Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for that past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,’’ “accelerated filer,’’ “smaller reporting company,’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock and Class A Common Stock as of ~~November 14, 2017~~June 3, 2020 were ~~16,298,173~~16,521,046 and ~~6,641,950,~~6,608,548, respectively.

	October 31,			January 31,			October 31,			April 30,			January 31,			April 30,
	2017			2017			2016			2020			2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	155,484		$	256,279		$	199,758		$	187,830		$	185,872		$	150,712
Trade receivables, net		132,941			66,847			130,076			49,765			78,388			85,715
Inventories		169,866			153,167			169,402			177,832			171,406			178,048
Other current assets		26,361			28,487			28,096			27,049			28,888			32,631
Total current assets		484,652			504,780			527,332			442,476			464,554			447,106
Property, plant and equipment, net		24,637			34,173			34,867			26,934			29,238			26,065
Operating lease right-of-use assets											86,444			89,523			87,353
Deferred and non-current income taxes		23,610			24,837			20,614			67,281			25,403			24,913
Goodwill		56,316			—			—			—			136,366			135,685
Other intangibles, net		22,568			1,633			1,730			18,272			42,359			46,570
Other non-current assets		47,783			42,379			39,935			56,506			59,865			60,969
Total assets	$	659,566		$	607,802		$	624,478		$	697,913		$	847,308		$	828,661
LIABILITIES AND EQUITY
Current liabilities:
Loans payable to bank, current	$	5,000		$	5,000		$	3,000
Accounts payable		28,014			27,192			22,443		$	19,241		$	35,488		$	37,477
Accrued liabilities		62,666			35,061			52,895			39,489			44,210			44,886
Accrued payroll and benefits											6,768			6,302			7,185
Current operating lease liabilities											15,053			15,083			13,771
Income taxes payable		5,192			4,149			5,601			13,064			8,217			8,663
Total current liabilities		100,872			71,402			83,939			93,615			109,300			111,982
Loans payable to bank		25,000			25,000			35,000			82,510			51,910			49,060
Deferred and non-current income taxes payable		7,501			3,322			3,145			25,085			25,419			29,071
Non-current operating lease liabilities											78,471			81,877			79,877
Other non-current liabilities		38,752			34,085			32,297			44,721			48,393			65,394
Total liabilities		172,125			133,809			154,381			324,402			316,899			335,384
Commitments and contingencies (Note 9)
Commitments and contingencies (Note 11)
Redeemable noncontrolling interest											2,966			3,165			3,636
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; 27,324,319, 27,176,656 and 27,138,206 shares issued and outstanding, respectively		273			272			271
Class A Common Stock, $0.01 par value, 30,000,000 shares authorized; 6,641,950, 6,644,105 and 6,644,105 shares issued and outstanding, respectively		66			66			66
Preferred Stock, $0.01 par value, 5,000,000 shares authorized; 0 shares issued											—			—			—
Common Stock, $0.01 par value, 100,000,000 shares authorized; 28,000,364, 27,859,328 and 27,866,510 shares issued and outstanding, respectively											280			279			279
Class A Common Stock, $0.01 par value, 30,000,000 shares authorized; 6,608,548, 6,603,645 and 6,586,780 shares issued and outstanding, respectively											65			65			65
Capital in excess of par value		189,332			185,354			182,834			210,070			208,473			203,640
Retained earnings		425,649			415,919			413,666			305,486			455,479			430,514
Accumulated other comprehensive income		80,388			76,780			77,057			77,074			85,050			76,337
Treasury Stock, 11,026,671, 10,869,321 and 10,849,321 shares, respectively, at cost		(208,267	)		(204,398	)		(203,797	)
Treasury Stock, 11,480,231, 11,443,308 and 11,388,021 shares, respectively, at cost											(223,176	)		(222,809	)		(221,194	)
Total Movado Group, Inc. shareholders' equity		487,441			473,993			470,097			369,799			526,537			489,641
Noncontrolling interests		—			—			—
Noncontrolling interest											746			707			—
Total equity		487,441			473,993			470,097			370,545			527,244			489,641
Total liabilities and equity	$	659,566		$	607,802		$	624,478
Total liabilities, redeemable noncontrolling interest and equity										$	697,913		$	847,308		$	828,661

Three Months Ended October 31,

Nine Months Ended October 31,

2017

2016

2017

2016

Net sales
$
190,693

$
179,818

$
418,739

$
421,967

Cost of sales

86,623

81,268

199,406

191,837

Gross profit

104,070

98,550

219,333

230,130

Selling, general, and administrative

78,885

67,479

189,479

183,590

Operating income

25,185

31,071

29,854

46,540

Other expense (Note 3)

—

(1,282
)

—

(1,282
)
Interest expense

(445
)

(333
)

(1,191
)

(1,039
)
Interest income

110

45

361

138

Income before income taxes

24,850

29,501

29,024

44,357

Provision for income taxes (Note 10)

7,490

9,286

10,341

14,450

Net income

17,360

20,215

18,683

29,907

Less: Net income attributed to noncontrolling interests

—

—

—

78

Net income attributed to Movado Group, Inc.
$
17,360

$
20,215

$
18,683

$
29,829

Basic income per share:

Weighted basic average shares outstanding

23,079

23,055

23,080

23,074

Net income per share attributed to Movado Group, Inc.
$
0.75

$
0.88

$
0.81

$
1.29

Diluted income per share:

Weighted diluted average shares outstanding

23,273

23,230

23,261

23,259

Net income per share attributed to Movado Group, Inc.
$
0.75

$
0.87

$
0.80

$
1.28

Dividends declared per share
$
0.13

$
0.13

$
0.39

$
0.39

	Three Months Ended April 30,
	2020			2019
Net sales	$	69,666		$	146,549
Cost of sales		37,773			67,676
Gross profit		31,893			78,873
Selling, general and administrative		58,137			73,899
Impairment of goodwill and intangible assets (Note 6)		155,919			-
Total operating expenses		214,056			73,899
Operating (loss)/income		(182,163	)		4,974
Interest expense		(271	)		(224	)
Interest income		15			21
(Loss)/income before income taxes		(182,419	)		4,771
(Benefit)/provision for income taxes (Note 12)		(32,330	)		847
Net (loss)/income		(150,089	)		3,924
Less: Net loss attributable to noncontrolling interests		(96	)		(1	)
Net (loss)/income attributable to Movado Group, Inc.	$	(149,993	)	$	3,925

Basic (loss)/income per share:
Weighted basic average shares outstanding		23,141			23,119
Net (loss)/income per share attributable to Movado Group, Inc.	$	(6.48	)	$	0.17

Diluted (loss)/income per share:
Weighted diluted average shares outstanding		23,141			23,452
Net (loss)/income per share attributable to Movado Group, Inc.	$	(6.48	)	$	0.17

Three Months Ended October 31,

Nine Months Ended October 31,

2017

2016

2017

2016

Comprehensive income, net of taxes:

Net income including noncontrolling interests
$
17,360

$
20,215

$
18,683

$
29,907

Net unrealized (loss) / gain on investments, net of tax (benefit) of
$(6), $4, $(6) and $1, respectively

(13
)

6

(12
)

8

Net change in effective portion of hedging contracts, net of tax
(benefit) of $88, $(9), $9 and $5, respectively

448

(43
)

37

31

Foreign currency translation adjustments

(5,525
)

(6,319
)

3,583

8,489

Comprehensive income including noncontrolling interests

12,270

13,859

22,291

38,435

Less: Comprehensive income attributed to noncontrolling interests

—

—

—

54

Total comprehensive income attributed to Movado Group, Inc.
$
12,270

$
13,859

$
22,291

$
38,381

	Three Months Ended April 30,
	2020			2019
Net (loss)/income	$	(150,089	)	$	3,924
Other comprehensive (loss)/income:
Net unrealized (loss)/gain on investments, net of tax (benefit)/provision of $(13) and $0, respectively		(38	)		1
Amortization of prior service cost, net of tax provision of $4 and $4, respectively		13			13
Foreign currency translation adjustments		(7,951	)		(4,184	)
Total other comprehensive loss, net of taxes		(7,976	)		(4,170	)
Less:
Comprehensive loss attributable to noncontrolling interests:
Net loss		(96	)		(1	)
Foreign currency translation adjustments		(64	)		(84	)
Total comprehensive loss attributable to noncontrolling interests		(160	)		(85	)
Total comprehensive loss attributable to Movado Group, Inc.	$	(157,905	)	$	(161	)

	Nine Months Ended October 31,						Three Months Ended April 30,
	2017			2016			2020			2019
Cash flows from operating activities:
Net income including noncontrolling interests	$	18,683		$	29,907
Adjustments to reconcile net income to net cash (used in) operating activities:
Net (loss)/income attributable to Movado Group, Inc.							$	(149,993	)	$	3,925
Adjustments to reconcile net (loss)/income to net cash used in operating activities:
Impairment of goodwill and intangible assets								155,919			-
Corporate initiatives								7,240			-
Depreciation and amortization		9,842			8,520			3,885			3,872
Transactional (gains) / losses		(859	)		2,663
Write-down of inventories		1,930			1,967
Transactional losses/(gains)								625			(232	)
Provision for inventories and accounts receivable								468			531
Deferred income taxes		719			230			(42,241	)		(134	)
Stock-based compensation		3,644			5,663			1,572			1,638
Impairment of long-term investment		—			1,282
Cost savings initiative		13,437			—
Other								4			199
Changes in assets and liabilities:
Trade receivables		(62,175	)		(60,386	)		25,432			(2,567	)
Inventories		(14,562	)		(7,657	)		(10,342	)		(14,756	)
Other current assets		1,647			1,540			(1,259	)		(4,134	)
Accounts payable		334			(5,140	)		(15,655	)		(896	)
Accrued liabilities		18,296			12,892			(6,134	)		1,294
Accrued payroll and benefits								500			(11,507	)
Income taxes payable		373			(917	)		4,781			(2,094	)
Other non-current assets		(5,399	)		(5,123	)		(366	)		(878	)
Other non-current liabilities		4,664			3,718			(17	)		124
Net cash (used in) operating activities		(9,426	)		(10,841	)
Net cash used in operating activities								(25,581	)		(25,615	)
Cash flows from investing activities:
Capital expenditures		(3,575	)		(3,847	)		(926	)		(2,204	)
Short-term investment		—			(151	)
Restricted cash deposits		1,018			(1,156	)
Trademarks and other intangibles		(500	)		(296	)		(41	)		(63	)
Acquisition, net of cash acquired		(78,991	)		—
Net cash (used in) investing activities		(82,048	)		(5,450	)
Net cash used in investing activities								(967	)		(2,267	)
Cash flows from financing activities:
Proceeds from bank borrowings		—			3,000			30,879			—
Repayments of bank borrowings		—			(5,000	)
Stock options exercised and other changes		(626	)		(1,256	)
Stock awards and options exercised and other changes								(367	)		(1,234	)
Stock repurchase								—			(2,616	)
Dividends paid		(8,953	)		(8,951	)		—			(4,591	)
Purchase of incremental ownership of U.K. joint venture		—			(1,320	)
Stock repurchase		(3,004	)		(3,263	)
Net cash (used in) financing activities		(12,583	)		(16,790	)
Effect of exchange rate changes on cash and cash equivalents		3,262			4,651
Net (decrease) in cash and cash equivalents		(100,795	)		(28,430	)
Cash and cash equivalents at beginning of period		256,279			228,188
Cash and cash equivalents at end of period	$	155,484		$	199,758
Net cash provided by/(used in) financing activities								30,512			(8,441	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash								(2,007	)		(2,889	)
Net increase/(decrease) in cash, cash equivalents and restricted cash								1,957			(39,212	)
Cash, cash equivalents, and restricted cash at beginning of year								186,438			190,459
Cash, cash equivalents, and restricted cash at end of period							$	188,395		$	151,247

Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents							$	187,830		$	150,712
Restricted cash included in other non-current assets								565			535
Cash, cash equivalents, and restricted cash							$	188,395		$	151,247

The accompanying interim unaudited ~~consolidated financial statements~~Consolidated Financial Statements have been prepared by Movado Group, Inc. (the “Company”), in a manner consistent with that used in the preparation of the annual audited ~~consolidated financial statements~~Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, ~~2017~~2020 (the ~~“2017~~“2020 Annual Report on Form 10-K”). The unaudited ~~consolidated financial statements~~Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the unaudited ~~consolidated financial statements~~Consolidated Financial Statements and the reported amounts of revenues and expenses during the periods reported. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited ~~consolidated financial statements~~Consolidated Financial Statements reflect all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the financial position and results of operations for the periods presented. The consolidated balance sheet data at January 31, ~~2017~~2020 is derived from the audited annual financial statements, which are included in the Company’s ~~2017~~2020 Annual Report on Form 10-K and should be read in connection with these interim unaudited financial statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.

In December 2019, COVID-19 emerged and subsequently spread worldwide. The World Health Organization declared COVID-19 a pandemic in March 2020, resulting in federal, state and local governments and other authorities mandating various restrictions, including travel restrictions, quarantines and other social distancing requirements. In response to ~~prior years’~~the outbreak, in mid-March 2020, the Company and the majority of the Company’s wholesale customers temporarily closed all of their retail stores for an indefinite period of time due to health concerns associated with COVID-19.

As the full magnitude of the effects on the Company’s business is difficult to predict at this time, the COVID-19 pandemic has had, and is expected to continue to have, a material adverse impact on the Company’s business, financial ~~statement amounts~~condition, result of operations and ~~related note disclosures~~cash flows for the foreseeable future. The Company believes that cash flows from operations and its credit lines and on-hand cash provide adequate funds to ~~conform~~support its operating, capital and debt service requirements for the next twelve months subsequent to ~~fiscal 2018 presentation.~~the issuance of these financial statements.

The Company amended its revolving credit facility to modify some of its financial covenants (see Note 8 - Debt and Lines of Credit). As a result, the Company expects to maintain compliance with the covenants for at least one year from the issuance of these financial statements based on the ~~adoption of ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” excess tax benefits~~Company’s current expectations. As the ongoing public health impact and ~~deficiencies~~the associated containment and remediation efforts related to ~~sharebased compensation are reported~~the COVID-19 pandemic is complex and rapidly evolving, the Company's plans as ~~operating activities in the statement of cash flows.~~described below may change.

~~NOTE 2~~The Company has taken steps to further strengthen its financial position and balance sheet, and to maintain financial liquidity and flexibility, including suspending the Company’s share repurchase program and reviewing and reducing operating expenses. In addition, the Company borrowed an additional $30.9 million under its revolving credit facility in March of 2020. For additional information see Note 8 - ~~CHANGES TO CRITICAL ACCOUNTING POLICIES~~

AsDebt and Lines of Credit. The Company did not declare a ~~result of~~dividend for the ~~acquisition of JLB Brands Ltd., the owner of the Olivia Burton brand, in the second~~first quarter of fiscal ~~2018,~~2021.

The Company is currently negotiating rent deferrals or other arrangements in respect of its rent obligations beginning with the month of April for all of its Company Stores and certain other leases. Since these negotiations are ongoing with no formal agreements in place, with the exception of its warehouse in Hong Kong, the Company ~~has made~~accrued for the ~~following additions to its critical accounting policies~~April payments.

During the first quarter of fiscal 2021, the Company recorded $7.2 million of corporate initiative costs which includes charges related to the impact on its business due to the COVID-19 pandemic. These costs include a $3.5 million increase in inventory reserves, a $1.5 million write-off related to unrefunded deposits for a canceled global customer event, a $1.1 million increase in bad debt reserves and $1.1 million of restructuring reserves, including severance.

The Company evaluates its long-lived assets, operating lease right of use assets, goodwill and intangible assets ~~and goodwill (see Note 17 – Acquisitions).~~

~~In accordance with applicable guidance, the Company estimates and records the fair value~~for indicators of ~~purchased intangible assets~~impairment at ~~the time of its acquisition, which~~least annually in the ~~acquisition~~fourth quarter of the Olivia Burton brand primarily consist of a trade name and customer relationships. 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 and are evaluated for impairment periodicallyeach fiscal year or whenever events or changes in circumstances indicate that their ~~related~~ carrying ~~values~~amounts may not be ~~fully~~ recoverable. ~~Estimates~~Given the substantial reduction in the Company’s sales and the reduced cash flow projections as a result of ~~fair value~~closures of the retail stores of the Company, and its wholesale customers due to the COVID-19 pandemic, as

well as the significant decline in the Company’s market capitalization, the Company determined that a triggering event occurred and that an impairment assessment was warranted for ~~finite-lived~~goodwill and intangible assets. This analysis resulted in impairment charges related to goodwill of $133.7 million and intangible assets ~~are primarily determined using discounted cash flows, with consideration~~ of ~~market comparisons and recent transactions. This approach uses significant estimates and assumptions, including projected future cash flows, discount rates and growth rates.~~

At$22.2 million in the time of acquisition, in accordance with applicable guidance, the Company records all acquired net assets at their estimated fair values. These estimated fair values are based on management’s assessments and independent third-party appraisals. The excess of the purchase consideration over the aggregate estimated fair values of the acquired net assets is recorded as goodwill.

Goodwill is not amortized but will be assessed for impairment at least annually. Under applicable guidance, the Company generally performs its annual goodwill impairment analysis using a qualitative approach to determine whether it is more likely than not that the fair value of goodwill is less than its carrying value. If, based on the results of the qualitative assessment, it is concluded that it is more likely than not that the fair value of goodwill is less than its carrying value, a quantitative test is performed. The Company early adopted ASU 2017-04 “Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment” (see Note 14 – Accounting Changes and Recent Accounting Pronouncements) on a prospective basis during the secondfirst quarter of fiscal ~~2018 in light~~2021. See Note 6 – Goodwill and Intangible Assets – for a further discussion of ~~goodwill in the period, associated with the acquisition of the Olivia Burton brand.~~

The quantitative impairment test is performed to measure the amount of impairment loss, if any. The quantitative impairment test identifies the existence of potential impairment by comparing the fair value of each reporting unit with its carrying value, including goodwill. If a reporting unit’s carrying amount exceeds its fair value, the Company will record an impairment charge, as an operating expense item, based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.

Determination of the fair value of a reporting unit and the fair value of individual assets and liabilities of a reporting unit is based on management's assessment, including the consideration of independent third-party appraisals when necessary. Furthermore, this determination is subjective in nature and involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. Estimates of fair value are primarily determined using discounted cash flows, market comparisons, and recent transactions. These approaches use significant estimates and assumptions, including projected future cash flows, discount rates, growth rates, and determination of appropriate market comparisons.these impairments.

In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments”, which makes improvements to financial instruments guidance, including the current expected credit losses guidance. The adoption of the new guidance was not material to the Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. This guidance provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. This guidance is applicable for the Company’s borrowing instruments, which use LIBOR as a reference rate, and is effective immediately, but is only available through December 31, 2022. The Company is currently evaluating the impact of the adoption of this standard on its Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in “Income Taxes (Topic 740)”. It also clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2020. The Company early adopted this standard effective February 1, 2020. The provision of ASU 2019-12 which has the most significant impact on the Company is the removal of a limitation on the tax benefit recognized on pre-tax losses during interim periods which exceed the expected loss for the fiscal year. The Company’s income tax benefit includes an income tax benefit of $2.2 million as a result of early adoption in the first quarter of fiscal 2021.

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair ~~value~~Value Measurement”, which modifies the disclosure requirements in ASC 820, Fair Value Measurement. The Company adopted ASU 2018-13 during the first quarter of fiscal 2021. The adoption of this guidance did not have an impact on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequently issued additional guidance that modified ASU 2016-13. This standard introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses requires entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This may result in the earlier recognition of allowance for losses. The Company adopted ASU 2016-13 on February 1, 2020. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements. Results for reporting periods as of February 1, 2020 are presented under the new standard, while prior results continue to be reported under the previous standard.

The Company presents net income/(loss) attributable to Movado Group, Inc. after adjusting for noncontrolling interests, as applicable, per share on a basic and diluted basis. Basic earnings per share is ~~defined~~computed using weighted-average shares outstanding during the period. Diluted earnings per share is computed using the weighted-average number of shares outstanding adjusted for dilutive common stock equivalents.

The number of shares used in calculating basic and diluted earnings (loss) per share is as follows (in thousands):

For the three months ended April 30, 2020 and 2019, approximately 891,000 and 78,000, respectively, of potentially dilutive common stock equivalents were excluded from the computation of diluted earnings per share because their effect would have been antidilutive. For the three months ended April 30, 2020, the Company also had approximately 120,000 stock options outstanding that could potentially dilute earnings per share in future periods that were excluded from the computation of diluted EPS because their effect would have been anti-dilutive given the net loss during the period.

During the first quarter of fiscal 2021 the Company did not declare quarterly cash dividends. During the first quarter of fiscal 2020, on March 28, 2019, the Company declared a quarterly cash dividend of $0.20 per share payable on April 24, 2019, to shareholders of record on April 10, 2019. The total dividend of $4.6 million was paid on April 24, 2019.

On November 22, 2019, the Company entered into an agreement and formed a joint venture with GDL Accessories PTY Ltd. (“GDL”), an Australian based company. The agreement established a joint venture, MGDL Distribution Pty Ltd (“MGDL”), and set out the terms in which both parties will govern their relationship as shareholders of MGDL, and the terms on which the joint venture will be managed.

The joint venture was formed to more cost effectively market and distribute Movado products to customers in Australia and in New Zealand (GDL was the sole distributor prior to agreement).

The Company contributed $0.9 million Australian dollars, or $0.6 million US dollars, to the joint venture and is a 51% interest holder. The Company controls all of the significant participating rights of the joint venture. As the Company controls all of the significant participating rights of the joint venture and is the majority interest holder in MGDL, the assets, liabilities and results of operations of the joint venture are consolidated and included in the Company’s Consolidated Financial Statements since the date of acquisition within the Watch and Accessory Brands segment. GDL’s interest is reflected in Net income attributable to noncontrolling interest in the Consolidated Statements of Operations and Noncontrolling interest in the Consolidated Balance Sheets. As of April 30, 2020, all amounts in the Consolidated Financial Statements related to MGDL were immaterial.

On December 3, 2018, the Company acquired 51% of City Time Distribucion, S.L.U, (“City Time”), the Company’s distributor in Spain, and simultaneously signed a joint venture agreement. The purchase price ~~that would be received~~was 4.2 million Euros, or $4.8 million, net of cash acquired, and was funded with cash on hand. The results of City Time have been included in the Company’s Consolidated Financial Statements since the date of acquisition within the Watch and Accessory Brands segment. Of the total purchase consideration, there were no material amounts allocated to assets acquired and liabilities assumed.

Pursuant to the joint venture agreement, the noncontrolling interest holder has the right to sell ~~an asset or paid~~its interest in City Time to ~~transfer a liability~~the Company on two specific dates in ~~an orderly transaction between market participants~~the future. The noncontrolling interest is not redeemable until such dates. The Company will adjust the carrying value of the redeemable interest to the redemption amount assuming it was redeemable at the ~~measurement~~balance sheet date. ~~Accounting guidance establishes a fair value hierarchy which prioritizes~~At April 30, 2020, the ~~inputs used~~Company concluded that the remeasurement adjustment is immaterial. If the noncontrolling interest holder does not exercise its right to sell its interest in ~~measuring fair value into three broad levels~~City Time to the Company, the Company nevertheless has the option to purchase the noncontrolling interest holder’s interest on each of the same two dates and at the same price as ~~follows:~~would have applied if the noncontrolling interest holder had exercised its sale option.

~~The following tables present~~amount by which the ~~fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands) as of October 31, 2017 and 2016 and January 31, 2017:~~

Fair Value at October 31, 2017


Balance Sheet Location

Level 1


Level 2


Level 3


Total

Assets:

Available-for-sale securities

Other current assets

$
291

$
—

$
—

$
291

Short-term investment

Other current assets

156

—

—

156

SERP assets - employer

Other non-current assets

1,538

—

—

1,538

SERP assets - employee

Other non-current assets

35,532

—

—

35,532

Hedge derivatives

Other current assets

—

67

—

67

Total

$
37,517

$
67

$
—

$
37,584

Liabilities:

SERP liabilities - employee

Other non-current liabilities

$
35,532

$
—

$
—

$
35,532

Hedge derivatives

Accrued liabilities

—

685

—

685

Total

$
35,532

$
685

$
—

$
36,217

Fair Value at January 31, 2017


Balance Sheet Location

Level 1


Level 2


Level 3


Total

Assets:

Available-for-sale securities

Other current assets

$
309

$
—

$
—

$
309

Short-term investment

Other current assets

154

—

—

154

SERP assets - employer

Other non-current assets

1,091

—

—

1,091

SERP assets - employee

Other non-current assets

30,831

—

—

30,831

Hedge derivatives

Other current assets

—

145

—

145

Total

$
32,385

$
145

$
—

$
32,530

Liabilities:

SERP liabilities - employee

Other non-current liabilities

$
30,831

$
—

$
—

$
30,831

Hedge derivatives

Accrued liabilities

—

211

—

211

Total

$
30,831

$
211

$
—

$
31,042

Fair Value at October 31, 2016


Balance Sheet Location

Level 1


Level 2


Level 3


Total

Assets:

Available-for-sale securities

Other current assets

$
280

$
—

$
—

$
280

Short-term investment

Other current assets

150

—

—

150

SERP assets - employer

Other non-current assets

1,464

—

—

1,464

SERP assets - employee

Other non-current assets

28,495

—

—

28,495

Hedge derivatives

Other current assets

—

141

—

141

Total

$
30,389

$
141

$
—

$
30,530

Liabilities:

SERP liabilities - employee

Other non-current liabilities

$
28,495

$
—

$
—

$
28,495

Hedge derivatives

Accrued liabilities

—

391

—

391

Total

$
28,495

$
391

$
—

$
28,886

~~The fair values of~~purchase price exceeded the ~~Company’s available-for-sale securities are based on quoted prices. The~~ fair value of the ~~short-term investment, which~~net assets acquired. As the structure of the acquisition allowed for a step up in basis for tax purposes, the full amount of goodwill is deductible for federal income tax purposes over 15 years.

The acquisition agreement included a ~~guaranteed investment certificate, is~~contingent consideration arrangement based on ~~its~~the MVMT brand achieving certain revenue and EBITDA (as defined in the acquisition agreement) targets. In connection therewith, the Company recorded a non-current liability of $16.5 million as of the date of acquisition to reflect the estimated fair value of the contingent purchase price. $14.5 million was allocated to purchase price ~~plus one half~~and $2.0 million to deferred compensation expense based on future employee service requirements.

The estimated fair value of the contingent consideration was determined using a ~~percent calculated annually.~~Monte Carlo simulation that includes key assumptions regarding MVMT’s projected financial performance during the earn-out period (through 2023), volatilities, estimated discount rates, risk-free interest rate, and correlation. Based on changes in projected financial performance, the contingent purchase price liability had been remeasured at July 31, 2019 to $1.9 million and to 0 at January 31, 2020. Of the $16.9 million (including interest accretion) decrease in the liability, $15.4 million was included in non-operating income (portion of contingent consideration allocated to purchase price) in the Consolidated Statements of Operations for the year ended January 31, 2020, and $0.5 million and $1.0 million were reflected as a reduction of deferred compensation (portion of contingent consideration allocated to deferred compensation based on future service requirements) within other current assets and other non-current assets, respectively, in the Consolidated Balance Sheets.

In connection with the remeasurement of the contingent consideration during the fiscal year ended January 31, 2020, the Company assessed the undiscounted cash flows associated with the long-lived assets pertaining to MVMT. Current estimates at that time indicated that carrying amounts were expected to be recovered. The ~~assets~~undiscounted cash flows related to the ~~Company’s defined contribution supplemental executive retirement plan (“SERP”) consist~~MVMT long-lived assets as of ~~both employer (employee unvested)~~January 31, 2020 exceeded the carrying value by approximately 33%. See Note 6 – Goodwill and ~~employee~~Intangible Assets for impairment of MVMT’s long-lived assets ~~which are invested in investment funds with fair values calculated based on quoted market prices.~~ as of April 30, 2020.

The ~~SERP liability represents~~Company performs its annual impairment assessment of goodwill as well as brand intangibles at the Company’s liability to the employees in the plan for their vested balances. The hedge derivatives are entered into by the Company principally to reduce its exposure to Swiss franc and Euro exchange rate risks. Fair valuesbeginning of the ~~Company’s hedge derivatives are calculated based on quoted foreign exchange rates and quoted interest rates. The carrying amount~~fourth quarter of ~~debt approximated~~each fiscal year or if an event occurs that would more likely than not reduce the fair value ~~as of October 31, 2017.~~

During the three months ended ~~October 31, 2016,~~April 30, 2020, in light of the ~~Company determined~~COVID-19 pandemic that ~~an investment~~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 ~~privately held company experienced an other than temporary impairment~~decrease in revenues and ~~recorded~~gross margin), a ~~charge of $1.3 million,~~decrease in ~~other expenses~~customer spending and the recent decline in the Company’s ~~Consolidated Statements~~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 reporting unit.

The Company performed recoverability tests for the long-lived assets of ~~Operations,~~MVMT, Olivia Burton and the Company Stores as of April 30, 2020. The Company concluded that the carrying amounts of the long-lived assets of Olivia Burton and the Company Stores were recoverable, while the long-lived assets of MVMT may not be recoverable. Utilizing a royalty rate to ~~reduce~~determine discounted projected future cash flows in the valuation of MVMT’s trade name and a discounted cash flow method for the valuation of MVMT’s customer relationships, the Company concluded that the fair values of MVMT’s tradenames and customer relationships did not exceed their carrying values. As a result, the Company recorded impairment charges in the Watch and Accessory Brands segment totaling $22.2 million during the three months ended April 30, 2020, decreasing MVMT’s trade name to $2.4 million and MVMT’s customer relationships to 0.

After adjusting the carrying value of MVMT’s intangible assets, the Company completed an interim quantitative impairment test of goodwill as of April 30, 2020 in which the Company compared the fair value of the Watch and Accessory reporting unit to ~~zero~~its respective carrying value. An impairment test of goodwill was not performed for the Company Stores reporting unit as there was 0 goodwill at this reporting unit. The fair value estimate for the Watches and Accessory reporting unit was based on the income and market approaches. The discounted cash flow method under the income approach involves estimating the cash flows in a discrete forecast period and a terminal value based on the Gordon Growth Model and discounting at a rate of return that reflects the relative risk of the cash flows. The market approach involves applying valuation multiples to the operating performance of the Watch and Accessory reporting unit derived from comparable publicly traded companies based on the relative historical and projected operations of the reporting unit.

The key estimates used in the ~~United States location~~discounted cash flows model included the Company’s weighted average cost of capital and projected cash flows, notably revenue growth rates and margin assumptions. The Company’s assumptions were based on the actual historical performance of the ~~Wholesale segment.~~

reporting units and took into account the recent severe and continued weakening of operating results as well as the anticipated rate of recovery, and implied risk premiums based on market prices of the Company’s common stock as of the assessment date. The significant estimates in the market approach model included identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and earnings multiples in estimating the fair value of the reporting unit. The excess of the Watch and Accessory unit’s carrying value over the estimate of the fair value was recorded in the Watch and Accessory Brands segment as the goodwillimpairment charge in the first quarter of 2020, totaling $133.7 million. As of April 30, 2020, 0 goodwill remains.

The ~~components~~changes in the carrying amount of ~~equity for~~other intangible assets during the ~~nine~~three months ended ~~October 31, 2017 and 2016~~April 30, 2020 are as follows (in thousands):

Movado Group, Inc. Shareholders' Equity

Common
Stock (1)

Class A
Common
Stock (2)

Capital in
Excess of
Par Value

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Income

Noncontrolling
Interests

Total

Balance, January 31, 2017

$
272

$
66

$
185,354

$
415,919

$
(204,398
)

$
76,780

$
—

$
473,993

Net income

18,683

18,683

Dividends

(8,953
)

(8,953
)
Stock repurchase

(3,004
)

(3,004
)
Stock options exercised

1

238

(865
)

(626
)
Supplemental executive
   retirement plan

96

96

Stock-based compensation
   expense

3,644

3,644

Net unrealized loss on
   investments, net of tax benefit
   of $6

(12
)

(12
)
Net change in effective
   portion of hedging contracts,
   net of tax of $9

37

37

Foreign currency translation
   adjustment (3)

3,583

3,583

Balance, October 31, 2017

$
273

$
66

$
189,332

$
425,649

$
(208,267
)

$
80,388

$
—

$
487,441

Common
Stock (1)

Class A
Common
Stock (2)

Capital in
Excess of
Par Value

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Income

Noncontrolling
Interests

Total

Balance, January 31, 2016

$
270

$
66

$
178,118

$
392,788

$
(199,195
)

$
68,505

$
595

$
441,147

Net income

29,829

78

29,907

Dividends

(8,951
)

(8,951
)
Stock repurchase

(3,263
)

(3,263
)
Stock options exercised, net of
   tax of $167

1

(86
)

(1,339
)

(1,424
)
Supplemental executive
   retirement plan

150

150

Stock-based compensation
   expense

5,663

5,663

Net unrealized gain on
   investments, net of
   tax of $1

8

8

Net change in effective
   portion of hedging contracts,
   net of tax of $5

31

31

Joint venture incremental share
   purchase

(1,011
)

(649
)

(1,660
)
Foreign currency translation
   adjustment (3)

8,513

(24
)

8,489

Balance, October 31, 2016

$
271

$
66

$
182,834

$
413,666

$
(203,797
)

$
77,057

$
—

$
470,097

	Trade names			Customer relationships			Other (1)			Total
Weighted Average Amortization Period (in years)	10			7			9
Balance at January 31, 2020	$	31,075		$	10,154		$	1,130		$	42,359
Impairment		(18,595	)		(3,570	)		-			(22,165	)
Additions		—			—			41			41
Amortization		(720	)		(456	)		(90	)		(1,266	)
Foreign exchange impact		(449	)		(240	)		(8	)		(697	)
Balance at April 30, 2020	$	11,311		$	5,888		$	1,073		$	18,272

Amortization expense for intangible assets was $1.3 million and $1.5 million for the three months ended April 30, 2020 and 2019, respectively.

As of April 30, 2020, the Company’s entire net forward contracts hedging portfolio consisted of 38.4 million Chinese Yuan equivalent, 12.0 million Swiss Francs equivalent, 9.8 million US dollars equivalent, 17.9 million Euros equivalent and 2.5 million British Pounds equivalent with various expiry dates ranging through September 10, 2020. These forward contracts are not designated as qualified hedges in accordance with ASC 815, Derivatives and Hedging, and, therefore, changes in the fair value of these derivatives are recognized in earnings in the period they arise. Net gains or losses related to these forward contracts are included in cost of sales, selling and general and administrative expenses in the Consolidated Statements of Operations. The cash flows related to these foreign currency contracts are classified in operating activities.

See Note 10 – Fair Value Measurements for fair value and presentation in the Consolidated Balance Sheets for derivatives.

For the quarter ended April 30, 2020, the Company did 0t have any cash flow hedges.

~~The Company follows accounting~~Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance establishes a fair value hierarchy which ~~requires disclosure of segment data based on how management makes decisions about allocating resources to segments and~~prioritizes the inputs used in measuring ~~their performance.~~

The Company conducts its business in two operating segments: Wholesale and Retail. The Company’s Wholesale segment includes the designing, manufacturing and distribution of watches of quality owned brands and licensed brands, in addition to revenue generated from after-sales service activities and shipping. The Retail segment includes the Company’s retail outlet locations.

~~The Company divides its business~~fair value into two major geographic locations: United States operations, and International, which includes the results of all non-U.S. Company operations. The allocation of geographic revenue is based upon the location of the customer. The Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 35.7%, 8.4%, 6.5% and 4.5%, respectively, of the Company’s total net sales for the three months ended October 31, 2017. For the three months ended October 31, 2016, the Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 23.5%, 7.3%, 7.2% and 5.4%, respectively, of the Company’s total net sales.

The Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 31.7%, 9.4%, 7.8% and 5.2%, respectively, of the Company’s total net sales for the nine months ended October 31, 2017. For the nine months ended October 31, 2016, the Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 23.1%, 8.4%, 8.4% and 5.9%, respectively, of the Company’s total net sales. Substantially all of the Company’s tangible International assets are located in Switzerland and Hong Kong.

~~Operating Segment Data for the Three Months Ended October 31, 2017 and 2016 (in thousands):~~

~~Operating Segment Data for the Nine Months Ended October 31, 2017 and 2016 (in thousands):~~

~~Geographic Location Data for the Three Months Ended October 31, 2017 and 2016 (in thousands):~~

~~United States and International net sales are net of intercompany sales of $87.2 million and $75.6 million for the three months ended October 31, 2017 and 2016, respectively.~~

~~Geographic Location Data for the Nine Months Ended October 31, 2017 and 2016 (in thousands):~~

~~United States and International net sales are net of intercompany sales of $211.8 million and $231.5 million for the nine months ended October 31, 2017 and 2016, respectively.~~

The guidance requires the use of observable market data if such data is available without undue cost and effort.

~~Inventories consisted~~The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of ~~the following~~April 30, 2020 and 2019 and January 31, 2020 (in thousands):

October 31,
2017

January 31,
2017

October 31,
2016

Finished goods
$
129,981

$
112,297

$
122,721

Component parts

37,920

38,482

43,326

Work-in-process

1,965

2,388

3,355

$
169,866

$
153,167

$
169,402

		Fair Value at April 30, 2020
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	133	$	—	$	—	$	133
Short-term investment	Other current assets		148		—		—		148
SERP assets - employer	Other non-current assets		964		—		—		964
SERP assets - employee	Other non-current assets		41,759		—		—		41,759
Defined benefit plan assets	Other non-current liabilities		—		—		22,799		22,799
Hedge derivatives	Other current assets		—		5		—		5
Total		$	43,004	$	5	$	22,799	$	65,808
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	41,735	$	—	$	—	$	41,735
Hedge derivatives	Accrued liabilities		—		29		—		29
Total		$	41,735	$	29	$	—	$	41,764

		Fair Value at January 31, 2020
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	184	$	—	$	—	$	184
Short-term investment	Other current assets		156		—		—		156
SERP assets - employer	Other non-current assets		988		—		—		988
SERP assets - employee	Other non-current assets		45,256		—		—		45,256
Defined benefit plan assets	Other non-current liabilities		—		—		24,227		24,227
Hedge derivatives	Other current assets		—		347		—		347
Total		$	46,584	$	347	$	24,227	$	71,158
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	45,264	$	—	$	—	$	45,264
Contingent consideration	Other non-current liabilities		—		—		—		—
Total		$	45,264	$	—	$	—	$	45,264

		Fair Value at April 30, 2019
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	178	$	—	$	—	$	178
Short-term investment	Other current assets		152		—		—		152
SERP assets - employer	Other non-current assets		978		—		—		978
SERP assets - employee	Other non-current assets		41,268		—		—		41,268
Defined benefit plan assets	Other non-current liabilities		—		—		31,202		31,202
Hedge derivatives	Other current assets		—		8		—		8
Total		$	42,576	$	8	$	31,202	$	73,786
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	41,268	$	—	$	—	$	41,268
Hedge derivatives	Accrued liabilities		—		509		—		509
Contingent consideration	Other non-current liabilities		—		—		16,884		16,884
Total		$	41,268	$	509	$	16,884	$	58,661

On January 30, 2015, the Company, together with Movado Group Delaware Holdings Corporation, Movado Retail Group, Inc. and Movado LLC (collectively, the “Borrowers”), each a wholly-owned domestic subsidiaryThe fair values of the ~~Company,~~Company’s available-for-sale securities are based on quoted prices. The fair value of the short-term investment, which is a guaranteed investment certificate, is based on its purchase price plus one half of a percent calculated annually. The assets related to the Company’s defined contribution supplemental executive retirement plan (“SERP”) consist of both employer (employee unvested) and employee assets which are invested in investment funds with fair values calculated based on quoted market prices. The SERP liability represents the Company’s liability to the employees in the plan for their vested balances. The hedge derivatives are entered into a Credit Agreement (the “Credit Agreement”) with the lenders party thereto and Bank of America, N.A. as administrative agent (in such capacity, the “Agent”). The Credit Agreement provides for a $100.0 million senior secured revolving credit facility (the “Facility”) including a $15.0 million letter of credit sub-facility that matures on January 30, 2020, with provisions for uncommitted increases of up to $50.0 million in the aggregate, subject to customary terms and conditions. In connection with the Credit Agreement, the Borrowers also entered into a Security and Pledge Agreement dated as of January 30, 2015 in favor of the Agent (the “Security Agreement”).

As of October 31, 2017, $30.0 million in loans were drawn under the Facility. Additionally, approximately $0.3 million in letters of credit, which were outstanding under the Borrower’s pre-existing asset-based revolving credit facility that was concurrently terminated when the Credit Agreement became effective, are deemed to be issued and outstanding under the Facility. As of October 31, 2017, availability under the Facility was approximately $69.7 million.

~~Borrowings under the Facility bear interest at rates selected periodically~~ by the Company ~~at LIBOR plus a spread ranging from 1.25%~~principally to ~~1.75% per annum,~~reduce its exposure to Swiss Franc and Euro exchange rate risks. Fair values of the Company’s hedge derivatives are calculated based on quoted foreign exchange rates and quoted interest rates. The carrying amount of debt approximated fair value as of April 30, 2020, January 31, 2020, and April 30, 2019, due to the ~~Company’s consolidated leverage ratio, or at~~availability and floating rate for similar instruments.

The Company sponsors a ~~base rate plus~~pension plan in Switzerland which was amended to a ~~spread ranging from 0.25% to 0.75% per annum~~defined benefit plan effective December 31, 2018. The plan covers certain international employees and is based on years of service and compensation on a career-average pay basis. The assets within the ~~Company’s consolidated leverage ratio (as~~plan are classified as a Level 3 asset within the fair value hierarchy and consist of an investment in pooled assets and include separate employee accounts that are invested in equity securities, debt securities and real estate. The values of the separate accounts invested are based on values provided by the administrator of the funds that cannot be readily derived from or corroborated by observable market data. The value of the assets is part of the funded status of the defined benefit plan and included in other non-current liabilities in the ~~Credit Agreement). At October 31, 2017, the Company’s spreads were 1.25% over LIBOR~~consolidated balance sheets at April 30, 2020 and ~~0.25% over the base rate. The Company has also agreed to pay certain fees and expenses and to provide certain indemnities, all of which are customary for such financings.~~April 30, 2019.

The ~~borrowings under~~contingent purchase price liability related to the ~~Facility are joint and several obligations~~acquisition of MVMT Watches, Inc., owner of the ~~Borrowers~~MVMT brand, is considered a Level 3 liability. Based on updated revenue and are also cross-guaranteed by each Borrower. In addition, pursuant to the Security Agreement, the Borrowers’ obligations under the Facility are secured by first priority liens, subject to permitted liens, on substantially all of the Borrowers’ assets other than certain excluded assets. The Security Agreement contains representations, warranties and covenants, which are customary for pledge and security agreements of this type, relating to the creation and perfection of security interests in favor of the Agent over various categories of the Borrowers’ assets.

The Credit Agreement contains affirmative and negative covenants binding on the Borrowers and their subsidiaries that are customary for credit facilities of this type, including, but not limited to, restrictions and limitations on the incurrence of debt and liens, dispositions of assets, capital expenditures, dividends and other payments in respect of equity interests, the making of loans and equity investments, mergers, consolidations, liquidations and dissolutions, and transactions with affiliates (in each case, subject to various exceptions).

~~The Borrowers are also subject to a minimum consolidated~~ EBITDA (as defined in the ~~Credit Agreement) test of $50.0 million, measured at~~acquisition agreement) performance expectations during the end of each fiscal quarter based on the four most recent fiscal quarters and a consolidated leverage ratio (as defined in the Credit Agreement) covenant not to exceed 2.50 to 1.00, measured as of the last day of each fiscal quarter. As of October 31, 2017,earn-out period for MVMT, the Company ~~was in compliance with its covenants under~~remeasured the ~~Credit Agreement.~~

~~The Credit Agreement contains events of default that are customary for facilities of this type, including, but not limited~~contingent consideration to nonpayment of principal, interest, fees and other amounts when due, failure of any representation or warranty to be true in any material respect when made or deemed made, violation of covenants, cross default with material indebtedness, material judgments, material ERISA liability, bankruptcy events, asserted or actual revocation or invalidity of the loan documents, and change of control.

~~As of October~~0 at January 31, 2017, the Company classified $5.0 million of the outstanding balance under the Facility as current based on voluntary payments estimated to be made in the next twelve months, with the remainder classified as long-term debt based on the 2020 maturity date of the Facility and the Company’s intent and ability to refinance its obligations thereunder.

As of October 31, 2017, Bank of America, N.A. issued two irrevocable standby letters of credit in connection with retail and operating facility leases to various landlords and for Canadian payroll to the Royal Bank of Canada. As of October 31, 2017, the Company had outstanding letters of credit totaling $0.3 million with expiration dates through May 31, 2018.

A Swiss subsidiary of the Company maintains unsecured lines of credit with an unspecified maturity with a Swiss bank. As of October 31, 2017 and 2016, these lines of credit totaled 6.5 million Swiss francs and 6.5 million Swiss francs with a dollar equivalent of $6.5 million and $6.4 million, respectively. As of October 31, 2017 and 2016, there were no borrowings against these lines. As of October 31, 2017, two European banks had guaranteed obligations to third parties on behalf of two of the Company’s foreign subsidiaries in the dollar equivalent of $1.1 million, in various foreign currencies, of which $0.5 million is a restricted deposit as it relates to lease agreements. As of October 31, 2016, 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 in various foreign currencies, of which $0.6 million is a restricted deposit as it relates to lease agreements.

The Company presents net income per share on a basic and diluted basis. Basic earnings per share are computed using weighted-average shares outstanding during the period. Diluted earnings per share are computed using the weighted-average number of shares outstanding adjusted for dilutive common stock equivalents.

~~The weighted-average number of shares outstanding for basic earnings per share was approximately 23,079,000 and 23,055,000 for~~2020. During the three months ended ~~October 31, 2017~~April 30, 2019, the liability was revalued with an increase in the fair value of the liability of $0.2 million and ~~2016, respectively. For~~was recorded in the ~~three months ended October 31, 2017 and 2016,~~Consolidated Statement of Operations.

There were 0 transfers between any levels of the ~~number~~fair value hierarchy for any of ~~shares outstanding for diluted earnings per share increased by approximately 194,000 and 175,000, respectively, due to potentially dilutive common stock equivalents issuable under~~ the Company’s ~~stock compensation plans and SERP.~~fair value measurements.

For the three months ended October 31, 2017 and 2016, approximately 798,000 and 862,000, respectively, of potentially dilutive common stock equivalents were excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

The weighted-average number of shares outstanding for basic earnings per share was approximately 23,080,000 and 23,074,000 for the nine months ended October 31, 2017 and 2016, respectively. For the nine months ended October 31, 2017 and 2016, the number of shares outstanding for diluted earnings per share increased by approximately 181,000 and 185,000, respectively, due to potentially dilutive common stock equivalents issuable under the Company’s stock compensation plans and SERP.

For the nine months ended October 31, 2017 and 2016, approximately 803,000 and 790,000, respectively, of potentially dilutive common stock equivalents were excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

The Company has minimum commitments related to the Company’s license agreements and endorsement agreements with brand ambassadors. The Company sources, distributes, advertises and sells watches pursuant to its exclusive license agreements with unaffiliated licensors. Royalty amounts under the license agreements are generally based on a stipulated percentage of revenues, although most of these agreements contain provisions for the payment of minimum annual royalty amounts. The license agreements have various terms, and some have ~~additional~~ renewal options, provided that minimum sales levels are achieved. Additionally, the license agreements require the Company to pay minimum annual advertising amounts.

The Company had previously recorded an obligation of $28.2 million due to the 2017 Tax Act, which was signed into law on December 22, 2017 and imposed a one-time mandatory deemed repatriation tax on cumulative undistributed foreign earnings which have not been previously taxed. The obligation, which was recorded in prior years, is payable in installments over eight years, with the first payment having been made in the second quarter of fiscal 2019.

The Company believes that income tax reserves are adequate; however, amounts asserted by taxing authorities could be greater or less than amounts accrued and reflected in the consolidated balance ~~sheets.~~sheet. Accordingly, the Company could record adjustments to the amounts for federal, state, and foreign liabilities in the future as the Company revises estimates or settles or otherwise resolves the underlying matters. In the ordinary course of business, the Company may take new positions that could increase or decrease unrecognized tax benefits in future periods.

During the second quarter of fiscal 2018, the Company released to cash $1.0 million in restricted cash deposits that were previously recorded in other current assets on the Company’s Consolidated Balance Sheet, related to a certain vendor agreement.

limitations, plus possible penalties and interest. The Company believes that U.S. Customs’ alternative duty methodology and estimate are not consistent with the Company’s facts and circumstances and is disputing U.S. Customs’ position. On February 24, 2017, the Company provided U.S. Customs with supplemental analyses and information supporting the Company’s historical allocation formulas and ~~is in the process of providing~~thereafter provided additional information for U.S. Customs’ review. Although the Company disagrees with U.S. Customs’ position, it cannot predict with any certainty the outcome of this matter. The Company intends to continue to work with U.S. Customs to reach a mutually-satisfactory resolution.

The purchase consideration for the MVMT business includes 2 future contingent payments that combined could total up to $100 million. Based on updated revenue and EBITDA (as defined in the acquisition agreement) performance expectations during the earn-out period for MVMT, the Company remeasured the contingent consideration to 0 at January 31, 2020 (see Note 5 – Acquisitions and Note 10 – Fair Value Measurements).

The Company is involved in legal proceedings and claims from time to time, in the ordinary course of its business. Legal reserves are recorded in accordance with the accounting guidance for contingencies. Contingencies are inherently unpredictable and it is possible that results of operations, balance sheets or cash flows could be materially and adversely affected in any particular period by unfavorable developments in, or resolution or disposition of, such matters. For those legal proceedings and claims for which the Company believes that it is probable that a reasonably estimable loss may result, the Company records a reserve for the potential loss. For proceedings and claims where the Company believes it is reasonably possible that a loss may result that is materially in excess of amounts accrued for the matter, the Company either discloses an estimate of such possible loss or range of loss or includes a statement that such an estimate cannot be made. As of ~~October 31, 2017,~~April 30, 2020, the Company is party to legal proceedings and contingencies, the resolution of which is not expected to materially affect its financial condition, future results of operations beyond the amounts accrued, or cash flows.

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which provides economic relief to assist American families and companies during the COVID-19 global pandemic. The CARES Act includes, among other things, provisions related to net operating loss carryback periods, refundable payroll tax credits and the delay of certain payroll taxes, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act allows U.S. net operating losses generated in fiscal 2019, 2020, and 2021 to be carried back up to five years and to offset 100% of regular taxable income in such years. The Company anticipates that there will be a U.S. net operating loss generated in fiscal 2021 which will be carried back to prior taxable years. The Company continues to evaluate other impacts of the CARES Act.

The Company recorded an income tax benefit of $32.3 million and income tax expense of ~~$7.5 million and $9.3~~$0.8 million for the three months ended ~~October 31, 2017~~April 30, 2020 and ~~2016,~~2019, respectively.

The effective tax rate was ~~30.1%~~17.7% for both three months ended April 30, 2020 and ~~31.5%~~2019, respectively. The significant components of the effective tax rate changed primarily due to the recording of valuation allowances on certain foreign deferred tax assets and impairments of the portion of goodwill of the Watch and Accessory reporting unit which is not tax deductible, both of which occurred during the first quarter of fiscal 2021. These changes were partially offset by changes in foreign profits in lower tax jurisdictions and the impact of the CARES Act, which enables the Company to carry back U.S. net operating losses generated in fiscal 2021 into prior taxable years with a U.S. statutory tax rate of 35.0%.

The effective tax rate for the three months ended ~~October 31, 2017 and 2016, respectively. The decrease in~~April 30, 2020 differs from the ~~effective~~U.S. statutory tax rate ~~was~~of 21.0% primarily due to ~~changes in jurisdictional earnings~~impairments of the portion of goodwill of the Watch and Accessory reporting unit which is not tax deductible, partially offset by the impact of ~~discrete items partially offset by no tax benefit being recognized on~~the CARES Act, which enables the Company to carry back U.S. net operating losses ~~incurred by certain foreign operations.~~

~~The Company recorded income tax expense of $10.3 million and $14.5 million for the nine months ended October 31, 2017 and 2016, respectively.~~

~~The effective~~generated in fiscal 2021 into prior taxable years with a U.S. statutory tax rate ~~was 35.6% and 32.6% for the nine months ended October 31, 2017 and 2016, respectively. The increase in the effective tax rate was primarily due to the impact~~ of discrete items mostly related to the adoption of ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” acquisition costs related to the acquisition of the Olivia Burton brand (see Note 17 – Acquisitions for additional disclosures) and no tax benefit being recognized on losses incurred by certain foreign operations, partially offset by changes in jurisdictional earnings.35.0%.

The effective tax rate for the three ~~and nine~~ months ended ~~October 31, 2017~~April 30, 2019 differs from the U.S. statutory tax rate of ~~35.0%~~21.0% primarily due to ~~changes~~foreign profits in ~~jurisdictional earnings~~lower tax jurisdictions and ~~the impact of discrete items,~~excess tax benefits related to stock-based compensation, partially offset by no0 tax benefit being recognized on ~~losses incurred by~~operating results of certain foreign ~~operations.~~subsidiaries.

In December 2019, the FASB issues ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in “Income Taxes (Topic 740)”. It also clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2020. The Company early adopted this standard effective February 1, 2020. The provision of ASU 2019-12 which has the most significant impact on the Company is the removal of a limitation on the tax ~~rate~~benefit recognized on pre-tax losses during interim periods which exceed the expected loss for the ~~nine months ended October 31, 2017 also~~fiscal year. The Company’s income tax benefit includes an ~~increase primarily due to the adoption~~income tax benefit of ~~ASU 2016-09 and acquisition costs related to the acquisition of the Olivia Burton brand.~~

~~The effective tax rate for the three and nine months ended October 31, 2016 differs from the U.S. statutory tax rate of 35.0% primarily~~$2.2 million as a result of ~~changes~~early adoption in ~~jurisdictional~~the first quarter of fiscal 2021.

As of April 30, 2020, the Company had 0 deferred tax liability for the undistributed foreign earnings ~~partially offset by no~~of approximately $181.3 million because the Company intends to continue permanently reinvesting such earnings in its foreign operations. It is not practicable to estimate the tax ~~benefit being recognized on losses incurred by certain~~liability related to a future distribution of these permanently reinvested foreign ~~operations.~~earnings.

The ~~Company accounts~~components of equity for ~~its derivative financial instruments in accordance with~~ the ~~accounting guidance~~three months ended April 30, 2020 and 2019 are as follows (in thousands):

			Movado Group, Inc. Shareholders' Equity
	Preferred Stock		Common Stock (1)		Class A Common Stock (2)		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Noncontrolling Interest			Total Movado Group, Inc. Shareholders' Equity			Redeemable Noncontrolling Interest
Balance, January 31, 2020	$	—	$	279	$	65	$	208,473		$	455,479		$	85,050		$	(222,809	)	$	707		$	527,244		$	3,165
Net income/(loss) attributable to Movado Group, Inc.											(149,993	)								59			(149,934	)		(155	)
Stock options exercised				1				(1	)								(367	)					(367	)
Supplemental executive retirement plan								26															26
Stock-based compensation expense								1,572															1,572
Net unrealized loss on investments, net of tax benefit of $13														(38	)								(38	)
Amortization of prior service cost, net of tax provision of $4														13									13
Foreign currency translation adjustment (3)														(7,951	)					(20	)		(7,971	)		(44	)
Balance, April 30, 2020	$	—	$	280	$	65	$	210,070		$	305,486		$	77,074		$	(223,176	)	$	746		$	370,545		$	2,966

	Preferred Stock		Common Stock (1)		Class A Common Stock (2)		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Noncontrolling Interest			Total Movado Group, Inc. Shareholders' Equity			Redeemable Noncontrolling Interest
Balance, January 31, 2019	$	—	$	277	$	65	$	201,814		$	431,180		$	80,507		$	(217,188	)	$	—		$	496,655		$	3,721
Net income/(loss) attributable to Movado Group, Inc.											3,925												3,925			(1	)
Dividends ($0.20 per share)											(4,591	)											(4,591	)
Stock repurchase																	(2,616	)					(2,616	)
Stock options exercised				2				154									(1,390	)					(1,234	)
Supplemental executive retirement plan								34															34
Stock-based compensation expense								1,638															1,638
Net unrealized gain on investments, net of tax benefit														1									1
Amortization of prior service cost, net of tax provision of $4														13									13
Foreign currency translation adjustment (3)														(4,184	)								(4,184	)		(84	)
Balance, April 30, 2019	$	—	$	279	$	65	$	203,640		$	430,514		$	76,337		$	(221,194	)	$	-		$	489,641		$	3,636

On August 29, 2017, the Board approved a share repurchase program under which requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. A significant portion of the Company’s purchases are denominated in Swiss francs and, to a lesser extent, the Japanese Yen. The Company also sells to third-party customers in a variety of foreign currencies, most notably the Euro and the British Pound. The Company reduces its exposure to the Swiss franc, Euro, British Pound and Japanese Yen exchange rate risks through a hedging program. Under the hedging program, the Company ~~manages most~~is authorized to purchase up to $50.0 million of its ~~foreign currency exposures on a consolidated basis, which allows it to net certain exposures and take advantage of natural offsets. In the event these exposures do not offset,~~outstanding common stock from time to time, depending on market conditions, share price and other factors. Under the share repurchase program, the Company ~~uses forward contracts to further reduce~~may purchase shares of its common stock through open market purchases, repurchase plans, block trades or otherwise. This authorization expires on August 29, 2020. See Note 8 – Debt and Lines of Credit – for restrictions on share repurchase under the ~~net exposures to currency fluctuations. Certain of these contracts meet~~Company’s revolving credit facility.

During the ~~requirements of qualified hedges. In these circumstances,~~three months ended April 30, 2020, the Company ~~designates~~did 0t repurchase shares of its common stock under the repurchase program. Duringthe three months ended April 30, 2019, the Company repurchased a total of 78,402 shares of its common stock under the share repurchase program at a total cost of $2.6 million, or an average of $33.36 per share.

At April 30, 2020, $36.4 million remains available for purchase under the Company’s repurchase program.

There were 36,923 and ~~documents these derivative instruments~~42,127 shares of common stock repurchased during the three months ended April 30, 2020 and 2019, respectively, as a ~~cash flow hedge~~result of ~~a specific underlying exposure, as well as~~ the ~~risk management objectives~~surrender of shares in connection with the vesting of certain stock awards. At the election of an employee, shares having an aggregate value on the vesting date equal to the employee’s withholding tax obligation may be surrendered to the Company.

The accumulated balances at April 30, 2020 and ~~strategies for undertaking the hedge transactions. Changes in the fair value~~2019, and January 31, 2020, related to each component of ~~hedges designated and documented as a cash flow hedge and which are highly effective, are recorded in~~accumulated other comprehensive income ~~until~~(loss) are as follows (in thousands):

The following table presents the ~~underlying transaction affects earnings,~~Company’s net sales disaggregated by customer type. Sales and ~~then~~usage-based taxes are ~~later reclassified into earnings~~excluded from net sales (in thousands):

The Company’s revenue from contracts with customers is recognized at a point in time. The Company’s net sales disaggregated by geography are based on the ~~same account~~location of the Company’s customer (see Note 18 – Segment and Geographic Information).

The Company’s wholesale revenue consists primarily of revenues from independent distributors, and from department stores, and chain and independent jewelry stores. The Company recognizes and records its revenue when obligations under the terms of a contract with the customer are satisfied, and control is transferred to the customer. Wholesale revenue is measured as the ~~hedged transaction.~~ amount of consideration the Company ultimately expects to receive in exchange for transferring goods. Wholesale revenue is included entirely within the Watch and Accessory Brands segment (see Note 18 – Segment and Geographic Information), consistent with how management makes decisions regarding the allocation of resources and performance measurement.

The ~~earnings impact~~Company’s direct to consumer revenue primarily consists of revenues from the Company’s outlet stores, concession stores, ecommerce, and consumer repairs. Revenue is ~~mostly offset~~recognized as the end consumer obtains delivery of the merchandise. Direct to Consumer revenue derived from concession stores, ecommerce and consumer repairs is included within the Watch and Accessory Brands segment; revenue derived from outlet stores is included within the Company Stores Segment (see Note 18 – Segment and Geographic Information). Direct to Consumer revenue is included in either the Watch and Accessory Brands segment or Company Stores Segments based on how the Company makes decisions about the allocation of resources and performance measurement.

All watches sold by the ~~effects of currency movements on~~Company come with limited warranties covering the ~~underlying hedged transactions. The Company formally assesses, both at the inception~~movement against defects in materials and ~~at each financial quarter thereafter, the effectiveness of the derivative instrument hedging the underlying forecasted cash flow transaction.~~workmanship. The Company does not ~~exclude any designated cash flow hedges from~~sell warranties separately.

The Company’s after-sales service revenues consists of out of warranty service provided to customers and authorized third party repair centers, and sale of watch parts. The Company recognizes and records its ~~effectiveness testing. Any ineffectiveness related~~revenue when obligations under the terms of a contract with the customer are satisfied and control is transferred to the ~~derivative financial instruments’ change~~customer. After-sales service revenue is measured as the amount of consideration the Company ultimately expects to receive in exchange for transferring goods. Revenue from after sales service, including consumer repairs, is included entirely within the Watch and Accessory Brands segment, consistent with how management makes decisions about the allocation of resources and performance measurement.

Under the Company’s Employee Stock Option Plan, as amended and restated as of April 4, 2013 (the “Plan”), the Compensation Committee of the Board of Directors, which consists of three of the Company’s non-employee directors, has the authority to grant participants incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights and stock awards, for up to 11,000,000 shares of common stock.

Stock options granted to participants under the plan generally became exercisable in equal installments over three years or cliff-vested after three years and remain exercisable until the tenth anniversary of the date of grant. All stock options granted under the Plan have an exercise price equal to or greater than the fair market value ~~will be recognized as other income in~~of the ~~Consolidated Statements of Operations in~~Company’s common stock on the ~~period in which the ineffectiveness was calculated. No ineffectiveness has been recorded in the three and nine months ended October 31, 2017 and 2016.~~grant date.

The Company uses forward exchange contracts, which do not meet the requirements of qualified hedges, to offset its exposure to certain foreign currency receivables and liabilities. These forward contracts are not designated as qualified hedges and, therefore, changes in the fair value of ~~these derivatives are~~the stock options, less expected forfeitures, is amortized on a straight-line basis over the vesting term. Total compensation expense for stock option grants recognized ~~in earnings in~~during the ~~period they arise, thereby offsetting~~three months ended April 30, 2020 and 2019 was $0.1 million (net of tax of approximately $22,000) and $0.2 million (net of tax of $0.1 million), respectively. As of April 30, 2020, all stock options have vested so, as a result, there was 0 unrecognized compensation cost related to unvested stock options. Total consideration received for stock option exercises during the ~~current earnings effect resulting from the revaluation of the related foreign currency receivables~~three months ended April 30, 2020 and ~~liabilities.~~

~~All of the Company’s derivative instruments have liquid markets to assess fair value. The Company does not enter into any derivative instruments for trading purposes.~~

~~As of October 31, 2017, the Company’s entire net forward contracts hedging portfolio consisted of 23.0~~2019 was 0 and $0.2 million, ~~Swiss francs equivalent, 12.8 million Euros equivalent and 11.3 million British Pounds equivalent~~, ~~with various expiry dates ranging through April 10, 2018.~~respectively.

The following table summarizes the ~~fair value and presentation in~~Company’s stock options activity during the ~~Consolidated Balance Sheets for derivatives (in thousands):~~first quarter of fiscal 2021:

Asset Derivatives

Liability Derivatives

Balance
Sheet
Location

October 31,
2017
Fair
Value

January 31,
2017
Fair
Value

October 31,
2016
Fair
Value

Balance
Sheet
Location

October 31,
2017
Fair
Value

January 31,
2017
Fair
Value

October 31,
2016
Fair
Value

Derivatives
   designated as
   hedging
   instruments:

Foreign Exchange
   Contracts
Other Current
Assets

$
67

$
—

$
110

Accrued
Liabilities

$
—

$
—

$
—

Total Derivative
   Instruments

$
67

$
—

$
110

$
—

$
—

$
—

	Outstanding Options		Weighted Average Exercise Price per Option		Option Price Per Share	Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value $(000)
Options outstanding at January 31, 2020 (399,905 options exercisable)		561,110	$	28.41	$23.35-$42.12	5.2	$	-
Granted		—
Exercised		—
Cancelled		—
Options outstanding at April 30, 2020		561,110	$	28.41	$23.35-$42.12	4.9	$	-
Exercisable at April 30, 2020		561,110	$	28.41		4.9	$	-

AsThere were 0 stock options exercised during the first quarter of ~~October 31, 2017 and 2016,~~fiscal 2021.

Under the balance of deferred net gains on derivative financial instruments documented as cash flow hedges included in accumulated other comprehensive income (“AOCI”) were immaterial for both periods. The maximum length of timePlan, the Company ~~hedges its exposure~~can also grant stock awards to ~~the fluctuation in future cash flows for forecasted transactions is 24 months.~~employees and directors. For the three months ended ~~October 31, 2017, the Company reclassified from AOCI to earnings $0.4~~April 30, 2020 and 2019, compensation expense for stock awards was $1.1 million (net of tax of $0.4 million) and $1.1 million (net of tax of $0.3 million), respectively. As of April 30, 2020, there was $6.4 million of ~~net loss, net~~unrecognized compensation cost related to unvested stock awards.

The following table summarizes the Company’s stock awards activity during the first quarter of ~~tax benefit~~fiscal 2021:

Outstanding stock awards can be classified as either time-based stock awards or performance-based stock awards. Time-based stock awards vest over time subject to continued employment. Performance-based stock awards vest over time subject both to continued employment and to the achievement of ~~$0.1~~ corporate financial performance goals. Upon the vesting of a stock award, shares are issued from the pool of authorized shares. For performance-based stock awards, the number of shares issued related to the performance units granted can vary from 0% to 150% of the target number of underlying stock award units, depending on the extent of the achievement of predetermined financial goals. The total fair value of stock award units that vested during the first three months of fiscal 2021 was $3.8 million. ~~For~~The number of shares issued related to the nine months ended October 31, 2017, the Company reclassified from AOCI to earnings $0.9 million of net loss, net of tax benefit of $0.2 million. For the three and nine months ended October 31, 2016, the Company reclassified amounts from AOCI to earnings that were immaterial for both periods. remaining stock awards are established at grant date.

NOTE ~~12- ACCUMULATED OTHER COMPREHENSIVE INCOME~~18 – SEGMENT AND GEOGRAPHIC INFORMATION

The ~~components~~Company conducts its business in 2 operating segments: Watch and Accessory Brands and Company Stores. The Company’s Watch and Accessory Brands segment includes the designing, manufacturing and distribution of ~~accumulated~~watches and, to a lesser extent, jewelry and other ~~comprehensive income consisted~~accessories, of 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. The Chief Executive Officer of the ~~following~~Company is the chief operating decision maker (“CODM”) and regularly reviews operating results for each of the two operating segments to assess performance and makes operating decisions about the allocation of the Company’s resources.

The Company divides its business into 2 major geographic locations: United States operations, and International, which includes the results of all non-U.S. Company operations. The allocation of geographic revenue is based upon the location of the customer. The Company’s International operations in Europe, the Americas (excluding the United States), Asia and the Middle East accounted for 37.8%, 9.1%, 8.3% and 3.8%, respectively, of the Company’s total net sales for the three months ended April 30, 2020. For the three months ended April 30, 2019, the Company’s International operations in Europe, the Middle East, the Americas (excluding the United States) and Asia accounted for 34.2%, 9.1%, 8.7% and 7.7%, respectively, of the Company’s total net sales.

Operating Segment Data as of and for the Three Months Ended April 30, 2020 and 2019 (in thousands):

~~On August 29, 2017, the Board approved a share repurchase program under which the Company is authorized to purchase up to $50.0 million~~Geographic Location Data as of ~~its outstanding common stock from time to time, depending on market conditions, share price~~ and ~~other factors. The Company may purchase shares of its common stock through open market purchases, repurchase plans, block trades or otherwise. This authorization expires on August 29, 2020.~~

On March 31, 2016, the Board approved a share repurchase program under which the Company was authorized to purchase up to $50.0 million of its outstanding common stock from time to time, depending on market conditions, share price and other factors. This program authorized the Company to purchase shares of its common stock through open market purchases, repurchase plans, block trades or otherwise. As of August 29, 2017, this program was canceled and a new share repurchase program was simultaneously approved. During the nine months ended October 31, 2017, under both the new and previously authorized repurchase plans, the Company repurchased a total of 120,507 shares of its common stock at a total cost of approximately $3.0 million or an average cost of $24.93 per share, which included 20,000 shares repurchased from the Movado Group Foundation at a total cost of approximately $0.5 million or $22.90 average per share. During the nine months ended October 31, 2016, under the previously authorized repurchase plan, the Company repurchased a total of 137,499 shares of its common stock at a total cost of approximately $3.3 million or an average cost of $23.73 per share, which included 15,000 shares repurchased from the Movado Group Foundation at a total cost of approximately $0.4 million or $27.67 average per share.

There were 36,843 and 47,310 shares of common stock repurchased during the nine months ended October 31, 2017 and 2016, respectively, as a result of the surrender of shares in connection with the vesting of certain stock awards. At the election of an employee, shares having an aggregate value on the vesting date equal to the employee’s withholding tax obligation may be surrendered to the Company to fund the payment of such taxes.

On January 26, 2017, FASB issued ASU 2017-04, “Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value when calculating goodwill, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which evaluates the extent, if any, by which the carrying value of a reporting unit exceeds its fair value, with any resulting impairment not exceeding the carrying amount of goodwill. The Company early adopted ASU 2017-04 on a prospective basis during the second quarter of fiscal 2018 in light of goodwill in the period, associated with the acquisition of the Olivia Burton brand (see Note 17 – Acquisitions). If the Company's goodwill becomes impaired, the adoption of ASU 2017-04 could make the impairment recorded materially different from what would have been recorded under the previous standard.

On January 5, 2017, FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business,” which clarifies the definition of a business. The objective of this ASU is to assist entities in determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company early adopted ASU 2017-01 on a prospective basis during the second quarter of fiscal 2018, in connection with the acquisition of the Olivia Burton brand (see Note 17 – Acquisitions). The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial position.

On March 30, 2016, FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which amends the accounting for certain aspects of share-based payments to employees. The new guidance requires, among its other provisions, that excess tax benefits (which represent the excess of actual tax benefits received at the date of vesting or settlement over the benefits recognized over the vesting period or upon issuance of share-based payments) and tax deficiencies (which represent the amount by which actual tax benefits received at the date of vesting or settlement is lower than the benefits recognized over the vesting period or upon issuance of share-based payments) be recorded in the income statement as an increase or decrease in income taxes when the awards vest or are settled. This is in comparison to the prior requirement that these excess tax benefits be recognized in additional paid-in capital and these tax deficiencies be recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement. The new guidance also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows rather than, as previously required, a financing activity. The Company adopted the provisions of ASU 2016-09 during the first quarter of fiscal 2018. The Company applied the change in the presentation on the cash flow statement retrospectively, which did not have a material impact on the Company’s consolidated financial statements. In addition, the guidance allows for a policy election to account for forfeitures as they occur, however, the Company continues to apply its policy of estimating forfeiture rates.

On August 28, 2017, FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities,” which expands an entity’s ability to apply hedge accounting for nonfinancial and financial risk components and allows for a simplified approach for fair value hedging of interest rate risk. The new guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The new guidance also simplifies the hedge documentation and effectiveness assessment requirements. For public companies, the standard will be effective for the first interim reporting period within annual periods beginning after December 15, 2018, with early adoption permitted. The new standard must be adopted using a modified retrospective transition with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date. The Company is evaluating the impact of the adoption of this guidance on the Company’s consolidated financial statements.

~~On February 25, 2016, FASB issued ASU 2016-02, “Leases,” which requires lessees to recognize most leases on the balance sheet. This change is expected to increase both reported assets~~Three Months Ended April 30, 2020 and liabilities. The new lease standard does not substantially change lessor accounting. For public companies, the standard will be effective for the first interim reporting period within annual periods beginning after December 15, 2018, although early adoption is permitted. Lessees and lessors will be required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new guidance, using a modified retrospective transition method. The requirements of this standard include a significant increase in required disclosures and will result in a material increase to the company’s total assets and liabilities through recognition of right-of-use assets and related lease liabilities. The Company is analyzing the impact of the adoption of this guidance on the Company’s consolidated financial statements, including assessing changes that might be necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting.

On May 28, 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This pronouncement affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, FASB deferred the effective date of the guidance. The new revenue standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and allows either a full retrospective adoption to all periods presented or a modified retrospective adoption approach with the cumulative effect of initial application of the revised guidance recognized at the date of initial application. Early adoption is permitted for periods beginning after December 15, 2016. On March 30, 2016, FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Principal versus Agent Considerations),” to clarify the implementation guidance on principal versus agent considerations. On April 14, 2016, FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Identifying Performance Obligations and Licensing),” to clarify the implementation guidance on identifying performance obligations and accounting for licenses of intellectual property. On May 9, 2016, FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Narrow-Scope Improvements and Practical Expedients),” to clarify the implementation guidance on assessing collectability, presentation of sales taxes, noncash consideration and completed contracts and contract modifications at transition. The Company is assessing the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences, if any, that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. The Company has elected to adopt the new standard under the Modified Retrospective approach and is considering whether it will apply certain of the practical expedients available under the new standard. The Company will continue evaluating the impact, if any, on changes to its business processes, systems and controls to support recognition and disclosure under the new guidance. The Company expects to adopt the new guidance in the beginning of fiscal 2019.

In fiscal 2016, the Company commenced an initiative to achieve greater operating efficiencies and streamline its operations, primarily at certain of its foreign subsidiaries. The Company recorded a total of $4.0 million of pre-tax expenses during fiscal 2016 and substantially completed the actions under the initiative as of January 31, 2016.

~~A summary rollforward of costs related to the operating efficiency initiatives and other items is as follows~~2019 (in thousands):

~~As a result~~United States and International net sales are net of ~~actions taken by the Company in the first quarter~~intercompany sales of ~~fiscal 2018 to better align its global infrastructure with the current business environment by consolidating certain operations~~$42.8 million and ~~streamlining functions to reduce costs and improve profitability, the Company recorded $6.3~~$77.9 million of pre-tax expenses primarily for severance and payroll related, other and occupancy charges, predominantly impacting the Company’s North American and Swiss operations. The Company recorded an additional $0.1 million of pre-tax expenses in the second quarter of fiscal 2018 related to Other. In light of the changing retail landscape and the growing importance of digital marketing and online sales, the Company also decided in the third quarter of fiscal 2018, to cease its participation in the Baselworld Watch and Jewelry Show. As a result, the Company recorded charges for the ~~write-off of certain fixed assets~~three months ended April 30, 2020 and other contract termination costs. The Company also wrote-off certain fixed assets related to the reduction of leased space in the Company’s Swiss operations. In the third quarter of fiscal 2018, the Company recorded an additional $7.0 million of pre-tax expenses related to fixed assets, severance and payroll related and other. The Company expects the cost savings initiatives to be substantially completed by the end of fiscal 2018.2019, respectively.

~~A summary roll forward of costs related to the cost savings initiatives is as follows (in thousands):~~

On July 3, 2017, the Company, through a wholly-owned U.K. subsidiary, acquired JLB Brands Ltd., the owner of the Olivia Burton brand, one of the United Kingdom’s fastest growing fashion watch and jewelry brands, for $78.2 million, or £60.0 million in cash, subject to working capital and other closing adjustments. After giving effect to the closing adjustments, the purchase price was $79.0 million, or £60.7 million, net of cash acquired of approximately $5.9 million, or £4.5 million. The acquisition was funded with cash on hand of the Company’s non-U.S. subsidiaries, and no debt was assumed in the acquisition. The acquisition adds a new brand with significant global growth potential to the Company’s portfolio.

The results of the Olivia Burton brand’s operations have been included in the consolidated financial statements since the date of acquisition within the International location of the Wholesale segment. In the International location of the Wholesale segment, for the three months ended October 31, 2017, operating income included $1.4 million of expenses primarily related to the amortization of acquired assets, as a result of the Company’s acquisition of the Olivia Burton brand. In the United States and International locations of the Wholesale segment, for the nine months ended October 31, 2017, operating (loss) / income included $0.2 million and $5.7 million, respectively, of expenses primarily related to transaction costs and adjustments in acquisition accounting, as a result of the Company’s acquisition of the Olivia Burton brand.

The acquisition was accounted for in accordance with FASB Topic ASC 805 (“Business Combinations”), which requires that the total cost of an acquisition be allocated to the tangible and intangible assets acquired and liabilities assumed based upon their respective fair values at the date of acquisition.

~~The following table summarizes the fair value of the assets acquired and liabilities assumed as of the July 3, 2017 acquisition date (in thousands):~~

Inventories include a step-up adjustment of approximately $0.8 million, which was expensed over the sell-through cycle of three months. The components of Trade name and other intangibles include a trade name of approximately $12.8 million (amortized over 10 years), and customer relationships of $8.6 million (amortized over 6 years).

~~The Company recorded goodwill of $55.3 million based on the amount by which the purchase price exceeded the fair value of the net assets acquired. Goodwill is not deductible for income tax purposes.~~

The operating results of the Olivia Burton brand have been included in the Company’s Consolidated Financial Statements beginning July 3, 2017. Net sales of the acquired Olivia Burton brand since the date of acquisition through October 31, 2017 were $12.1 million. The Olivia Burton brand’s operating income since the date of acquisition was $4.4 million, which excludes unallocated corporate expenses and expenses incurred in non-UK geographies to support the brand.

The following table provides the Company’s unaudited pro forma net sales, net income and net income per basic and diluted common share as if the results of operations of the Olivia Burton brand had been included in the Company’s operations commencing on February 1, 2016, based on available information relating to operations of the Olivia Burton brand. This pro forma information is not necessarily indicative either of the combined results of operations that actually would have been realized by the Company had the Olivia Burton brand acquisition been consummated at the beginning of the period for which the pro forma information is presented, or of future results.

~~The change in the carrying amount of the Company’s goodwill, which is included in the International location of the Wholesale segment, is as follows (in thousands):~~

~~Trade name and other intangible assets consist of the following (in thousands):~~

Estimated amortization expense for the next five years is: $0.7 million for the remaining three months of fiscal 2018, $2.7 million in fiscal years 2019, through 2023 and $6.3 million in total in the years thereafter.

~~NOTE 18 – NET INCOME ATTRIBUTED TO MOVADO GROUP, INC. AND TRANSFERS TO NONCONTROLLING INTEREST~~

~~The following table summarizes the change from net income attributed to Movado Group, Inc. and transfers to noncontrolling interest (in thousands):~~

On August 4, 2016, Movado Group, Inc. and Majorelle Limited, an English company (“Majorelle”), voluntarily terminated the joint venture agreement they had entered into on January 30, 2013 (the “JV Agreement”) relating to MGS Distribution Limited, an English company (“MGS”). Under the JV Agreement, the Company and Majorelle owned 90% and 10%, respectively, of the issued and outstanding shares of MGS which was formed to distribute the Company’s licensed watch brands in the United Kingdom. The mutual agreement to terminate the JV Agreement was the result of the Company acquiring the remaining shares in MGS from Majorelle, for the purchase price of $1.7 million, thereby increasing its ownership interest in MGS to 100%. Since August 4, 2016, the Company has accounted for MGS (renamed Movado Group UK Limited in September 2017) as a wholly-owned entity.

On November 6, 2017, the Company announced that it and MGI Luxury Group S.A., a wholly-owned subsidiary of the Company, had entered into an agreement with Hugo Boss Trade Mark Management GmbH & Co. KG pursuant to which the expiration of the existing license agreement for the Hugo Boss brand was extended through December 31, 2023. The agreement also amends certain provisions including minimum sales commitments, royalty rates, marketing and advertising expenditures and other Company obligations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Quarterly Report on Form 10-Q, including, without limitation, statements under Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as statements in future filings by the Company with the Securities and Exchange Commission (the “SEC”), in the Company’s press releases and oral statements made by or with the approval of an authorized executive officer of the Company, which are not historical in nature, are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates, forecasts and projections about the Company, its future performance, the industry in which the Company operates and management’s assumptions. Words such as “expects”, “anticipates”, “targets”, “goals”, “projects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “will”, “should” and variations of such words and similar expressions are also intended to identify such forward-looking statements. The Company cautions readers that forward-looking statements include, without limitation, those relating to the Company’s future business prospects, projected operating or financial results, revenues, working capital, liquidity, capital needs, inventory levels, plans for future operations, expectations regarding capital expenditures, operating efficiency initiatives and other items, cost savings initiatives, and operating expenses, effective tax rates, margins, interest costs, and income as well as assumptions relating to the foregoing. Forward-looking statements are subject to certain risks and uncertainties, some of which cannot be predicted or quantified. Actual results and future events could differ materially from those indicated in the forward-looking statements, due to several important factors herein identified, among others, and other risks and factors identified from time to time in the Company’s reports filed with the SEC, including, without limitation, the following: general economic and business conditions which may impact disposable income of consumers in the United States and the other significant markets (including Europe) where the Company’s products are ~~sold,~~sold; uncertainty regarding such economic and business ~~conditions,~~conditions; trends in consumer debt levels and bad debt ~~write-offs,~~write-offs; general uncertainty related to possible terrorist attacks, natural disasters, pandemics, including the effect of the COVID-19 pandemic and other diseases on travel and traffic in the Company’s retail stores and wholesale business; supply disruptions and delivery delays from the Company’s Chinese and other suppliers as a result of the COVID-19 pandemic; adverse impact on the Company’s wholesale customers and customer traffic in the Company’s stores as a result of increased uncertainty and economic disruption caused by the COVID-19 pandemic; the stability of the European Union (including the impact of the ~~June 23, 2016 referendum advising that the~~ United ~~Kingdom~~Kingdom’s process to exit from the European Union); the stability of the United Kingdom after its exit from the European Union, and defaults on or downgrades of sovereign debt and the impact of any of those events on consumer ~~spending,~~spending; changes in consumer preferences and popularity of particular designs, new product development and ~~introduction,~~introduction; decrease in mall traffic and increase in e-commerce; the ability of the Company to successfully implement its business strategies, competitive products and ~~pricing,~~pricing; the impact of “smart” watches and other wearable tech products on the traditional watch ~~market, seasonality,~~market; seasonality; availability of alternative sources of supply in the case of the loss of any significant supplier or any supplier’s inability to fulfill the Company’s ~~orders,~~orders; the loss of or curtailed sales to significant ~~customers,~~customers; the Company’s dependence on key employees and ~~officers,~~officers; the ability to successfully integrate the operations of acquired businesses ~~(including the Olivia Burton brand)~~ without disruption to other business ~~activities,~~activities; the possible impairment of acquired intangible assets including goodwill if the carrying value of any reporting unit were to exceed its fair value; volatility in reported earnings resulting from changes in the estimated fair value of contingent acquisition consideration; the continuation of the ~~company’s~~Company’s major warehouse and distribution ~~centers,~~centers; the continuation of licensing arrangements with third ~~parties,~~parties; losses possible from pending or future ~~litigation,~~litigation; the ability to secure and protect trademarks, patents and other intellectual property ~~rights,~~rights; the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely ~~basis,~~basis; the ability of the Company to successfully manage its expenses on a continuing ~~basis,~~basis; information systems failure or breaches of network ~~security,~~security; the continued availability to the Company of financing and credit on favorable ~~terms,~~terms; business ~~disruptions, disease,~~disruptions; and general risks associated with doing business outside the United States including, without limitation, import duties, tariffs (including retaliatory tariffs), quotas, political and economic stability, changes to existing laws or regulations, and success of hedging strategies with respect to currency exchange rate fluctuations.

These risks and uncertainties, along with the risk factors discussed under Item 1A. “Risk Factors” in the Company’s ~~2017~~2020 Annual Report on Form 10-K, should be considered in evaluating any forward-looking statements contained in this report or incorporated by reference herein. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are qualified by the cautionary statements in this section. The Company undertakes no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report.

The ~~preparation of financial statements~~Company’s Consolidated Financial Statements have been prepared in ~~conformity~~accordance with accounting principles generally accepted ~~accounting principles~~ in the United States ~~requires~~and those significant policies are more fully described in Note 1 to the Company’s Consolidated Financial Statements. The preparation of these financial statements and the application of certain critical accounting policies require management to make judgments based on estimates and assumptions that affect the ~~reported amounts~~information reported. 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. Management bases its estimates and judgments about the carrying values of assets and liabilities that are not readily apparent from other sources on historical experience, contractual commitments and ~~disclosure of contingent assets and liabilities at~~on various other factors that are believed to be reasonable under the dates of the consolidated financial statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Estimates by their nature are based on judgments and available information. Therefore, actualcircumstances. Actual results could ~~materially~~ differ from ~~those estimates under different assumptions and conditions.~~these estimates.

Critical accounting policies are those that are most important to the portrayal of the Company’s financial condition and the results of operations and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s most critical accounting policies have been discussed in the Company’s ~~2017~~2020 Annual Report on Form 10-K and are incorporated by reference herein.

In the first quarter of 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13. As a result of adoption, the Company replaced its methodology in determining the allowance for doubtful accounts which was based on an analysis of the aging of accounts receivable, assessments of collectability based on historical trends, the financial condition of the Company’s customers and an evaluation of economic conditions with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss rate for its trade accounts receivables. The adoption had no material impact on the Company’s Consolidated Financial Statements.

The Company performs its annual impairment assessment of goodwill and long-lived intangible assets at the beginning of the fourth quarter of each fiscal year. The Company determined that there was no impairment in fiscal 2020. During the three months ended April 30, 2020, in light of the COVID-19 induced closing of the Company’s stores and the stores of the vast majority of the Company’s wholesale customers (resulting in a decrease in revenues and gross margin), 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 ~~Critical Accounting Policies for updates~~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 reporting unit. The assessment concluded that the fair values of MVMT’s tradename and customer relationships and Watch and Accessory reporting unit did not exceed their respective carrying values. This analysis resulted in impairment charges related to goodwill of $133.7 million and intangible assets of $22.2 million in the first quarter of fiscal 2021.

As of April 30, 2020, there have been no material changes to any of the Company’s critical accounting policies ~~disclosed in~~other than the ~~Company’s 2017 Annual Report on Form 10-K.~~changes mentioned above.

On October 24, 2017, the Company entered into an amendment to its lease agreement dated December 21, 2000 (as previously amended, the “Lease”) with Mack-Cali Realty L.P. (“Lessor”) pursuant to which the Company leases its corporate headquarters from Lessor at 650 From Road, Paramus, New Jersey. The amendment extends the term of the Lease through June 30, 2030, and provides the Company with an option to renew the term of the Lease for one additional extension period of five years through June 30, 2035.

~~On August 29, 2017, the Board of Directors approved the payment of a cash dividend in the amount of $0.13 for each share of the Company’s outstanding common stock and class A common stock.~~

On August 29, 2017, the Board of Directors approved a share repurchase program under which the Company is authorized to purchase up to $50.0 million of its outstanding common stock from time to time, depending on market conditions, share price and other factors. The Company may purchase shares of its common stock through open market purchases, repurchase plans, block trades or otherwise. This authorization expires on August 29, 2020. Concurrent with this approval, the Board of Directors cancelled the previously authorized $50 million share buyback program which would have expired on September 30, 2017.

~~On May 25, 2017, the Board of Directors approved the payment of a cash dividend in the amount of $0.13 for each share of the Company’s outstanding common stock and class A common stock.~~

On March 20, 2017, the Company announced cost savings initiatives to better align its global infrastructure with the current business environment by consolidating certain operations and streamlining functions to reduce costs and improve profitability. The cost savings initiatives include a reduction in the Company’s workforce in its North American and Swiss operations as well as charges for fixed assets, occupancy, and other expenses. In light of the changing retail landscape and the growing importance of digital marketing and online sales, the Company also decided in the third quarter of fiscal 2018, to cease its participation in the Baselworld Watch and Jewelry Show. As a result, the Company recorded charges for the write-off of certain fixed assets and other contract termination costs. The Company expects these actions to yield approximately $12.0 million of pre-tax savings in fiscal 2018, which will be reinvested in marketing and other areas of its operations. For the nine months ended October 31, 2017, the Company recorded a total of $13.4 million of pre-tax expenses in connection with these actions and expects the cost savings initiatives to be substantially completed by the end of fiscal 2018.

The Company conducts its business ~~primarily~~ in two operating segments: ~~Wholesale~~Watch and ~~Retail.~~Accessory Brands and Company Stores. The Company’s ~~Wholesale~~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 ~~Retail~~Company Stores segment includes the Company’s physical retail outlet ~~locations.~~locations in the United States and Canada. The Company also operates in two major geographic locations: United States ~~operations~~ and International, the latter of which includes the results of all non-U.S. Company operations.

~~As of July 31, 2017, the~~The Company divides its watch and accessory business into two principal categories: the owned brands category and the licensed brands category. The owned brands category consists of the Movado®, ~~Olivia Burton®~~Concord®, Ebel®, ~~Concord®~~Olivia Burton® and ~~ESQ® Movado~~MVMT® brands. ~~Previously, the Company classified the Movado®, Ebel®, Concord® and ESQ® Movado brands together as a category referred to as luxury brands. Watches~~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®, ~~Juicy Couture®,~~ Lacoste®~~, Tommy Hilfiger®~~, SCUDERIA FERRARI® and Rebecca Minkoff® and Uri Minkoff®. ~~These changes to the Company’s watch brand categories did not change the Company’s operating segments.~~

Gross margins vary among the brands included in the Company’s portfolio and also among watch models within each brand. Watches in the Company’s owned brands category generally earn higher gross margin percentages than watches in the licensed brands category. 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. Gross margins in the Company’s outlet business are affected by the mix of product sold and may exceed those of the wholesale business since the Company earns margins on its outlet store sales from manufacture to point of sale to the consumer.

In light of the COVID-19 pandemic, the Company’s results of operations for the first quarter of fiscal 2021 may not be indicative of the results that the Company will experience in the full fiscal year 2021. In addition to the delivery delays from the Company’s Chinese suppliers that resulted from factory closures in China during the initial phase of the crisis, the virus has now impacted the Company’s worldwide operations as well as those of the Company’s customers. In response to the outbreak, in mid-March 2020, the Company and the majority of the Company’s wholesale customers closed all of their retail stores indefinitely due to health concerns associated with the COVID-19 pandemic; however, in certain regions, the Company’s wholesale customers have begun to open their stores. Furthermore, various containment and mitigation measures that have been imposed by governmental and other authorities around the world (such as quarantines and other social distancing requirements) have materially adversely affected sales of the Company’s products, which are heavily dependent on customer traffic in our Company Stores and in the stores of the Company’s wholesale customers. The continuation or tightening of such measures would have a further material adverse effect on the Company’s results of operations and financial condition. In addition, as the Company’s potential customers face layoffs and other negative economic impacts from the COVID-19 outbreak, their disposable income for discretionary purchases and their actual or perceived wealth may be negatively impacted, potentially exacerbating the impact on the Company’s net sales. The ongoing impact of the outbreak of COVID-19 on the Company’s liquidity, revenues, impairment considerations surrounding the Company’s indefinite and long-lived assets and results of operations cannot be reasonably predicted at this time due to the high level of uncertainty, unknown future developments, duration of containment measures and the timeline for recovery.

In response to this challenging environment, while the Company’s focus remains on the health and safety of our associates, customers and business partners, the Company is taking the following actions:

In addition, the Company is developing a long-term strategy to reduce operating expenses, streamline the organization and maintain a high level of variable expenses enabling the Company to be more responsive to further shifts in trends and the retail environment.

The Company will continue to consider near-term demands and the long-term financial health of the business as steps are taken to mitigate the consequences of the COVID-19 pandemic and the uncertain business environment.

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 global equity markets, 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 reporting unit.

The Company made revisions to its internal forecasts, resulting in a reduction in both current and future expected cash flows, due to the COVID-19 pandemic and the uncertain business environment. As a result, during the first quarter of fiscal 2021, the Company recorded impairment charges related to goodwill of $133.7 million and intangible assets related to MVMT’s tradename and customer relationships of $22.2 million.

During the first quarter of fiscal 2021, the Company recorded $3.5 million of increases in inventory reserves and $1.1 million increases in allowance for doubtful accounts, similarly driven by current and expected changes to operations as result of the COVID-19 pandemic.

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. 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. Customs and Border Patrol (“CBP”) has taken 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. Under this position, most of the cases and 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. A pending request to CBP for reconsideration and revocation of the ruling has been filed on behalf of the Company and certain other watch importers on the basis that the CBP ruling is inconsistent with CBP’s longstanding position that the country of origin of the movement confers the country of origin of a traditional watch. On January 15, 2020, the United States and China signed a “Phase One” trade agreement pursuant to which this 15% U.S. special tariff was reduced to 7.5%, effective February 14, 2020.

Results of operations for the three months ended ~~October 31, 2017~~April 30, 2020 as compared to the three months ended ~~October~~April 30, 2019

During the first quarter of fiscal 2021, the Company’s and many of the wholesale customers have been impacted by closures, reduced store hours or reduced traffic. The Company has seen and expects to continue to see material reductions in sales as a result of the COVID-19 pandemic and the uncertain business environment. In addition, these reductions in sales have not been entirely offset by proportional decreases in expenses, as the Company continues to incur costs such as operating lease costs, depreciation expense, and certain other costs such as compensation and administrative expenses, resulting in a negative effect on the relationship between the Company’s expenses and sales. The Company continues to take steps to manage the Company’s resources by reducing or deferring capital expenditures, reducing advertising expenditures, reducing compensation costs, in part through employee furloughs, salary reductions and European government subsidies of a portion of employees’ wages, as well as reducing overall operating expenses to mitigate the adverse impact of the pandemic. The current circumstances are dynamic and the impacts of the COVID-19 pandemic on the Company’s business operations, including the duration and impact on overall consumer demand, cannot be reasonably predicted at this time. The Company anticipates the COVID-19 pandemic will have a material adverse impact on its business, results of operations, financial condition and cash flows for the year ending January 31, ~~2016~~2021. As the COVID-19 pandemic is complex and rapidly evolving, the Company’s plans may change.

Net Sales: Comparative net sales by business segment were as follows (in thousands):

Net sales for the three months ended ~~October 31, 2017~~April 30, 2020 were ~~$190.7~~$69.7 million, ~~above~~$76.9 million or 52.5% below the prior year ~~period by $10.9 million or 6.0%.~~period. This decrease is primarily due to the COVID-19 pandemic. For the three months ended ~~October 31, 2017,~~April 30, 2019, fluctuations in foreign currency exchange rates ~~favorably~~negatively impacted net sales by ~~$1.1~~$0.7 million when compared to the prior year period.

Watch and Accessory Brands Net sales for the three months ended October 31, 2017 in the Wholesale segment were $172.3 million, above the prior year period by $8.2 million or 5.0%. The increase in net sales was primarily the result of an increase in net sales in the International location of the Wholesale segment, partially offset by a decrease in net sales in the United States location of the Wholesale segment.

Net sales for the three months ended October 31, 2017 in the United States location of the Wholesale segment were $67.3 million, below the prior year period by $18.8 million or 21.9%, driven by net sales decreases in both the licensed brands and owned brands categories. The net sales decreases recorded in the licensed and owned brands categories were $10.2 million, or 39.3%, and $8.5 million, or 14.5%, respectively. The net sales decreases in both categories reflected the overall U.S. watch market, which continues to be challenging and unpredictable, as well as declining traffic in malls, traditional department stores and jewelry chain stores. The net sales decrease in the owned brands category included an offset of U.S. sales attributable to the acquisition of the Olivia Burton brand.Sales

Net sales for the three months ended ~~October 31, 2017~~April 30, 2020 in the ~~International location of the Wholesale~~Watch and Accessory Brands segment were ~~$105.0~~$63.3 million, ~~above~~below the prior year period by ~~$27.0~~$68.2 million, or ~~34.7%, which included fluctuations~~51.9%. The decrease in ~~foreign currency exchange rates which favorably impacted~~ net sales ~~by $1.1 million when compared~~was primarily attributable to the ~~prior year~~COVID-19 pandemic and the resultant closure of the stores of the Company’s wholesale customers during the period. ~~This increase was primarily driven by~~There were decreases in net sales ~~increases~~ in both the ~~licensed brands~~United States and owned brands categories. The net sales increase in the licensed brands category was $18.4 million, or 30.1%, primarily due to net sales increases in Europe, Latin America, the Middle East and Asia. The net sales increase recorded in the owned brands category was $9.9 million, or 64.7%, primarily due to sales increases in Europe and Asia. The net sales increase in the owned brands category included sales attributable to the acquisitionInternational locations of the ~~Olivia Burton brand.~~Watch and Accessory Brands segment.

Net sales for the three months ended October 31, 2017 in the Retail segment were $18.4 million, above the prior year period by $2.7 million, or 16.9%, as a result of higher sales in both comparable and non-comparable stores resulting from better product mix and higher conversion rates as products resonate well with customers and operating more outlet locations in the current period. As of October 31, 2017, the Company operated 41 retail outlet locations and as of October 31, 2016, the Company operated 40 retail outlet locations.

~~Gross Profit.~~ Gross profit for the three months ended October 31, 2017 was $104.1 million or 54.6% of net sales as compared to $98.6 million or 54.8% of net sales in the prior year period. The increase in gross profit of $5.5 million was primarily due to higher net sales partially offset by a lower gross margin percentage. The decrease in the gross margin percentage of approximately 20 basis points for the three months ended October 31, 2017, resulted primarily from an unfavorable shift in channel and product mix of approximately 50 basis points and an unfavorable impact of approximatelyApril 30, basis points related to the amortization of the inventory step-up adjustment due to the acquisition of the Olivia Burton brand in the current period. These unfavorable impacts were partially offset by the Company’s cost savings initiatives of approximately 30 basis points and a favorable impact of fluctuations in foreign currency exchange rates of approximately 30 basis points.

~~Selling, General and Administrative (“SG&A”).~~ SG&A expenses for the three months ended October 31, 2017 were $78.9 million, representing an increase from the prior year period of $11.4 million or 16.9%. The increase in SG&A expenses was attributable to charges related to the Company’s cost savings initiatives of $7.0 million, primarily due to the write-off of certain fixed assets and contract termination costs related to the Company’s decision to no longer participate at the Baselworld Watch and Jewelry Show and the write-off of certain fixed assets related to the reduction of leased space in the Company’s Swiss operations. Also contributing to the increase in SG&A expenses were higher performance-based compensation of $1.5 million, higher distribution costs of $1.3 million, higher marketing expenses of $1.2 million and $0.8 million of expenses related to the Company’s acquisition of the Olivia Burton brand related to the amortization of acquired intangible assets. These increases in SG&A expenses were partially offset by a decrease in compensation and benefit expenses of $1.0 million (which included additional expenses related to the acquisition of the Olivia Burton brand and operating more outlet locations), primarily related to the Company’s cost savings initiatives, which predominately included a reduction in the Company’s workforce in the Company’s North American and Swiss operations.

~~Wholesale Operating Income.~~ In the three months ended October 31, 2017 and 2016, respectively, the Company recorded Wholesale segment operating income of $22.2 million and $28.7 million, which includes $15.8 million and $14.3 million of unallocated corporate expenses as well as $15.7 million and $14.0 million of certain intercompany profits related to the Company’s supply chain operations. The $6.5 million decrease in operating income was the net result of higher SG&A expenses of $10.5 million, partially offset by a higher gross profit of $4.0 million when compared to the prior year period. The increase in SG&A expenses was attributable to charges related to the Company’s cost savings initiatives of $7.0 million, primarily due to the write-off of certain fixed assets and contract termination costs related to the Company’s decision to no longer participate at the Baselworld Watch and Jewelry Show and the write-off of certain fixed assets related to the reduction of leased space in the Company’s Swiss operations. Also contributing to the increase in SG&A expenses were higher performance-based compensation of $1.5 million, higher distribution costs of $1.3 million, higher marketing expenses of $1.2 million and $0.8 million of expenses related to the Company’s acquisition of the Olivia Burton brand related to the amortization of acquired intangible assets. These increases in SG&A expenses were partially offset by a decrease in compensation and benefit expenses of $1.2 million (which included additional expenses related to the acquisition of the Olivia Burton brand), primarily related to the Company’s cost savings initiatives, which predominately included a reduction in the Company’s workforce in the Company’s North American and Swiss operations. The increase in gross profit of $4.0 million was primarily due to higher net sales.

~~U.S. Wholesale Operating Income.~~ In the United States location of the Wholesale segment, during the three months ended October 31, 2017 and 2016, respectively, the Company recorded a breakeven and $12.2 million in operating income, which included unallocated corporate expenses of $15.8 million and $14.3 million. The decrease in operating income of $12.2 million was the net result of lower gross profit of $12.6 million, partially offset by lower SG&A expenses of $0.4 million. The decrease in gross profit of $12.6 million was due to lower net sales and a lower gross margin percentage. The decrease in SG&A expenses of $0.4 million was attributable to a decrease in compensation and benefit expenses of $1.8 million due to lower headcount related to the Company’s cost savings initiatives, lower stock-based compensation expense of $0.4 million, partially offset by higher performance-based compensation of $1.3 million and higher marketing expense of $0.7 million.

~~International Wholesale Operating Income.~~ In the International location of the Wholesale segment, during the three months ended October 31, 2017 and 2016, respectively, the Company recorded operating income of $22.2 million and $16.4 million, which included $15.7 million and $14.0 million of certain intercompany profits related to the Company’s International supply chain operations. The increase in operating income of $5.8 million was primarily due to higher gross profit of $16.7 million, partially offset by higher SG&A expenses of $10.9 million. The increase in gross profit of $16.7 million was primarily due to higher net sales and, to lesser extent, a higher gross margin percentage. The increase in SG&A expenses of $10.9 million was attributable to charges related to the Company’s cost savings initiatives of $7.0 million, primarily due to the write-off of certain fixed assets and contract termination costs related to the Company’s decision to no longer participate at the Baselworld Watch and Jewelry Show and the write-off of certain fixed assets related to the reduction of leased space in the Company’s Swiss operations. Also contributing to the increase in SG&A expenses were higher distribution costs of $1.3 million, $0.8 million of expenses related to the Company’s acquisition of the Olivia Burton brand, which primarily included the amortization of acquired intangible assets, higher compensation and benefit expenses of $0.6 million, (which included additional expenses related to the acquisition of the Olivia Burton brand) and higher marketing expenses of $0.5 million.

~~Retail Operating Income.~~ Operating income of $2.9 million and $2.4 million was recorded in the Retail segment for the three months ended October 31, 2017 and 2016, respectively. The increase in operating income of $0.5 million was the result a higher gross profit of $1.4 million partially offset by higher SG&A expenses of $0.9 million. The higher gross profit was the result of higher net sales partially offset by a lower gross margin percentage. The increase in SG&A expenses of $0.9 million was primarily due to higher compensation, benefit and occupancy expenses related to operating more outlet locations when compared to the prior year period.

~~Other Expense.~~ The Company recorded other expense of $1.3 million for the three months ended October 31, 2016. The Company had a long-term investment in a privately held company, accounted for under the cost method, with a carrying value of $1.3 million. Due to the increasingly competitive and difficult market conditions, the operating performance and business outlook for the Company’s long-term investment declined significantly during the three months ended October 31, 2016. As such, the Company determined the investment experienced an other than temporary impairment and recorded a charge of $1.3 million, to reduce the carrying value to zero2020 in the United States ~~location~~locations of the ~~Wholesale segment.~~

~~Income Taxes.~~ ~~The Company recorded income tax expense of $7.5 million~~Watch and ~~$9.3 million for the three months ended October 31, 2017 and 2016, respectively.~~

The effective tax rate was 30.1% and 31.5% for the three months ended October 31, 2017 and 2016, respectively. The decrease in the effective tax rate was primarily due to changes in jurisdictional earnings and the impact of discrete items partially offset by no tax benefit being recognized on losses incurred by certain foreign operations.

The effective tax rate for the three months ended October 31, 2017 differs from the U.S. statutory tax rate of 35.0% primarily due to changes in jurisdictional earnings and the impact of discrete items, partially offset by no tax benefit being recognized on losses incurred by certain foreign operations.

The effective tax rate for the three months ended October 31, 2016 differs from the U.S. statutory tax rate of 35.0% primarily as a result of changes in jurisdictional earnings, partially offset by no tax benefit being recognized on losses incurred by certain foreign operations.

~~Net Income Attributed to Movado Group, Inc.~~ ~~The Company recorded net income attributed to Movado Group, Inc. of $17.4 million and $20.2 million for the three months ended October 31, 2017 and 2016, respectively.~~

~~Results of operations for the nine months ended October 31, 2017 as compared to the nine months ended October 31, 2016~~

~~Net Sales:~~ ~~Comparative net sales by business~~Accessory Brands segment were ~~as follows (in thousands):~~

~~Net sales for the nine months ended October 31, 2017 were $418.7~~$22.3 million, below the prior year period by ~~$3.2~~$22.4 million, or ~~0.8%. For the nine months ended October 31, 2017, fluctuations in foreign currency exchange rates unfavorably impacted~~50.1%, resulting from net sales ~~by $2.1 million when compared~~decreases across all brands in both the owned and licensed brand categories due to the ~~prior year period.~~COVID-19 pandemic. The net sales recorded in the owned brands category decreased by $15.2 million, or 48.5%, and net sales recorded in the licensed brand category decreased $4.2 million, or 45.8%.

Net sales for the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2020 in the ~~Wholesale~~International locations of the Watch and Accessory Brands segment were ~~$370.5~~$41.0 million, below the prior year ~~period~~ by ~~$6.8~~$45.8 million, or 1.8%. The decrease in net sales was the result of a decrease in net sales in the United States location of the Wholesale segment, partially offset by an increase in net sales in the International location of the Wholesale segment.

Net sales for the nine months ended October 31, 2017 in the United States location of the Wholesale segment were $144.1 million, below the prior year period by $40.0 million or 21.7%, driven by net sales decreases in both the owned brands and licensed brands categories. The net sales decreases recorded in the owned and licensed brands categories were $20.4 million, or 16.4%, and $18.8 million, or 35.1%, respectively. The sales decreases in both categories reflected the overall watch market, which continues to be challenging and unpredictable, as well as declining traffic in malls, traditional department stores and jewelry chain stores. The sales decrease in the licensed brands category included an offset of the launch of Rebecca Minkoff and Uri Minkoff brand watches during the second quarter of fiscal 2018. The sales decrease in the owned brands category included an offset of U.S. sales attributable to the Olivia Burton brand in the current period.

~~Net sales for the nine months ended October 31, 2017 in the International location of the Wholesale segment were $226.4 million, above the prior year by $33.2 million or 17.2%~~52.8%, which included fluctuations in foreign currency exchange rates which unfavorably impacted net sales by ~~$2.1~~$0.7 million when compared to the prior year period. ~~This increase was primarily driven by~~The decrease in net sales ~~increases~~were across all brands in both the owned and licensed ~~brands and owned brands categories.~~brand categories due to the COVID-19 pandemic. The net sales ~~increase in the licensed brands category was $22.5 million, or 14.9%, primarily due to sales increases in Europe, the Middle East, Latin America and Asia. The net sales increase~~decrease recorded in the owned brands category was ~~$12.6~~$11.3 million, or ~~33.4%~~55.3% and is due to sales decreases primarily in Europe, the Americas (excluding the United States), Asia, and the Middle East. The net sales decrease in the licensed brands category was $32.9 million, or 51.7%, primarily due to net sales ~~increases~~decreases in Europe, the Americas (excluding the United States), Asia and ~~Latin America. The net sales increase in~~ the ~~owned brands category included sales attributable to the Olivia Burton brand in the current period.~~Middle East.

Net sales for the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2020 in the ~~Retail~~Company Stores segment were ~~$48.2~~$6.4 million, ~~above~~$8.7 million or 57.6% below the prior year ~~period by $3.5 million, or 7.9%, as a~~period. The net sales decrease in comparable stores is primarily the result of ~~higher~~the closure of the Company’s retail stores in mid-March in response to the COVID-19 pandemic. This decrease was offset by the addition of new stores that did not exist in the prior-year period but contributed to sales ~~in both comparable and non-comparable stores resulting from better product mix and higher conversion rates as products resonate well with customers and operating more outlet locations~~ in the current ~~period.~~period prior to the COVID-19 related closures in mid-March. As of April 30, 2020, and 2019, the Company operated 47 and 44 retail outlet locations, respectively.

Gross profit for the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2020 was ~~$219.3~~$31.9 million or ~~52.4%~~45.8% of net sales as compared to ~~$230.1~~$78.9 million or ~~54.5%~~53.8% of net sales in the prior year period. The decrease in gross profit of ~~$10.8~~$47.0 million was primarily due to lower net sales and a lower gross margin percentage. The decrease in the gross margin percentage of approximately ~~210~~800 basis points for the ~~nine~~three months ended ~~October 31, 2017,~~April 30, 2020 resulted primarily from corporate initiatives related to an increase in inventory reserves in response to the COVID-19 pandemic of approximately 500 basis points, the decreased deleveraging of certain fixed costs as a result of lower sales of approximately 150 basis points, additional U.S. special tariffs of approximately 70 basis points, an unfavorable ~~shift in channel and product~~impact of sales mix of approximately ~~170~~60 basis points ~~severance related to the Company’s cost savings initiative of approximately 30 basis points, an unfavorable~~and a negative impact of fluctuations in foreign currency exchange rates of approximately 20 basis points, and an unfavorable impact of approximately 20 basis points related to the amortization of the inventory step-up adjustment due to the acquisition of the Olivia Burton brand in the current period. These unfavorable impacts were partially offset by the Company’s cost savings initiatives of approximately 30 basis points.

SG&A expenses for the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2020 were ~~$189.5~~$58.1 million, representing ~~an increase~~a decrease from the prior year period of ~~$5.9~~$15.8 million, or ~~3.2%.~~21.3%, primarily from lower marketing expenses of $9.8 million; a decrease in payroll related expenses of $5.0 million primarily as a result of the furloughing of employees, salary reductions and European government subsidies starting at the beginning of April in response to the COVID-19 pandemic; a decrease of $2.7 million in trade show costs due to the cancellation of a global customer event due to COVID-19 health concerns and travel restrictions; a $0.8 million decrease in consulting and recruiting charges and a decrease of $0.6 million in travel and entertainment charges due to travel restrictions related to the COVID-19 pandemic. The decrease in SG&A was partially offset by an increase in corporate initiative charges primarily in response to the COVID-19 pandemic of $3.7 million consisting of $1.5 million in write-off of unrefunded trade show deposits, $1.1 million in additional accounts receivable reserves and $1.1 million in restructuring charges. For the three months ended April 30, 2020, fluctuations in foreign currency rates related to the foreign subsidiaries positively impacted SG&A expenses ~~was attributable~~by $0.2 million when compared to the prior year period.

As a ~~$12.0~~result of the economic conditions caused by the response to COVID-19, the Company performed a quantitative assessment of its goodwill and long-lived intangible assets at April 30, 2020. The Company recorded a goodwillimpairment of $133.7 million ~~charge~~ related to the Company’s ~~cost savings initiatives~~Watch and ~~$5.1~~Accessory reporting unit as the carrying value of goodwill exceeded the fair value at April 30, 2020. The Company also recorded a $22.2 million of expenses related to the Company’s acquisition of the Olivia Burton brand, which primarily included transaction costs and the amortization of acquired intangible assets. Also contributing to the increase in SG&A expenses were higher performance-based compensation of $1.8 million and higher distribution costs of $1.6 million. These increases in SG&A expenses were partially offset by a decrease in compensation and benefit expenses of $6.6 million, (which included additional expenses related to the acquisition of the Olivia Burton brand and operating more outlet locations) primarily due to the Company’s cost savings initiatives, which predominately included a reduction in the Company’s workforce in the Company’s North American and Swiss operations, and the non-recurrence of a $1.8 millionimpairment charge related to MVMT’s trade name and customer relationships as the ~~retirement announcement~~carrying amount of these long-lived intangible assets exceeded the ~~Company’s former Vice Chairman~~fair value.

Watch and ~~Chief~~Accessory Brands Operating ~~Officer, which occurred in~~(Loss)/Income

For the prior year period. Also contributing to the decrease in SG&A expenses were the fluctuations in foreign currency exchange rates of $3.9 million (resulting from a $1.0 million transactional gain in the current period compared to a $2.2 million transactional loss in the prior year period and $0.7 million of which arose from the translation of foreign subsidiary results), lower marketing expenses of $1.5 million and lower customer related expenses of $2.1 million, primarily due to a recovery of $0.8 million of the allowances for uncollectible receivables from a customer in the current period that were initially recorded in the comparable period last year.

~~Wholesale Operating Income.~~ ~~In the nine~~three months ended ~~October 31, 2017 and 2016, respectively,~~April 30, 2020 the Company recorded ~~Wholesale~~an operating loss of $179.6 million in the Watch and Accessory Brands segment which included goodwill and intangible assets impairment charges of $133.7 million and $22.2 million, respectively. Without these charges, for the three months ended April 30, 2020, operating loss would have been $23.7 million as compared to operating income of ~~$22.6~~$3.1 million for the three months ended April 30, 2019, which includes $6.0 million and ~~$39.9 million, which includes $29.2 million and $33.0~~$9.0 million of unallocated corporate expenses as well as ~~$31.2~~$11.1 million and ~~$30.5~~$13.0 million, respectively, of certain intercompany profits related to the Company’s supply chain operations. ~~The $17.3 million~~In addition to the assets impairments, the decrease in operating income was the ~~net~~ result of a decrease in gross profit of ~~$12.3~~$41.6 million, ~~and higher~~which included corporate initiative costs of $3.5 million comprising an increase in inventory reserves, partially offset by a decrease in SG&A expenses of ~~$5.0~~$14.8 million when compared to the prior year period. The decrease in gross profit ~~of $12.3 million~~ was ~~primarily due to lower net sales and~~the result of lower gross margin ~~percentage.~~percentage and lower sales. The increase in SG&A expenses was attributable to a $12.0 million charge related to the Company’s cost savings initiatives and $5.1 million of expenses related to the Company’s acquisition of the Olivia Burton brand, which primarily included transaction costs and the amortization of acquired intangible. Also contributing to the increase in SG&A expenses were higher performance-based compensation of $1.8 million and higher distribution costs of $1.6 million. These increases in SG&A expenses were partially offset by a decrease in compensation and benefit expenses of $6.7 million, (which included additional expenses related to the acquisition of the Olivia Burton brand) primarily due to the Company’s cost savings initiatives, which predominately included a reduction in the Company’s workforce in the Company’s North American and Swiss operations, and the non-recurrence of a $1.8 million charge related to the retirement announcement of the Company’s former Vice Chairman and Chief Operating Officer, which occurred in the prior year period. Also contributing to the decrease in SG&A expenses ~~were~~of $14.8 million resulted primarily from lower marketing expenses of $9.8 million; a decrease in payroll related expenses of $4.1 million primarily as a result of the furloughing of employees, salary reductions and European government subsidies starting at the beginning of April in response to the COVID-19 pandemic; a decrease of $2.7 million in trade show costs due to the cancellation of a global customer trade show due to COVID-19 health concerns and travel restrictions; a $0.8 million decrease in consulting and recruiting charges and a decrease of $0.6 million in travel and entertainment charges due to travel restrictions related to the COVID-19 pandemic. The decrease in SG&A was partially offset by an increase in corporate initiative charges primarily in response to the COVID-19 pandemic of $3.7 million consisting of $1.5 million in write-off of unrefunded trade show deposits, $1.1 million in additional accounts receivable reserves and $1.1 million in restructuring charges. For the three months ended April 30, 2020, fluctuations in foreign currency exchange rates ~~of $3.9~~positively impacted the Watch and Accessory Brands segment operating loss by $0.1 million ~~(resulting from a $1.0 million transactional gain in the current period~~when compared to ~~a $2.2 million transactional loss in~~ the prior year ~~period~~period.

For the three months ended April 30, 2020 the Company recorded an operating loss of $117.6 million of which arose from the translation of foreign subsidiary results), lower marketing expenses of $1.5 million and lower customer related expenses of $2.1 million, primarily due to a recovery of $0.8 million of the allowances for uncollectible receivables from a customer in ~~the current period that were initially recorded in the comparable period last year.~~

~~U.S. Wholesale Operating Loss / Income.~~ In the United States ~~location~~locations of the ~~Wholesale~~Watch and Accessory Brands segment ~~during~~which included goodwill and impairment charges of $77.5 million and $22.2 million, respectively. Without these charges, for the ~~nine~~three months ended ~~October 31, 2017 and 2016, respectively, the Company recorded~~April 30, 2020, operating loss would have been $17.9 million as compared to operating loss of ~~$12.7~~$10.8 million ~~and an operating income of $6.2 million,~~for the three months ended April 30, 2019, which ~~included~~includes unallocated corporate expenses of ~~$29.2~~$6.0 million and ~~$33.0 million. The decrease~~$9.0 million, respectively. In addition to the assets impairments, the increase in operating ~~income of $18.9 million~~loss was the ~~net~~ result of lower gross profit of ~~$27.7~~$17.7 million, which included corporate initiative costs of $3.5 million comprising an increase in inventory reserves, partially offset by lower SG&A expenses of ~~$8.8~~$10.6 million. The decrease in gross profit of ~~$27.7~~$17.7 million was due to lower sales and a lower gross margin percentage. The decrease in SG&A expenses of ~~$8.8~~$10.6 million ~~was~~resulted primarily ~~attributable to~~from lower ~~compensation and benefit~~marketing costs of $7.1 million; a decrease in payroll related expenses of ~~$8.7~~$3.1 million primarily as a result of the furloughing of employees and salary reductions starting at the beginning of April in response to the COVID-19 pandemic; a decrease of $0.4 million in consulting and recruiting charges and a decrease of $0.3 million in travel and entertainment charges due to ~~the Company’s cost savings initiatives, and the non-recurrence of a $1.8 million charge~~travel restrictions related to the ~~retirement announcement of the Company’s former Vice Chairman and Chief Operating Officer, which occurred~~COVID-19 pandemic. The decrease in the prior year period, and lower marketing expense of $2.2 million and lower customer related expenses of $1.4 million, primarily due to a recovery of $0.8 million of the allowances for uncollectible receivables from a customer in the current period and a charge of $0.8 million to allowances for uncollectible receivables in the prior year period,SG&A was partially offset by ~~a $3.7 million charge related~~an increase in corporate initiative charges primarily in response to the ~~Company’s cost savings initiatives~~COVID-19 pandemic of $1.2 million consisting of $1.1 million in additional accounts receivable reserves and ~~higher performance based compensation expense of $1.5 million.~~$0.1 million in restructuring charges.

International ~~Wholesale~~Watch and Accessory Brands Operating ~~Income.~~ In(Loss)/Income

For the ~~International location of the Wholesale segment, during the nine~~three months ended ~~October 31, 2017 and 2016, respectively,~~April 30, 2020 the Company recorded an operating loss of $62.0 million in the International locations of the Watch and Accessory Brands segment which included goodwill impairment charges of $56.2 million. Without these charges, for the three months ended April 30, 2020, operating loss would have been $5.8 million as compared to operating income of ~~$35.3~~$13.9 million for the three months ended April 30, 2019, which amounts include $11.1 million and ~~$33.7~~$13.0 million, ~~which included $31.2 million and $30.5 million~~respectively, of certain intercompany profits related to the Company’s International supply chain operations. ~~The increase~~In addition to the goodwill impairment charges, the decrease in operating income ~~of $1.6 million~~ was primarily ~~due~~related to ~~higher~~lower gross profit of ~~$15.3~~$23.9 million, partially offset by ~~higher~~lower SG&A expenses of ~~$13.8~~$4.2 million. The ~~increase~~decrease in gross profit of ~~$15.3~~$23.9 million was primarily ~~due~~related to ~~higher~~lower net sales ~~partially offset by~~and a lower gross margin percentage. The ~~increase~~decrease in SG&A expenses of ~~$13.8~~$4.2 million ~~was~~resulted primarily ~~attributable~~from lower marketing costs of $2.7 million; a decrease in payroll related expense of $1.0 million primarily as a result of the furloughing of employees, salary reductions and European government subsidies starting at the beginning of April in response to ~~an $8.3~~the COVID-19 pandemic; a decrease of $2.7 million ~~charge~~in trade show costs due to cancellation of a global customer event due to COVID-19 health concerns and travel restrictions; a decrease in $0.4 million in consulting and recruiting charges; and a decrease of $0.3 million in travel and entertainment charges due to travel restrictions related to the Company’s cost savings initiatives, $4.9 million of expenses related to the Company’s acquisition of the Olivia Burton brand, which included transaction costs and the amortization of acquired intangible assets, and higher compensation and benefit expenses of $2.1 million (which included additional expenses related to the acquisition of the Olivia Burton brand), higher distribution costs of $1.6 million and higher marketing of $0.7 million, partially offset by the fluctuationsCOVID-19 pandemic. The decrease in foreign currency exchange rates of $3.9 million (resulting from a $1.0 million transactional gain in the current period compared to a $2.2 million transactional loss in the prior year period and $0.7 million of which arose from the translation of foreign subsidiary results).

~~Retail Operating Income.~~ ~~Operating income of $7.3 million and $6.6 million~~SG&A was recorded in the Retail segment for the nine months ended October 31, 2017 and 2016, respectively. The increase in operating income of $0.7 million was the result of an increase in gross profit of $1.5 million, partially offset by an increase in ~~SG&A expenses~~corporate initiative charges primarily in response to the COVID-19 pandemic of ~~$0.8~~$2.5 million consisting of $1.5 million in write-off of unrefunded trade show deposits and $1.0 million in restructuring charges. Fluctuation in foreign currency exchange rates positively impacted operating loss by $0.1 million when compared to the prior year period.

The ~~increase~~Company recorded operating loss of $2.5 million and operating income $1.9 million in the Company Stores segment for the three months ended April 30, 2020 and 2019, respectively. The decrease in operating income of $4.4 million was primarily related to lower gross profit of ~~$1.5~~$5.4 million partially offset by lower SG&A expenses of $1.0 million. The decrease in SG&A expenses of $1.0 million was primarily due to ~~higher net sales, partially offset by~~ a ~~lower gross margin percentage.~~ decrease in payroll related expenses of $0.9 million due to the closing of the Company’s stores and the furloughing of employees due to the COVID-19 pandemic. As of April 30, 2020, and 2019, the Company operated 47 and 44 retail outlet locations, respectively.

The ~~increase in SG&A expenses~~Company recorded an income tax benefit of $32.3 million and an income tax expense of $0.8 million ~~was primarily due to higher compensation, benefit and occupancy expenses related to operating more outlet locations when compared to the prior year period.~~

~~Other Expense.~~ ~~The Company recorded other expense of $1.3 million~~ for the nine months ended October 31, 2016. The Company had a long-term investment in a privately held company, accounted for under the cost method, with a carrying value of $1.3 million. Due to the increasingly competitive and difficult market conditions, the operating performance and business outlook for the Company’s long-term investment declined significantly during the three months ended ~~October31, 2016. As such, the Company determined the investment experienced an other than temporary impairment~~April 30, 2020 and ~~recorded a charge of $1.3 million, to reduce the carrying value to zero.~~2019, respectively.

~~Income Taxes.~~ ~~The Company recorded income tax expense of $10.3 million and $14.5 million for the nine months ended October 31, 2017 and 2016, respectively.~~

The effective tax rate was ~~35.6% and 32.6%~~17.7% for ~~the nine~~both three months ended ~~October 31, 2017~~April 30, 2020 and ~~2016,~~2019, respectively. The ~~increase in~~significant components of the effective tax rate ~~was~~changed primarily due to the ~~impact~~recording of ~~discrete items mostly related to the adoption of ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” acquisition costs related to the acquisition~~valuation allowances on certain foreign deferred tax assets and impairments of the ~~Olivia Burton brand~~portion of goodwill of the Watch and noAccessory reporting unit which is not tax ~~benefit being recognized on losses incurred by certain foreign operations,~~deductible, both of which occurred during the first quarter of fiscal 2021. These changes were partially offset by changes in ~~jurisdictional earnings.~~foreign profits in lower tax jurisdictions and the impact of the CARES Act, which enables the Company to carry back U.S. net operating losses generated in fiscal 2021 into prior taxable years with a U.S. statutory tax rate of 35.0%.

The effective tax rate for the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2020 differs from the U.S. statutory tax rate of ~~35.0%~~21.0% primarily due to ~~changes in jurisdictional earnings~~impairments of the portion of goodwill of the Watch and Accessory reporting unit which is not tax deductible, partially offset by the impact of ~~discrete items,~~the CARES Act, which enables the Company to carry back U.S. net operating losses generated in fiscal 2021 into prior taxable years with a U.S. statutory tax rate of 35.0%.

The effective tax rate for the three months ended April 30, 2019 differs from the U.S. statutory tax rate of 21.0% primarily due to foreign profits in lower tax jurisdictions and excess tax benefits related to stock-based compensation, partially offset by no tax benefit being recognized on ~~losses incurred by~~operating results of certain foreign ~~operations, as well as an increase primarily due to the adoption of ASU 2016-09 and acquisition costs related to the acquisition of the Olivia Burton brand.~~

The effective tax rate for the nine months ended October 31, 2016 differs from the U.S. statutory tax rate of 35.0% primarily as a result of changes in jurisdictional earnings, partially offset by no tax benefit being recognized on losses incurred by certain foreign operations.subsidiaries.

The Company recorded net ~~income attributed~~loss attributable to Movado Group, Inc. of ~~$18.7~~$150.0 million and ~~$29.8~~net income attributable to Movado Group, Inc. of $3.9 million, for the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2020 and ~~2016,~~2019, respectively.

The Company believes that cash flows from operations and its credit lines and on-hand cash provide adequate funds to support its operating, capital and debt service requirements for the next twelve months subsequent to the issuance of these financial statements. During the fiscal year ended January 31, 2020 the Company’s liquidity needs were funded through cash from operations. However, during the first quarter of fiscal 2021, the Company’s cash generated from operations was negatively impacted due to widespread closures of the Company’s retail locations and the Company’s wholesale customers’ stores as a result of the COVID-19 pandemic and the Company borrowed $30.9 million under its revolving credit facility as a precautionary measure in order to increase the Company’s cash position and preserve liquidity given the upcoming uncertainty in global markets from the COVID-19 pandemic. Given the disruption to the Company’s business caused by the COVID-19 pandemic, in June 2020, the Company amended its credit agreement to provide for temporary relief under some of the Company’s financial covenants for a specified period. Although the Company believes it has adequate sources of liquidity over the long term, continued uncertainty surrounding the COVID-19 pandemic, an economic recession or a slow recovery could adversely affect the Company’s business and liquidity.

In response to the uncertainty, the Company has taken other actions to reinforce its liquidity and financial flexibility. Specific actions that the Company is undertaking include, but are not limited to, actively reducing SG&A expense by minimizing non-essential operating costs, right-sizing marketing expenses to the lower revenue base while maintaining a focus on digital, driving procurement savings, including by reducing third party services, tightly managing inventories by delaying or cancelling inventory receipts as deliveries are prioritized, reducing capital expenditures while prioritizing investment in high-return projects particularly in digital and suspending quarterly dividend and share repurchases for the foreseeable future.

At ~~October 31, 2017 and October 31, 2016, respectively,~~April 30, 2020 the Company had ~~$155.5~~working capital of $348.9 million ~~and $199.8~~as compared to $335.1 million at April 30, 2019. The increase in working capital was primarily the result of additional cash and cash equivalents ~~$143.9~~of $37.1 million primarily due to an increase in borrowings and ~~$194.6 million of which consisted of cash and cash equivalents at~~a decrease in accounts payable. These factors were offset by a decrease in accounts receivable resulting primarily from lower sales due to the Company’s foreign subsidiaries. The majority of the foreign cash balances are associated with earnings that the Company has asserted are permanently reinvested, and which are required to support continued growth outside the United States through funding of capital expenditures, operating expenses and similar cash needs of the foreign operations.COVID-19 pandemic. The Company has recorded a federal tax liability of $2.9 million related to $12.6 million of pre-2013 foreign earnings which have been earmarked for future repatriation. A deferred tax liability has not been recorded fordefines working capital as the ~~remaining undistributed foreign earnings of approximately $330 million, because the~~difference between current assets and current liabilities.

The Company intends to permanently reinvest such earnings in its foreign operations. It is, therefore, not practicable to estimate the amount of tax that may be payable on the future possible distribution of these earnings.

~~Cash used in operating activities was $9.4 million and $10.8 million for the nine months ended October 31, 2017 and 2016, respectively. The $9.4~~had $25.6 million of cash used in operating activities for the ~~nine~~three months ended ~~October 31, 2017, was primarily due~~April 30, 2020 as compared to an unfavorable change in working capital as presented on the consolidated statements of cash flows of $56.1 million, partially offset by favorable non-cash items of $28.7 million, which included a $13.4 million charge related to the Company’s cost savings initiatives, and net income of $18.7 million. The unfavorable change in working capital of $56.1 million was primarily due to the increases in accounts receivable as a result of the seasonality of sales and the normal building of inventory in anticipation of the holiday selling season in the fourth quarter of the current fiscal year, as well as inventory build related to the acquisition of the Olivia Burton brand, partially offset by higher accrued liabilities. Included in the change in working capital were $5.4 million of payments related to the Company’s cost savings initiatives. The $10.8$25.6 million of cash used in operating activities for the ~~nine~~three months ended ~~October 31, 2016, was primarily due to an unfavorable change in working capital as presented on the cash flow of $59.7 million, partially offset~~April 30, 2019. Cash used by ~~favorable non-cash items of $20.3 million and net income~~operating activities for the ~~period of $29.9 million. The unfavorable change in working capital of $59.7 million was primarily due~~quarter ended April 30, 2020 included net loss attributable to the ~~increases~~Movado Group, Inc. of $150.0 million, positively adjusted by $127.5 million related to non-cash items. Cash used in operating activities included a decrease in accounts ~~receivable~~payable and accrued liabilities totaling $21.8 million primarily as a result of a reduction in expenditures during the ~~seasonality~~quarter and timing of payments to vendors and an increase in investment in inventories of $10.3 million primarily due to lower sales resulting from the COVID-19 pandemic. Cash provided by operating activities for the quarter ended April 30, 2020 included a $25.4 million decrease in trade receivables primarily due to lower sales resulting from the COVID-19 pandemic and ~~the building~~an increase in income taxes payable of ~~inventory in anticipation~~$4.8 million due to timing of ~~the holiday selling season, partially offset by higher accrued liabilities.~~tax payments.

Cash used in investing ~~activities~~ was ~~$82.0 million and $5.5~~$1.0 million for the ~~nine~~three months ended ~~October 31, 2017 and 2016, respectively.~~April 30, 2020 as compared to $2.3 million for the three months ended April 30, 2019. The cash used in ~~investing activities for~~ the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2020 was primarily for the acquisition, net of cash acquired, of the Olivia Burton brand and capital expenditures primarily related to the opening and renovations of the Company’s retail outlet locations and capital expenditures related to the construction of shop-in-shops at some of the Company’s wholesale customers. The cash used in investing activities for the nine months ended October 31, 2016 was primarily for restricted cash deposits and capital expenditures related to the construction of shop-in-shops at some of the Company’s wholesale customers, computer hardware and software and spending on tooling and design.

Cash ~~used in~~provided by financing activities was ~~$12.6 million and $16.8~~$30.5 million for the ~~nine~~three months ended ~~October 31, 2017 and 2016, respectively. Cash~~April 30, 2020 as compared to cash used inby financing activities of $8.4 million for the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2019. The cash provided in the three months ended April 30, 2020 included proceeds from bank borrowings of $30.9 million as a precautionary measure in order to increase the ~~payment~~Company’s cash position, preserve financial flexibility and maintain liquidity in response to the COVID-19 pandemic, offset by $0.4 million stock awards exercised, net of ~~dividends, the repurchase~~$0.4 million of shares repurchased as a result of ~~the Company’s common stock, and~~ the surrender of shares in connection with the vesting of certain stock awards. ~~Cash used~~In response to the COVID-19 pandemic, the Company has suspended its quarterly dividend and share repurchases effective the first quarter of fiscal 2021. The Company paid $4.6 million in ~~financing activities for~~dividends and $2.6 million in share repurchases during the ~~nine months ended~~first quarter of fiscal 2020.

On October 31, 2016 included the payment of dividends, the repayments of bank borrowings, the surrender of shares in connection with the vesting of certain stock awards, the repurchase of shares of the Company’s common stock and the purchase of the remaining incremental ownership in a joint venture.

~~On January 30, 2015,~~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. Borrowers”), each a wholly owned domestic subsidiary of the Company, and Movado Watch Company S.A. and MGI Luxury Group S.A. (collectively, the “Swiss Borrowers” and, together with the U.S. Borrowers, the “Borrowers”), each a ~~wholly-owned domestic~~wholly owned Swiss subsidiary of the Company, entered into aan Amended and Restated Credit Agreement (the “Credit Agreement”) with the lenders party thereto and Bank of America, N.A. as administrative agent (in such capacity, the “Agent”). The Credit Agreement ~~provides for a~~amends and restates the Company’s prior credit agreement dated as of January 30, 2015 (the “Prior Credit Agreement”) and extends the maturity of the $100.0 million senior secured revolving credit facility (the “Facility”) ~~including~~provided thereunder to October 12, 2023. The Facility includes a $15.0 million letter of credit ~~sub-facility that matures on January 30, 2020,~~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. ~~In connection with~~

On June 5, 2020, the Company and its lenders entered into an amendment (the “Second Amendment”) to the Credit Agreement ~~the Borrowers also entered into a Security and Pledge Agreement dated~~effective as of ~~January~~April 30, ~~2015~~2020. Among other things, the Second Amendment provides for the following temporary relief with respect to the financial maintenance covenants in ~~favor~~the Credit Agreement from April 30, 2020 through the date on which the Company delivers a compliance certificate in respect of the ~~Agent~~period ended July 31, 2021 (or earlier if the Company demonstrates satisfaction of certain earnings and leverage milestones) (the ~~“Security Agreement”~~“Suspension Period”).: (i) the maximum consolidated leverage ratio is increased from 2.50 to 1.0 to 2.75 to 1.0 for the four quarter period ended April 30, 2020 and suspended thereafter until the end of the Suspension Period when it resumes at 2.50 to 1.0 and (ii) the minimum EBITDA covenant levels are reduced. In addition, the Second Amendment provides that (i) through April 30, 2021, the Company is required to maintain minimum liquidity (comprised of unrestricted cash and cash equivalents and unutilized commitments under the Credit Agreement) of $100.0 million, (ii) during the Suspension Period, certain covenants, including covenants related to dividends, debt incurrence, investments and capital expenditures, have been tightened and (iii) during the Suspension Period, the interest rate for borrowings under the Credit Agreement is increased to LIBOR plus 2.75% per annum and the commitment fee in respect of the unutilized commitments is increased to 0.45% per annum. In addition, the Second Amendment permanently increased the LIBOR floor for loans under the Credit Agreement from 0% to 1.00% and permanently reduced the minimum EBITDA financial covenant level to $35.0 million starting with the four-quarter period ending July 31, 2021. The foregoing summary of the Second Amendment is qualified by reference to the full text of the amendment, which is attached as Exhibit 4.1 hereto and incorporated herein by reference.

As of ~~October 31, 2017, $30.0~~April 30, 2020, and April 30, 2019, there was 70.0 million and 50.0 million in ~~loans were drawn under the Facility. Additionally, approximately $0.3~~Swiss Francs, respectively (with a dollar equivalent of $72.5 million and $49.1 million, respectively), in ~~letters~~addition to $10.0 million as of credit, which were outstanding under the Borrower’s pre-existing asset-based revolving credit facility that was concurrently terminated when the Credit Agreement became effective, are deemed to be issued andApril 30, 2020, in loans outstanding under the Facility. ~~As of October 31, 2017, availability~~Availability under the Facility was ~~approximately $69.7 million.~~

~~Borrowings under the Facility bear interest at rates selected periodically~~reduced by the Company at LIBOR plus a spread ranging from 1.25% to 1.75% per annum, based on the Company’s consolidated leverage ratio, or at a base rate plus a spread ranging from 0.25% to 0.75% per annum based on the Company’s consolidated leverage ratio (as defined in the Credit Agreement). At October 31, 2017, the Company’s spreads were 1.25% over LIBOR and 0.25% over the base rate. The Company has also agreed to pay certain fees and expenses and to provide certain indemnities, allaggregate number of ~~which are customary for such financings.~~

The borrowings under the Facility are joint and several obligations of the Borrowers and are also cross-guaranteed by each Borrower. In addition, pursuant to the Security Agreement, the Borrowers’ obligations under the Facility are secured by first priority liens, subject to permitted liens, on substantially all of the Borrowers’ assets other than certain excluded assets. The Security Agreement contains representations, warranties and covenants, which are customary for pledge and security agreements of this type, relating to the creation and perfection of security interests in favor of the Agent over various categories of the Borrowers’ assets.

The Borrowers are also subject to a minimum consolidated EBITDA (as defined in the Credit Agreement) test of $50.0 million, measured at the end of each fiscal quarter based on the four most recent fiscal quarters and a consolidated leverage ratio (as defined in the Credit Agreement) covenant not to exceed 2.50 to 1.00, measured as of the last day of each fiscal quarter. As of October 31, 2017, the Company was in compliance with its covenants under the Credit Agreement.

The Credit Agreement contains events of default that are customary for facilities of this type, including, but not limited to, nonpayment of principal, interest, fees and other amounts when due, failure of any representation or warranty to be true in any material respect when made or deemed made, violation of covenants, cross default with material indebtedness, material judgments, material ERISA liability, bankruptcy events, asserted or actual revocation or invalidity of the loan documents, and change of control.

As of October 31, 2017, the Company classified $5.0 million of the outstanding balance under the Facility as current based on voluntary payments estimated to be made in the next twelve months, with the remainder classified as long-term debt based on the 2020 maturity date of the Facility and the Company’s intent and ability to refinance its obligations thereunder.

~~As of October 31, 2017, Bank of America, N.A. issued two irrevocable standby~~ 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. As of October 31, 2017,~~Canada, totaling approximately $0.3 million at both April 30, 2020 and April 30, 2019. At April 30, 2020, the ~~Company had outstanding~~ letters of credit ~~totaling $0.3 million with~~have expiration dates through ~~May 31, 2018.~~June 1, 2020. As of April 30, 2020, and April 30, 2019, availability under the Facility was $17.2 million and $50.6 million, respectively. For additional information regarding the Facility, see Note 8 – Debt and Lines of Credit to the Consolidated Financial Statements.

The Company had weighted average borrowings under the facility of $65.6 million and $49.8 million during the three months ended April 30, 2020 and 2019, respectively, with a weighted average interest rate of 1.17% and 1.00% during the three months ended April 30, 2020 and 2019, respectively.

A Swiss subsidiary of the Company maintains unsecured lines of credit with an unspecified maturity with a Swiss bank. As of ~~October 31, 2017~~April 30, 2020, and ~~2016,~~2019, these lines of credit totaled 6.5 million Swiss ~~francs and 6.5 million Swiss francs~~Francs for both periods, with a dollar equivalent of ~~$6.5~~$6.7 million and $6.4 million, respectively. As of ~~October 31, 2017~~April 30, 2020, and ~~2016,~~2019, there were no borrowings against these lines. As of October 31, 2017, two European banks had guaranteed obligations to third parties on behalf of two of the Company’s foreign subsidiaries in the dollar equivalent of $1.1 million, in various foreign currencies, of which $0.5 million is a restricted deposit as it relates to lease agreements. As of October 31, 2016,April 30, 2020, and 2019, 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 $1.1 million, respectively, in various foreign currencies, of which $0.6 million isand $0.5 million, respectively, was a restricted deposit as it relates to lease agreements.

Cash paid for interest, including unused commitments fees, was $0.2 million for the three months ended April 30, 2020 and April 30, 2019.

The Company did not pay cash dividends during the three months ended April 30, 2020. The Company paid cash dividends of ~~$0.39~~$0.20 per share or ~~approximately $9.0~~$4.6 million ~~for both~~during the ~~nine~~three months ended ~~October 31, 2017 and 2016.~~

On November 21, 2017, the Board of Directors approved the payment of a cash dividend in the amount of $0.13 for each share of the Company’s outstanding common stock and class A common stock. The dividend will be paid on December 15, 2017 to all shareholders of record as of the close of business on December 1, 2017.April 30, 2019. 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. The Company is committed to resuming dividend payments when the environment and its business stabilize and dividends are permitted by the terms of its revolving credit facility (see Note 8 – Debt and Lines of Credit).

On August 29, 2017, the Board approved a share repurchase program under which the Company is authorized to purchase up to $50.0 million of ~~Directors approved the payment of a cash dividend in the amount of $0.13 for each share of the Company’s~~its outstanding common stock from time to time, depending on market conditions, share price and ~~class A~~other factors. Under this program the Company may purchase shares of its common stock through open market purchases, repurchase plans, block trades or otherwise through August 29, 2020. See Note 8 – Debt and Lines of Credit – for restrictions on share repurchase under the Company’s revolving credit facility. During the three months ended April 30, 2020, the Company did not repurchase any shares of its common stock.

~~On May 25, 2017, the Board of Directors approved the payment of a cash dividend in the amount of $0.13~~ At April 30, 2020, $36.4 million remains available for ~~each share of~~purchase under the Company’s ~~outstanding common stock and class A common stock.~~

~~On March 20, 2017, the Board of Directors approved the payment of a cash dividend in the amount of $0.13 for each share of the Company’s outstanding common stock and class A common stock.~~

Cash at October 31, 2017 amounted to $155.5 million compared to $199.8 million at October 31, 2016. The decrease in cash is primarily the result of the acquisition of the Olivia Burton brand, the payout of dividends, capital expenditures and the repayment of bank borrowings, partially offset by cash provided by operating activities.

Management believes that the cash on hand in addition to the expected cash flow from operations and the Company’s short-term borrowing capacity will be sufficient to meet its working capital needs for at least the next twelve months.repurchase program.

The Company does not have off-balance sheet financing or unconsolidated special-purpose entities.

See Note 143- Recent Accounting Pronouncements to the accompanying unaudited ~~consolidated financial statements~~Consolidated Financial Statements for a description of certain accounting changes and recent accounting pronouncements which may impact ~~our consolidated financial statements~~the Company’s Consolidated Financial Statements in future reporting periods.

The Company’s primary market risk exposure relates to foreign currency exchange ~~risk.~~risk (see Note 9 – Derivative Financial Instruments to the Consolidated Financial Statements). A significant portion of the Company’s purchases are denominated in Swiss ~~francs~~Francs and, to a lesser extent, the Japanese Yen. The Company also sells to third-party customers in a variety of foreign currencies, most notably the Euro, Swiss Franc and the British Pound. The Company reduces its exposure to the Swiss ~~franc,~~Franc, Euro, British Pound, Chinese Yuan and Japanese Yen exchange rate risk through a hedging program. Under the hedging program, the Company manages most of its foreign currency exposures on a consolidated basis, which allows it to net certain exposures and take advantage of natural offsets. In the event these exposures do not offset, from time to time the Company uses various derivative financial instruments to further reduce the net exposures to currency fluctuations, predominately forward and option contracts. Certain of these contracts meet the requirements of qualified hedges. In these circumstances, the Company designates and documents these derivative instruments as a cash flow hedge of a specific underlying exposure, as well as the risk management objectives and strategies for undertaking the hedge transactions. Changes in the fair value of hedges designated and documented as a cash flow hedge and which are highly effective, are recorded in other comprehensive income until the underlying transaction affects earnings, and then are later reclassified into earnings in the same account as the hedged transaction. The earnings impact is mostly offset by the effects of currency movements on the underlying hedged transactions. To the extent that the Company does not engage in a hedging program, any change in the Swiss Franc, Euro, British Pound, Chinese Yuan and Japanese Yen exchange rates to local currency would have an equal effect on the Company’s earnings.

From time to time the Company uses forward exchange contracts, which do not meet the requirements of qualified hedges, to offset its exposure to certain foreign currency receivables and liabilities. These forward contracts are not designated as qualified hedges and, therefore, changes in the fair value of these derivatives are recognized in earnings in the period they arise, thereby offsetting the current earnings effect resulting from the revaluation of the related foreign currency receivables and liabilities. To the extent that the Company does not engage in a hedging program, any change in the Swiss franc, Euro, British Pound and Japanese Yen exchange rates to local currency have an equal effect on the Company’s earnings.

As of ~~October 31, 2017,~~April 30, 2020, the Company’s entire net forward contracts hedging portfolio consisted of ~~23.0~~38.4 million Chinese Yuan equivalent, 12.0 million Swiss ~~francs~~Francs equivalent, ~~12.8~~9.8 million US dollars equivalent, 17.9 million Euros equivalent and ~~11.3~~2.5 million British Pounds equivalent with various expiry dates ranging through ~~April~~September 10, ~~2018~~2020, compared to a portfolio of ~~30.0~~40.4 million Chinese Yuan equivalent, 31.0 million Swiss ~~francs~~Francs equivalent, ~~11.8~~15.3 million US dollars equivalent, 14.2 million Euros equivalent and ~~7.7~~1.9 million British Pounds equivalent with various expiry dates ranging through ~~March 14, 2017~~October 29, 2019, as of ~~October 31, 2016.~~April 30, 2019. If the Company were to settle its Swiss ~~franc~~Franc forward contracts at October 31, 2017 and 2016, the net result would be a loss of $0.4 million, net of tax benefit of $0.3 million and a loss of $0.2 million, net of tax benefit of $0.1 million, respectively. If the Company were to settle its Euro forward contracts at October 31, 2017 and 2016,April 30, 2020, the net result would be an immaterial ~~gain in both periods.~~loss. As of ~~October 31, 2017 and 2016,~~April 30, 2020, the Company’s British Pound, Chinese Yuan, US Dollar and Euro forward contracts had no ~~value.~~gain or loss. The Company had no ~~Swiss franc, Euro or British Pound option contracts related to~~ cash flow hedges as of ~~October 31, 2017~~April 30, 2020 and ~~2016,~~April 30, 2019, respectively.

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. Under its hedging program, the Company can purchase various commodity derivative instruments, primarily futures contracts. ~~Contracts that meet the requirements of qualified hedges~~When held, these derivatives are documented as qualified cash flow hedges, and the resulting gains and losses on these derivative instruments are first reflected in other comprehensive income, and later reclassified into earnings, partially offset by the effects of gold market price changes on the underlying actual gold purchases. ~~Changes in the fair value of contracts that are not qualified hedges are recognized in the period they arise.~~ The Company did not hold any future contracts in its gold hedge portfolio as of ~~October 31, 2017~~April 30, 2020 and ~~2016;~~2019, thus, any changes in the gold purchase price will have an equal effect on the Company’s cost of sales.

Floating rate debt at April 30, 2020 and 2019 totaled $82.5 million (70 million in Swiss francs and $10 million) and $49.1 million (50 million in Swiss francs), respectively. The ~~Company has certain~~ debt ~~obligations with variable interest rates, which are~~outstanding at April 30, 2020 is based on LIBOR plus a spread ranging from ~~1.25%~~1.00% to 1.75% per annum or on a base rate plus a spread ranging from ~~0.25%~~0% to 0.75% per ~~annum.~~annum, with the spread in each case being based on the Company’s consolidated leverage ratio (as defined in the credit agreement). As of April 30, 2020, the Company had weighted average borrowings of $65.6 million with a weighted average interest rate of 1.17%. As of April 30, 2020, the Company’s spreads were 1.25% over LIBOR and 0.25% over the base rate. The Company does not hedge these interest rate risks. AsBased on the average floating rate debt outstanding during the three months ended April 30, 2020, a one-percent increase or decrease in the average interest rate during the period would have resulted in a change to interest expense of ~~October 31, 2017,~~$0.2 million for the Company had $30.0 million in outstanding debt. The Company estimates that a 1% increase in interest rates would decrease the Company’s annual income by approximately $0.3 million. For additional information concerning potential changes to future interest obligations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”three months ended April 30, 2020.

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, it should be noted that a control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that its objectives will be met and may not prevent all errors or instances of fraud.

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such terms are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective at a reasonable assurance level as of the end of the period covered by this report.

There ~~has~~have been no ~~change~~changes in the Company’s internal control over financial reporting during the three months ended ~~October 31, 2017,~~April 30, 2020, that ~~has~~have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. On July 3, 2017, the Company acquired JLB Brands Ltd., the owner of the Olivia Burton brand. In conducting its evaluation of the effectiveness of internal control over financial reporting as of October 31, 2017, the Company excluded JLB Brands Ltd. from that evaluation in accordance with the rules relating to recently-acquired entities.

The Company is involved in legal proceedings and claims from time to time, in the ordinary course of its business. Legal reserves are recorded in accordance with the accounting guidance for contingencies. Contingencies are inherently unpredictable and it is possible that results of operations, balance sheets or cash flows could be materially and adversely affected in any particular period by unfavorable developments in, or resolution or disposition of, such matters. For those legal proceedings and claims for which the Company believes that it is probable that a reasonably estimable loss may result, the Company records a reserve for the potential loss. For proceedings and claims where the Company believes it is reasonably possible that a loss may result that is materially in excess of amounts accrued for the matter, the Company either discloses an estimate of such possible loss or range of loss or includes a statement that such an estimate cannot be made. As of October 31, 2017, the Company is party to legal proceedings and contingencies, the resolution of which is not expected to materially affect its financial condition, future results of operations beyond the amounts accrued, or cash flows.

In December 2016, U.S. Customs and Border Protection (“U.S. Customs”) issued an audit report concerning the methodology used by the Company to allocate the cost of certain watch styles imported into the U.S. among the component parts of those watches for tariff purposes. The report disputes the reasonableness of the Company’s historical allocation formulas and proposes an alternative methodology that would imply approximately $5.1 million in underpaid duties over the five-year period covered by the statute of limitations, plus possible penalties and interest. The Company believes that U.S. Customs’ alternative duty methodology and estimate are not consistent with the Company’s facts and circumstances and is disputing U.S. Customs’ position. ~~On February 24, 2017, the~~The Company ~~provided~~continues to provide U.S. Customs with supplemental analyses and information supporting the Company’s historical allocation ~~formulas and is in the process of providing additional information for U.S. Customs’ review.~~formulas. Although the Company disagrees with U.S. Customs’ position, it cannot predict with any certainty the outcome of this matter. The Company intends to continue to work with U.S. Customs to reach a mutually-satisfactory resolution.

In addition to the above matter, 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 beyond the amounts accrued, or cash flows.

As of ~~October 31, 2017,~~April 30, 2020, there have been no material changes to any of the risk factors previously reported in the Company’s ~~2017~~2020 Annual Report on Form 10-K.

On August 29, 2017, the Board ~~of Directors~~ approved a share repurchase program under which the Company is authorized to purchase up to $50.0 million of its outstanding common stock from time to time through August 29, 2020, depending on market conditions, share price and other factors. ~~Under the program the~~The Company ~~is authorized to~~may purchase shares of its common stock through open market purchases, repurchase ~~programs,~~plans, block trades or otherwise. ~~This authorization expires on August 29, 2020.~~ During the three months ended ~~October 31, 2017,~~April 30, 2020, the Company ~~repurchased a total of 49,000~~did not repurchase any shares of its common ~~stock in the open market at a total cost of approximately $1.3 million or an average cost of $27.52 per share.~~stock.

~~There were 4,798 shares of common stock repurchased during the three months ended October 31, 2017 as a result of the surrender of shares in connection with the vesting of certain stock awards.~~ At the election of an employee, upon the vesting of a stock award or the exercise of a stock option, shares of common stock having an aggregate value on the vesting of the award or the exercise date of the option, as the case may be, equal to the employee’s withholding tax obligation may be surrendered to the Company by netting them from the vested shares issued. Similarly, shares having an aggregate value equal to ~~fund~~ the exercise price of an option may be tendered to the Company in payment of ~~such taxes.~~the option exercise price and netted from the shares of common stock issued upon the option exercise. An aggregate of 36,923 shares were repurchased during the three months ended April 30, 2020 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 following table summarizes information about the Company’s purchases for the three months ended ~~October 31, 2017~~April 30, 2020 of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934, as amended:

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

August 1, 2017 – August 31, 2017

4,798

$
27.29

—

$
50,000,000

September 1, 2017 – September 30, 2017

20,000

27.28

20,000

49,454,435

October 1, 2017 – October 31, 2017

29,000

27.69

29,000

48,651,310

Total

53,798

$
27.50

49,000

$
48,651,310

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
February 1, 2020 – February 29, 2020		3,028	$	15.85		—	$	36,405,816
March 1, 2020 – March 31, 2020		—		—		—		36,405,816
April 1, 2020 – April 30, 2020		33,895		9.41		—		36,405,816
Total		36,923	$	9.94		—	$	36,405,816

On June 5, 2020, the Company entered into an amendment (the “Second Amendment”) to the Company’s Amended and Restated Credit Agreement (the “Credit Agreement”) dated October 12, 2018 with the lenders party thereto and Bank of America, N.A., as administrative agent, governing the terms of the Company’s $100.0 million senior secured revolving credit facility. Among other things, the Second Amendment provides for the following temporary relief with respect to the financial maintenance covenants in the Credit Agreement from the Second Amendment’s effective date of April 30, 2020 through the date on which the Company delivers a compliance certificate in respect of the period ended July 31, 2021 (or earlier if the Company demonstrates satisfaction of certain earnings and leverage milestones) (the “Suspension Period”): (i) the maximum consolidated leverage ratio is increased from 2.50 to 1.0 to 2.75 to 1.0 for the four quarter period ended April 30, 2020 and suspended thereafter until the end of the Suspension Period when it resumes at 2.50 to 1.0 and (ii) the minimum EBITDA covenant levels are reduced. In addition, the Second Amendment provides that (i) through April 30, 2021, the Company is required to maintain minimum liquidity (comprised of unrestricted cash and cash equivalents and unutilized commitments under the Credit Agreement) of $100.0 million, (ii) during the Suspension Period, certain covenants, including covenants related to dividends, debt incurrence, investments and capital expenditures, have been tightened and (iii) during the Suspension Period, the interest rate for borrowings under the Credit Agreement is increased to LIBOR plus 2.75% per annum and the commitment fee in respect of the unutilized commitments is increased to 0.45% per annum. In addition, the Second Amendment permanently increased the LIBOR floor for loans under the Credit Agreement from 0% to 1.00% and permanently reduced the minimum EBITDA financial covenant level to $35.0 million starting with the four-quarter period ending July 31, 2021. The foregoing summary of the Second Amendment is qualified by reference to the full text of the amendment, which is attached as Exhibit 4.1 hereto and incorporated herein by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

New York		13-2595932
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

650 From Road, Ste. 375 Paramus, New Jersey		07652-3556
(Address of Principal Executive Offices)		(Zip Code)

			Page
Part I	Financial Information (Unaudited)		3
	Item 1.	Consolidated Balance Sheets at ~~October 31, 2017,~~April 30, 2020, January 31, ~~2017~~2020 and ~~October 31, 2016~~April 30, 2019	3
		Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~October 31, 2017~~April 30, 2020 and ~~October 31, 2016~~April 30, 2019	4
		Consolidated Statements of Comprehensive (Loss) Income for the three ~~and nine~~ months ended ~~October 31, 2017~~April 30, 2020 and ~~October 31, 2016~~April 30, 2019	5
		Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~October 31, 2017~~April 30, 2020 and ~~October 31, 2016~~April 30, 2019	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2322
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3331
	Item 4.	Controls and Procedures	3432
Part II	Other Information		35
	Item 1.	Legal Proceedings	3533
	Item 1A.	Risk Factors	3533
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3533
	Item 5.	Other Information	34
	Item 6.	Exhibits	3735
Signature			3836

	Net Sales
	2017		2016
Wholesale:
Owned brands category	$	75,138	$	73,749
Licensed brands category		95,015		86,818
After-sales service and all other		2,159		3,522
Total Wholesale		172,312		164,089
Retail		18,381		15,729
Consolidated total	$	190,693	$	179,818

	Net Sales
	2017		2016
Wholesale:
Owned brands category	$	154,620	$	162,428
Licensed brands category		208,914		205,229
After-sales service and all other		6,956		9,601
Total Wholesale		370,490		377,258
Retail		48,249		44,709
Consolidated total	$	418,739	$	421,967

	Net Sales				Operating Income (3) (4)
	2017		2016		2017		2016
United States (1)	$	85,685	$	101,854	$	2,971	$	14,626
International (2)		105,008		77,964		22,214		16,445
Consolidated total	$	190,693	$	179,818	$	25,185	$	31,071


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Large accelerated filer	☐	Accelerated filer	☒	Non-accelerated filer ~~(Do not check if a smaller reporting company)~~	☐
Smaller reporting company	☐	Emerging growth company	☐

	Three Months Ended October 31,						Nine Months Ended October 31,
	2017			2016			2017			2016
Net sales	$	190,693		$	179,818		$	418,739		$	421,967
Cost of sales		86,623			81,268			199,406			191,837
Gross profit		104,070			98,550			219,333			230,130
Selling, general, and administrative		78,885			67,479			189,479			183,590
Operating income		25,185			31,071			29,854			46,540
Other expense (Note 3)		—			(1,282	)		—			(1,282	)
Interest expense		(445	)		(333	)		(1,191	)		(1,039	)
Interest income		110			45			361			138
Income before income taxes		24,850			29,501			29,024			44,357
Provision for income taxes (Note 10)		7,490			9,286			10,341			14,450
Net income		17,360			20,215			18,683			29,907
Less: Net income attributed to noncontrolling interests		—			—			—			78
Net income attributed to Movado Group, Inc.	$	17,360		$	20,215		$	18,683		$	29,829

Basic income per share:
Weighted basic average shares outstanding		23,079			23,055			23,080			23,074
Net income per share attributed to Movado Group, Inc.	$	0.75		$	0.88		$	0.81		$	1.29

Diluted income per share:
Weighted diluted average shares outstanding		23,273			23,230			23,261			23,259
Net income per share attributed to Movado Group, Inc.	$	0.75		$	0.87		$	0.80		$	1.28

Dividends declared per share	$	0.13		$	0.13		$	0.39		$	0.39

		Fair Value at October 31, 2017
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	291	$	—	$	—	$	291
Short-term investment	Other current assets		156		—		—		156
SERP assets - employer	Other non-current assets		1,538		—		—		1,538
SERP assets - employee	Other non-current assets		35,532		—		—		35,532
Hedge derivatives	Other current assets		—		67		—		67
Total		$	37,517	$	67	$	—	$	37,584
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	35,532	$	—	$	—	$	35,532
Hedge derivatives	Accrued liabilities		—		685		—		685
Total		$	35,532	$	685	$	—	$	36,217

		Fair Value at January 31, 2017
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	309	$	—	$	—	$	309
Short-term investment	Other current assets		154		—		—		154
SERP assets - employer	Other non-current assets		1,091		—		—		1,091
SERP assets - employee	Other non-current assets		30,831		—		—		30,831
Hedge derivatives	Other current assets		—		145		—		145
Total		$	32,385	$	145	$	—	$	32,530
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	30,831	$	—	$	—	$	30,831
Hedge derivatives	Accrued liabilities		—		211		—		211
Total		$	30,831	$	211	$	—	$	31,042

		Fair Value at October 31, 2016
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	280	$	—	$	—	$	280
Short-term investment	Other current assets		150		—		—		150
SERP assets - employer	Other non-current assets		1,464		—		—		1,464
SERP assets - employee	Other non-current assets		28,495		—		—		28,495
Hedge derivatives	Other current assets		—		141		—		141
Total		$	30,389	$	141	$	—	$	30,530
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	28,495	$	—	$	—	$	28,495
Hedge derivatives	Accrued liabilities		—		391		—		391
Total		$	28,495	$	391	$	—	$	28,886

	Total Assets
	October 31, 2017		January 31, 2017		October 31, 2016
Wholesale	$	633,101	$	584,518	$	600,885
Retail		26,465		23,284		23,593
Consolidated total	$	659,566	$	607,802	$	624,478

	Net Sales				Operating (Loss) / Income (3) (4)
	2017		2016		2017		2016
United States (1)	$	192,325	$	228,734	$	(5,409)	$	12,841
International (2)		226,414		193,233		35,263		33,699
Consolidated total	$	418,739	$	421,967	$	29,854	$	46,540

	April 30, 2020			January 31, 2020			April 30, 2019
Foreign currency translation adjustments	$	77,394		$	85,345		$	76,624
Available-for-sale securities		86			124			120
Unrecognized prior service cost related to defined benefit pension plan		(354	)		(367	)		(407	)
Net actuarial loss related to defined benefit pension plan		(52	)		(52	)		—
Total accumulated other comprehensive income	$	77,074		$	85,050		$	76,337

	For the Three Months Ended April 30,
Customer Type	2020		2019
Wholesale	$	52,910	$	115,161
Direct to consumer		16,304		30,356
After-sales service		452		1,032
Net Sales	$	69,666	$	146,549


	Asset Derivatives							Liability Derivatives
	Balance Sheet Location	October 31, 2017 Fair Value		January 31, 2017 Fair Value		October 31, 2016 Fair Value		Balance Sheet Location		October 31, 2017 Fair Value		January 31, 2017 Fair Value		October 31, 2016 Fair Value
Derivatives not designated as hedging instruments:
Foreign Exchange Contracts	Other Current Assets	$	—	$	145	$	31		Accrued Liabilities	$	685	$	211	$	391
Total Derivative Instruments		$	—	$	145	$	31			$	685	$	211	$	391

	Number of Stock Award Units			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value $(000's)
Units outstanding at January 31, 2020		490,239		$	33.50	1.4	$	8,442
Units granted		86,500		$	10.00
Units vested		(141,235	)	$	26.88
Units forfeited		(3,409	)	$	25.75
Units outstanding at April 30, 2020		432,095		$	31.02	1.3	$	4,455

	Currency Translation Adjustments		Available-for-sale securities			Hedging Contracts			Total
Balance, January 31, 2017	$	76,569	$	197		$	14		$	76,780
Other comprehensive income / (loss) before reclassifications		3,583		(12	)		931			4,502
Amounts reclassified from accumulated other comprehensive income (1)		—		—			(894	)		(894)
Net current-period other comprehensive income / (loss)		3,583		(12	)		37			3,608
As of October 31, 2017	$	80,152	$	185		$	51		$	80,388

	Operating (Loss)/Income (3)(4)(5)
	2020			2019
Watch and Accessory Brands	$	(179,621	)	$	3,095
Company Stores		(2,542	)		1,879
Consolidated total	$	(182,163	)	$	4,974

	Total Assets (1)
	April 30, 2020		January 31, 2020		April 30, 2019
Watch and Accessory Brands	$	634,135	$	782,339	$	766,571
Company Stores		63,778		64,969		62,090
Consolidated total	$	697,913	$	847,308	$	828,661

	Balance at January 31, 2017		Cash payments			Foreign exchange		Accrued balance at October 31, 2017
Severance	$	78	$	(1	)	$	1	$	78
Occupancy charges		330		(99	)		2		233
Total	$	408	$	(100	)	$	3	$	311

	Net Sales				Operating (Loss)/Income (3)(4)(5)
	2020		2019		2020			2019
United States (1)	$	28,534	$	59,494	$	(119,990	)	$	(8,952	)
International (2)		41,132		87,055		(62,173	)		13,926
Consolidated total	$	69,666	$	146,549	$	(182,163	)	$	4,974

	Fiscal 2018 Charges (2)		Cash payments			Non-cash adjustments			Foreign exchange			Balance in Accrued Liabilities at October 31, 2017
Severance and payroll related (1)	$	6,061	$	(5,276	)	$	(401	)	$	67		$	451
Fixed assets (1)		5,105		—			(5,105	)		—			—
Other (1)		2,172		(73	)		(71	)		(6	)		2,022
Occupancy charges (1)		99		(22	)		—			6			83
Total	$	13,437	$	(5,371	)	$	(5,577	)	$	67		$	2,556

Assets Acquired and Liabilities Assumed	Fair Value
Cash and cash equivalents	$	5,909
Trade receivables, net		3,106
Inventories		4,164
Prepaid expenses and other current assets		913
Property, plant and equipment, net		131
Goodwill		55,322
Trade name and other intangibles		21,415
Total assets acquired		90,960
Accounts payable		608
Accrued liabilities		844
Income taxes payable		643
Deferred and non-current income taxes payable		3,965
Total liabilities assumed		6,060
Total purchase price	$	84,900

		Three Months Ended October 31,				Nine Months Ended October 31,
	2017		2016		2017		2016
(In thousands, except per share data)		(Unaudited)				(Unaudited)
Net sales	$	190,693	$	184,749	$	430,002	$	432,885
Net income	$	18,479	$	21,146	$	24,885	$	30,814

Basic income per share:
Net income per share attributed to Movado Group, Inc.	$	0.80	$	0.92	$	1.08	$	1.34

Diluted income per share:
Net income per share attributed to Movado Group, Inc.	$	0.79	$	0.91	$	1.07	$	1.32

	Total
Balance at January 31, 2017	$	—
Acquisition of the Olivia Burton brand		55,322
Foreign exchange impact		994
Balance at October 31, 2017	$	56,316

	As of
	October 31, 2017
	Gross carrying amount		Accumulated amortization		Foreign exchange		Net
Intangible assets subject to amortization:
Trade name	$	12,766	$	(433)	$	251	$	12,584
Customer relationships		8,598		(486)		168		8,280
Total intangible assets	$	21,364	$	(919)	$	419	$	20,864

	Three Months Ended October 31,				Three Months Ended April 30,
	2017		2016		2020		2019
Wholesale:
Watch and Accessory Brands:
United States	$	67,304	$	86,125	$	22,307	$	44,662
International		105,008		77,964		40,979		86,833
Total Wholesale		172,312		164,089
Retail		18,381		15,729
Total Watch and Accessory Brands						63,286		131,495
Company Stores:
United States						6,227		14,832
International						153		222
Total Company Stores						6,380		15,054
Net Sales	$	190,693	$	179,818	$	69,666	$	146,549

~~10.1~~4.1		~~Thirteenth~~Second Amendment, dated June 5, 2020 and effective April 30, 2020, to ~~Lease~~the Amended and Restated Credit Agreement, dated ~~October 24, 2017 between Mack-Cali Realty, L.P., as landlord, and the Registrant, as tenant, further amending the lease dated~~ as of ~~December 21, 2000.~~October 12, 2018, among the Company, certain U.S. and Swiss subsidiaries thereof, the lenders party thereto and Bank of America, N.A. as administrative agent.

~~10.2~~10.1*		~~Term Sheet dated October 11, 2017 governing the amendment~~License Agreement among Tommy Hilfiger Licensing LLC, Movado Group, Inc. and ~~restatement of the Amended and Restated License Agreement,~~Swissam Products Limited, effective as of January 1, ~~2012 by~~2020, amending and ~~between MGI Luxury Group, S.A. and Hugo Boss Trademark Management GmbH & Co. KG.~~restating the prior license agreement among such parties dated September 16, 2009.

31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial information from Movado Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~October 31, 2017~~April 30, 2020 filed with the SEC, formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements. XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document.

104		Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).

		* Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.

		MOVADO GROUP, INC.
		(Registrant)
Dated: ~~November 21, 2017~~June 9, 2020	By:	/s/ Sallie A. DeMarsilis
		Sallie A. DeMarsilis Senior Vice President, Chief Financial Officer and Principal Accounting Officer