disease outbreak or other natural or man-made disaster, its continued success will depend, in part, on the safety and availability of its personnel and office facilities and on the proper functioning of its computer, telecommunication and other systems.
Removed
Our efforts to keep our offices open may not be successful, could expose our employees, customers, and partners to health risks, and us to associated liability, and may involve additional financial burdens. The pandemic may have long-term effects on the nature of the office environment and remote working, and this may present operational challenges that may adversely affect our business.
Added
Climate change exacerbates these risks by increasing the frequency and severity of natural disasters.
Removed
“Brexit” has created significant uncertainty for the Company’s U.K. business operations which could have a material adverse effect on the Company’s financial condition and results of operations. On June 23, 2016, the results of the United Kingdom (“U.K”) European Union (“E.U.”) Membership Referendum (“Brexit”) were announced approving the withdrawal of the U.K. from the E.U.
Added
If the Company cannot efficiently respond to disruptions in our operations, for example, by finding alternative suppliers or distributors or quickly repairing damaged systems, it may be late in fulfilling customer 13 orders, thereby resulting in reputational damage, lost sales, or cancellation charges, any of which could materially harm its financial condition and results of operations.
Removed
In January 2020, the U.K. parliament approved the terms of an agreement with the E.U. to determine the future terms of the parties’ relationship, including the terms of trade between the U.K. and the E.U. and other nations, following the U.K.’s exit from the E.U., which occurred on January 31, 2020.
Added
In addition, natural disasters may disrupt purchasing behaviors, negatively impacting revenue generation. Infectious disease outbreaks, such as the COVID-19 pandemic, could have a material adverse effect on the Company's business. The Company’s business could be adversely affected by infectious disease outbreaks, such as the novel strain of coronavirus commonly referred to as COVID-19.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of January 31, 2022, the Company’s leased facilities individually comprising more than 20,000 square feet were as follows: Location Function Square Footage Lease Expiration Moonachie, New Jersey Watch distribution and repair 100,000 February 2025 Paramus, New Jersey Executive offices 90,100 June 2030 Hong Kong Watch distribution 44,800 April 2024 Bienne, Switzerland Corporate functions and watch sales 31,700 June 2023 Bienne, Switzerland Watch distribution, assembly and repair 20,700 October 2022 The foregoing facilities, as well as 16 additional leased facilities worldwide averaging approximately 5,000 square feet, are used exclusively in connection with the Watch and Accessory Brands segment of the Company’s business except that a portion of the Company’s executive office space in Paramus, New Jersey is used in connection with management of its retail business.
Biggest changeAs of January 31, 2023, the Company’s leased facilities individually comprising more than 20,000 square feet were as follows: Location Function Square Footage Lease Expiration Moonachie, New Jersey Watch distribution and repair 100,000 February 2025 Paramus, New Jersey Executive offices 90,100 June 2030 Bienne, Switzerland Corporate and sales functions and watch distribution, assembly and repair 56,700 December 2032 Hong Kong Watch distribution 44,800 April 2024 The foregoing facilities, as well as 12 additional leased facilities worldwide averaging approximately 5,000 square feet, are used exclusively in connection with the Watch and Accessory Brands segment of the Company’s business except that a portion of the Company’s executive office space in Paramus, New Jersey is used in connection with management of its retail business.
Since acquiring Ebel in 2004, the Company owns an architecturally significant building in La Chaux-de-Fonds, Switzerland. The Company also leases retail space averaging 1,700 square feet per store with leases expiring with various dates through October 2031 for the operation of the Company’s 51 retail outlet locations.
Since acquiring Ebel in 2004, the Company owns an architecturally significant building in La Chaux-de-Fonds, Switzerland. The Company also leases retail space averaging 1,700 square feet per store with leases expiring with various dates through September 2032 for the operation of the Company’s 55 retail outlet locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCustoms ruling effective August 1, 2021 holds that while the special tariff applies to all China-sourced watch bands, the special tariff does not apply to China-sourced watch cases imported as part of a watch containing a non-Chinese movement.
Biggest changeCustoms ruling effective August 1, 2021 holds that while the special tariff applies to all China-sourced watch bands, the special tariff does not apply to China-sourced watch cases imported as part of such a watch containing a non-Chinese movement.
Pending greater clarity on the retroactive effect of this ruling, for the time being the Company continues to maintain an accrual for Chinese watch case imports prior to August 1, 2021. 24 In addition to the above matters, the Company is involved in other legal proceedings and contingencies, the resolution of which is not expected to materially affect its financial condition, future results of operations, or cash flows.
Pending greater clarity on the retroactive effect of this ruling, for the time being the Company continues to maintain an accrual for Chinese watch case imports prior to August 1, 2021. 25 In addition to the above matters, the Company is involved in other legal proceedings and contingencies, the resolution of which is not expected to materially affect its financial condition, future results of operations, or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnder both current share repurchase programs, the Company is permitted to purchase shares of its common stock through open market purchases, repurchase plans, block trades or otherwise.
Biggest changeUnder both share repurchase programs, the Company is permitted to purchase shares of its common stock through open market purchases, repurchase plans, block trades or otherwise. During the fiscal year ended January 31, 2023, the Company repurchased a total of 898,956 shares of its common stock at a total cost of $31.4 million, or an average of $34.94 per share.
Companies) and the Russell 2000 Index. Each index assumes an initial investment of $100 on January 31, 2017 and the reinvestment of dividends (where applicable). Comparison of Cumulative Five Year Total Return $250 $200 $150 $100 $50 $0 01/31/16 01/31/17 01/31/18 01/31/19 01/31/20 01/31/21 Movado Group, Inc.
Companies) and the Russell 2000 Index. Each index assumes an initial investment of $100 on January 31, 2018 and the reinvestment of dividends (where applicable). Comparison of Cumulative Five Year Total Return $250 $200 $150 $100 $50 $0 01/31/16 01/31/17 01/31/18 01/31/19 01/31/20 01/31/21 Movado Group, Inc.
For dividends declared and paid during fiscal 2022, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." On March 25, 2021, the Board approved a share repurchase program under which the Company is authorized to purchase up to $25.0 million of its outstanding common stock from time to time through September 30, 2022, depending on market conditions, share price and other factors.
For dividends declared and paid during fiscal 2023, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." On March 25, 2021, the Board approved a share repurchase program under which the Company was authorized to purchase up to $25.0 million of its outstanding common stock from time to time through September 30, 2022, depending on market conditions, share price and other factors.
The class A common stock is not publicly traded and, consequently, there is currently no established public trading market for these shares. During each quarter of fiscal 2022, the Company declared cash dividends on its common stock and class A common stock.
The class A common stock is not publicly traded and, consequently, there is currently no established public trading market for these shares. During each quarter of fiscal 2023, the Company declared cash dividends on its common stock and class A common stock.
The following table summarizes information about the Company’s purchases of shares of its common stock in the fourth quarter of fiscal 2022.
The following table summarizes information about the Company’s purchases of shares of its common stock in the fourth quarter of fiscal 2023.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities As of March 21, 2022, there were 45 h olders of record of the Company’s class A common stock and 308 ho lders of record of the Company’s common stock (including nominee holders such as banks and brokerage firms who hold shares for beneficial owners), although we believe that the number of beneficial owners is much higher.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities As of March 20, 2023, there were 43 holders of record of the Company’s class A common stock and 302 holders of record of the Company’s common stock (including nominee holders such as banks and brokerage firms who hold shares for beneficial owners), although we believe that the number of beneficial owners is much higher.
An aggregate of 87,828 s hares were repurchased during the fiscal year ended January 31, 2022 as a result of the surrender of shares of common stock in connection with the vesting of certain restricted stock awards and stock options.
An aggregate of 28,405 shares were repurchased during the fiscal year ended January 31, 2023 as a result of the surrender of shares of common stock in connection with the vesting of certain restricted stock awards and stock options.
The Company’s common stock is traded on the New York Stock Exchange under the symbol “MOV” and on March 21, 2022, the closing price of the Company’s common stock was $35.87 .
The Company’s common stock is traded on the New York Stock Exchange under the symbol “MOV” and on March 20, 2023, the closing price of the Company’s common stock was $32.59.
Issuer Repurchase of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Amount that May Yet Be Purchased Under the Plans or Programs November 1, 2021 – November 30, 2021 20,958 $ 44.14 5,256 $ 57,800,681 December 1, 2021 – December 31, 2021 91,262 40.98 73,856 54,793,843 January 1, 2022 – January 31, 2022 59,045 40.53 59,045 52,400,746 Total 171,265 $ 41.21 138,157 $ 52,400,746 26 PERFORMANCE GRAPH The performance graph set forth below compares the cumulative total shareholder return of the Company’s shares of common stock for the last five fiscal years through the fiscal year ended January 31, 2022 with that of the S&P SmallCap 600 Index, the Broad Market (NYSE Stock Market – U.S.
Issuer Repurchase of Equity Securities Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Amount that May Yet Be Purchased Under the Plans or Programs November 1, 2022 – November 30, 2022 30,000 $ 31.36 30,000 $ 23,309,638 December 1, 2022 – December 31, 2022 73,500 31.58 73,500 20,988,241 January 1, 2023 – January 31, 2023 — — — 20,988,241 Total 103,500 $ 31.52 103,500 $ 20,988,241 27 PERFORMANCE GRAPH The performance graph set forth below compares the cumulative total shareholder return of the Company’s shares of common stock for the last five fiscal years through the fiscal year ended January 31, 2023 with that of the S&P SmallCap 600 Index, the Broad Market (NYSE Stock Market – U.S.
S&P SmallCap 600 Index NYSE Composite Index Russell 2000 Index Company Name / Index 1/31/17 1/31/18 1/31/19 1/31/20 1/31/21 1/31/22 Movado Group, Inc. 100.00 115.03 122.47 68.21 82.23 151.38 S&P SmallCap 600 Index 100.00 116.56 115.11 122.67 151.11 167.20 NYSE (U.S. Companies) 100.00 122.07 115.21 130.84 141.76 167.51 Russell 2000 Index 100.00 117.18 113.05 123.47 160.72 158.78
S&P SmallCap 600 Index NYSE Composite Index Russell 2000 Index Company Name / Index 1/31/18 1/31/19 1/31/20 1/31/21 1/31/22 1/31/23 Movado Group, Inc. 100.00 106.47 59.30 71.49 131.60 130.78 S&P SmallCap 600 Index 100.00 98.75 105.24 129.63 143.44 142.10 NYSE (U.S. Companies) 100.00 94.38 107.18 116.13 137.22 135.37 Russell 2000 Index 100.00 96.48 105.36 137.15 135.50 130.92
Removed
During the fiscal year ended January 31, 2022, the Company repurchased a total of 686,559 shares of its common stock at a total cost of $22.6 million, or an average of $32.92 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeExcluding these corporate initiative charges and reversals for both periods, SG&A expenses would have increased $57.9 million primarily from the following factors: higher marketing expenses of $32.0 million; an increase in performance-based compensation of $9.2 million; an increase in payroll related expenses of $8.6 million primarily due to the absence of the furloughing of employees and temporary salary reductions that occurred in the prior year period in response to the COVID-19 pandemic; an increase in credit card fees and sales commissions of $3.4 million due to higher sales in the current year; an increase in consulting and recruiting charges of $1.4 million; an increase in rent and rent-related charges of $1.3 million primarily due to the opening of new company stores 36 and an increase of $1.2 million in donations primarily to the Movado Group Foundation.
Biggest changeExcluding the reversal in corporate initiative charges in the prior year, SG&A expenses would have increased $3.3 million primarily from the following factors: an increase in payroll related expense of $3.8 million; an increase of $2.8 million in professional service fees primarily to support enhancement to the Company's 35 commercial and administrative systems; and higher marketing expenses of $1.4 million.
Control passes to outlet store customers at the time of sale and to substantially all e-commerce upon shipment. Prior to January 1, 2021, the requirement for recognizing revenue for e-commerce was met upon delivery to the customer.
Control passes to outlet store customers at the time of sale and to substantially all e-commerce customers upon shipment. Prior to January 1, 2021, the requirement for recognizing revenue for e-commerce was met upon delivery to the customer.
The effective tax rate for fiscal 2022 was 21.1% and differed from the U.S. statutory tax rate of 21.0% primarily due to U.S. state and local taxes, net of the federal benefit, partially offset by the CARES Act NOL Carryback Provision and related tax effects and foreign 38 profits being taxed in lower taxing jurisdictions.
The effective tax rate for fiscal 2022 was 21.1% and differed from the U.S. statutory tax rate of 21.0% primarily due to U.S. state and local taxes, net of the federal benefit, partially offset by the CARES Act NOL Carryback Provision and related tax effects and foreign profits being taxed in lower taxing jurisdictions.
The effect on deferred tax assets and liabilities due to a change in tax rates 33 is recognized in income in the period that includes the enactment date. In addition, the amounts of any future tax benefits are reduced by a valuation allowance to the extent such benefits are not expected to be realized on a more-likely-than-not basis.
The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income in the period that includes the enactment date. In addition, the amounts of any future tax benefits are reduced by a valuation allowance to the extent such benefits are not expected to be realized on a more-likely-than-not basis.
Additionally, interest expense includes the amortization of deferred financing costs, and unused commitment fees associated with the Company’s revolving credit facility. Income Taxes The Company follows the asset and liability method of accounting for income taxes as prescribed under the Accounting Standards Codification guidance for Income Taxes (“ASC Topic 740”).
Additionally, interest expense includes the amortization of deferred financing costs, and unused commitment fees associated with the Company’s revolving credit facility. 30 Income Taxes The Company follows the asset and liability method of accounting for income taxes as prescribed under the Accounting Standards Codification guidance for Income Taxes (“ASC Topic 740”).
When such a determination has been made, management compares the carrying value of the asset groups with their estimated future undiscounted cash flows. If it is determined that an 32 impairment has occurred, the fair value of the asset group is determined and compared to its carrying value.
When such a determination has been made, management compares the carrying value of the asset groups with their estimated future undiscounted cash flows. If it is determined that an impairment has occurred, the fair value of the asset group is determined and compared to its carrying value.
The difference in gross margin percentages within the licensed brands category is primarily due to the impact of royalty payments made 28 on the licensed brands. Gross margins in the Company’s e-commerce business generally earn higher gross margin percentages than those of the traditional wholesale business.
The difference in gross margin percentages within the licensed brands category is primarily due to the impact of royalty payments made on the licensed brands. Gross margins in the Company’s e-commerce business generally earn higher gross margin percentages than those of the traditional wholesale business.
The Company paid additional cash dividends of $0.20 per share or $4.6 million during the three months ended April 30, 2021, $0.20 per share or $4.7 million during the three months ended July 31, 2021, $0.20 per share or $4.6 million during the three months ended October 31, 2021 and $0.25 per share or $5.7 million during the three months ended January 31, 2022.
The Company paid cash dividends of $0.20 per share, or $4.6 million, during the three months ended April 30, 2021; $0.20 per share, or $4.7 million, during the three months ended July 31, 2021; $0.20 per share, or $4.6 million, during the three months ended October 31, 2021; and $0.25 per share, or $5.7 million, during the three months ended January 31, 2022.
The Company retains adequate levels of component parts to facilitate both the manufacturing of its watches as well as the after-sales service of its watches for an extended period of time after the discontinuance of the manufacturing of such watches.
The Company retains adequate levels of component parts to 31 facilitate both the manufacturing of its watches as well as the after-sales service of its watches for an extended period of time after the discontinuance of the manufacturing of such watches.
Accounting Changes and Recent Accounting Pronouncements See Note 3 to the accompanying audited consolidated financial statements for a description of recent accounting pronouncements which may impact the consolidated financial statements in future reporting periods. 41
Accounting Changes and Recent Accounting Pronouncements See Note 3 to the accompanying audited consolidated financial statements for a description of recent accounting pronouncements which may impact the consolidated financial statements in future reporting periods.
RECENT DEVELOPMENTS AND INITIATIVES COVID-19 The COVID-19 pandemic and related public health measures materially impacted the Company’s operating results for the fiscal year ended January 31, 2021 and continue to materially affect how the Company and its customers and suppliers operate their businesses.
RECENT DEVELOPMENTS AND INITIATIVES COVID-19 The COVID-19 pandemic and related public health measures materially impacted the Company’s operating results for the fiscal year ended January 31, 2021 and continue to affect how the Company and its customers and suppliers operate their businesses to varying degrees.
The Facility includes a $15.0 million letter of credit subfacility, a $25.0 million swingline subfacility and a $75.0 million sublimit for borrowings by the Swiss Borrowers, with provisions for uncommitted increases to the Facility of up to $50.0 million in the aggregate subject to customary terms and conditions.
The Facility includes a $15.0 million letter of credit subfacility, a $25.0 million swingline subfacility and a $75.0 million sublimit for borrowings by the Swiss Borrower, with provisions for uncommitted increases to the Facility of up to $50.0 million in the aggregate subject to customary terms and conditions.
The Company’s hedging program mitigated the impact of the exchange rate fluctuations on product costs and gross margins for fiscal years 2022 and 2021. Selling, General and Administrative (“SG&A”) Expenses The Company’s SG&A expenses consist primarily of marketing, selling, distribution, general and administrative expenses.
The Company’s hedging program mitigated the impact of the exchange rate fluctuations on product costs and gross margins for fiscal years 2023 and 2022. Selling, General and Administrative (“SG&A”) Expenses The Company’s SG&A expenses consist primarily of marketing, selling, distribution, general and administrative expenses.
On an on-going basis, management evaluates its estimates and judgments, including those related to sales discounts and markdowns, product returns, bad debt, inventories, income taxes, warranty obligations, useful lives of property, plant and equipment, impairments, stock-based compensation and contingencies and litigation.
On an on-going basis, management evaluates its estimates and judgments, including those related to sales discounts and markdowns, product returns, bad debt, inventories, income taxes, warranty obligations, useful lives of property, plant and equipment, impairments of long-lived assets, stock-based compensation and contingencies and litigation.
Marketing expenses include salaries, various forms of media advertising, digital advertising (including social media), customer acquisition costs and co-operative advertising with customers and distributors and other point of sale marketing and promotion spending.
Marketing expenses include salaries, various forms of media advertising, digital advertising (including social media), customer acquisition costs and co-operative advertising with customers and distributors and other point of sale marketing and promotional spending.
Watch and Accessory Brands Operating Income/(Loss) For fiscal 2022 the Company recorded operating income of $85.6 million in the Watch and Accessory Brands segment which includes $38.7 million of unallocated corporate expenses as well as $80.5 million of certain intercompany profits related to the Company’s supply chain operations.
For fiscal 2022, the Company recorded operating income of $85.6 million in the Watch and Accessory Brands segment which included $38.7 million of unallocated corporate expenses as well as $80.5 million of certain intercompany profits related to the Company’s supply chain operations.
The primary factors that influence annual sales are general economic conditions in the Company’s U.S. and international markets, new product introductions, the level and effectiveness of advertising and marketing expenditures and product pricing decisions. 52.7 % of the Company’s total sales are from international markets (see Note 20 to the Consolidated Financial Statements), and therefore reported sales made in those markets are affected by foreign exchange rates.
The primary factors that influence annual sales are general economic conditions in the Company’s U.S. and international markets, new product introductions, the level and effectiveness of advertising and marketing expenditures and product pricing decisions. 55.6% of the Company’s total sales are from international markets (see Note 20 to the Consolidated Financial Statements), and therefore reported sales made in those markets are affected by foreign exchange rates.
Watch and Accessory Brands Operating Income/(Loss) In the United States locations of the Watch and Accessory Brands segment, for the twelve months ended January 31, 2022, the Company recorded operating income of $9.6 million, which includes unallocated corporate expenses of $38.7 million.
For the twelve months ended January 31, 2022, the Company recorded operating income of $9.6 million in the United States locations of the Watch and Accessory Brands segment which included unallocated corporate expenses of $38.7 million.
RESULTS OF OPERATIONS The following is a discussion of the results of operations for fiscal 2022 compared to fiscal 2021 along with a discussion of the changes in financial condition during fiscal 2022.
RESULTS OF OPERATIONS The following is a discussion of the results of operations for fiscal 2023 compared to fiscal 2022 along with a discussion of the changes in financial condition during fiscal 2023.
The Company expects that capital expenditures in fiscal 2023 will be approximately $10.0 million as compared to $5.7 million in fiscal 2022. The capital spending will be primarily for projects in the ordinary course of business including facilities improvements, shop-in-shops, website development, computer hardware and software and tooling costs.
The Company expects that capital expenditures in fiscal 2024 will be approximately $10.0 million as compared to $7.1 million in fiscal 2023. The capital spending will be primarily for projects in the ordinary course of business including facilities improvements, shop-in-shops, website development, computer hardware and software and tooling costs.
Availability under the Facility was reduced by the aggregate number of letters of credit outstanding, issued in connection with retail and operating facility leases to various landlords and for Canadian payroll to the Royal Bank of Canada, totaling approximately $0.3 million at both January 31, 2022 and January 31, 2021.
Availability under the Facility was reduced by the aggregate amount of letters of credit outstanding, issued in connection with retail and operating facility leases to various landlords and for Canadian payroll to the Royal Bank of Canada, totaling approximately $0.3 million at both January 31, 2023 and January 31, 2022.
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 considers transfer of control passes to the wholesale customer upon shipment or upon receipt depending on the agreement with the customer and shipping terms.
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.
International Watch and Accessory Brands Operating Income/(Loss) In the International locations of the Watch and Accessory Brands segment, for the twelve months ended January 31, 2022 the Company recorded operating income of $76.0 million, which includes $80.5 million of certain intercompany profits related to the Company’s International supply chain operations.
For the twelve months ended January 31, 2022, the Company recorded an operating income of $76.0 million in the International locations of the Watch and Accessory Brands segment which included $80.5 million of certain intercompany profits related to the Company’s supply chain operations.
As of January 31, 2022, and 2021, two European banks had guaranteed obligations to third parties on behalf of two of the Company’s foreign subsidiaries in the dollar equivalent of $1.2 million and $1.3 million, respectively, in various foreign currencies, of which $0.6 million, in both periods, was a restricted deposit as it relates to lease agreements.
As of January 31, 2023 and 2022, two European banks had guaranteed obligations to third parties on behalf of two of the Company’s foreign subsidiaries in the dollar equivalent of $1.2 million for both periods, in various foreign currencies, of which $0.6 million for both periods was a restricted deposit as it relates to lease agreements.
For a discussion of our results of operations in fiscal year 2021 compared to fiscal year 2020, 34 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, 2021, filed with the SEC on March 25, 2021.
For a discussion of our results of operations in fiscal year 2022 compared to fiscal year 2021, 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, 2022, filed with the SEC on March 24, 2022.
As of January 31, 2022, and 2021, these lines of credit totaled 6.5 million Swiss Francs for both periods, with a dollar equivalent of $7.0 million and $7.3 million, respectively. As of January 31, 2022, and 2021, there were no borrowings against these lines.
As of January 31, 2023, and 2022, these lines of credit totaled 6.5 million Swiss Francs for both periods, with a dollar equivalent of $7.1 million and $7.0 million, respectively. As of January 31, 2023, and 2022, there were no borrowings against these lines.
Selling expenses consist primarily of salaries, sales commissions, sales force travel and related expenses, credit card fees, depreciation and amortization, expenses associated with the Company’s annual worldwide customer conference and other industry trade shows and operating costs incurred in connection with the Company’s retail business. Sales commissions vary with overall sales levels.
Selling expenses consist primarily of salaries, sales commissions, sales force travel and related expenses, credit card fees, depreciation and amortization, expenses associated with the Company’s customer conferences and industry trade shows and operating costs incurred in connection with the Company’s retail business. Sales commissions vary with overall sales levels.
Cash provided by operating activities for fiscal 2022 was impacted by an increase in accounts payable of $18.3 million primarily as a result of timing of payments, a decrease in income taxes receivable of $17.1 million due to a receipt of a U.S. federal income tax refund and an increase in accrued payroll and benefits of $7.3 million primarily due to an increase in accrued performance-based compensation.
Cash provided by operating activities in fiscal 2022 was impacted by an increase in accounts payable of $18.3 million primarily as a result of timing of payments, a decrease in income taxes receivable of $17.1 million due to a receipt of a U.S. federal income tax refund and an increase in accrued payroll and benefits of $7.3 million primarily due to an increase in performance-based compensation, partially offset by an increase in trade receivable of $18.6 million and inventories of $15.4 million.
The Company funded approximately $2.0 million of these commitments in fiscal 2022 and may be called upon to satisfy capital calls in respect of the remaining $19.5 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.
The Company funded approximately $2.0 million of these commitments in fiscal 2022 and an additional $3.3 million in fiscal 2023 and may be called upon to satisfy capital calls in respect of the remaining $16.2 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.
At January 31, 2022, the letters of credit have expiration dates through May 31, 2022. As of January 31, 2022, and January 31, 2021, availability under the Facility was $99.7 million and $78.5 million, respectively. For additional information regarding the Facility, see Note 9 – Debt and Lines of Credit to the Consolidated Financial Statements.
At January 31, 2023, the letters of credit have expiration dates through May 31, 2023. As of January 31, 2023, and January 31, 2022, availability under the Facility was $99.7 million for both periods. For additional information regarding the Facility, see Note 9 – Debt and Lines of Credit to the Consolidated Financial Statements.
The increase in gross profit of $148.6 million was primarily due to higher net sales combined with a higher gross margin percentage.
The increase in gross profit of $14.8 million was primarily due to higher net sales combined with a higher gross margin percentage.
Other Non-Operating Income The Company recorded other income of $0.5 million primarily due to the final settlement related to a sale of a building in an international location in the prior year and the non-service components of the Company’s Swiss pension plan for fiscal 2022.
The Company recorded other income of $0.5 million primarily due to the final settlement related to a sale of a building in an international location in the prior year and the non-service components of the Company’s Swiss pension plan for fiscal 2022. Interest Expense Interest expense was $0.5 million for fiscal 2023 as compared to $0.7 million for fiscal 2022.
The Company has the ability to manage its capital expenditures on discretionary projects. Cash used by financing activities was $66.6 million for fiscal 2022 as compared to $34.4 million for fiscal 2021.
The Company has the ability to manage its capital expenditures on discretionary projects. Cash used by financing activities was $65.3 million for fiscal 2023 as compared to $66.6 million for fiscal 2022.
Finite-lived intangible assets are amortized over their respective estimated useful lives, which range from three to ten years, and are evaluated for impairment periodically and whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable.
The fair values of these intangible assets are estimated 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 periodically and whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable.
During fiscal 2022, the Company repurchased a total of 686,559 shares of its common stock under the March 25, 2021 share repurchase program at a total cost of $22.6 million, or an average of $32.92 per share.
During fiscal 2022, the Company repurchased a total of 686,559 shares of its common stock under the March 25, 2021 share repurchase program at a total cost of $22.6 million, or an average of $32.92 per share. The Company has various contractual obligations as part of its ordinary course of business.
The Company defines working capital as the difference between current assets and current liabilities. The Company had $130.8 million of cash provided by operating activities for fiscal 2022 as compared to $68.4 million for fiscal 2021. Cash provided by operating activities for fiscal 2022 included net income of $92.6 million, positively adjusted by $20.8 million related to non-cash items.
The Company defines working capital as the difference between current assets and current liabilities. The Company had $54.3 million of cash provided by operating activities for fiscal 2023 as compared to $130.8 million for fiscal 2022. Cash provided by operating activities for fiscal 2023 included net income of $97.0 million, positively adjusted by $20.3 million related to non-cash items.
Cash paid for interest, including unused commitments fees, was $0.4 million and $1.7 million during fiscal 2022 and 2021, respectively.
Cash paid for interest, including unused commitments fees, was $0.3 million and $0.4 million during fiscal 2023 and 2022, respectively.
The current year includes a reversal in corporate initiative charges due to a $1.1 million change in estimate primarily impacting the accounts receivable reserve due to collection of a previously reserved receivable.
The prior year included a reversal in certain fiscal 2021 corporate initiative charges of $1.1 million due to a change in estimate primarily impacting the accounts receivable reserve due to collection of a previously reserved receivable.
The excess of the carrying value over the fair value, if any, is recognized as a loss during that period. The impairment is calculated as the difference between asset carrying values and their estimated fair values. Other than as it relates to intangibles, as described above, no impairment charge was recorded in fiscal 2022 or in fiscal 2021, respectively.
The excess of the carrying value over the fair value, if any, is recognized as a loss during that period. The impairment is calculated as the difference between asset carrying values and their estimated fair values. No impairment charge was recorded in fiscal 2023 or in fiscal 2022.
As of January 31, 2022 and 2021, the Company operated 51 and 47 retail outlet locations, respectively. Gross Profit Gross profit for fiscal 2022 was $419.1 million or 57.2% of net sales as compared to $270.5 million or 53.4% of net sales in the prior year.
As of January 31, 2023 and 2022, the Company operated 55 and 51 retail outlet locations, respectively. Gross Profit Gross profit for fiscal 2023 was $433.9 million or 57.7% of net sales as compared to $419.1 million or 57.2% of net sales in the prior year.
Borrowers, the “Borrowers”), each a wholly owned Swiss subsidiary of the Company, entered into an Amended and Restated Credit Agreement 39 (the “Credit Agreement”) with the lenders party thereto and Bank of America, N.A. as administrative agent (in such capacity, the “Agent”).
Borrowers”), each a wholly owned domestic subsidiary of the Company, and Movado Watch Company S.A. and MGI Luxury Group S.A., each a wholly owned Swiss subsidiary of the Company, entered into an Amended and Restated Credit Agreement (as subsequently amended, the “Credit Agreement”) with the lenders party thereto and Bank of America, N.A. as administrative agent (in such capacity, the “Agent”).
As a result, the Company recorded impairment charges in the Watch and Accessory Brands segment totaling $22.2 million in the first quarter of fiscal 2021, decreasing MVMT’s trade name to $2.4 million and MVMT’s customer relationships to zero.
As a result of this analysis, the Company recorded impairment charges in the Watch and Accessory Brands segment totaling $22.2 million in the first quarter of fiscal 2021, decreasing MVMT's trade name to $2.4 million and MVMT's customer relationships to zero. Inventories The Company values its inventory at the lower of cost or net realizable value.
The increase in gross profit was primarily the result of higher net sales and also a higher gross margin percentage primarily due to a favorable change in sales mix partially offset by increased shipping costs.
The increase in gross profit of $14.9 million was primarily the result of higher net sales, combined with a higher gross margin percentage primarily due to a favorable change of sales mix, partially offset by a negative impact of fluctuations in foreign exchange rates and increased shipping costs.
Cost of sales of the Company’s products consists primarily of costs for raw materials, component costs, royalties, depreciation, amortization, assembly costs, shipping to customers, design costs and unit overhead costs associated with the Company’s supply chain operations predominately in Switzerland and Asia.
The Company’s ability to improve margins through price increases is therefore, to some extent, constrained by competitors’ actions. 29 Cost of sales of the Company’s products consists primarily of costs for raw materials, component costs, royalties, depreciation, amortization, assembly costs, shipping to customers, design costs and unit overhead costs associated with the Company’s supply chain operations predominately in Switzerland and Asia.
Selling, General and Administrative (“SG&A”) SG&A expenses in fiscal 2022 were $301.6 million, representing an increase from the prior year of $44.9 million, or 17.5%.
Selling, General and Administrative (“SG&A”) SG&A expenses in fiscal 2023 were $313.5 million, representing an increase from the prior year of $12.0 million, or 4.0%.
The current year SG&A expenses include a partial reversal of certain fiscal 2021 corporate initiative charges due to a change in estimate of $1.0 million primarily impacting the accounts receivable reserve due to collection of a previously reserved receivable.
Prior year SG&A expenses included a reversal in certain fiscal 2021 corporate initiative charges of $1.0 million primarily due to collection of a previously reserved receivable.
Expense related to stock options and stock awards compensation is recognized on a straight-line basis over the vesting term and only if the performance condition is probable of being achieved. Pension Benefit Obligation The Company sponsors a plan in Switzerland. The pension expense and obligation are developed from actuarial valuations.
Expense related to stock options and stock awards compensation is recognized on a straight-line basis over the vesting term and only if the performance condition is probable of being achieved.
International Watch and Accessory Brands Net Sales Net sales in fiscal 2022 in the International locations of the Watch and Accessory Brands segment were $382.0 million, above the prior year by $92.6 million, or 32.0%, which included fluctuations in foreign currency exchange rates which favorably impacted net sales by $9.2 million when compared to the prior year.
International Watch and Accessory Brands Net Sales Net sales in fiscal 2023 in the International locations of the Watch and Accessory Brands segment were $413.1 million, above the prior year by $31.1 million, or 8.1%, which included fluctuations in foreign currency exchange rates that negatively impacted net sales by $31.8 million when compared to the prior year.
In addition, the conflict could have broader implications on economies outside the region, such as the global inflationary impact of a potential boycott of Russian oil and gas by other countries.
In addition, the conflict has had broader implications on economies outside the region, such as the global inflationary impact of boycotts of Russian oil and gas by other countries and the blockade of Ukrainian grain exports.
The significant factors that influence annual sales volumes in the Company’s retail operations are similar to those that influence U.S. wholesale sales. In addition, most of the Company’s retail outlet locations are near vacation destinations and, therefore, the seasonality of these stores is driven by the peak tourist seasons associated with these locations.
In addition, most of the Company’s retail outlet locations are near vacation destinations and, therefore, the seasonality of these stores is driven by the peak tourist seasons associated with these locations.
The cash used in fiscal 2022 included $22.6 million in stock repurchased in the open market, $22.0 million in dividends paid ($2.3 million of which had been declared in January 2021) repayment of $21.1 million of bank borrowings and $3.1 million in shares repurchased as a result of the surrender of shares in connection with the vesting of certain stock awards and options, partially offset by $3.4 million received in connection with stock options exercised.
The cash used in fiscal 2023 included $31.4 million in stock repurchased in the open market, $31.4 million in dividends paid and $1.1 million in shares repurchased as a result of the surrender of shares in connection with the vesting of certain stock awards, offset by $1.6 million received in connection with stock options exercised.
The following are net sales by business segment and geographic location (in thousands): Fiscal Year Ended January 31, 2022 2021 Watch and Accessory Brands: United States $ 244,204 $ 157,951 International 382,019 289,411 Company Stores 106,170 59,035 Net sales $ 732,393 $ 506,397 The following are net sales by category (in thousands): Fiscal Year Ended January 31, 2022 2021 Watch and Accessory Brands: Owned brands category $ 249,940 $ 178,173 Licensed brands category 368,354 262,367 After-sales service and all other 7,929 6,822 Total Watch and Accessory Brands 626,223 447,362 Company Stores 106,170 59,035 Consolidated total $ 732,393 $ 506,397 The following table presents the Company’s results of operations expressed as a percentage of net sales for the fiscal years indicated: Fiscal Year Ended January 31, 2022 2021 Net sales 100.0 % 100.0 % Gross margin 57.2 % 53.4 % Selling, general and administrative expenses 41.2 % 50.7 % Impairment of goodwill and intangible assets 0.0 % 30.8 % Operating income/(loss) 16.0 % (28.1 %) Gain on sale of a non-operating asset 0.0 % 0.3 % Other income 0.1 % 0.1 % Interest expense 0.1 % 0.4 % Provision/(benefit) for income taxes 3.4 % (6.2 %) Noncontrolling interests 0.1 % 0.1 % Net income/(loss) attributable to Movado Group, Inc. 12.5 % (22.0 %) Fiscal 2022 Compared to Fiscal 2021 Net Sales Net sales in fiscal 2022 were $732.4 million, representing a $226.0 million or 44.6% increase above the prior year.
The following are net sales by business segment and geographic location (in thousands): Fiscal Year Ended January 31, 2023 2022 Watch and Accessory Brands: United States $ 227,268 $ 244,204 International 413,071 382,019 Total Watch and Accessory Brands 640,339 626,223 Company Stores United States 106,645 101,888 International 4,914 4,282 Total Company Stores 111,559 106,170 Net sales $ 751,898 $ 732,393 33 The following are net sales by category (in thousands): Fiscal Year Ended January 31, 2023 2022 Watch and Accessory Brands: Owned brands category $ 230,277 $ 249,940 Licensed brands category 399,556 368,354 After-sales service and all other 10,506 7,929 Total Watch and Accessory Brands 640,339 626,223 Company Stores 111,559 106,170 Consolidated total $ 751,898 $ 732,393 The following table presents the Company’s results of operations expressed as a percentage of net sales for the fiscal years indicated: Fiscal Year Ended January 31, 2023 2022 Net sales 100.0 % 100.0 % Gross margin 57.7 % 57.2 % Selling, general and administrative expenses 41.7 % 41.2 % Operating income 16.0 % 16.0 % Other income 0.3 % 0.1 % Interest expense 0.1 % 0.1 % Provision for income taxes 3.3 % 3.4 % Noncontrolling interests 0.3 % 0.1 % Net income attributable to Movado Group, Inc. 12.6 % 12.5 % Fiscal 2023 Compared to Fiscal 2022 Net Sales Net sales in fiscal 2023 were $751.9 million, representing a $19.5 million or 2.7% increase above the prior year.
In response to the invasion, the Company decided in March 2022 to suspend all sales to Russia and Belarus. Sales to these two countries are immaterial to the Company’s results of operations.
In response to the invasion, the Company decided in March 2022 to suspend all sales to Russia and Belarus. Sales and assets in Russia, Belarus and Ukraine for all periods presented are immaterial to the Company's results of operations, financial condition and cash flows.
Watch and Accessory Brands Net Sales 35 Net sales in fiscal 2022 in the Watch and Accessory Brands segment were $626.2 million, an increase above the prior year period of $178.9 million, or 40.0%.
Watch and Accessory Brands Net Sales Net sales in fiscal 2023 in the Watch and Accessory Brands segment were $640.3 million, an increase above the prior year period of $14.1 million, or 2.3%.
At January 31, 2022 the Company had working capital of $402.4 million as compared to $374.0 million at January 31, 2021. The increase in working capital was primarily the result of an increase in cash of $53.3 million and an increase in accounts receivable resulting primarily from higher net sales, partially offset by an increase in accounts payable.
At January 31, 2023 the Company had working capital of $424.8 million as compared to $402.4 million at January 31, 2022. The increase in working capital was primarily the result of an increase in inventories and a decrease in accounts payable, partially offset by a decrease in cash.
The Company had weighted average borrowings under the facility of $4.8 million and $53.1 million, with a weighted average interest rate of 2.79% and 2.59% during fiscal 2022 and 2021, respectively. A Swiss subsidiary of the Company maintains unsecured lines of credit with an unspecified maturity with a Swiss bank.
The Company had weighted average borrowings under the facility of zero and $4.8 million during fiscal 2023 and fiscal 2022, respectively, with a weighted average interest rate of 2.8% during fiscal 2022. A Swiss subsidiary of the Company maintains unsecured lines of credit with a Swiss bank that are subject to repayment upon demand.
The increase in gross profit of $66.2 million was due to higher net sales, combined with a higher gross margin percentage primarily from a favorable impact of sales mix.
The increase in operating income was the result of an increase in gross profit of $24.2 million, partially offset by higher SG&A expenses of $2.1 million. The increase in gross profit of $24.2 million was primarily the result of higher net sales, combined with a higher gross margin percentage primarily due to a favorable sales mix.
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®, Calvin Klein® and Scuderia Ferrari®.
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®. The Company's collaboration with Scuderia Ferrari ended on June 30, 2022, although the Company had the right to sell remaining inventory through December 31, 2022.
The current year SG&A expenses include a reversal in certain fiscal 2021 corporate initiatives charges due to a change in estimate of $1.1 million primarily impacting the accounts receivable reserve due to collection of a previously reserved receivable.
Prior year SG&A expenses included a reversal in certain fiscal 2021 corporate initiative charges of $1.1 million due to collection of a previously reserved receivable.
The invasion and the subsequent economic sanctions imposed by some countries may negatively impact the Company’s revenue to the extent the conflict and the sanctions significantly impact the economic conditions in or our ability to sell products to customers in the affected region.
Russia's invasion of Ukraine On February 24, 2022, Russia launched a comprehensive invasion of Ukraine. The invasion and the subsequent economic sanctions imposed by some countries have negatively impacted the Company's revenue to the extent the conflict and the sanctions negatively impacted economic conditions and our ability to sell products to customers in the affected region.
The net sales recorded in the owned brands category increased by $68.5 million, or 55.6%, and net sales recorded in the licensed brand category increased $17.1 million, or 54.5%.
The net sales recorded in the owned brands category decreased $19.3 million, or 10.1%, and net sales recorded in the licensed brand category increased $2.5 million, or 5.2%.
All of the Company’s brands compete with a number of other brands not only on styling but also on wholesale and retail price. The Company’s ability to improve margins through price increases is therefore, to some extent, constrained by competitors’ actions.
All of the Company’s brands compete with a number of other brands not only on styling but also on wholesale and retail price.
Although the COVID-19 pandemic is expected to continue to impact the Company’s results of operations for the foreseeable future, the pandemic’s adverse impact on the Company has significantly diminished in recent quarters, and the Company believes that based on the Company’s current expectations, cash flows from operations and its credit lines and cash on-hand, the Company has adequate funds to support its operating, capital and debt service requirements and expects to maintain compliance with its debt covenants for the next twelve months subsequent to the issuance of the accompanying Consolidated Financial Statements.
Of this total, $114.0 million and $197.4 million, respectively, consisted of cash and cash equivalents at the Company’s foreign subsidiaries. 36 The Company believes that based on the Company’s current expectations, cash flows from operations and its credit lines and cash on-hand, the Company has adequate funds to support its operating, capital and debt service requirements and expects to maintain compliance with its debt covenants for the next twelve months subsequent to the issuance of the accompanying Consolidated Financial Statements.
The Company’s international sales are primarily billed in local currencies (predominantly Euros, British Pounds and Swiss Francs) and translated to U.S. dollars at average exchange rates for financial reporting purposes. 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 Company’s international sales are primarily billed in local currencies (predominantly Euros, British Pounds and Swiss Francs) and translated to U.S. dollars at average exchange rates for financial reporting purposes. The Company reduces its exposure to exchange rate risk through a hedging program.
For the year ended January 31, 2022, fluctuations in foreign currency rates related to the foreign subsidiaries increased SG&A expenses by $2.0 million when compared to the prior year.
Increased SG&A expenses were partially offset by a decrease in performance-based compensation of $7.8 million. For the year ended January 31, 2023, fluctuations in foreign currency rates related to the foreign subsidiaries favorably impacted SG&A expenses by $9.1 million when compared to the prior year.
Although the COVID-19 pandemic's adverse impact on the Company has significantly diminished in recent quarters, the full magnitude of the effects on the Company’s business is difficult to predict at this time, and the pandemic is expected to continue to impact the Company’s results of operations for the foreseeable future.
Although the COVID-19 pandemic's adverse impact on the Company has significantly diminished in recent quarters, the pandemic is expected to continue to affect the Company's results of operations for the foreseeable future due to impacts on supply chains, shipping operations, consumer behavior, spending levels, shopping preferences and tourism.
Inventory classified as discontinued, together with the related component parts that can be assembled into saleable finished goods, is sold primarily through the Company’s retail outlet locations.
Cost is determined using the average cost method. The Company performs reviews of its on-hand inventory to determine amounts, if any, of inventory that is deemed discontinued, excess, or unsaleable. Inventory classified as discontinued, together with the related component parts that can be assembled into saleable finished goods, is sold primarily through the Company’s retail outlet locations.
The Company recorded a gain on the sale of a non-operating asset of $1.3 million related to a sale of a building in an international location for fiscal 2021. The Company recorded other income of $0.4 million primarily due to the non-service components of the Company’s Swiss pension plan for fiscal 2021.
Other Non-Operating Income Other non-operating income 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, 2022, the Company recorded other non-operating income due to the final settlement related to a sale of a building in an international location in the prior year period.
During the three months ended April 30, 2020, in light of the COVID-19 pandemic that resulted in the closing of the Company’s stores and of the vast majority of the stores of the Company’s wholesale customers (resulting in a decrease in revenues and gross margin), a decrease in customer spending and the recent decline in the Company’s market capitalization, the Company concluded that a triggering event had occurred during the first quarter, resulting in the need to perform a quantitative interim impairment assessment over the Company’s Olivia Burton, MVMT and Company Stores’ long-lived assets as well as the Watch and Accessory Brands reporting unit.
During the three months ended April 30, 2020, in light of the COVID-19 pandemic that resulted in the closing of the Company’s stores and of the vast majority of the stores of the Company’s wholesale customers (resulting in a decrease in revenues and gross margin), the Company performed recoverability tests for the long-lived assets of MVMT, Olivia Burton and the Company Stores as of April 30, 2020.
Net Income/(Loss) Attributable to Movado Group, Inc. The Company recorded net income attributable to Movado Group, Inc. of $91.6 million and net loss attributable to Movado Group, Inc. of $111.5 million for fiscal 2022 and 2021, respectively.
Net Income Attributable to Movado Group, Inc. The Company recorded net income attributable to Movado Group, Inc. of $94.5 million and $91.6 million for fiscal 2023 and 2022, respectively. LIQUIDITY AND CAPITAL RESOURCES At January 31, 2023 and January 31, 2022, the Company had $251.6 million and $277.1 million, respectively, of cash and cash equivalents.
Excluding these corporate initiative charges and reversals from both periods, SG&A expense would have increased $20.7 million primarily due to the following factors: higher marketing expenses of $12.7 million; an increase in payroll related expenses of $3.0 million primarily due to the absence of the furloughing of employees and temporary salary reductions that occurred in the prior year period in response to the COVID-19 pandemic; an increase in consulting and recruiting charges of $2.2 million; an increase in performance-based compensation of $1.4 million; and an increase in sales commissions of $0.8 million due to higher sales in the current year.
Excluding the reversal in corporate initiative charges in the prior year SG&A expenses would have increased $1.1 million primarily due to the following factors: an increase in payroll related expense of $1.8 million; higher marketing expenses of $1.0 million; and an increase in sales commissions of $0.4 million.
The improvement in operating income of $21.4 million was primarily related to higher gross profit of $33.2 million mainly due to higher sales and a higher gross margin percentage, partially offset by a $11.8 million increase in SG&A expenses.
The decrease in operating income of $6.6 million was primarily related to a $6.5 million increase in SG&A expenses and a $0.1 million decrease in gross profit mainly due to a lower gross margin percentage.
Although the Company currently expects to continue to declare cash dividends in the future, the decision of whether to declare any future cash dividend, including the amount of any such dividend and the establishment of record and payment dates, will be determined, in each quarter, by the Board of Directors, in its sole discretion. 40 On March 25, 2021, the Board approved a share repurchase program under which the Company is authorized to purchase up to $25.0 million of its outstanding common stock through September 30, 2022, depending on market conditions, share price and other factors.
Although the Company currently expects to continue to declare cash dividends in the future, the decision of whether to declare any future cash dividend, including the amount of any such dividend and the establishment of record and payment dates, will be determined, in each quarter, by the Board of Directors, in its sole discretion.
Cash used in financing activities for fiscal 2021 included net repayment of bank borrowings of $33.6 million. On October 12, 2018, the Company, together with Movado Group Delaware Holdings Corporation, Movado Retail Group, Inc. and Movado LLC (together with the Company, the “U.S.
On October 12, 2018, the Company, together with Movado Group Delaware Holdings Corporation, Movado Retail Group, Inc. and Movado LLC (together with the Company, the “U.S.
In addition to the absence of asset impairments in fiscal 2022, the increase in operating income was the result of an increase in gross profit of $115.4 million, which included corporate initiatives costs in the prior year period of $0.7 million comprising an increase in inventory reserves, partially offset by an increase in SG&A expenses of $33.0 million when compared to the prior year.
The increase in operating income was the result of an increase in gross profit of $14.9 million, partially offset by an increase in SG&A expenses of $5.4 million when compared to the prior year.
Various containment and mitigation measures that have at times been imposed by governmental and other authorities around the world (such as quarantines and other social distancing requirements) have adversely affected sales of our products, given that those sales are heavily dependent on customer traffic in traditional retail stores, such as those of our wholesale partners, and our Company stores.
Various containment and mitigation measures that have at times been imposed by governmental and other authorities around the world have adversely affected sales of our products and our supply chain.
The increase in gross margin percentage of approximately 380 basis points for fiscal 2022 resulted primarily from a favorable impact of sales mix of approximately 280 basis points, increased leveraging of certain fixed costs as a result of higher net sales of approximately 60 basis points, a positive impact of fluctuations in foreign exchange rates of approximately 30 basis points and the non-recurrence of a prior year charge related to an increase in inventory reserves in response to the COVID-19 pandemic of approximately 20 basis points, partially offset by an approximately 10 basis point impact due to increased shipping costs.
The increase in gross margin percentage of approximately 50 basis points for fiscal 2023 resulted primarily from a favorable impact of sales mix of approximately 120 basis points, partially offset by a negative impact of fluctuations in foreign exchange rates of approximately 70 basis points and approximately 20 basis points impact due to increased shipping costs.
At January 31, 2022, $2.4 million remains available for purchase under the Company’s March 25, 2021 repurchase program and all $ 50.0 million remains available for purchase under the Company's November 23, 2021 repurchase program. During fiscal 2021, the Company did not repurchase any shares of its common stock.
At January 31, 2023, zero remains available for purchase under the Company’s March 25, 2021 repurchase program and $21.0 million remains available for purchase under the Company's 38 November 23, 2021 repurchase program.
Interest Expense Interest expense was $0.7 million for fiscal 2022 as compared to $2.0 million for fiscal 2021. The decrease was primarily due to lower weighted average borrowings outstanding under the Company’s revolving credit facility, partially offset by a higher weighted average interest rate and higher unused credit line fees during fiscal 2022 as compared to fiscal 2021.
The decrease was due to no borrowings under the Company’s revolving credit facility during fiscal 2023, partially offset by higher unused credit line fees during fiscal 2023 as compared to fiscal 2022. Income Taxes The Company recorded an income tax provision of $24.9 million and $24.8 million for fiscal 2023 and 2022, respectively.
The increase in SG&A expenses was primarily due to higher marketing expenses of $4.7 million; an increase in payroll related expenses of $2.7 million primarily due to company stores being open throughout the period (as compared to the significant closures during the prior year); an increase in credit card fees and sales commissions of $1.7 million due to higher sales in the current year as compared to the prior year; an increase in rent and rent-related expenses of $1.3 million due to the opening of new company stores; and an increase in performance-based compensation of $0.5 million.
The increase in SG&A expenses was primarily due to an increase of $2.9 million in payroll related expenses; an increase in marketing expenses of $2.3 million; and an increase in rent and rent related of $1.2 million due to the opening of new company stores.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−2 removed11 unchanged
Biggest changeA s of January 31, 2022, the Company’s entire net forward contracts hedging portfolio consisted of 7.4 million Chinese Yuan equivalent, 28.0 million Swiss Francs equivalent, 16.2 million US Dollars equivalent, 37.5 million Euros equivalent (including 18.0 million Euros designated as cash flow hedges) and 1.5 million British Pounds equivalent with various expiry dates ranging through July 13, 2022, compare d to a portfolio of 29.4 million Chinese Yuan equivalent, 6.0 million Swiss Francs equivalent, 10.9 million US Dollars equivalent, 16.6 million Euros equivalent and 0.7 million British Pounds equivalent with various expiry dates ranging through May 19, 2021, as of January 31, 2021 .
Biggest changeAs of January 31, 2023, the Company’s entire net forward contracts hedging portfolio consisted of 14.7 million Chinese Yuan equivalent, 30.0 million Swiss Francs equivalent, 15.7 million US Dollars equivalent, 22.8 million Euros equivalent (including 3.0 million Euros designated as cash flow hedges) and 0.6 million British Pounds equivalent with various expiry dates ranging through June 1, 2023, compared to a portfolio of 7.4 million Chinese Yuan equivalent, 28.0 million Swiss Francs equivalent, 16.2 million US Dollars equivalent, 37.5 million Euros equivalent (including 18.0 million Euros designated as cash flow hedges) and 1.5 million British Pounds equivalent with various expiry dates ranging through July 13, 2022, as of January 31, 2022.
If the Company were to settle its Swiss Franc forward contracts at January 31, 2022, the net result would be a $0.1 million loss. If the Company were to settle its Euro forward contracts at January 31, 2022, the net result would be a $0.1 million gain.
If the Company were to settle its Swiss Franc forward contracts at January 31, 2023, the result would be a $1.1 million gain. If the Company were to settle its Euro forward contracts at January 31, 2023, the result would be a $0.2 loss million.
As of January 31, 2022, the Company’s British Pound, Chinese Yuan and US Dollar forward contracts had no gain or loss. The Company had no cash flow hedges as of January 31, 2021. Commodity Risk The Company considers its exposure to fluctuations in commodity prices to be primarily related to gold used in the manufacturing of the Company’s watches.
As of January 31, 2023, the Company’s British Pound, Chinese Yuan and US Dollar forward contracts had no gain or loss. 39 Commodity Risk The Company considers its exposure to fluctuations in commodity prices to be primarily related to gold used in the manufacturing of the Company’s watches.
The Company did not hold any future contracts in its gold hedge portfolio as of January 31, 2022 and 2021; thus, any changes in the gold purchase price will have an equal effect on the Company’s cost of sales.
The Company did not hold any future contracts in its gold hedge portfolio as of January 31, 2023 and 2022; thus, any changes in the gold purchase price will have an equal effect on the Company’s cost of sales. Debt and Interest Rate Risk Floating rate debt at January 31, 2023 and 2022 was zero for both periods.
Removed
Debt and Interest Rate Risk Floating rate debt at January 31, 2022 and 2021 totaled zero and $21.2 million (of which 10 million was denominated in Swiss Francs), respectively. For fiscal 2022, the Company had weighted average borrowings of $4 .8 m illion with a weighted average interest rate of 2.79% .
Added
During fiscal 2023, the Company had no borrowings. The Company does not hedge these interest rate risks. 40
Removed
The Company does not hedge these interest rate risks. Based on the average floating rate debt outstanding during fiscal 2022, a one-percent increase or decrease in the average interest rate during the period would have resulted in a change to interest expense of approximately $48,000 for the fiscal year ended January 31, 2022. 42

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