Company Overview - Movado (MOV) shares increased by 7.4% to close at $14.49, supported by higher trading volume compared to normal sessions, despite a 25.1% decline over the past four weeks [1] - The upcoming quarterly earnings for Movado are projected at $0.39 per share, reflecting a year-over-year decrease of 29.1%, with expected revenues of $181.63 million, a slight increase of 1.1% from the previous year [2] - The consensus EPS estimate for Movado has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [3] Industry Insights - Movado operates within the Zacks Retail - Jewelry industry, which includes other companies like Brilliant Earth Group, Inc. (BRLT), whose stock rose by 5.1% to $1.45, with a 4.6% return over the past month [3] - Brilliant Earth Group's consensus EPS estimate has seen a significant change of -166.7% over the past month, now projected at -$0.01, which is a 133.3% decline from the previous year's report [4] - Both Movado and Brilliant Earth Group currently hold a Zacks Rank of 3 (Hold), indicating a neutral outlook for these stocks [3][4]

Group 1 - The Culture Makers event was created and launched in 2023 to unite and celebrate the Hispanic and Latin community [1] - Jessica Alba expressed excitement about the growth of the Culture Makers event and emphasized its purpose of fostering culture, collaboration, community, and connection [1] - The event featured notable attendees including Eva Longoria, Danny Ramirez, and Robert Rodriguez, and included food from Tacos 1986 and cocktails curated by Don Julio [1]

Core Insights - Movado Group, Inc. has launched a new Artist Series collaboration with Derrick Adams, a prominent Black artist, focusing on the celebration of the Black experience through contemporary cubism and vibrant colors [1][2][3] - The limited-edition collection includes five watch designs, each with 125 pieces, and a total of 25 collectors sets, marking the first time Movado has designed a clock in an Artist Series collaboration [2][3] Company Overview - Movado Group, Inc. designs, sources, and globally distributes a variety of watch brands including MOVADO®, MVMT®, OLIVIA BURTON®, and others, while also operating Movado Company Stores in the U.S. and Canada [5] Artist Profile - Derrick Adams is a multidisciplinary artist based in Brooklyn, New York, recognized for his vibrant and contemporary-cubist style that reflects the richness of Black culture [4]

Financial Data and Key Metrics - Net sales for the third quarter decreased by 2.6% to $187.7 million compared to the same period last year [20] - Gross profit margin for the quarter was 53.8%, down from 54.5% in the prior year, primarily due to unfavorable channel and product mix [21] - Operating income decreased to $9.3 million from $20.7 million in the third quarter of fiscal 2024, driven by lower sales and higher operating expenses [22] - Net income for the quarter was $8.3 million, or $0.37 per diluted share, compared to $17.4 million, or $0.77 per diluted share, in the year-ago period [23] - Year-to-date sales for the nine-month period ended October 31, 2024, were $478.7 million, a decrease of 2.9% compared to the same period last year [24] - Gross profit for the nine-month period was $260.3 million, or 54.4% of sales, down from $273.6 million, or 55.5% of sales, in the prior year [25] - Net income for the nine-month period was $14.9 million, or $0.66 per diluted share, compared to $34.6 million, or $1.53 per diluted share, in the year-ago period [26] Business Line Performance - Movado brand sales on the company's website increased by 16.9% in the quarter, with September and October sales growing by over 25% [7] - Licensed brands sales grew by 3.8% in the third quarter, driven by strong performance in Coach, Lacoste, Calvin Klein, and HUGO BOSS [9] - Coach brand performed well, driven by new product introductions, including the Sammy collection, which resonated with Gen Z consumers [9] - Tommy Hilfiger sales were led by the TH 85 Chronograph and the new Henry family of automatic watches [10] - HUGO BOSS returned to growth in the quarter, with strong sales of the Time Traveler collection and the new Bossmatic family [11] - Lacoste saw strong sales growth, particularly in its jewelry collection, with the Metropole Bracelet continuing to grow at a double-digit rate [12] - Calvin Klein brand grew overall, driven by strong sales in jewelry and the introduction of the new Pulse family for women's watches [13] Regional Performance - US net sales decreased by 7.1% in the third quarter, while international markets grew by 0.4%, with growth in Latin America, the Middle East, India, and Australia offsetting declines in Europe [14] - Movado brand performed well in India, with a 20% increase in sales, positioning it as a significant growth market [8] - Europe, the company's largest international market, continued to soften, contributing to a 1.1% decline in international sales on a constant currency basis [20] Strategic Initiatives and Industry Competition - The company has focused on introducing new product families and revitalizing marketing efforts across its brand portfolio [6] - Investments in marketing have been made to drive revenue growth and brand awareness, despite a 2.9% decline in net sales year-to-date [6] - The company is prioritizing cost reduction, brand-building initiatives, and rationalizing marketing investments to improve profitability [6] - Movado is targeting growth opportunities in jewelry and emerging markets like India and Southeast Asia, while aiming to return North America and the Movado brand to higher profitability [6] - The company has a strong balance sheet with $182 million in cash and no debt, and has announced a new $50 million share repurchase plan [6] Management Commentary on Operating Environment and Future Outlook - The retail environment in the US and Europe remains challenging, with retailers tightly managing inventories [7] - The company expects a strong holiday season, supported by the launch of its Amazon Premiere platform and a new marketing campaign [8] - Management is optimistic about the long-term potential of the Movado brand in India and other growth markets [8] - The company is focused on reducing operating costs and improving profitability, with $6.5 million in annualized savings expected from recent cost-saving initiatives [30] - For fiscal 2025, the company expects net sales of approximately $665 million, gross profit of 54% of sales, and operating income of $23 million [29] Other Important Information - The company repurchased approximately 120,000 shares under its share repurchase program in the first nine months of fiscal 2025 [27] - A new three-year $50 million share buyback program has been approved by the Board of Directors [28] Q&A Session Summary Question: New stock buyback authorization usage - The company plans to use the new buyback authorization primarily to offset dilution, with potential changes depending on cash generation [33][34] Question: Retail inventory levels and leading indicators - Retail inventory levels in the US and Europe are historically low, and the company expects a rebound as economic conditions improve [37][38] - E-commerce businesses typically carry less inventory than in-store businesses, but they represent no more than 20-25% of a retailer's overall business [39]

Financial Performance - Net sales for the three months ended October 31, 2024 were $182.7 million, representing a $5.0 million or 2.6% decrease from the prior year period[117]. - The Watch and Accessory Brands segment net sales were $161.9 million, down $3.3 million or 2.0% compared to the prior year period, primarily due to unfavorable sales mix and decreased volumes[118]. - In the United States, net sales for the Watch and Accessory Brands segment were $51.6 million, a decrease of $3.7 million or 6.7%, with owned brands category sales down $5.4 million or 13.1%[120]. - International net sales for the Watch and Accessory Brands segment were $110.3 million, an increase of $0.4 million or 0.4%, positively impacted by foreign currency exchange rates[121]. - Net sales for the nine months ended October 31, 2024 were $478.7 million, a decrease of $14.3 million or 2.9% from the prior year[136]. - Net sales in the Watch and Accessory Brands segment for the nine months ended October 31, 2024 were $415.2 million, down $9.6 million or 2.3% from the prior year[137]. - The U.S. locations of the Watch and Accessory Brands segment experienced net sales of $137.2 million for the nine months ended October 31, 2024, a decrease of $4.7 million or 3.3%[138]. Profitability - Gross profit for the three months ended October 31, 2024 was $98.4 million, or 53.8% of net sales, compared to $102.3 million or 54.5% in the prior year[123]. - Operating income in the Watch and Accessory Brands segment for the three months ended October 31, 2024 was $5.3 million, down $13.2 million from $18.5 million in the prior year period[125]. - Net income attributable to Movado Group, Inc. for the three months ended October 31, 2024 was $5.1 million, down from $17.4 million in the prior year[133]. - For the nine months ended October 31, 2024, the Company recorded operating income of $7.5 million in the Watch and Accessory Brands segment, a decrease from $31.9 million in the same period of 2023[145]. - The Company Stores segment recorded operating income of $5.4 million for the nine months ended October 31, 2024, a decrease from $9.3 million in the same period of 2023[149]. - Net income attributable to Movado Group, Inc. was $11.7 million for the nine months ended October 31, 2024, down from $34.6 million in 2023[153]. Expenses - SG&A expenses for the three months ended October 31, 2024 were $91.8 million, an increase of $10.2 million or 12.5% from the prior year period[124]. - SG&A expenses for the nine months ended October 31, 2024 were $247.4 million, an increase of $15.0 million or 6.5% from the prior year[144]. Cash Flow and Capital Management - The Company had cash and cash equivalents of $181.5 million as of October 31, 2024, compared to $201.0 million in the prior year[154]. - Working capital decreased to $398.4 million as of October 31, 2024, from $412.1 million in 2023[155]. - Cash used in operating activities was $40.6 million for the nine months ended October 31, 2024, compared to cash provided of $7.4 million in the same period of 2023[157]. - Cash used in investing activities increased to $11.9 million for the nine months ended October 31, 2024, from $8.8 million in 2023[158]. - The Company declared and paid cash dividends totaling $23.3 million for the nine months ended October 31, 2024, compared to $45.4 million in the same period of 2023[168]. - The Company has authorized a total of $100.0 million for share repurchase programs, with $15.2 million remaining under the November 23, 2021 program and the full $50.0 million available under the December 5, 2024 program[169]. - During the nine months ended October 31, 2024, the Company repurchased 120,000 shares at an average cost of $21.90 per share, totaling $2.6 million, compared to 85,722 shares at an average cost of $27.40 per share, totaling $2.3 million in the same period of 2023[169]. Risk Management - The Company employs a hedging program to manage foreign currency exchange risks, particularly with Swiss Francs, Euros, and British Pounds[172]. - The Company uses forward exchange contracts to offset exposure to foreign currency receivables and liabilities, with changes in fair value recognized in earnings[174]. - The Company has a comprehensive risk management strategy that includes hedging against currency fluctuations and commodity price changes[172]. - As of October 31, 2024, the Company's net forward contracts hedging portfolio included 30.0 million Swiss Francs and 33.0 million Euros, with various expiry dates through April 10, 2025[175]. - The Company reported a potential gain of $0.1 million if Swiss Franc forward contracts were settled as of October 31, 2024, and a $0.2 million gain for Euro forward contracts[175]. - The Company did not hold any futures contracts in its gold hedge portfolio as of October 31, 2024, meaning fluctuations in gold prices will directly affect the cost of sales[176]. - The Company had zero floating rate debt as of October 31, 2024, and 2023, with no weighted average borrowings during the nine months ended October 31, 2024[177]. - The Company has no off-balance sheet financing or unconsolidated special-purpose entities, indicating a straightforward financial structure[170].

Group 1 - Amentum Holdings Inc. will be added to the S&P 500 effective prior to the open of trading on September 30, 2024, replacing Bath & Body Works, Inc. [1][2] - Bath & Body Works will move to the S&P SmallCap 600 effective prior to the open of trading on October 1, 2024, replacing Movado Group, Inc. [1][2] - Jacob's Solutions Inc. is spinning off its Critical Mission Solutions and Cyber Intelligence business, which will merge with private Amentum to create the newly publicly traded Amentum Holdings [1] Group 2 - The changes in the S&P indices reflect that Bath & Body Works is no longer representative of the large-cap market space, while Movado is no longer representative of the small-cap market space [1]

Core Viewpoint - Movado Group, Inc. reported disappointing Q2 results, leading to a significant stock decline of -15% and a downward revision of its FY2025 outlook, indicating ongoing brand weakness and ineffective marketing efforts [1][2][9] Financial Performance - Q2 revenues were $159.3 million, a slight decline of -0.7%, but exceeded Wall Street's expectations by $8.8 million; however, they fell short of the company's own forecasts [2][3] - Operating expenses increased by $3.7 million to $83.3 million, resulting in a shallow operating income of $3.0 million and an EPS of $0.16, missing consensus estimates by $0.03 [3][4] - The gross margin decreased by 1.5 percentage points to 54.2%, attributed partly to the lower-priced Movado Bold Quest series [3] Revised Guidance - The company revised its FY2025 sales guidance to $665-675 million, a decrease of -0.4% year-on-year at the mid-point, down from a previous range of $700-710 million [3][9] - Operating income expectations were also lowered to $23-26 million from $32-35 million, with $20 million in earnings pressure due to increased marketing spend [3][9] Marketing Strategy - Movado launched a new marketing campaign featuring five brand ambassadors, which requires successful execution to justify the increased marketing expenditure [4][9] - The campaign's effectiveness is questioned due to the perceived decline in cultural relevance of some ambassadors, raising concerns about its potential impact on sales [4] Valuation and Investment Outlook - Updated DCF model estimates Movado's fair value at $16.31, indicating a 13% downside from the current stock price, with a more conservative sales outlook post-FY2025 [5][6] - The company's capital allocation strategy, characterized by high cash reserves, contributes to an unattractive investment case, suggesting a potential 45% downside instead of 13% [6] Market Context - The luxury watch market is facing challenges, with competitors like LVMH reporting a -3% decline in watch and jewelry sales, reflecting broader macroeconomic pressures [3][9] - Despite increased marketing efforts, Movado's sales performance remains weak, indicating that the current strategy has not yet yielded positive results [2][9]

Eroding financials and lowered guidance didn't make for a beneficial combination. Many of Movado Group's (MOV -14.66%) goods are quite attractive, but the company's stock wasn't looking too pretty on Thursday. On the back of dispiriting quarterly results, investors peeled away from the stock, leaving it nearly 15% down in price at market close. The benchmark S&P 500 index did much better by comparison, "only" shedding 0.3% during the session. Revenue and profitability declines Movado's second quarter of fis ...

Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $159.3 million, a decrease of 0.7% compared to $160.4 million in Q2 2024, with a constant dollar decrease of 0.3% [14][15] - Operating income decreased to $3 million from $9.6 million in Q2 2024, with net income at $3.7 million or $0.16 per diluted share, down from $8 million or $0.36 per diluted share in the prior year [15][17] - Gross profit margin was 54.2%, down from 55.7% in the same quarter last year, primarily due to unfavorable channel and product mix [14][15] Business Line Data and Key Metrics Changes - Movado brand sales grew by 1.4%, with a 21% increase in direct-to-consumer sales through Movado.com, offset by a 6% decline in the wholesale channel [5][12] - Licensed brands saw a 2.5% growth for the quarter, with notable performance from brands like Coach and Tommy Hilfiger [9][10] - The overall performance of the jewelry segment outperformed watches, indicating strong innovation and market demand [24] Market Data and Key Metrics Changes - U.S. net sales decreased by 0.3%, while international net sales decreased by 0.9% on a constant currency basis [14] - The company noted cautious order placements from retail partners, particularly in Europe and the U.S., due to a challenging consumer spending environment [5][12] - Growth was observed in developing markets such as Latin America and India, where economic conditions have improved [21] Company Strategy and Development Direction - The company is focused on aligning operating expenses with sales while continuing to support brand-building efforts [6][12] - A new advertising campaign featuring high-profile brand ambassadors was launched, aimed at enhancing brand equity and consumer engagement [7][22] - The company plans to introduce new products and line extensions to strengthen its market position, particularly in the Movado brand [8][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging retail environment and the impact of consumer spending on sales, leading to an updated outlook for the second half of the year [5][19] - The company expects net sales for the year to be in the range of $665 million to $675 million, with second-half sales anticipated to be flat to low single digits compared to the previous year [19] - Management expressed confidence in the strategic initiatives in place, despite not achieving the desired results as quickly as planned [12][19] Other Important Information - The company maintained a strong balance sheet with $198 million in cash and no debt, while inventory levels increased to support sales expectations for the second half of the year [4][17] - Capital expenditures for the first six months were $3.9 million, with a share repurchase program still in effect [18] Q&A Session Summary Question: Insights on competition and pricing - Management noted that the watch category has become challenging across luxury and accessible segments, with gains in the fashion watch category despite broader market difficulties [20][21] Question: Global media campaign and India opportunity - The Movado campaign is primarily focused on North America but will also run in India and other markets, with expectations for future international opportunities [23] Question: Performance of jewelry segment - Jewelry is outperforming watches in the fashion brands, with strong innovation and market opportunities identified, particularly in Europe and Mexico [24] Question: Financial guidance and interest rates - Management indicated that current guidance does not factor in potential interest rate cuts, as the impact on consumers typically lags behind economic changes [25] Question: Share buyback strategy - The decision to be more aggressive in share buybacks will depend on confidence in the market environment and the company's performance [26]

Sales Performance - Net sales for the three months ended July 31, 2024 were $159.3 million, a decrease of $1.1 million or 0.7% compared to the prior year period[76]. - The Watch and Accessory Brands segment net sales were $133.9 million, down $0.2 million or 0.1% from the prior year[77]. - In the United States, net sales for the Watch and Accessory Brands segment increased by $0.6 million or 1.4% to $46.5 million, driven by online retail growth[78]. - International net sales in the Watch and Accessory Brands segment decreased by $0.8 million or 0.9% to $87.4 million, impacted by unfavorable sales mix and foreign exchange fluctuations[79]. - Company Stores segment net sales were $25.4 million, a decrease of $0.9 million or 3.4% from the prior year, primarily due to an unfavorable sales mix[80]. - For the six months ended July 31, 2024, net sales decreased by $9.3 million or 3.1% to $296.0 million compared to the prior year period[93]. - The Watch and Accessory Brands segment net sales for the six months ended July 31, 2024 were $253.3 million, a decrease of $6.4 million or 2.4% from the previous year[94]. - The licensed brands category net sales increased by $1.3 million or 13.1% in the United States, while owned brands category decreased by $1.0 million or 2.9%[78]. - Fluctuations in foreign currency exchange rates negatively impacted net sales by $0.6 million compared to the prior year[76]. Profitability - Gross profit for the three months ended July 31, 2024 was $86.4 million, representing 54.2% of net sales, down from 55.7% in the prior year[81]. - The decrease in gross margin percentage was approximately 150 basis points, primarily due to an unfavorable sales mix[81]. - Gross profit for the six months ended July 31, 2024 was $161.9 million, representing 54.7% of net sales, down from $171.3 million or 56.1% in the prior year[98]. - The Company recorded an operating loss of $0.6 million in the Watch and Accessory Brands segment, a decrease from an operating income of $4.6 million in the same period of 2023, reflecting a change of $5.2 million[83]. - In the U.S. locations of the Watch and Accessory Brands segment, the operating loss improved to $8.6 million for the three months ended July 31, 2024, compared to a loss of $10.4 million in the prior year, driven by a $1.6 million increase in gross profit[84]. - The International locations of the Watch and Accessory Brands segment reported an operating income of $8.0 million for the three months ended July 31, 2024, down from $15.0 million in the prior year, due to a decrease in gross profit of $3.4 million[85]. - The Company recorded operating income of $4.1 million for the six months ended July 31, 2024, down from $7.1 million in the same period of 2023, reflecting a decrease of $3.0 million primarily due to lower sales and higher SG&A expenses[103]. - Net income attributable to Movado Group, Inc. of $3.7 million for the three months ended July 31, 2024, down from $8.0 million in the same period of 2023[90]. - Net income attributable to Movado Group, Inc. was $6.6 million for the six months ended July 31, 2024, compared to $17.2 million for the same period in 2023, indicating a significant decline[105]. Expenses - SG&A expenses increased by $3.7 million or 4.6% to $83.3 million, mainly due to higher marketing expenses[82]. - SG&A expenses for the six months ended July 31, 2024 increased by $4.8 million or 3.2% to $155.5 million, primarily due to higher marketing and payroll related expenses[99]. Cash Flow and Financial Position - The Company had cash and cash equivalents of $198.3 million as of July 31, 2024, down from $218.9 million a year earlier, with working capital decreasing to $405.0 million from $412.7 million[106]. - Cash used in operating activities was $35.9 million for the six months ended July 31, 2024, compared to cash provided of $9.2 million in the same period of 2023, largely due to increased investment in inventories and trade receivables[107]. - Cash used in investing activities increased to $8.3 million for the six months ended July 31, 2024, from $6.1 million in the prior year, primarily for long-term investments and capital expenditures[108]. - Cash used in financing activities was $17.7 million for the six months ended July 31, 2024, a decrease from $38.2 million in the same period of 2023, with dividends paid totaling $15.5 million[109]. - The Company repurchased 39,000 shares of its common stock at a total cost of $1.1 million during the six months ended July 31, 2024, with $16.8 million remaining available under the share repurchase program[116]. - The Company had no borrowings under its $100.0 million revolving credit facility as of July 31, 2024, with availability under the facility at $99.7 million[112]. - The Company has no floating rate debt as of July 31, 2024, and 2023, indicating a stable debt position[123]. - There were no weighted average borrowings during the six months ended July 31, 2024, reflecting a conservative financial strategy[123]. Taxation - The effective tax rate for the three months ended July 31, 2024 was 19.5%, a decrease from 26.1% in the prior year, primarily due to changes in foreign tax credits and deductions[89]. - The effective tax rate increased to 31.9% for the six months ended July 31, 2024, compared to 23.7% in the prior year, primarily due to limitations on foreign tax credits[105]. Currency and Hedging - The Company’s foreign currency hedging portfolio included 25.0 million Chinese Yuan and 35.9 million Euros as of July 31, 2024, with a potential gain of $0.4 million if Swiss Franc forward contracts were settled[121]. - The Company did not hold any future contracts in its gold hedge portfolio as of July 31, 2024, and 2023, meaning gold price fluctuations will directly impact the cost of sales[122].