Financials

Movado Lowers Guidance Amid ‘Uncertain’ Retail Environment

FinancialsNov 23, 2022

Movado Lowers Guidance Amid ‘Uncertain’ Retail Environment

Its Q3 sales dipped as inflation took its toll on shoppers in the U.S. and Europe.

A set of Movado Connect 2.0 watches. The watch company’s U.S. net sales were down 6 percent in Q3 as inflation weighed on shoppers.
Paramus, N.J.—Movado Group posted a decline in sales in the third quarter as inflation weighs weighed on shoppers in the United States and Europe.

The New Jersey-based company also lowered its fiscal-year guidance, citing an uncertain retail environment.

“As consumers in our key markets experience inflationary pressure, we are updating our annual outlook to reflect currency headwinds and a softer spending environment,” said CEO Efraim Grinberg.
 
Movado’s portfolio includes Movado, Ebel, MVMT and Oliva Burton as well as licensed brands like Coach and Tommy Hilfiger.
 
Here are five takeaways from its recent earnings report.
 
Inflation is taking a toll on customers in the U.S. and Europe.

The company’s U.S. net sales were down 6 percent year-over-year in the third quarter.

For the first nine months of the year, U.S. sales slipped 2 percent compared with the same period last year.

Movado saw a dip in both its wholesale customers in the owned brand category and online, though it was partially offset by a rise in sales at company-owned stores.

“In the United States and Europe, we have seen inflation of everyday goods and higher energy prices begin to take a greater toll on consumers’ purchasing power, and we expect that trend to continue for the balance of this year and into next year,” said Grinberg on an earnings call Tuesday.

Overall net sales in the third quarter were down 3 percent year-over-year to $211.4 million compared with $217.7 million in the third quarter of fiscal 2022.

Gross profit was $121 million, or 57 percent of sales, compared with $125.6 million, or 59 percent of sales, in the prior-year period.

For the first nine months of the year, net sales were up 6 percent to $557.6 million compared with $526.4 million in the first nine months of fiscal 2022.

Gross profit in the first nine months was $324.6 million, or 58 percent of sales, compared with $298.2 million, or 57 percent of sales in the prior year period.

“We are pleased with our overall performance for the third quarter of fiscal 2023 despite being negatively impacted by the continued strength of the U.S. dollar and by intensifying economic pressures in certain key markets as the quarter progressed,” Chief Financial Officer Sallie DeMarsilis said on the call.

Its international business is still going strong.
 
While U.S. sales struggle, Movado’s international sales have been comparatively solid. 

Movado’s international net sales were down less than 1 percent compared with the third quarter of last year.
 
For the first nine months of the year, international sales were up 13 percent year-over-year.
 
“Our international sales are now almost two times larger than our U.S. wholesale business,” said Grinberg.

 Related stories will be right here … 

Movado is lowering its fiscal guidance.

The company is readjusting its full-year outlook due to foreign exchange headwinds and an “uncertain” retail environment.

The company now expects net sales in the range of $740 million to $750 million compared with its prior outlook of $780 million to $790 million.

The currency impact is expected to shave around $35 million from net sales, but the revised outlook still means growth of 1 to 2 percent when compared with its previous fiscal year.

Operating income is expected to be in the range of $120 million to $125 million compared with previous guidance of $125 million to $130 million.

Gross profit is still expected to be around 58 percent of net sales.

“As we think about the balance of the year, we believe that the intended consequences of central banks to tamp down inflation are beginning to take effect and economies around the world are beginning to slow. There continues to be a heightened risk of a recession and retailers and consumers are becoming increasingly cautious,” said Grinberg.

The company’s revised outlook reflects its cautious approach to the year ahead.

“Within this context, we are navigating a retail environment with reduced visibility and we will focus on controlling the things that we can control,” he said, noting the company will be managing expenses and inventory.

Brilliant Earth also lowered its guidance in its most recent quarterly report, citing similar macro headwinds.

The holiday season may be unpredictable.

The uncertainty of the retail environment makes forecasting for the holiday season more challenging, said Grinberg.

Last year’s holiday season was strong, he noted, buoyed by less competition from travel and dining.

“The consumer was in fantastic shape and they were being urged to buy early or take the risk that retailers would run out of best-selling products. Today, the environment is completely different,” he said.

As the holiday season approaches, Grinberg said the company is “well positioned” and will support its brands with marketing campaigns to bolster sell-through for its watch and jewelry brands.

Its in-house and licensed brands are performing well.

Movado’s brand portfolio includes its eponymous brand as well as in-house and licensed brands.

The Movado brand has been bolstered by its website, with sales up 56 percent compared with two years ago, though down 14 percent in the first nine months of the year.

The brand recently introduced its “Alta” collection, inspired by Movado’s history, featuring ceramic bezels and a Movado automatic chronograph movement.

The company’s licensed brands saw sales increase 12 percent.

The Tommy Hilfiger brand performed well while Hugo Boss continued to build on its momentum, said Movado, collaborating with influencers, like TikTok star Khaby, to promote the brand.

Coach signed Jennifer Lopez as an ambassador and has been growing its online business in China, also with the help of influencers.

Lacoste introduced the third generation of its 12.12 line, inspired by the brand’s iconic polo shirt. It also debuted Lacoste jewelry, which has seen strong sell-through, said the company.

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 partnership with Swatch Group.

The rollout has continued, eliciting a strong response from consumers, said Movado. Women represent about 50 percent of Calvin Klein watch sales with men at 33 percent, and the “for everyone” segment at 17 percent.

For the holiday season, the company will promote the Calvin Klein brand in key European markets with billboard and digital ads.

As for the Olivia Burton and MVMT brands, Movado said it’s working on its strategic plans and building out a team. It has been encouraged by the progress.

MVMT’s “Raptor Automatic,” the brand’s most expensive watch at $500, is doing well, as is its collaboration on watches and sunglasses with the Hello Kitty brand.

The company is offering higher price points for Olivia Burton. 

Though its home market of the U.K. has been “economically challenged,” Movado said there has been a positive response to its new holiday offerings from retailers, with more newness planned for next spring.

The Latest

TrendsDec 06, 2022
Pantone’s 2023 Color of the Year Is A Lot Like Rubellite, Spinel, Ruby

“Viva Magenta” easily finds its colored gemstone counterparts.

AuctionsDec 06, 2022
Jewels from the Sunken ‘Ship of Gold’ Smash Auction Estimates

Holabird Western Americana Collections offered hundreds of treasures recovered from the S.S. Central America in its Dec. 3 sale.

ColumnistsDec 06, 2022
The Smart Lab: 6 Holiday Email Marketing Strategies To Boost Sales

From creating catchy subject lines to retargeting abandoned carts, Emmanuel Raheb has a half-dozen pieces of email marketing advice.

Brought to you by
How To Buy Colored Gemstones

Give your customers the full gemstone buying experience by using the 6C's.

IndependentsDec 06, 2022
CD Peacock Names VP of Client Engagement, Experience

Qi Holtzman is a member of the second generation to run the family-owned Chicago area jeweler.

Weekly QuizDec 01, 2022
This Week’s Quiz
Test your knowledge of the latest jewelry news with this quick test.
Take the Quiz
IndependentsDec 05, 2022
Holocaust Survivor and Jeffrey Mann Jewelers Matriarch Rena Mann Dies

Mann, who opened the Ohio jewelry store with her husband and son in 1984, was 95.

TechnologyDec 05, 2022
Timex Ticks into the Metaverse with Bored Ape Yacht Club

The watch brand will create 500 custom timepieces for holders of Bored Ape Yacht Club NFTs.

Brought to you by
Knowledge and Skills for Today’s Hot Topics

From laboratory-grown diamonds to design to country-of-origin, GIA's Alumni Collective™ has a seminar to suite your needs.

EditorsDec 05, 2022
Meet Jewelry’s First TikTok Star

When it comes to translating luxury into the social media platform’s approachable style, JewelsWithJules has cracked the code.

Events & AwardsDec 05, 2022
WJA Foundation Awards Nearly $60K in Scholarships for 2022-2023

Scholarship winners received awards in six different categories.

SourcingDec 02, 2022
Alrosa CEO Sergey Ivanov to Step Down, Report Says

According to Russian news sources, the sanctioned head of the diamond company is leaving to take a job with an investment group.

SourcingDec 02, 2022
Lucapa Sells 170-Carat Pink Diamond Unearthed This Summer

Said to be the largest pink diamond found in hundreds of years, “The Lulo Rose” was sold for an undisclosed sum.

AuctionsDec 02, 2022
Here’s How 2 Royal Jewels Performed at Auction in Denmark

A princess’s tiara fell within its pre-sale estimate while an Art Deco bracelet from a queen doubled it.

CollectionsDec 02, 2022
Piece of the Week: Foundrae’s Chain

A closer look at the bold links reveals a subtle, surprising detail.

Supplier BulletinDec 01, 2022
Take Your Jewelry Design Process Digital with the GIA Alumni Collective™

Sponsored by GIA Alumni Collective™

WatchesDec 01, 2022
Rolex to Certify Pre-Owned Watches

Retailers within its official distribution network will be able to sell the authenticated timepieces.

CollectionsDec 01, 2022
Kendra Scott’s New Collection is for Barbie Girls

The capsule collection combines the brand’s classic styles with Barbie’s signature pink color.

AuctionsDec 01, 2022
13-Carat Pink Diamond Withdrawn From Christie’s Auction

The auction house is not offering any details on why the fancy vivid pink stone was pulled from its upcoming “Magnificent Jewels” sale.

SourcingDec 01, 2022
Nomad’s Is Selling Its Stones to Raise Money for Ukraine Again

In the spirit of an advent calendar, “Gems to Help Ukraine” will sell a stone a day through Dec. 24 on the Nomad’s Instagram account.

GradingDec 01, 2022
PhotoScribe Granted Patent for Method that Verifies a Stone’s Identification

The secure mark combines an overt mark with a covert data set to provide assurance on a gem.

SurveysNov 30, 2022
5 Things Retailers Should Know About the Start to the Holiday Season

Plus, what a potential rail strike would mean for retailers.

WatchesNov 30, 2022
Watchfinder & Co. Will Launch a Marketplace Next Year

It will provide a place for select luxury watch retailers to sell their stock.

MajorsNov 30, 2022
Pomellato Buys Into Italian Goldsmith

The brand has purchased a minority stake in Costanzo & Rizzetto.

SourcingNov 30, 2022
Firestone Restarts Operations of Lesotho Diamond Mine

Liqhobong has been in a care-and-maintenance period since the start of the pandemic.

MajorsNov 29, 2022
LVMH Acquires Jewelry Manufacturer Pedemonte Group

The strategic acquisition will bolster the luxury titan’s production capacity in its watch and jewelry division.

CollectionsNov 29, 2022
Alex and Ani Founder Carolyn Rafaelian Has Launched a Fine Jewelry Line

The new brand, Metal Alchemist, focuses on unisex, classic jewelry designs.

IndependentsNov 29, 2022
Reinhold Jewelers’ Holiday Book Is an Ode to an Important Beverage

The 2022 edition of the retailer’s annual publication pays homage to the coffee farms and shops of Puerto Rico.

×

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