PARIS — The Swatch Group and Japan’s Citizen Watch are being investigated in Italy over pricing practices. According to the Italian Competition Authority (or AGCM), the watchmakers may be in violation of European Union regulations for imposing retail prices displayed online on authorized distributors. More from WWD The offices of the Italian branches of both watchmakers were inspected on Dec. 3 by the competition watchdog, assisted by the Special Antitrust Unit of the Italian financial police. Citizen, ...

Core Viewpoint - Italy's antitrust regulator has initiated investigations into The Swatch Group and Citizen Watch for potentially restricting competition on retail prices of watches sold in Italy [1][2]. Group 1: Investigations Overview - The Italian Competition Authority is examining whether Citizen Watch Italy and The Swatch Group (Italia) have engaged in anti-competitive agreements, specifically concerning retail price coordination among authorized dealers [2]. - The investigations are based on suspected violations of Article 101 of the Treaty on the Functioning of the European Union (TFEU) [2]. Group 2: Allegations Against Citizen Watch - Citizen Watch is accused of directing its selective distribution network to maintain specific retail prices and monitoring pricing behavior among its distributors [3]. - The company allegedly implemented "retaliatory commercial measures" against distributors who offered discounts or deviated from the set prices [3]. Group 3: Allegations Against The Swatch Group - Similar allegations have been made against The Swatch Group, which is suspected of imposing fixed retail prices within its selective distribution network and monitoring compliance [4]. - The Swatch Group may also retaliate against distributors that do not adhere to these pricing requirements [4]. Group 4: Legal Implications - The pricing practices of both Citizen Watch and The Swatch Group could be classified as resale price maintenance, which is a serious violation under Article 4(a) of Commission Regulation [5]. - These practices may infringe upon Article 101 of the TFEU, leading to potential legal consequences [5]. Group 5: Investigative Actions - In December 2025, the Italian Competition Authority, with support from the Special Antitrust Unit of the Italian Financial Police, conducted inspections at the offices of both Citizen Watch Italy and The Swatch Group (Italia) as part of the ongoing investigations [6].

Group 1 - The Italian competition authority has initiated two investigations into Swiss watchmaker Swatch and Japan's Citizen Watch [1]

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Financial Data and Key Metrics Changes - Revenue growth of 3.1% to $186.1 million, with a 5.9% increase excluding the Middle East [4][14] - Gross margin improved by 80 basis points to 54.3% compared to 53.5% last year, despite a $4.5 million impact from U.S. tariffs [5][15] - Adjusted operating income grew over 40% to $12.6 million, with positive operating cash flow of $1.3 million for the first nine months [5][16] - Net income for the third quarter was $10.2 million, or $0.45 per diluted share, compared to $8.5 million, or $0.37 per diluted share in the previous year [17] Business Line Data and Key Metrics Changes - Movado brand sales grew 17.7% on a comparable store basis, with overall sales in Movado company stores increasing by 9.4% [9] - Licensed brands saw a 6.4% growth overall, with a 2.9% increase on a constant currency basis [10] - Strong performance in jewelry and watches, particularly from brands like Coach and Hugo Boss [10][11] Market Data and Key Metrics Changes - U.S. net sales increased by 6.9%, while international net sales increased by 0.6%, with strong performances in Europe and Latin America [15] - The Middle East showed softer results, but the company is working on rebuilding its strategy in that region [4][15] Company Strategy and Development Direction - Focus on building brands sustainably, driving innovation, and improving financial results [4][6] - Plans to return to growth in the Middle East next year and continue to invest in brand-building efforts while improving profitability [4][25] - Emphasis on capturing momentum from younger consumers embracing analog watches [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving dynamics in the fashion and accessible luxury watch categories [6] - Acknowledgment of ongoing global economic and political uncertainty, leading to no fiscal 2026 outlook provided [20] Other Important Information - The company ended the quarter with $183.9 million in cash and no debt, and a quarterly dividend of $0.35 per share was approved [6][19] - Recent trade agreements are expected to lower U.S. tariff rates on Swiss watches, allowing for better planning and reduced price-based mitigation [5][20] Q&A Session Summary Question: Is the success of watches and brands due to influencers or design trends with Gen Z? - Management indicated it is a combination of both increased social media coverage and innovative designs resonating with younger consumers [22] Question: Does having sold-out conditions impair sales? - Management clarified that sold-out conditions are planned for select product families and that they expect to replenish styles soon [23] Question: Will the success in sales change spending levels for the fiscal year? - Management emphasized a balance between investing in brand-building and improving profitability [25]

Financial Data and Key Metrics Changes - Revenue growth of 3.1% to $186.1 million in Q3 2026, with a 5.9% increase excluding the Middle East [4][5] - Gross margin improved by 80 basis points to 54.3% compared to 53.5% last year, despite a $4.5 million impact from U.S. tariffs [5][15] - Adjusted operating income grew over 40% to $12.6 million, with positive operating cash flow of $1.3 million for the first nine months [5][17] - Net income for Q3 was $10.2 million, or $0.45 per diluted share, compared to $8.5 million, or $0.37 per diluted share in the previous year [17][18] Business Line Data and Key Metrics Changes - Movado brand sales grew 17.7%, with overall sales in Movado company stores increasing by 9.4% on a comparable store basis [9] - Licensed brands saw a 6.4% growth overall, with Coach driving double-digit growth among Gen Z consumers [10][11] - Strong performance in the Museum Collection and new product launches, including the Bangle Collection and Style Set with Lab-Grown Diamonds [7][8] Market Data and Key Metrics Changes - U.S. net sales increased by 6.9%, with strong growth in the fashion brand business and direct-to-consumer channels [6][14] - International net sales increased by 0.6%, with strong performances in Europe and Latin America, offset by weaker results in the Middle East [14][15] Company Strategy and Development Direction - Focus on building brands sustainably, driving innovation, and improving financial results [5][6] - Plans to return to growth in the Middle East next year after rebuilding the team and refining strategy [4][5] - Emphasis on capturing momentum among younger consumers embracing analog watches for their design and quality [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving dynamics in the fashion and accessible luxury watch categories despite global economic uncertainties [6][12] - No fiscal 2026 outlook provided due to current economic uncertainty and unpredictable tariff developments [20] Other Important Information - The company ended the quarter with $183.9 million in cash and no debt, and a quarterly dividend of $0.35 per share was approved [6][19] - Capital expenditures for the first nine months were $3.5 million, with approximately 100,000 shares repurchased under the share repurchase program [19] Q&A Session Questions and Answers Question: Is the success seen with many watches and brands due to influencers or design trends with Gen Z? - The success is attributed to a combination of increased social media coverage and innovative designs resonating with younger consumers [22] Question: Does having sold-out conditions impair sales? - Sold-out conditions are seen as a balance of supply and demand, with plans to replenish styles in early Q1 [23] Question: Will the success in sales change spending levels for the fiscal year? - The focus remains on improving profitability while continuing to invest in brand-building efforts [24]

Core Insights - Movado Group, Inc. reported third quarter net sales of $186.1 million, reflecting a 3.1% increase from $180.5 million in the same quarter of fiscal 2025 [1] - The company achieved a gross margin of 54.3%, which is an expansion of 80 basis points compared to 53.5% in the third quarter of fiscal 2025 [1] - Operating income for the third quarter reached $11.7 million, nearly doubling from $6.0 million in the prior year’s third quarter [1]

Financial Data and Key Metrics Changes - Third-quarter net sales totaled $267 million, down 7% in constant currency compared to the prior year, slightly ahead of expectations [18] - Gross margin in Q3 was 48.7%, down 70 basis points year-over-year, but underlying gross margins improved compared to the prior year [18][20] - Adjusted operating loss for Q3 narrowed to $15 million from $22 million a year ago, with expectations for a break-even to slightly positive adjusted operating margin for the full year [22][25] Business Line Data and Key Metrics Changes - Traditional watch sales for the Fossil brand in Q3 were up high double digits, outperforming the market [5][6] - The wholesale channel grew mid-single digits globally, with notable strength in EMEA and Asia regions [12] - The company reported a 26% year-over-year reduction in inventory, aligning with a 7% sales decline [23][34] Market Data and Key Metrics Changes - The U.S. watch market showed low single-digit growth, with department and specialty store channels up low double digits [5] - In Asia, India and Japan experienced double-digit growth, while China remained under pressure [12][33] - The company noted a positive performance in the Asia region, particularly in traditional watches and jewelry, with gross margin expansion [32] Company Strategy and Development Direction - The company has successfully transformed its balance sheet, extending debt maturity to 2029 and bringing in over $32 million of new capital [4][24] - The turnaround plan focuses on three pillars: strengthening the core brand, right-sizing the cost structure, and improving the balance sheet [8][16] - The company is committed to a full-price selling model, which has improved margin architecture and reduced promotional activity [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the path to profitable growth, reiterating financial guidance for the full year [17][25] - The company acknowledged ongoing challenges in the macro environment, particularly in China, but remains optimistic about growth in other regions [33] - Management highlighted the importance of disciplined expense management and working capital improvements [22][23] Other Important Information - The company has appointed Devin Leong as General Manager for Asia, expected to enhance market presence and accelerate growth [12] - The Nick Jonas campaign has generated nearly 6 billion impressions and is attracting a younger demographic [9][10] - The company is focusing on brand investment and enhancing visibility through media and PR partnerships [11] Q&A Session Summary Question: What is driving the gap between wholesale growth and store comps? - Management clarified that the decline in store comps refers to direct-to-consumer performance, which has been intentionally reduced to improve margins [27][28] Question: Can you provide insights on the performance in Asia? - Management noted strong performance in India and Japan, while China remains challenging, with a focus on reducing promotional activity to improve gross margins [32][33] Question: What initiatives are driving inventory improvements? - Management highlighted tighter inventory control and a focus on key products, resulting in a significant reduction in SKUs and improved gross margins [34][37]

Core Viewpoint - Shares of Richemont and Swatch Group increased following U.S. President Donald Trump's announcement of negotiations with Switzerland to reduce the 39% tariff on exports [1] Company Summary - Richemont's stock performance improved as a result of potential tariff reductions [1] - Swatch Group also experienced a rise in share value due to the same tariff negotiation news [1] Industry Summary - The luxury goods industry may benefit from lower export tariffs, enhancing competitiveness in the U.S. market [1]

Core Insights - Swiss watch exports experienced a decline of 3.1% year-over-year in September, totaling 2 billion Swiss francs ($2.5 billion), primarily due to a 39% tariff imposed by the Trump administration on imports from Switzerland to the US, which is the largest market for Swiss watches [1][2][3] - The decline in exports to the US was significant, with a 56% drop, marking the second consecutive monthly decrease following a surge in shipments in July as producers prepared for the anticipated tariffs [2][3] - Exports to the US have negatively impacted major companies in the industry, including Richemont and Swatch Group AG, as well as independent watchmakers like Audemars Piguet, Patek Philippe, and Rolex SA, leading to a drop in share prices for Swatch and Richemont [3][4] Market Performance - Excluding the US market, Swiss watch exports would have increased by 7.8% in September, indicating strong demand in other regions [5] - The decline was primarily driven by steel watches, which saw a 3.8% decrease in value, while mid-priced watches experienced a 4.2% increase in exports [5] Future Outlook - The Swiss government is actively pursuing negotiations with the US to lower the tariff, although the likelihood of success remains uncertain [7] - Despite the challenges, overall Swiss exports to the US showed signs of recovery in September, suggesting that demand for Swiss goods is resilient against the tariffs [6]