52 added · 59 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
For example, packaging and point-of-sale materials are subject to 25% Section 301 duties, and watch bands (whether as spare parts or as components of complete watches produced in the Far East) and jewelry are subject to 7.5% Section 301 duties.
As a result, there can be no assurance that tariff levels will decrease when Section 122 authority expires, or that new or higher duties will not be imposed. 12 In response to tariff increases, the Company may seek to raise prices, which could reduce demand and result in loss of customers, or may over time attempt to shift sourcing or manufacturing to other countries or suppliers.
For example, smart watches are subject to significant intellectual property infringement risks, greater fixed costs than traditional watches, and the need to satisfy consumer expectations for compatibility with third-party smartphone operating systems over the life of the watch.
To the extent that hostilities persist or expand, the Company could experience reduced sales, delays in product deliveries, inventory imbalances, increased costs, asset impairment charges, or other adverse effects on its business, financial condition, and results of operations.
In addition, the anticipated future cost savings from these initiatives may not materialize. 19 The Company depends on its information systems to run its business and any significant breach of or disruption to those systems could materially disrupt the Company’s business.
In addition, as a result of the related restatements of financial results, the Company has received and responded to information requests from the SEC and could become subject to inquiries from other regulatory or governmental authorities.
On July 1, 2026, the Company executed a license agreement with Coach Services, Inc. pursuant to which the Company licenses the trademark Kate Spade New York ® and related trademarks on an exclusive worldwide basis for use in connection with the manufacture, distribution, advertising and sale of watches with a term through June 30, 2030.
Section 122 tariffs expire after 150 days absent Congressional approval; however, the Administration has announced plans to conduct investigations into trade practices in order to enable the imposition of tariffs under other statutory authorities.
In 2025, the United States imposed additional “reciprocal” and other tariffs under the International Emergency Economic Powers Act (“IEEPA”).
As of the date of this Annual Report, Section 122 tariffs impose an incremental 10% ad valorem duty on covered imports, and the Administration has announced its intent to increase this rate to 15%.
The Middle East represents a significant market for the Company, and further deterioration in regional stability could adversely affect consumer confidence, tourism, retail traffic, and overall demand for discretionary consumer products in that market.
In addition, expanded military activity, sanctions, trade restrictions, shipping disruptions, port closures, airspace restrictions, or damage to critical infrastructure could disrupt the Company’s distribution channels, supply chain operations, logistics providers, and retail partners in the region.
No longer disclosed
For example, in April 2025, the Trump Administration announced a series of so-called “reciprocal” tariffs on dozens of countries with which the U.S. has a trade deficit, including special incremental tariffs of 32% on Swiss goods, 24% on Japanese goods, and 34% on Chinese goods.
Together with the special tariffs applicable to Chinese products implemented in 2018, the special tariffs on Chinese products implemented in 2025 have increased the total U.S. special tariff on Chinese packaging materials to 170% and on Chinese watch bands and jewelry to 152.5%.
In addition, most of the bands used in the production of the Company’s traditional watches, as well as most of the Company's jewelry, are made in China and have been subject to a U.S. special 7.5% tariff since February 2020.
The additional special tariffs already in effect as of the date of this annual report on Form 10-K are tariffs of 10% on most products (including all or substantially all products imported by the Company) from all countries worldwide, and a 145% tariff on substantially all products of Chinese origin.
In addition, the special 10% tariff applicable to all other countries applies to substantially all other products imported by the Company, including all Swiss watches as well as all watch heads (i.e., the entirety of a watch other than the watch band) produced in the Far East (which generally have Japanese movements and are therefore considered products of Japan for U.S. customs purposes).
For example, in April 2025, China announced tariffs of 125% on all imports from the United States.
Most of the Company’s packaging products are made in China and have been subject to a U.S. special 25% tariff since May 2019.
Based on that investigation, the Company has determined that the former managing director of the Dubai Branch, who oversaw the Affected Region, as well as certain employees under his direction, took actions that resulted in an overstatement of sales, premature recognition of sales, and underreporting of credit notes (e.g., sales discounts) owed to customers in the Affected Region.
The investigation has not identified any impact to reported sales to customers in other regions, nor has the investigation identified any knowledge of, or participation in, the misconduct by Company employees (whether members of management or otherwise) outside of the Affected Region.
Starting in July 2018, the U.S. government announced a series of lists covering thousands of categories of Chinese origin products subject to U.S. special tariffs in addition to the regular tariffs that have historically applied to such products.
As a result of the 2025 increases in the U.S. special tariffs, the Company may seek to raise prices for products sold in the United States, which is the Company’s single largest market, which could result in the loss of customers and harm its operating performance.
In late January 2025, the Company became aware of allegations of misconduct within the Dubai branch (the “Dubai Branch”) of the Company’s Swiss subsidiary, MGI Luxury Group Sárl, related to sales to certain customers in the Middle East, India & Asia Pacific region (the “Affected Region”).