Restatement of Previously Issued Consolidated Financial Statements

3 Months Ended

Apr. 30, 2025

Accounting Changes and Error Corrections [Abstract]

Restatement of Previously Issued Consolidated Financial Statements

NOTE 1A – RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

In late January 2025, the Company became aware of allegations of misconduct within the Dubai branch (the “Dubai Branch”) of the Company’s Swiss subsidiary, MGI Luxury Group Sárl, related to sales to certain customers in the Middle East, India & Asia Pacific region (the “Affected Region”). Promptly thereafter, the Company retained outside counsel to conduct an investigation into these allegations. Based on that investigation, the Company has determined that the former managing director of the Dubai Branch, who oversaw the Affected Region, as well as certain employees under his direction, took actions that resulted in an overstatement of sales, premature recognition of sales, and underreporting of credit notes (e.g., sales discounts) owed to customers in the Affected Region. These actions included the use of a third-party warehouse unknown to the Company’s management to facilitate the premature recognition of sales, and the falsification of documents to circumvent internal controls. The conduct occurred over a period of approximately five years (beginning with the Company’s fiscal year ended January 31, 2021). The investigation has not identified any impact to reported sales to customers in other regions, nor has the investigation identified any knowledge of, or participation in, the misconduct by Company employees (whether members of management or otherwise) outside of the Affected Region. The Company has terminated the now former managing director of the Dubai Branch.

The Company concluded that its historical consolidated financial statements for the fiscal years ended January 31, 2024 and 2023, and the interim periods within fiscal years 2025 and 2024, required restatement to properly record the extent and timing of sales earned and credits issued during the relevant time period. Additionally, the restated interim periods of fiscal 2025 reflected a reduction in operating expenses as a result of the reversal of certain accruals due to the lower adjusted operating results. The misstatements did not impact the Company’s cash flows or compliance with the debt covenants in the Company’s credit agreement. The restatement of the previously issued Consolidated Financial Statements for the years ended January 31, 2024 and January 31, 2023 and for the quarterly periods ended October 31, 2024, July 31, 2024, April 30, 2024, October 31, 2023, July 31, 2023 and April 30, 2023 was reflected in the Company's 2025 Annual Report on Form 10-K, which should be referred to in connection with these interim unaudited financial statements.

The Company has included herein its restated unaudited Consolidated Financial Statements at April 30, 2024 and for the quarterly period ended April 30, 2024.

The Company has also included restated impacted amounts within the accompanying footnotes to the Consolidated Financial Statements.

On April 28, 2025, the Company received a voluntary request for documents and information relating to that restatement from the Division of Enforcement of the Securities and Exchange Commission (the “SEC”). The Company is cooperating with the SEC in responding to those requests.

MOVADO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	April 30, 2024
	As Previously Reported			Adjustment			As Restated
ASSETS
Current assets:
Cash and cash equivalents	$	225,372			—		$	225,372
Trade receivables, net		101,722			(20,706	)		81,016
Inventories		159,618			5,552			165,170
Other current assets		22,258			—			22,258
Income taxes receivable		8,336			(266	)		8,070
Total current assets		517,306			(15,420	)		501,886
Property, plant and equipment, net		19,037			—			19,037
Operating lease right-of-use assets		89,155			—			89,155
Deferred and non-current income taxes		43,280			—			43,280
Other intangibles, net		6,935			—			6,935
Other non-current assets		75,702			—			75,702
Total assets	$	751,415		$	(15,420	)	$	735,995
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	32,999			—		$	32,999
Accrued liabilities		41,976			(250	)		41,726
Accrued payroll and benefits		7,340			(1,150	)		6,190
Current operating lease liabilities		18,192			—			18,192
Income taxes payable		6,459			(2,196	)		4,263
Total current liabilities		106,966			(3,596	)		103,370
Deferred and non-current income taxes payable		8,143			—			8,143
Non-current operating lease liabilities		79,749			—			79,749
Other non-current liabilities		52,877			—			52,877
Total liabilities		247,735			(3,596	)		244,139
Commitments and contingencies
Redeemable noncontrolling interest		—			—			—
Equity:
Preferred Stock, $0.01 par value, 5,000,000 shares authorized; no shares issued		—			—			—
Common Stock, $0.01 par value, 100,000,000 shares authorized; 29,131,595 shares issued and outstanding		291			—			291
Class A Common Stock, $0.01 par value, 30,000,000 shares authorized; 6,483,116 shares issued and outstanding		64			—			64
Capital in excess of par value		240,923			—			240,923
Retained earnings		465,435			(11,784	)		453,651
Accumulated other comprehensive income		82,073			8			82,081
Treasury Stock, 13,404,954 shares, at cost		(287,414	)		—			(287,414	)
Total Movado Group, Inc. shareholders' equity		501,372			(11,776	)		489,596
Noncontrolling interest		2,308			(48	)		2,260
Total equity		503,680			(11,824	)		491,856
Total liabilities and equity	$	751,415		$	(15,420	)	$	735,995

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended April 30, 2024
	As Previously Reported			Adjustment			As Restated
Net sales	$	136,669		$	(2,290	)	$	134,379
Cost of sales		61,156			303			61,459
Gross profit		75,513			(2,593	)		72,920
Selling, general and administrative		72,202			(1,400	)		70,802
Operating income		3,311			(1,193	)		2,118
Non-operating income/(expense):
Other income, net		2,172			—			2,172
Interest expense		(118	)		—			(118	)
Income/(loss) before income taxes		5,365			(1,193	)		4,172
Provision/(benefit) for income taxes		2,302			(269	)		2,033
Net income/(loss)		3,063			(924	)		2,139
Less: Net income attributable to noncontrolling interest		172			(48	)		124
Net income/(loss) attributable to Movado Group, Inc.	$	2,891		$	(876	)	$	2,015

Basic income/(loss) per share:
Weighted basic average shares outstanding		22,253			—			22,253
Net income/(loss) per share attributable to Movado Group, Inc.	$	0.13		$	(0.04	)	$	0.09

Diluted income/(loss) per share:
Weighted diluted average shares outstanding		22,673			—			22,673
Net income/(loss) per share attributable to Movado Group, Inc.	$	0.13		$	(0.04	)	$	0.09

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended April 30, 2024
	As Previously Reported			Adjustment			As Restated
Cash flows from operating activities:
Net income/(loss)	$	3,063		$	(924	)	$	2,139
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation and amortization		2,288			—			2,288
Transactional gains		(1,434	)		—			(1,434	)
Provision for inventories and accounts receivable		1,210			—			1,210
Deferred income taxes		(457	)		—			(457	)
Stock-based compensation		1,838			—			1,838
Other		82			—			82
Changes in assets and liabilities:
Trade receivables		1,094			2,290			3,384
Inventories		(15,990	)		303			(15,687	)
Other current assets		(5,090	)		—			(5,090	)
Accounts payable		1,082			—			1,082
Accrued liabilities		3,067			(250	)		2,817
Accrued payroll and benefits		(107	)		(1,150	)		(1,257	)
Income taxes receivable		4,462			252			4,714
Income taxes payable		(13,264	)		(521	)		(13,785	)
Other non-current assets		95			—			95
Other non-current liabilities		(13	)		—			(13	)
Net cash used in operating activities		(18,074	)		—			(18,074	)

The restatement had no impact on investing and financing activities or cash balances.

The following amounts (in thousands) were restated in the Consolidated Statement of Comprehensive Income (Loss) for the three months ended April 30, 2024.


	For the Three Months Ended April 30, 2024
	As Previously Reported			Adjustment			As Restated
Net income/(loss)	$	3,063		$	(924	)	$	2,139
Other comprehensive income/(loss):
Foreign currency translation adjustments		(10,339	)		8			(10,331	)
Total other comprehensive (loss)/income		(10,262	)		8			(10,254	)
Comprehensive income/(loss) attributable to noncontrolling interests:
Net income/(loss)		172			(48	)		124
Foreign currency translation adjustments		(23	)		-			(23	)
Total comprehensive income/(loss) attributable to noncontrolling interests		149			(48	)		101
Total comprehensive income/(loss) attributable to Movado Group, Inc.	$	(7,348	)	$	(868	)	$	(8,216	)

The following amounts (in thousands) were restated in the Consolidated Statement of Changes in Equity for the three months ended April 30, 2024.


	For the Three Months Ended April 30, 2024
	As Previously Reported			Adjustment			As Restated
Retained earnings beginning balance	$	470,317		$	(10,908	)	$	459,409
Net income/(loss) attributable to Movado Group, Inc.	$	2,891		$	(876	)	$	2,015
Retained earnings ending balance	$	465,435		$	(11,784	)	$	453,651


Accumulated other comprehensive income beginning balance	$	92,335		$	-		$	92,335
Foreign currency translation adjustment	$	(10,339	)	$	8		$	(10,331	)
Accumulated other comprehensive income ending balance	$	82,073		$	8		$	82,081


Noncontrolling interest beginning balance	$	2,159		$	-		$	2,159
Net income attributable to Movado Group, Inc.	$	172		$	(48	)	$	124
Foreign currency translation adjustment	$	(23	)	$	-		$	(23	)
Noncontrolling interest ending balance	$	2,308		$	(48	)	$	2,260

Total equity ending balance	$	503,680		$	(11,824	)	$	491,856

MOVADO GROUP INC 10-Q