Financials

Movado Sees ‘Continued Weakness’ in U.S. After Q2 Sales Slow

FinancialsAug 26, 2022

Movado Sees ‘Continued Weakness’ in U.S. After Q2 Sales Slow

The company lowered its full-year guidance, citing increased economic uncertainty.

20220826_Movado watches.jpg
A set of Movado Connect 2.0 watches. The company’s net sales in the U.S. were down 5 percent in its most recent quarter, and CEO Efraim Grinberg predicted “continued weakness” ahead.
Paramus, N.J.—Movado Group reported a mixed second quarter, with overall sales on the rise but U.S. sales falling.
 
The New Jersey-based company lowered its full-year guidance, citing “increased uncertainty in the economic environment.”
 
Its portfolio includes Movado and Oliva Burton as well as licensed brands like Coach and Tommy Hilfiger.
 
Here are five takeaways from its recent earnings report.
 
Movado’s U.S. sales struggled in Q2.
 
The company’s U.S. sales dipped 5 percent year-over-year in the second quarter.
 
For the first half of the year, U.S. sales dipped 0.2 percent compared with last year’s first half.
 
“In the U.S., we saw an increasingly difficult retail market impacted by rising inflation and the anniversary of robust stimulus programs that benefited consumers in multiple income categories,” said CEO Efraim Grinberg on an earnings call Thursday.
 
He also noted a slowing of the U.S. economy as the Federal Reserve hiked rates in an effort to combat inflation.
 
“Our [lowered] outlook does factor that there's going to be continued weakness in the U.S,” said Grinberg.
 
Overall net sales in the second quarter were up 5 percent year-over-year to $182.8 million compared to $173.9 million in the second quarter of fiscal 2022. 
 
The increase in net sales was attributed to growth in wholesale customers’ brick and mortar stores and in Movado company stores.
 
Gross profit was $106.9 million, or 59 percent of sales, compared to $98.5 million, or 57 percent of sales, in the prior year period.
 
For the first half of the year, net sales were up 12 percent to $346.2 million compared with $308.7 million in the first six months of fiscal 2022. 
 
First-half gross profit was $203.6 million, or 59 percent of sales, compared to $172.7 million, or 56 percent of sales in the prior year period.
 
Its international business, however, is doing well.
 
Movado’s international net sales increased 15 percent compared with the second quarter of last year.
 
For the first half of the year, international sales climbed 24 percent year-over-year.
 
International net sales increased 24.1% as compared to the same period last year.
 
Stimulus programs in the U.S. lifted sales last year, making for a more difficult comparison this quarter. Movado’s international markets were not impacted in the same way last year, noted Grinberg.
 
The company did particularly well in Latin America, India and Europe, said CFO Sallie DeMarsilis during the earnings call.
 
 Related stories will be right here … 
 
Movado lowered its full-year guidance in the face of economic uncertainty.
 
Movado is approaching the second half of its fiscal year with caution.
 
The company lowered its full-year guidance, expecting net sales to be $780 million to $790 million versus its previous outlook range of $780 million to $800 million. 
 
The new outlook is still growth of 7 to 8 percent compared with its previous fiscal year.
 
However, due to a strong first half of fiscal 2023, the company now expects operating income to be at the high-end of its previous outlook of $125 million to $130 million. 
 
“As we look at the second half of the year, we believe that we will need to continue to execute in an uncertain environment, including facing the impact of unfavorable currency due to the strengthening of the U.S. dollar,” said Grinberg.
 
“We’re returning to more normalized trends,” he added, noting the company saw strong growth in the U.S., due in part to the stimulus packages and low interest rates.
 
“If you look at most of our numbers against 2019, which is the last pre-pandemic year, I would expect that they'll be better than that, and they have been better than that,” he said.
 
Movado’s outlook does not take into consideration an increase in inflation, geopolitical unrest, or supply chain issues.
 
The launch of its new Calvin Klein collection is going well.
 
Movado 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.
 
“We are excited by our launch of Calvin Klein in both jewelry and watches, which began early this year and has exceeded our initial expectations,” said Grinberg.
 
“To date, we have opened over 1,500 retail doors as well as several key online retailers on a global basis.”
 
Watches make up about 75 percent of the brand’s overall sales with women’s watches in the lead, he said, accounting for 70 percent of watch sales.
 
Products that feature Calvin Klein’s branding make up about 20 percent of the business. 
 
In the second half of the year, Movado plans to bolster its marketing efforts in Europe, with digital ads and billboards, and have a digital launch in China.
 
Its other brands, in-house and licensed, also put on solid performances.
 
Its Movado brand posted a low-single digit decline in sales for the quarter, weighed down by slower retail in the U.S., but lifted by strong international sales, particularly in India.
 
“We remain excited about the prospects of Movado as we continue to elevate both the product and the brand image,” said Grinberg.
 
Its higher-priced watches did well, with the average retail price up 12 percent compared with last year.
 
Its Movado SE and Bold collections were among the best-sellers.
 
The Movado SE collection will expand in the fall with new colors and the introduction of a woman’s automatic version, while the Bold collection will debut new ceramic models and a new Bold Fusion Automatic.
 
In September, the Movado brand will launch its first influencer program, said Grinberg, recruiting a yet-to-be-named gold medal Olympic skier and a ceramicist.
 
The campaign will run through the holidays, as will a new Bold television commercial.
 
The Olivia Burton and MVMT brands are focused on revamping their marketing messages, said Grinberg.
 
Olivia Burton is shaking up its product assortment, with newness planned for the fall and throughout next year. MVMT also has a new leadership team.
 
Its licensed brands posted 15 percent year-over-year growth in the second quarter.
 
For Tommy Hilfiger, its “Matthew” watch for men was a top seller while women opted for the minimalist “Libby” watch with a sparkle dial. The brand will launch campaigns in Europe, Brazil, and India in the third quarter.
 
The Hugo Boss brand’s marketing efforts, which included influencer partners, paid off, with the “Steer” and “Novia” collections doing well.
 
For Coach, COVID-19 closures in China posed a problem, but that market is beginning to bounce back, said Grinberg. Sales were driven by its ceramic collection, “Greyson,” with help from the brand’s social media ad campaign starring Jennifer Lopez sporting a pink “Greyson” watch.
 
Lacoste’s “Replay” and “12.12” collections were best sellers for the brand. The third generation of 12.12 will launch this fall with a marketing boost in its home market of France.
 
Lacoste also has plans to launch a jewelry line in the fourth quarter, with more details to follow.
 

The Latest

5 main.jpg
Supplier BulletinNov 21, 2024
Tasha R Releases 2025 Labbelle Lab Diamond Jewelry Catalog

Sponsored by Tasha R

18-karat gold Tiffany & Co. pocket watch Captain Arthur Rostron
AuctionsNov 21, 2024
Gold Watch Gifted to Titanic Rescue Ship Captain Sells for $2M

Three Titanic survivors presented him with the personalized Tiffany & Co. timepiece about a year after the tragedy.

Harris Jewelry storefront
MajorsNov 21, 2024
Harris Jewelry Ordered to Reopen Claims Portal for Refund Requests

A federal court found that the jewelry store chain violated terms of the settlement reached after it was accused of defrauding customers.

Jewelers Mutual Group Cybersecurity
Brought to you by
Navigating Cybersecurity: Essential Guidance for Jewelers

From protecting customer data to safeguarding inventory records, it's crucial to learn how to tackle cybersecurity challenges.

Cynthia Erivo wearing Have a Heart x Cynthia Erivo collection
CollectionsNov 21, 2024
Channel Elphaba in Muse’s ‘Have a Heart x Cynthia Erivo’ Collection

Cynthia Erivo chose Dreams of Hope, an organization dedicated to empowering LGBTQA+ youth, as the charity for this year’s collection.

Weekly QuizNov 14, 2024
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Rocksbox San Francisco store
MajorsNov 21, 2024
Rocksbox Opens Pop-Up Store in San Francisco

The new space was designed to evoke a warm, inviting vibe.

Mary Moses Kinney
IndependentsNov 21, 2024
Mary Moses Kinney Is Now Part of The Edge’s Team

Kinney, who spent nearly 30 years at IJO, has been hired to head Abbott Jewelry Systems’ new virtual marketplace.

Article-Top-Image.jpg
Brought to you by
Enhance Your Expertise with IGI’s In-Person Courses in NYC

This fall, sharpen your skills in jewelry grading, quality control and diamond assessment.

Sotheby’s New York building
CrimeNov 20, 2024
Sotheby’s to Pay $6.25M Settlement to NY State for Alleged Tax Fraud

The auction house was accused of helping clients avoid paying taxes on millions of dollars’ worth of art purchased from 2010 to 2020.

Kering logo
Events & AwardsNov 20, 2024
Kering Debuts New Jewelry Award With Sustainability Focus

The four finalists will present their pieces at the 2025 JCK Las Vegas show.

Model wearing pieces from Camera Oscura collection
CollectionsNov 20, 2024
Pamela Love Channels Surrealist Artists in New Collection

The “Camera Oscura” collection showcases earring designs celebrating female Surrealist artists Claude Cahun and Leonor Fini.

Columbia Gem House “Pebbles to Pines” fundraiser
Policies & IssuesNov 20, 2024
Columbia Gem House Raises $10K for Reforestation Efforts

The money will fund the planting of 10,000 trees in critical areas across Oregon, Arizona, Montana, and other regions.

The jewelry symposium 2025
Events & AwardsNov 20, 2024
The Jewelry Symposium Opens Registration, Scholarship Applications

The event centered on advancing jewelry manufacturing technology will return to Detroit in May 2025.

Stock image of police cars with lights on
CrimeNov 19, 2024
Woman Killed in Armed Robbery of Sacramento Jewelry Store

Local reports identified the woman as the wife of the jewelry store owner.

Tsar Ferdinand I Bulgaria colored diamond pin and emerald diamond ring
AuctionsNov 19, 2024
‘A Tsar’s Treasure’ Fetches $2.9M at Sotheby’s Jewelry Sale

A collection of pieces owned by Ferdinand I, the first king of modern Bulgaria, and his family, blew away estimates in Geneva last week.

Trove NYC flagship exterior
MajorsNov 19, 2024
Trove Opens First US Flagship in NYC

The Australian jewelry box brand’s new West Village store will showcase new jewelers each month through its Designer in Residence program.

Snoop Dogg and Carolyn Rafaelian
CollectionsNov 19, 2024
Snoop Dogg’s New Jewelry Collection Is All About Love

“Lovechild” was created in partnership with Carolyn Rafaelian’s Metal Alchemist brand.

Helzberg CEO Brad Hampton
EditorsNov 18, 2024
Q&A: Helzberg CEO Brad Hampton on the Jeweler’s Rebrand

Hampton discussed how Helzberg is improving the customer experience and why it was inspired by the company formerly known as Dunkin’ Donuts.

Andrea Jose jewelry
Policies & IssuesNov 18, 2024
Reciprocity Jewels Returns to NYC Jewelry Week

The group will host several curated events and an exhibition of designer jewelry made with Peruvian gold traceable to the miners’ names.

Dolly Parton and Kendra Scott
CollectionsNov 18, 2024
Dolly Parton Shines in Collaboration with Kendra Scott

The collection honors the 50th anniversary of Dolly Parton’s “Love is Like a Butterfly” song, which shares a birth year with Kendra Scott.

IGI Expressions
Events & AwardsNov 18, 2024
IGI Jewelry Design Competition Returns

This year’s theme asks designers to take inspiration from classic fairy tales.

New York Comic Con Javits Center crowd
EditorsNov 15, 2024
Why Fine Jewelry Belongs at New York Comic Con

Senior Editor Lenore Fedow makes the case for why more jewelers should be appealing to nerds at the annual event.

Marie Lichtenberg and Raiz’in collection
CollectionsNov 15, 2024
Marie Lichtenberg Battles Counterfeits with New ‘Raiz’in Scapular’ Designs

The latest “Raiz’in” drop showcases a newly designed “Scapular” necklace and donates a portion of the proceeds to Make-A-Wish France.

Citizen 100th Anniversary Limited Edition #1 Pocket Watch
WatchesNov 15, 2024
Piece of the Week: Citizen’s Commemorative Pocket Watch

No. 1 out of 100, the timepiece was created to mark Citizen’s 100th anniversary and will be auctioned off at Sotheby’s next month.

My Next Question store security episode
Recorded WebinarsNov 15, 2024
Watch: 10 Tips to Keep Your Jewelry Store Secure

On the latest episode of “My Next Question,” two experts share best practices for store security during the holidays and year-round.

18th century diamond necklace
AuctionsNov 14, 2024
18th-Century Diamond Necklace Sells for Nearly $5M

Sotheby’s sold the necklace, which potentially has ties to Marie-Antoinette, for $4.8 million to a woman bidding via phone.

Saks Fifth Avenue Holiday Window
MajorsNov 14, 2024
Saks Fifth Avenue Cancels Holiday Light Display

Instead of its usual elaborate display, the store will illuminate its façade and frame the windows to highlight its flagship’s architecture.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy