Movado Posts Record Q1 Sales Despite ‘Challenging’ US Market
The company opted not to raise its fiscal guidance, citing a slowdown in the U.S. market as a key reason.
The New Jersey-based company, whose portfolio includes Movado and Oliva Burton as well as licensed brands like Coach and Tommy Hilfiger, posted a 21 percent net sales increase year-over-year.
Despite a strong start to the year, the company will refrain from raising its fiscal guidance, citing a slowdown in the U.S. market as one key reason.
Here are five takeaways from its recent earnings report.
Movado had a record year.
Net sales in the first quarter were up 21 percent to $163.4 million, compared with $134.8 million in the previous fiscal year’s first quarter.
“These results reflect the ongoing appeal of our powerful portfolio of sought-after global brands, the strength of our elevated omnichannel model, and the discipline with which we execute our strategies,” said CEO Efraim Grinberg in a press release about the results.
“The diversity of our business model continues to serve us well as we successfully capitalized on growth opportunities across our portfolio, channels, and geographies, most notably in Europe, the Middle East, India, and Latin America.”
Movado attributed the sales increase to growth in its wholesale customers’ brick-and-mortar stores as well as growth in Movado company stores.
On an earnings call Thursday morning, Grinberg noted a return to brick-and-mortar stores as customers return to work and make travel plans.
Quarterly gross profit totaled $96.7 million, or 59 percent of net sales, compared with $74.2 million, or 55 percent of net sales, in the same period last year.
In the U.S. market, net sales were up 7 percent year-over-year. Internationally, sales were up 35 percent.
A slowdown in the U.S. market kept Movado from upping its fiscal outlook.
With a record year under its belt, the company is taking an optimistic-yet-cautious approach to the year ahead.
“While our first quarter is extremely strong, we’re seeing a heightened level of uncertainty and as such, we are not increasing our outlook,” said Grinberg on the call.
“We believe we are taking the appropriate actions to navigate an environment of slowing U.S. growth, higher inflation, increased currency volatility, and geopolitical instability.”
“Despite our strong sales performance for Movado, we did see U.S. retail become more challenging as the quarter progressed,” added Grinberg.
In their recent results, Pandora and Brilliant Earth both also signaled the U.S. market is expected to see a slowdown.
However, Grinberg maintained the company is well-positioned, even in an increasingly uncertain environment.
“We remain confident about our growth prospects and expect to continue to benefit from our compelling product innovation and diversified brand portfolio, including the recent successful launch of Calvin Klein watches and jewelry.”
The company will continue to invest in its people and brands, supported by its strong balance sheet, it said.
“Overall, we expect fiscal 2023 to represent another year of strong performance and significant accomplishments for Movado Group,” said Grinberg.
It maintained its fiscal 2023 net sales guidance of approximately $780 million to $800 million.
Gross profit is still 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.
Though the guidance is unchanged, the company did note there is “heightened level” of economic, geopolitical, and currency uncertainty.
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 added.
Movado’s owned and licensed brands performed well.
Movado’s owned brands include its eponymous watch brand as well as Olivia Burton and MVMT.
The Movado brand saw an increase in wholesale revenue as retailers replenished their inventory.
The growth was partially offset by a 13 percent decline in Movado’s online business, which was up against a strong previous quarter in which sales more than tripled.
The Movado SE collection performed well, particularly those watches with a new green dial.
MVMT’s ceramic watches performed well while Olivia Burton is preparing to introduce new offerings in Q4.
Its portfolio of licensed brands, which include Coach, Tommy Hilfiger, Hugo Boss, and Lacoste, put on a strong year-over-year performance, said Movado.
Coach continued its successful partnership with Jennifer Lopez while Tommy Hilfiger increased its new product offerings, including the “Matthew” line for him and the “Layla” collection for her.
“We had a very strong start to the year in Hugo Boss as the brand takes on an important marketing refresh with new brand associations, like Hailey Bieber,” noted Grinberg.
Lacoste saw success with its new sport watch and its Minecraft collaboration.
Movado also launched its Calvin Klein watches and jewelry line this year.
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.
Calvin Klein’s watches and jewelry are now available in 400 points of sale and the response has been “very positive,” said Grinberg.
Movado released a corporate responsibility report.
Movado published its fiscal 2022 corporate responsibility report Wednesday.
The 68-page report outlines the company’s plans to “empower, evolve, and enrich its people, products, planet, and community” through the end of fiscal 2026.
“Our main goal outlined in the report is to empower our employees to ‘Make Time’ for impactful, long-term ESG (environmental, social, and governance) improvements that ultimately strengthen the Movado Group community and brand,” Grinberg said.
Highlights of its “Make Time” plan include fostering a diverse and inclusive workforce, ensuring positive working conditions in its supply chain, designing more sustainable products, and reducing the use of single-use plastic.
Movado hired a new chief marketing officer.
There’s a new chief marketing officer at Movado.
Luxury veteran Stéphane Gerschel stepped into the role last month.
It had remained vacant since February 2021, when longtime marketing executive Mary Leach died after a battle with cancer.
Previously, Gerschel served as the global brand managing director for Pomellato at the Kering Group in Milan. Before that, he worked at LVMH as the senior director for international communication at Bulgari and the international communication director for Veuve Clicquot.
“As we continue to advance digitally and expand our watch and jewelry collections, we are confident that Stéphane’s extensive experience and terrific leadership skills will help drive Movado Group’s evolution in this pivotal time,” said Grinberg in a press release.
Gerschel is also the author of five books, including “Louis Vuitton Icons,” published by Assouline, and “The Seasons of Veuve Clicquot,” published by Rizzoli New York.
“As an iconic, global brand, I’ve always admired the Movado brand along with the company’s powerful portfolio of world-class brands. I am truly honored to join the company and look forward to working closely with Efraim and the entire Movado Group team as we amplify all our brands’ presence on the global stage,” said Gerschel.
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