Movado Group(MOV) - 2026 Q3 - Earnings Call Transcript

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]