Group 1 - Movado Group has faced significant challenges, with shares down 15.8% year to date and 38.2% over the last year [1] - Following the COVID-19 pandemic, there was a notable surge in demand for quality watches, which initially benefited the industry [1]

Group 1 - Movado Group, Inc. is a watchmaker originally from Switzerland, now based in the United States, known for its clean and simple design [1] - The company has established a reputation for offering products that are not exactly cheap but are priced within a reasonable range [1] Group 2 - The focus of the analysis is primarily on small- to mid-cap companies, which are often overlooked by many investors, while also occasionally reviewing large-cap names for a broader market perspective [1]

Movado Group (MOV) Q1 2026 Earnings Call May 29, 2025 09:00 AM ET Company Participants Allison Malkin - PartnerEfraim Grinberg - Chairman & CEOSallie Demarsilis - EVP, COO, CFO & Principal Accounting OfficerHamed Khorsand - Principal Operator Good day, everybody, and welcome to Movado First Quarter and Fiscal Year twenty twenty six Earnings Call. As a reminder, today's call is being recorded and may not be reproduced in full or in part without permission from the company. At this time, I would like to turn ...

Financial Data and Key Metrics Changes - For the first quarter, sales were $131.8 million, down 1.9% from $134.4 million last year, or down 1% on a constant currency basis [5][15] - Adjusted operating income decreased to $870,000 from $2.1 million last year [5][18] - Adjusted earnings per share were $0.08, down from $0.09 last year [6][18] - Cash at the end of the quarter was $203.1 million, compared to $225.4 million at the same time last year [19] Business Line Data and Key Metrics Changes - U.S. sales decreased by 1.6%, while international sales were down 2.2%, or 0.7% on a constant currency basis [7][16] - Licensed brands saw strong growth with sales improving by high single digits [8] - Movado brand refresh initiatives, including new product introductions, have received a strong consumer response [7] Market Data and Key Metrics Changes - The retail environment remains uncertain, impacting consumer behavior, particularly in the U.S. and Europe [24] - The outlet division saw an improved trend with sales down only 1.7%, continuing into the second quarter [10] Company Strategy and Development Direction - The company is focused on managing controllables and operating with flexibility while delivering innovation and value [12] - Strategic initiatives include product innovation and cost savings measures, such as reducing marketing expenditures [5][17] - The company is rationalizing its expense infrastructure to improve financial performance [26] Management Comments on Operating Environment and Future Outlook - Management noted that the current economic environment and tariff-related uncertainties have impacted consumer discretionary spending [11][20] - The company is not providing a fiscal 2026 outlook due to macroeconomic uncertainties [20] - There is resilience in the category with young consumers embracing trend-forward watches and jewelry [12] Other Important Information - The company recorded approximately $1.6 million of other non-operating income, primarily from interest earned on its global cash position [18] - Unrealized losses due to currency fluctuations were noted, with management indicating that these will only be realized when paid [30][31] Q&A Session Summary Question: Insights on sales momentum and trends - Management indicated that sales vary by market and brand, with pockets of growth and challenges, but they are satisfied with current sales levels [23] Question: Impact of tariffs on consumer behavior - Management acknowledged that discretionary purchases are challenged and emphasized the importance of delivering value to consumers [24][25] Question: Alignment of earnings per share and cash dividend - Management highlighted a strong balance sheet and expected improved operating cash flow in the second half of the year [28] Question: Unrealized loss in foreign exchange - Management explained that the unrealized loss was due to a decline in the U.S. Dollar and will be mitigated in future quarters [30][31]

Financial Performance - Net sales for the three months ended April 30, 2025 were $131.8 million, representing a $2.6 million or 1.9% decrease from the prior year period[113]. - The Watch and Accessory Brands segment net sales were $114.8 million, a decrease of $2.3 million or 2.0% compared to the prior year, primarily due to a $6.8 million or 17.0% decrease in the owned brands category[114]. - The licensed brands category saw an increase in net sales of $6.2 million or 8.3%, partially offsetting the decline in owned brands[114]. - Net sales for the U.S. Watch and Accessory Brands segment were $38.6 million, a decrease of $0.5 million or 1.4% compared to the prior year, primarily due to an unfavorable sales mix[115]. - International net sales in the Watch and Accessory Brands segment were $76.2 million, down $1.8 million or 2.3%, impacted by foreign currency fluctuations of $1.2 million[116]. - Net income attributable to Movado Group, Inc. was $1.4 million for the three months ended April 30, 2025, compared to $2.0 million in the prior year[130]. Cost and Expenses - The Company recorded $4.6 million in accruals for severance and employee-related charges during fiscal year 2025 as part of a cost-savings initiative[107]. - The Company expects annual savings of approximately $10.0 million from the cost-savings initiatives implemented[107]. - Gross profit for the three months ended April 30, 2025, was $71.4 million, representing 54.1% of net sales, a decrease from 54.3% in the prior year[118]. - SG&A expenses increased by $0.3 million or 0.4% to $71.1 million, driven by a $2.7 million rise in foreign exchange losses[119]. - The Company recorded an operating loss of less than $0.1 million in the Watch and Accessory Brands segment, compared to an operating income of $1.7 million in the prior year[120]. - The U.S. locations of the Watch and Accessory Brands segment reported an operating loss of $7.0 million, an improvement from an $8.1 million loss in the prior year[121]. - International locations recorded operating income of $7.0 million, down from $9.8 million in the prior year, due to higher SG&A expenses[124]. Cash Flow and Investments - Cash used in operating activities was $7.2 million, an improvement from $18.1 million used in the prior year[133]. - The Company had $203.1 million in cash and cash equivalents as of April 30, 2025, down from $225.4 million in the prior year[131]. - The Company committed to invest up to $21.5 million in minority investments, having funded approximately $14.1 million through fiscal 2025 and an additional $1.3 million in the first three months of fiscal 2026[143]. - Cash paid for interest was $0.1 million for both the three-month periods ended April 30, 2025, and April 30, 2024[142]. Tariffs and Foreign Exchange - The U.S. government imposed a baseline special tariff of 10% on products from all countries, which is expected to increase the Company's cost of sales[104]. - The total U.S. special tariff on Chinese watch bands and jewelry has increased to 37.5% due to recent tariff implementations[105]. - Fluctuations in foreign currency exchange rates negatively impacted net sales by $1.2 million compared to the prior year period[113]. Shareholder Returns - The Company declared a cash dividend of $0.35 per share, totaling $7.8 million, for both the three-month periods ended April 30, 2025, and April 30, 2024[144]. - The Company expects to continue declaring cash dividends in the future, subject to the Board of Directors' discretion[144]. Debt and Financial Obligations - As of April 30, 2025, the Company had unsecured lines of credit totaling 6.5 million Swiss Francs, equivalent to $7.9 million, with no borrowings against these lines[140]. - The Company had no floating rate debt as of April 30, 2025, and reported no weighted average borrowings during the three months ended April 30, 2025[153]. - The Company has guaranteed obligations to third parties totaling $1.5 million as of April 30, 2025, related to its foreign subsidiaries[141]. Hedging and Future Contracts - As of April 30, 2025, the Company's net forward contracts hedging portfolio included 30.5 million U.S. dollars equivalent and 34.6 million Euros equivalent, with various expiry dates[151]. - The Company did not hold any future contracts in its gold hedge portfolio as of April 30, 2025, meaning changes in gold purchase prices will directly affect the cost of sales[152]. Share Repurchase - During the three months ended April 30, 2024, the Company repurchased 39,000 shares at a total cost of $1.1 million, averaging $27.85 per share[145].

Core Viewpoint - Movado's quarterly earnings significantly missed expectations, indicating potential challenges in the company's performance and outlook [1][2][6] Financial Performance - Movado reported earnings of $0.08 per share, falling short of the Zacks Consensus Estimate of $0.39 per share, and down from $0.13 per share a year ago, representing an earnings surprise of -79.49% [1] - The company posted revenues of $131.77 million for the quarter, missing the Zacks Consensus Estimate by 7.28%, and down from $136.67 million year-over-year [2] - Over the last four quarters, Movado has only surpassed consensus EPS estimates once and has not beaten consensus revenue estimates [2] Stock Performance - Movado shares have declined approximately 11.5% since the beginning of the year, contrasting with the S&P 500's slight gain of 0.1% [3] - The current Zacks Rank for Movado is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.57 on revenues of $164.35 million, and for the current fiscal year, it is $2.57 on revenues of $678.2 million [7] - The trend of estimate revisions for Movado is mixed, which could change following the recent earnings report [6] Industry Context - The Retail - Jewelry industry, to which Movado belongs, is currently ranked in the top 14% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Movado's stock performance [5]

[First Quarter Fiscal 2026 Financial Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%202026%20Financial%20Highlights) Movado Group reported a slight decrease in Q1 FY2026 net sales, with reduced operating income and EPS, while maintaining a strong balance sheet and approving a quarterly dividend Q1 FY2026 Key Financial Metrics | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $131.8 million | $134.4 million | -1.9% | | Operating Income | $0.3 million | $2.1 million | -86.2% | | Adjusted Operating Income | $0.9 million | N/A | N/A | | Diluted EPS | $0.06 | $0.09 | -33.3% | | Adjusted Diluted EPS | $0.08 | N/A | N/A | - The company ended the quarter with a strong liquidity position, holding **$203.1 million** in cash and no debt[4](index=4&type=chunk)[5](index=5&type=chunk) - The Board of Directors approved a quarterly cash dividend of **$0.35** per share[1](index=1&type=chunk)[4](index=4&type=chunk)[9](index=9&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management successfully navigated a challenging retail environment through cost-saving initiatives and product innovation, with strong performance from licensed brands and optimism for future opportunities despite market volatility - Successfully navigated a challenging retail environment by focusing on operational efficiency and cost-saving initiatives[4](index=4&type=chunk) - The licensed brand portfolio performed very well, indicating renewed vibrancy in the fashion watch category. The Movado brand also saw a strong response to new product introductions[4](index=4&type=chunk) - While anticipating continued market volatility, the company is optimistic about introducing compelling innovation across its brand portfolio[4](index=4&type=chunk) [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) This section provides a detailed analysis of the first quarter's financial results, including net sales, profitability, and non-GAAP adjustments [Net Sales](index=2&type=section&id=Net%20Sales) Net sales for Q1 FY2026 decreased by **1.9%** to **$131.8 million**, primarily due to declines in owned brands, partially offset by growth in licensed brands Net Sales Performance (Q1 FY2026 vs Q1 FY2025) | Category | Value (Q1 FY26) | Change vs Q1 FY25 | Constant Dollar Change | | :--- | :--- | :--- | :--- | | **Total Net Sales** | **$131.8 million** | **-1.9%** | **-1.0%** | | U.S. Net Sales | N/A | -1.6% | N/A | | International Net Sales | N/A | -2.2% | -0.7% | - The overall decrease in net sales was attributed to declines in owned brands and Movado Company Stores, which was partially offset by an increase in licensed brands[8](index=8&type=chunk) [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Gross margin slightly decreased to **54.1%**, while operating expenses increased to **$71.1 million**, leading to a sharp decline in operating income to **$0.3 million** and net income to **$1.4 million** - Gross margin decreased to **54.1%** from **54.3%**, primarily due to the negative impact of foreign exchange rates, increased shipping costs, and decreased leverage of fixed costs from lower sales[8](index=8&type=chunk) - Operating expenses increased to **$71.1 million** from **$70.8 million**, mainly due to higher foreign exchange losses and performance-based compensation, partially offset by lower payroll and marketing expenses[8](index=8&type=chunk) Profitability Comparison (Q1 FY2026 vs Q1 FY2025) | Metric | Q1 FY2026 | Q1 FY2025 (As Restated) | | :--- | :--- | :--- | | Gross Profit | $71.4 million | $72.9 million | | Operating Income | $0.3 million | $2.1 million | | Net Income Attributable to Movado | $1.4 million | $2.0 million | | Diluted EPS | $0.06 | $0.09 | [Non-GAAP Adjustments](index=2&type=section&id=Non-GAAP%20Adjustments) The company reported adjusted non-GAAP figures, excluding a **$0.6 million** pre-tax charge related to a cost-savings initiative, resulting in an adjusted operating income of **$0.9 million** and adjusted diluted EPS of **$0.08** - First quarter fiscal 2026 results included a pre-tax charge of **$0.6 million**, or **$0.02** per diluted share, associated with a corporate cost-savings initiative[6](index=6&type=chunk) GAAP to Non-GAAP Reconciliation (Q1 FY2026, in thousands, except EPS) | Metric | As Reported (GAAP) | Adjustment | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $291 | $579 | $870 | | Net Income | $1,420 | $460 | $1,880 | | Diluted EPS | $0.06 | $0.02 | $0.08 | [Capital Allocation](index=3&type=section&id=Capital%20Allocation) The Board of Directors approved a quarterly cash dividend of **$0.35** per share, with no share repurchases made during the quarter, leaving **$50.0 million** available under the program - The Board of Directors approved a cash dividend of **$0.35** per share, payable on June 26, 2025, to shareholders of record as of June 12, 2025[9](index=9&type=chunk) - No shares were repurchased during the first quarter of fiscal 2026. As of April 30, 2025, **$50.0 million** remained available under the share repurchase program[10](index=10&type=chunk) [Business Outlook](index=3&type=section&id=Fiscal%202026%20Outlook) Movado Group has elected not to provide a fiscal 2026 outlook due to economic uncertainty and unpredictable tariff impacts, but is planning actions to mitigate these effects - The company has chosen not to provide a fiscal 2026 outlook, citing economic uncertainty and unpredictable tariff impacts[11](index=11&type=chunk) - To mitigate the impact of recent tariff changes, the company is planning actions such as select price increases at wholesale and retail levels[11](index=11&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the unaudited consolidated financial statements for the period ended April 30, 2025 [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 FY2026, Movado Group generated **$131.8 million** in net sales and **$71.4 million** in gross profit, with operating income at **$0.3 million** and net income at **$1.4 million** Consolidated Statements of Operations (in thousands) | Account | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 (As Restated) | | :--- | :--- | :--- | | Net sales | $131,769 | $134,379 | | Gross profit | $71,350 | $72,920 | | Operating income | $291 | $2,118 | | Net income attributable to Movado Group, Inc. | $1,420 | $2,015 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of April 30, 2025, the company reported total assets of **$747.2 million**, total liabilities of **$253.8 million**, and total shareholders' equity of **$493.2 million**, with **$203.1 million** in cash Key Balance Sheet Items (in thousands) | Account | April 30, 2025 | April 30, 2024 (As Restated) | | :--- | :--- | :--- | | Cash and cash equivalents | $203,086 | $225,372 | | Inventories | $189,298 | $165,170 | | Total current assets | $511,007 | $501,886 | | Total assets | $747,178 | $735,995 | | Total current liabilities | $125,555 | $103,370 | | Total equity | $495,400 | $491,856 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for Q1 FY2026 was **$7.2 million**, an improvement from the prior year, with the period ending with a cash balance of **$203.1 million** Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 (As Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | ($7,214) | ($18,074) | | Net cash used in investing activities | ($2,837) | ($4,796) | | Net cash used in financing activities | ($467) | ($9,917) | | Net change in cash | ($5,341) | ($36,735) | | Cash at end of period | $203,873 | $226,079 |

Wall Street expects a year-over-year increase in earnings on higher revenues when Movado (MOV) reports results for the quarter ended April 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may mov ...

Core Viewpoint - Movado Group, Inc. is under investigation for potential violations of federal securities laws and unlawful business practices related to misconduct in its Dubai branch, which has led to the need for restating financial statements [1][2]. Group 1: Allegations and Misconduct - In late January 2025, Movado became aware of allegations of misconduct in its Dubai branch, specifically regarding sales practices in the Middle East, India, and Asia Pacific [2]. - The investigation revealed that the former managing director and certain employees engaged in actions that resulted in an overstatement of sales, premature recognition of sales, and underreporting of credit notes owed to customers [2]. - The misconduct occurred over approximately five years, starting from the fiscal year ended January 31, 2021, and involved the use of a third-party warehouse and falsification of documents [2]. Group 2: Financial Impact - Movado announced that its historical consolidated financial statements for the fiscal years ended January 31, 2024, 2023, and 2022, as well as interim periods within fiscal years 2025 and 2024, require restatement [2]. - The restated interim periods for fiscal 2025 will reflect a reduction in operating expenses due to the reversal of certain accruals linked to lower adjusted operating results [2]. - Following the news of the investigation, Movado's stock price fell by $0.25 per share, or 1.81%, closing at $13.56 per share on April 11, 2025 [2]. Group 3: Internal Controls - Movado's management identified a material weakness in internal control over financial reporting, particularly in the risk assessment process related to the lack of functional segregation of duties in the Dubai branch [2].

Core Viewpoint - Rosen Law Firm is investigating potential securities claims on behalf of shareholders of Movado Group, Inc. due to allegations of materially misleading business information issued by the company [1]. Group 1: Allegations and Company Response - On April 11, 2025, Movado disclosed allegations of misconduct within its Dubai branch related to sales practices in the Middle East, India, and Asia Pacific [3]. - The company identified that the former managing director and certain employees engaged in actions leading to an overstatement of sales, premature recognition of sales, and underreporting of credit notes owed to customers [3]. - Movado's financial statements dating back to 2022 will require restatements to accurately reflect sales and credits, indicating ineffective internal controls over financial reporting [3]. Group 2: Financial Impact - Following the disclosure of these allegations, Movado's stock price fell to $13.56 per share, marking a 1.81% decrease from the previous closing price of $13.81 [3]. Group 3: Legal Action and Investor Rights - Rosen Law Firm is preparing a class action to seek recovery of investor losses, allowing affected shareholders to join without any out-of-pocket fees through a contingency fee arrangement [2]. - Investors are encouraged to select qualified legal counsel with a successful track record in securities class actions, highlighting Rosen Law Firm's experience and past achievements in this area [4].