Fiscal 2022 Net Sales of $732.4 million ~

~ Fiscal 2022 EPS of $3.87 and Fiscal 2022 Adjusted EPS of $3.94 ~

~ Fourth Quarter Net Sales of $206.0 million ~

~ Fourth Quarter EPS of $1.33 and Fourth Quarter Adjusted EPS of $1.32 ~

~ Board Approves 40% Increase in Quarterly Dividend to $0.35 Per Share ~

Paramus, NJ — Movado Group announced fourth quarter and fiscal year 2022 results for the periods ended January 31, 2022.

Fiscal Year 2022 Highlights (See attached table for GAAP and Non-GAAP measures)

• Delivered topline growth of 44.6% or 42.8% on a constant dollar basis year over year;
• Drove gross margin expansion of 380 bps from prior year period to 57.2% from 53.4%. Adjusted gross margin was 53.6% of sales in fiscal 2021;
• Generated operating income of $117.5 million as compared to a loss of $142.1 million in the prior year period. Adjusted operating income was $119.7 million as compared to adjusted operating income of $30.7 million in fiscal 2021;
• Achieved diluted earnings per share of $3.87 as compared to a loss of $4.80 in the prior year period. Adjusted diluted earnings per share was $3.94 as compared to $0.92 in fiscal 2021; and
• Ended the year with cash of $277.1 million.

Efraim Grinberg, Chairman and Chief Executive Officer, stated, “We closed out the year with exceptional fourth quarter performance, resulting in record annual net sales of $732.4 million and operating profit margin of 16.0%. We attribute our ongoing strength to the successful execution of our strategy with powerful brands, excellent craftsmanship and desirable designs. This drove sales growth in our owned and licensed brands; in the U.S. and internationally; and across our channels of wholesale and direct-to-consumer. We continued our digital advancement, reporting significant growth on our Movado.com site, which we believe is a testament to our keen focus and further development of our digital platform and omni-channel capabilities. I could not be more proud of our teams around the world that executed against our strategic objectives and delivered results that exceeded our expectations, while adapting to rapidly changing conditions in the marketplace.”

Mr Grinberg continued, “As we look ahead, we recognize that we continue to operate in an uncertain environment, with rising interest rates heightened by increasing inflation, combined with the war in Ukraine, on-going COVID outbreaks and closures in China, and lapping U.S. stimulus measures in the first half of last year, yet we remain confident in our positioning and our ability to deliver long term growth in sales and profit. We have a deep pipeline of product innovation and recently added another iconic licensed brand to our portfolio with the launch of CALVIN KLEIN, which is experiencing strong consumer response.”

Mr. Grinberg concluded, “Inline with our strategy of continuing to return value to shareholders, we are pleased to announce that our Board approved a 40% increase in our quarterly dividend to $0.35 per share. We also plan to execute our share repurchase plan at an accelerated pace, subject to prevailing market conditions. This reflects confidence in our business, as well as our recent results and balance sheet that included $277.1 million of cash at year end with no debt. Our priorities for our cash flow will continue to focus on investing in our long-term growth and evaluating other initiatives to enhance value.”

Fiscal Fourth Quarter Highlights (See attached table for GAAP and Non-GAAP measures)

• Delivered topline growth of 15.5% or 17.2% on a constant dollar basis year over year;
• Drove gross margin expansion of 220 bps from prior year period to 58.7% from 56.5%. Adjusted gross margin was 54.9% of sales in fourth quarter of fiscal 2021;
• Generated operating income of $38.2 million as compared to $25.9 million in the prior year period. Adjusted operating income was $37.9 million as compared to adjusted operating income of $23.9 million in the fourth quarter of fiscal 2021; and
• Achieved diluted earnings per share of $1.33 as compared to $1.29 in the prior year period. Adjusted diluted earnings per share was $1.32 as compared to $0.84 in the fourth quarter of fiscal 2021.

Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)

Fourth quarter fiscal 2022 results of operations included the following charges and benefits:

• $0.7 million pre-tax charge, or $0.6 million after tax, representing $0.03 per diluted share, associated with the amortization of acquired intangible assets related to the acquisition of Olivia Burton;
• $0.1 million pre-tax charge, or $0.1 million after tax, representing $0.00 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT; and
• $1.1 million pre-tax benefit, or $0.8 million after tax, representing $0.04 per diluted share, due to a change in estimate related to corporate initiative charges recorded primarily in response to the COVID-19 pandemic.

Fourth quarter fiscal 2021 results of operations included the following charges and benefits:

• $0.7 million pre-tax charge, or $0.6 million after tax, representing $0.02 per diluted share, associated with the amortization of acquired intangible assets related to the acquisition of Olivia Burton;
• $0.1 million pre-tax charge, or $0.1 million after tax, representing $0.00 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT;
• $2.8 million pre-tax benefit, or $1.9 million after tax, representing $0.08 per diluted share, due to change in estimate related to corporate initiative charges recorded primarily in response to the COVID-19 pandemic; and
• $9.2 million income tax benefit, representing $0.39 per diluted share, resulting from the available carryback of NOLs permitted under the CARES Act.

Fourth Quarter Fiscal 2022 Results (See attached table for GAAP and Non-GAAP measures)

• Net sales increased 15.5% (17.2% on a constant dollar basis) to $206.0 million compared to $178.3 million in the fourth quarter of fiscal 2021. The increase in net sales reflected growth in wholesale customers’ brick and mortar stores, in online retail (both in the Company’s owned and wholesale customers’ websites) and in Movado Company Stores. U.S. net sales increased 18.5% as compared to the fourth quarter of last year (and increased 12.3% as compared to pre-pandemic fourth quarter of fiscal 2020). International net sales increased 12.7% as compared to the fourth quarter of last year (and increased 3.8% as compared to pre-pandemic fourth quarter of fiscal 2020).
• Gross profit was $120.8 million, or 58.7% of net sales, compared to $100.8 million, or 56.5% of net sales in the fourth quarter of fiscal 2021. None of the items mentioned above in the Non-GAAP Items section impacted gross profit for the fourth quarter of fiscal 2022. Adjusted gross profit for the fourth quarter of fiscal 2021, which excludes a $2.8 million change in estimate associated with corporate initiative charges recorded primarily in response to the COVID-19 pandemic, was $98.0 million, or 54.9% of net sales. The increase in adjusted gross margin percentage was primarily the result of favorable changes in channel and product mix and an increase in leverage of certain fixed costs as a result of higher sales, partially offset by increased shipping costs.
• Operating expenses increased to $82.6 million in the fourth quarter of fiscal 2022 from $74.9 million in the fourth quarter of fiscal 2021. Excluding the operating expense charges mentioned above in the Non-GAAP Items section, operating expenses were $82.9 million compared to $74.1 million in the prior year period. This increase was primarily due to higher marketing expenses and an increase in certain operating expenses to support the increase in net sales. Excluding the operating expense charges mentioned above in the Non-GAAP Items section, as a percent of sales, operating expenses decreased to 40.3% of sales from 41.6% in the prior year period primarily due to improved sales leverage.
• Operating income was $38.2 million compared to $25.9 million in the fourth quarter of fiscal 2021. Adjusted operating income, which excludes the items listed above in the Non-GAAP Items section, was $37.9 million for the fourth quarter of fiscal 2022 and $23.9 million for the prior year period.
• The Company recorded a tax provision of $6.6 million, as compared to a tax benefit of $4.8 million in the fourth quarter of fiscal 2021. Based upon adjusted pre-tax income, the adjusted tax provision was $6.5 million, or an adjusted tax rate of 17.1%, as compared to an adjusted tax provision of $3.7 million, or an adjusted tax rate of 15.6%, in the fourth quarter of fiscal 2021.
• Net income for the fourth quarter of fiscal 2022 was $31.4 million, or $1.33 per diluted share, compared to net income of $30.3 million, or $1.29 per diluted share, in the fourth quarter of fiscal 2021. Adjusted net income for the fiscal 2022 period was $31.2 million, or $1.32 per diluted share, compared to adjusted net income of $19.7 million, or $0.84 per diluted share, for the fourth quarter of fiscal 2021, both of which exclude the fourth quarter items listed above in the Non-GAAP Items section after the associated tax effects for their respective periods.

Full Year Fiscal 2022 Results (See attached table for GAAP and Non-GAAP measures)

• Net sales increased 44.6% (42.8% on a constant dollar basis) to $732.4 million compared to net sales of $506.4 million in fiscal 2021. The increase in net sales reflected growth in wholesale customers’ brick and mortar stores and in Movado Company Stores due to the partial recovery from the COVID-19 pandemic and in online retail (both in the Company’s owned and wholesale customers’ websites). U.S. net sales increased 61.1% compared to last year (and increased 14.4% compared to pre-pandemic fiscal 2020). International net sales increased 32.5% as compared to last year (and decreased 3.1% as compared to pre-pandemic fiscal 2020).
• Gross profit was $419.1 million, or 57.2% of net sales, compared to gross profit of $270.5 million, or 53.4% of net sales, in fiscal 2021. None of the items mentioned in the Non-GAAP Items section above or in the equivalent sections of prior earnings releases issued by the Company for fiscal 2022 impacted gross profit for the year. Adjusted gross profit for fiscal 2021 was $271.2 million, or 53.6% of net sales, which excludes $0.7 million in corporate initiative charges related to the impact on the business of the COVID-19 pandemic. The year over year increase in adjusted gross margin percentage was primarily the result of favorable changes in channel and product mix, leveraging certain fixed costs as a result of higher sales and favorable foreign currency exchange rates.
• Operating expenses were $301.6 million in fiscal 2022 compared to $412.6 million in fiscal 2021. For fiscal 2022, adjusted operating expenses were $299.4 million, which excludes $2.9 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton, $0.4 million in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition and a $1.1 million benefit due to change in estimate related to corporate initiative charges recorded primarily in response to the COVID-19 pandemic. For fiscal 2021, adjusted operating expenses were $240.5 million, which excludes $155.9 million in adjustments related to the impairment of goodwill and certain intangible assets, $11.9 million in corporate initiative charges related to the impact to the business from the COVID-19 pandemic, $2.7 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton and $1.6 million in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition. The increase in adjusted operating expenses was primarily due to higher marketing expenses and performance-based compensation and an increase in certain operating expenses to support the increase in net sales.
• Operating income was $117.5 million in fiscal 2022 as compared to operating loss of $142.1 million in fiscal 2021. Adjusted operating income for fiscal 2022 was $119.7 million compared to adjusted operating income for fiscal 2021 of $30.7 million, both of which exclude the net charges listed in the preceding bullets for their respective periods.
• The tax provision was $24.8 million in fiscal 2022 compared to tax benefit of $31.2 million in fiscal 2021. The provision for fiscal 2022 included a benefit of $0.6 million primarily associated with the amortization of acquired intangible assets related to Olivia Burton and MVMT offset by $0.2 million provision related to a change in estimate related to corporate initiatives taken in response to the COVID-19 pandemic. The provision for fiscal 2021 included a $24.9 million benefit related to the impairment of goodwill and certain intangible assets, a $9.2 million benefit resulting from the available carryback of NOLs permitted under the CARES Act, $3.9 million of benefit related to corporate initiative charges related to the impact on the business from the COVID-19 pandemic including restructuring, and a $1.1 million benefit associated with the amortization of acquired intangible assets related to Olivia Burton and the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition, offset by a $0.5 million provision associated with a gain on the sale of a non-operating asset in Switzerland. Based upon adjusted pre-tax income, the adjusted effective tax rate for fiscal 2022 was 21.1% as compared to the adjusted effective tax rate of 25.5% in fiscal 2021.
• Net income was $91.6 million, or $3.87 per diluted share, for fiscal 2022 compared to net loss of $111.5 million, or $4.80 per diluted share, for fiscal 2021. Adjusted net income in fiscal 2022 was $93.4 million or $3.94 per diluted share, which excludes the fiscal 2022 net charges listed above after the associated tax effects, as described in the immediately preceding bullet. This compares to adjusted net income for fiscal 2021 of $21.4 million, or $0.92 per diluted share, which excludes the fiscal 2021 net charges listed above after the associated tax effects, as described in the immediately preceding bullet.

Fiscal 2023 Outlook

The Company expects fiscal 2023 net sales to be in a range of approximately $780 million to $800 million, gross profit of approximately 58.0% of net sales, and operating income in a range of $125 million to $130 million. Assuming no changes to the current tax regulations, the Company anticipates an effective tax rate of approximately 25% for the fiscal year. The outlook excludes approximately $3.0 million of amortization of acquired intangible assets and deferred compensation for fiscal 2023 related to the Olivia Burton and MVMT brands. This outlook does not contemplate significant impact of increasing inflation, geopolitical unrest or extended COVID-19 related impacts on the supply chain and shipping costs, and assumes no further significant fluctuations from prevailing foreign currency exchange rates.

Quarterly Dividend and Share Repurchase Program

The Company announced today that the Board of Directors approved a 40% increase to the regular quarterly cash dividend to $0.35 per share from $0.25 per share. A $0.35 dividend will be paid on April 20, 2022 for each share of the Company’s outstanding common stock and class A common stock held by shareholders of record as of the close of business on April 6, 2022.

During the fourth quarter of fiscal 2022, the Company repurchased approximately 138,200 shares under its share repurchase program. As of January 31, 2022, the Company had $2.4 million remaining under the March 25, 2021 share repurchase program and all $50.0 million remaining available under the November 23, 2021 repurchase program. The Company plans to execute its share repurchase plan at an accelerated pace in the current fiscal year, subject to prevailing market conditions and the business environment.

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