Movado Group Inc. (MOV) 2025 Q2 Earnings Call Summary

Optimistic Highlights

• Improved Sales Trends

Sales trends improved from the first to the second quarter, with net sales remaining virtually flat on a constant dollar basis compared to last year.

• Strong Balance Sheet

The company maintains a strong balance sheet with $198 million in cash and no debt.

• Positive Response to Marketing

Increased marketing investments led to a 10% increase in unit volume for licensed brands and a 21% increase in Movado.com sales.

• New Advertising Campaign

Launched a comprehensive new advertising campaign featuring high-profile ambassadors, which received significant positive press coverage.

• Growth in Licensed Brands

Licensed brands grew by 2.5% for the quarter, with strong performance in brands like Coach, Tommy Hilfiger, Hugo Boss, and Lacoste.

Pessimistic Highlights

• Decline in Operating Profit

Operating profit declined to $3 million from $9.6 million in the same quarter last year, primarily due to increased marketing investments.

• Decrease in Gross Margin

Gross profit as a percentage of sales decreased to 54.2% from 55.7% last year, driven by unfavorable channel and product mix.

• Lower Net Income

Net income for the second quarter was $3.7 million, down from $8 million in the same period last year.

• Challenging Consumer Environment

Retail partners, especially in Europe and the U.S., are placing orders cautiously due to a challenging consumer spending environment.

• Decline in Year-to-Date Sales

Year-to-date sales decreased by 3.1% compared to the same period last year.

Company Outlook

• Updated Sales Expectations

Net sales for the year are expected to be in the range of $665 million to $675 million, with second-half sales expected to be flat to up low single digits compared to last year.

• Focus on Expense Management

The company plans to bring operating expenses more in line with sales while continuing to support brand-building efforts.

• Continued Marketing Investments

Increased spending on brand-building efforts is expected to jumpstart the Movado brand and position the company for accelerated growth as the market improves.

• Long-Term Confidence

Despite short-term challenges, the company remains confident in its strategic plan and initiatives to support its brands and customers.

Q & A Highlights

• Q: You mentioned coming out of this period with your increased market share, market share growth. Can you talk what you’re seeing from the competition today from a pricing perspective, from a viability perspective, and anything from a geographic perspective also? Thanks. (Michael Legg, from The Benchmark Company)

  A: The watch category overall has become challenging, affecting both luxury and accessible segments. Gains have been seen in the fashion watch category, while European markets and the U.S. economy show signs of stress. Growth has been noted in markets like Latin America, Mexico, and India. The new Movado campaign has received strong reviews and is expected to yield positive results. (Efraim Grinberg)

• Q: You mentioned the media campaign in India there. Can you talk about, I assume that the media campaign is global. Just comment on that. And then second, on the India opportunity, can you just expand a little bit on the opportunity there? (Michael Legg, from The Benchmark Company)

  A: The Movado campaign is predominantly in North America but will also run in India and some other markets. Movado is about 90% domestic, but the campaign is expected to present international opportunities in the future. (Efraim Grinberg)

• Q: And then just on jewelry. I didn’t hear anything on jewelry. Is that something kind of taking a backseat to the consumer returns or how’s jewelry doing? (Michael Legg, from The Benchmark Company)

  A: Jewelry is outperforming watches in fashion brands and continues to present a big opportunity, particularly strong in markets like Europe and Mexico. Movado jewelry assortment will be reset next year. (Efraim Grinberg)

• Q: And then a couple of financials on the guidance. I assume that does not factor any interest rate cuts into it. It’s just more of a steady state with the consumer. Can you give us a little insight into that? (Michael Legg, from The Benchmark Company)

  A: Interest rate declines will likely happen gradually and won't have an immediate impact on consumers. The benefit to consumers will take time, similar to how rate hikes do. (Efraim Grinberg)

• Q: And then just last question. Your stock buyback has 16.8 million left. You use it to offset any dilution from issued shares. What would it take for you to be more aggressive in the share buyback? At what level of stock? (Michael Legg, from The Benchmark Company)

  A: It's not about a specific stock level but about confidence in the environment and execution. The company will look at share buybacks as the year progresses and as the market evolves. (Efraim Grinberg)