Movado Group(MOV)2024-12-05 20:50Financial Data and Key Metrics - Net sales for the third quarter decreased by 2.6% to 9.3 million from 8.3 million, or 17.4 million, or 478.7 million, a decrease of 2.9% compared to the same period last year [24] - Gross profit for the nine-month period was 273.6 million, or 55.5% of sales, in the prior year [25] - Net income for the nine-month period was 0.66 per diluted share, compared to 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 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 665 million, gross profit of 54% of sales, and operating income of 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]