Movado’s 2021 US Sales Shot Up 61 Percent

FinancialsMar 24, 2022

Movado’s 2021 US Sales Shot Up 61 Percent

Also, the company has donated $100,000 to charities aiding those affected by the war in Ukraine.

These 36 mm square-dial watches are a part of Movado’s capsule collection in collaboration with the late artist Carmen Herrera.
Paramus, N.J.—Movado Group reported strong sales in the fourth quarter and the full year but remained cautious about the fiscal year ahead in light of the war in Ukraine and inflationary pressures.

Like Signet CEO Gina Drosos last week, Movado CEO Efraim Grinberg opened the company’s earnings call Thursday morning by addressing the Russian invasion of Ukraine.

“We are now operating in a world that is being greatly affected by the devastation in Ukraine. Our hearts and prayers go out to all those affected by this untenable situation.”

The Movado Group Foundation donated $100,000, split evenly between the International Rescue Committee and UNHCR, the UN Refugee Agency.

Looking at its results, net sales in the fourth quarter were up 16 percent to $206 million, compared with $178.3 million in the previous year’s fourth quarter.

Movado attributed the sales increase to growth in its wholesale customers’ brick-and-mortar stores as well as in online retail, in its owned stores and wholesale customers’ website, and growth in Movado stores.

For the full year, net sales surged 45 percent to $732.4 million, compared with $506.4 million in 2021.

Quarterly gross profit totaled $120.8 million, or 59 percent of net sales, compared with $100.8 million, or 57 percent of net sales, in the same period last year.

Gross profit for the full year was $419.1 million, or 57 percent of net sales, compared to gross profit of $270.5 million, or 53 percent of net sales, in fiscal 2021.

In the U.S. market, quarterly net sales were up 19 percent year-over-year, and up 12 percent compared with pre-pandemic Q4 2020.

For the full year, U.S. sales soared, climbing 61 percent year-over-year, and up 14 percent compared with Q4 2020.

“We attribute our ongoing strength to the successful execution of our strategy with powerful brands, excellent craftsmanship and desirable designs,” said CEO Efraim Grinberg in a press release about the results.

“This drove sales growth in our owned and licensed brands; in the U.S. and internationally, and across our channels of wholesale and direct-to-consumer.”

The Movado website has seen “significant growth,” said Grinberg on the call, as the company continues to develop its digital platform and omnichannel capabilities.

Sales on the Movado website grew by 34 percent in the fourth quarter, with average unit retail increasing by 17 percent. Website sales grew 61 percent in the full year.

Movado jewelry made up 12 percent of the brand’s e-commerce sales in the quarter, Grinberg said, with sales more than doubling year-over-year.

For the quarter, watches that retail for more than $1,000 accounted for more than 20 percent of Movado sales.

In fall 2021, Movado launched a new capsule collection in collaboration with Cuban-born artist Carmen Herrera, who died last month at 106.

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Movado Group’s licensed brands, including Coach and Tommy Hilfiger, also put on a solid performance, with sales up 12 percent year-over-year in the quarter and up 40 percent for the full year.

The Tommy Hilfiger brand saw strong growth, particularly in key European markets, in both jewelry and watches.

The Coach brand performed well in the U.S. and China, especially its “Arden” collection.

The Hugo Boss brand’s sales exceeded pre-pandemic levels. A new “Admiral'' model, made of ocean plastic and featuring a solar movement, will be introduced this spring to appeal to eco-conscious consumers.

Movado will produce Hugo Boss jewelry in addition to watches after its wholly owned Swiss subsidiary, MGI Luxury Group, recently amended its licensing deal with Hugo Boss Trade Mark Management, according to an SEC filing.

The licensing period was also extended to Dec. 31, 2026, with an additional five years for certain rights after that.

Lacoste also performed well, with its “1212” and “Tiebreaker” collections standing out. The brand will soon introduce a new Minecraft collection and an active lifestyle collection.

The Olivia Burton brand was down single digits for the year due to challenges in its U.K. market.

The MVMT brand also saw single-digit declines for the year, which Grinberg attributed to moderating customer acquisition costs due to decreased marketing efficiency. The brand’s newly appointed CEO, Eran Cohen, is developing a growth strategy, said Grinberg.

Movado also launched its Calvin Klein watches and jewelry line earlier this month.

It inked a five-year licensing agreement with the brand in August 2020 after Calvin Klein ended its 22-year licensing deal with Swatch Group.

Grinberg is taking a cautious approach to the fiscal year ahead.

He highlighted rising inflationary pressures, including wage and labor pressures, as reasons and said Movado will offset some of these costs through price increases.

“As we look ahead, we recognize that we continue to operate in an uncertain environment, with rising interest rates heightened by increasing inflation, combined with the war in Ukraine, ongoing COVID outbreaks and closures in China, and lapping U.S. stimulus measures in the first half of last year, yet we remain confident in our positioning and our ability to deliver long term growth in sales and profit,” he said.

Fiscal 2023 net sales are expected to be in the range of approximately $780 million to $800 million.

Gross profit is expected to be 58 percent of net sales, while operating income is expected to be in the range of to $125 million to $130 million.

The updated outlook does not take into consideration inflation, geopolitical unrest, additional COVID-related retail closures or significant changes in foreign currency exchange rates, Movado noted.

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