Financials

Movado’s U.S. Sales More Than Double in Q2

FinancialsAug 26, 2021

Movado’s U.S. Sales More Than Double in Q2

The watch company’s sales in the region were up nearly 150 percent, exceeding pre-pandemic levels.

A set of Movado Connect 2.0 watches. The watch company’s net sales were up 96 percent in the second quarter as U.S. and international markets slowly recovered from the COVID-19 pandemic.
Paramus, N.J.—Movado Group saw U.S. sales more than double in the second quarter and exceed pre-pandemic levels.

Net sales in the second quarter were up 96 percent to $173.9 million, compared with $88.5 million in the previous year’s second quarter.

The company saw strong growth in online retail, both in its owned and wholesale customers’ websites, in Movado stores, and in wholesale customers’ brick-and-mortar stores, noting a partial recovery from the COVID-19 pandemic.

U.S. net sales more than doubled on a constant dollar basis, up 146 percent compared with last year’s second quarter and exceeding pre-pandemic fiscal 2020 sales by 29 percent.

International sales rebounded, up 64 percent year-over-year, but down 3 percent compared to pre-pandemic fiscal 2020.

Gross profit totaled $98.5 million, or 57 percent of net sales, compared with $45.4 million, or 51 percent of net sales, in the same period last year.

The increase was attributed to “favorable changes” in channel and product mix and favorable foreign currency exchange rates, partially offset by an increase in certain fixed costs to support the increase in net sales, said Movado.

“We reported a record second quarter performance finishing a strong first half for Movado Group and reflecting the successful implementation of our strategy to maximize the power of our watch and jewelry brands by accelerating our omni-channel presence while maintaining financial and operational discipline,” said CEO Efraim Grinberg in a press release about the results.

Looking at the first half of fiscal 2022, sales were up 95 percent to $308.7 million compared with $158.2 million in the first six months of fiscal 2021.

U.S. net sales were up 139 percent compared with last year’s first half and surpassed pre-pandemic fiscal 2020 sales by 20 percent.

“Geographically, our strongest region has been the U.S.,” said Grinberg during an earnings call Thursday morning.

International sales were up 66 percent year-over-year in the first half, but down 12 percent compared to pre-pandemic fiscal 2020.

Gross profit in the first half totaled $172.7 million, or 56 percent of net sales, compared with $77.2 million, or 49 percent of net sales, in the same period last year.

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The Movado brand saw continued growth, noting a solid performance online and in its jewelry category.

Movado Group’s licensed brands, including Coach and Tommy Hilfiger, also put on a solid performance.

For the Tommy Hilfiger brand, jewelry and watches performed well, including its Parker and Sporty Boyfriend watches for her. The brand will soon introduce “bolder” looks for men and will add crystal embellishments to its Kennedy collection.

Coach saw double-digit growth in the U.S. and triple-digit growth in China compared with pre-pandemic sale, driven by innovation in the brand, Grinberg during the earnings call, highlighting new dial treatments and crystal embellishments.

It will expand its Arden and men’s collections.

The Hugo Boss brand, meanwhile, saw a 56 percent increase year-over-year, despite closures in Europe, where the brand is a fan favorite. The growth is due in part to the expansion of the Pilot line and the addition of the new Santiago line.

The brand has plans to introduce a new 46mm Grand Master Chrono and will expand its women’s collection.

The Lacoste brand’s new iconic Lacoste 12.12, featuring multi-colored crocodiles, performed well.

The MVMT brand introduced its well-received ceramic collection, which sells out quickly, and its Ocean Classic edition, made from reclaimed ocean plastic with a solar movement. Both lines are at a higher price point.

Its new Raptor collection is doing well in the early third quarter, said Grinberg.

The company will launch its Calvin Klein watches and jewelry line in January 2022; it inked a five-year licensing agreement with the iconic brand in August 2020 after Calvin Klein ended its 22-year licensing deal with Swatch Group.

Movado is hopeful for the year ahead, upping its fiscal 2022 guidance.

Net sales are expected to be in the range of approximately $680 million to $690 million, up from its prior guidance of $650 million to $665 million.

Gross profit is to be 55.5 to 56 percent of net sales, up from prior guidance of 54 to 55 percent, while operating profit is expected to be in the range of 13 to 13.5 percent of net sales, up from prior guidance of 10 to 11 percent.

The updated outlook does not take into consideration additional COVID-19 related retail closures or significant changes in foreign currency exchange rates, Movado noted. 
Lenore Fedowis the associate editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

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