Movado Group Q2 Earnings Call Highlights

Key Points

• Movado reported strong fiscal Q2 results: Sales rose 4.9% to $169.8 million, adjusted operating income more than doubled to $15.1 million, and diluted EPS increased to $0.54 from $0.23.
• Growth was broad-based across the U.S. and international markets, supported by stronger demand, product launches, pricing and lower promotions. However, the Middle East remained a weakness, while younger consumers showed renewed interest in traditional watches.
• Margin gains included temporary benefits: Gross margin reached 59.4%, helped by $3.2 million in IEEPA duty refunds and lower-duty inventory; management expects second-half gross margin of 55%–56% as those benefits fade. The company expects mid-single-digit sales growth for the remainder of fiscal 2027 and will no longer provide an annual outlook.

Movado Group NYSE: MOV reported higher sales, profit and margins for its fiscal 2027 second quarter, as demand improved across its U.S. and principal international markets and the company benefited from product mix, pricing actions and lower promotional activity.

Sales rose 4.9% to $169.8 million in the quarter from $161.8 million a year earlier, or 4.4% on a constant-currency basis. Adjusted operating income increased to $15.1 million from $7 million, while diluted earnings per share rose to $0.54 from $0.23.

The quarter's results included $3.2 million in refunds of duties paid under the International Emergency Economic Powers Act, or IEEPA. The refunds added $0.11 per diluted share after tax. Excluding that benefit, the company said gross margin improved 340 basis points year over year.

Sales Growth Across U.S. and International Markets

Chairman and Chief Executive Officer Efraim Grinberg said sales growth was supported by increased sell-through for both the Movado brand and licensed brands in the United States. U.S. net sales increased 4.9% from the prior-year quarter.

International net sales also increased 4.9%, or 4.1% in constant currency. Grinberg cited strong growth in Latin America and India, as well as low-single-digit growth in Europe. The Middle East remained a drag on results because of ongoing regional challenges, particularly in markets dependent on international tourism.

Grinberg said the company is seeing increased engagement with traditional watches among younger consumers, especially in the U.S., Mexico, Brazil and India. He said consumers are increasingly treating watches as accessories and fashion statements rather than as wearable technology.

“Younger consumers are coming back pretty seriously into traditional watches,” Grinberg said during the question-and-answer session. “Beginning again to collect traditional watches and have multiple products.”

Movado.com sales increased 8% in the quarter, while sales at Movado outlet stores increased 3%. Grinberg said those businesses benefited from higher average selling prices and improving margins.

Margin Gains Include Temporary Inventory Benefit

Gross margin was 59.4% in the second quarter, compared with 54.1% a year earlier. The IEEPA duty refunds contributed 190 basis points to the reported result. Excluding the refunds, gross margin was 57.5%.

Chief Financial Officer Sallie DeMarsilis said the underlying margin improvement reflected favorable channel and product mix, partially offset by higher shipping costs. The company also benefited from selling inventory that carried lower duty rates following the repeal of IEEPA tariffs in February 2026.

Management said that inventory-related duty benefit is temporary and is not expected to continue during the second half of the fiscal year. In response to an analyst question, Grinberg said the lower expected second-half gross margin is “100%” attributable to the return to current inventory and incoming inventory subject to newer tariffs.

The company expects to recover an additional $6.8 million in IEEPA duties it previously paid, but has not recognized a gain for those potential refunds because it will wait until cash is received.

Operating expenses increased to $85.7 million from $80.6 million, driven by higher performance-based compensation and greater selling and marketing spending to support sales growth. The company also cited fuel surcharges tied to conditions in the Middle East and higher e-commerce shipping activity around Mother’s Day as contributors to increased shipping costs.

Product Launches and Brand Marketing

Movado highlighted new product launches across its portfolio, with an emphasis on smaller and shaped watches, jewelry-inspired designs and products targeted toward younger consumers.

• At Movado, the company cited demand for the Baby Face mini strap watch, which sold more than 400 units on movado.com in less than a month and sold out quickly. It also highlighted women’s Museum Bangle and Velura collections, as well as the men’s BOLD Verso S line.
• Coach watches continued to show momentum with Gen Z consumers, led by the Sammy collection and the new Iris jewelry-inspired collection. Coach will introduce Mini Sammy and the tonneau-shaped Greta collection in the second half.
• Tommy Hilfiger reported demand for the TH Oxford family and the Bryant men’s chronograph. The company also said women’s watch penetration has increased globally, with Mia and Nora among the successful collections.
• Olivia Burton sales increased 23% in the quarter as the brand focused on the United Kingdom and U.S. markets. The company said smaller shaped watches, including Mini Grove and Mini Grosvenor, were driving performance.
• Calvin Klein saw improvement in watches, particularly women’s styles. A new square watch collection sold out quickly in markets globally, according to Grinberg.

The company also said it will expand its long-term partnership with Tapestry and begin launching Kate Spade watches in the next fiscal year. Grinberg said the introductory collection has received a strong response from partners globally.

First-Half Results, Balance Sheet and Outlook

For the first six months ended July 31, 2026, sales increased 6.3% to $312.2 million. Net income was $19.7 million, or $0.86 per diluted share, compared with $7.2 million, or $0.32 per diluted share, in the prior-year period. First-half operating income was $22.6 million, including the $3.2 million in IEEPA duty refunds, compared with $7.9 million a year earlier.

Cash totaled $211.6 million at quarter-end, up from $180.5 million a year earlier, and the company had no debt. Inventory declined $15 million, or 7.1%, from the prior-year level, which DeMarsilis attributed to the timing of receipts. She said Movado was comfortable with the composition and level of inventory as it replenishes top-selling products for the third and fourth quarters.

Movado returned more than $16 million to shareholders through quarterly dividend payments year to date. It repurchased approximately $61,000 of stock in the first half and had $44.6 million remaining under its authorized share repurchase program as of July 31.

The company said it will discontinue providing an annual outlook, arguing that its focus is better served by executing its long-term strategy. However, it expects mid-single-digit top-line growth for the remainder of fiscal 2027 and second-half gross margin in a range of 55% to 56%.

About Movado Group (NYSE:MOV)

Movado Group, Inc is a global designer, manufacturer and distributor of watches and related jewelry products. The company's portfolio encompasses both owned and licensed brands, offering a wide range of timepieces from luxury to accessible price points. Major owned brands include Movado, Concord, and Ebel, alongside newer acquisitions such as MVMT and Olivia Burton. In addition, Movado Group holds licensing agreements to produce watches under fashion names like Hugo Boss, Tommy Hilfiger, Coach, Lacoste and Scuderia Ferrari.

Movado Group's product line spans classic dress watches, sport and dive models, fashion-forward designs and limited-edition collections.

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