Movado Group Reports 1.7% Decline in Net Sales for Fiscal Year Ending January 31, 2025

Movado Group, Inc. reported a decline in financial performance for the fiscal year ending January 31, 2025, with net sales of $653.4 million, a decrease of 1.7% from $664.4 million in the previous year. The company's Watch and Accessory Brands segment generated $556.4 million in sales, down 0.7% from the prior year, while the Company Stores segment saw a more significant decline, with sales dropping 6.7% to $97.0 million. The decrease in sales was attributed to unfavorable sales mix and fluctuations in foreign currency exchange rates, which negatively impacted net sales by approximately $1.4 million.

The company's gross profit for fiscal 2025 was $353.1 million, representing 54.0% of net sales, down from 54.8% in the previous year. This decline was primarily due to lower net sales and a decrease in gross margin percentage, which was affected by an unfavorable sales mix and the decreased leveraging of fixed costs. Selling, general, and administrative expenses increased by 5.5% to $333.1 million, driven by higher marketing expenses and costs associated with an internal investigation into misconduct at the company's Dubai branch, which resulted in a restatement of financial statements.

Movado's operational challenges were compounded by a material weakness in internal controls over financial reporting, identified during an investigation into the Dubai branch's sales practices. The company has initiated changes to improve its internal controls and mitigate risks associated with the lack of functional segregation of duties. As a result of these issues, the company restated its financial results for the previous fiscal years, impacting reported sales and expenses.

Looking ahead, Movado Group anticipates ongoing challenges in the consumer spending environment, prompting a cost-savings initiative aimed at reducing operating expenses. The company expects to achieve annual savings of approximately $10 million from this initiative. Additionally, the company is navigating increased tariffs on imports, particularly from China, which could further impact its cost structure and pricing strategies. Despite these challenges, Movado remains focused on enhancing its market position through strategic marketing and product development initiatives.