Movado Group Inc’s Mixed Earnings Call Highlights

Movado Group Inc ((MOV)) has held its Q1 earnings call. Read on for the main highlights of the call.

Movado Group Inc’s recent earnings call painted a mixed picture for investors. While the company showcased a robust cash position and growth in its licensed brands, it faced challenges with declining sales, operating income, and net income. These issues were further exacerbated by currency fluctuations and economic uncertainties.

Strong Cash Position

Movado ended the quarter with an impressive $203 million in cash and no debt. This strong cash position provides the company with financial flexibility to navigate the current economic uncertainties and invest in future growth opportunities.

Dividend Approval

The Board of Directors approved a dividend of $0.35 per share for the first quarter. This decision reflects the company’s commitment to returning value to shareholders despite the challenging economic environment.

Growth in Licensed Brands

Licensed brands experienced strong growth, with sales improving by high single digits. This growth was particularly notable in women’s watch collections and men’s jewelry offerings, highlighting the brand’s successful expansion in these segments.

Positive Consumer Response to New Collections

Movado’s new Mini Bangle collections and Bold Mini Quest received a strong consumer response, which helped elevate the brand’s positioning in the market. This positive reception indicates a successful product launch strategy.

Improved Trend in Outlet Division

Sales in the Outlet division showed signs of improvement, with a minor decline of only 1.7%. This improvement was particularly evident in May, suggesting a potential recovery in this segment.

Decrease in Sales

The company reported sales of $131.8 million, a decrease of 1.9% from the previous year. This decline was seen both in the U.S. and international markets, with international sales decreasing by 2.2%.

Operating Income Decline

Adjusted operating income fell to $870,000 from $2.1 million last year. This significant decline reflects the challenges the company faces in maintaining profitability amid economic pressures.

Decreased Net Income

Net income for the quarter was $1.9 million, or $0.08 per diluted share, down from $2 million, or $0.09 per diluted share, last year. This decrease highlights the impact of reduced sales and increased costs on the company’s bottom line.

Currency Fluctuations Impact

Unrealized losses due to significant currency fluctuations negatively affected Movado’s financial results. This impact underscores the challenges of operating in a global market with volatile exchange rates.

Inventory Increase

Inventory levels increased by $24.1 million compared to the same period last year, primarily due to the timing of receipts. This increase may pose challenges if sales do not pick up as expected.

Uncertain Economic Environment

The company’s results continue to be negatively impacted by an uncertain economic environment and tariff-related uncertainties. These factors contribute to the challenges Movado faces in achieving stable growth.

Forward-Looking Guidance

Movado opted not to provide a fiscal 2026 outlook, citing macroeconomic and tariff-related uncertainties. The company reported a slight decrease in sales and adjusted operating income for the quarter, with a minor decline in gross profit margin due to currency fluctuations and increased shipping costs. Despite these challenges, Movado’s strong cash position and growth in licensed brands offer a foundation for potential recovery.

In summary, Movado Group Inc’s earnings call highlighted a mixed performance, with strong cash reserves and growth in certain segments overshadowed by declines in sales and profitability. The company’s cautious approach to future guidance reflects the ongoing economic uncertainties it faces. Investors will be watching closely to see how Movado navigates these challenges while leveraging its strengths.