Financials

Movado Predicts Declining Sales Amid ‘Volatile’ Retail Environment

FinancialsMar 24, 2023

Movado Predicts Declining Sales Amid ‘Volatile’ Retail Environment

The watch company expects first-quarter sales to fall as much as 15 percent due to inflation and tough comps.

20230324_Movado.jpg
A set of Movado Connect 2.0 watches. The watch company’s net sales rose in the full fiscal year but fell in the fourth quarter.
Paramus, N.J.—Movado Group ended its fiscal year 2023 on a low note, with fourth-quarter sales slipping as rising prices affected customers in its two largest markets, the United States and Europe.

The New Jersey-based company’s full-year sales rose overall, though sales in the U.S. market fell.

Signet Jewelers and Brilliant Earth’s results followed a similar trajectory, with sales increasing for the year despite a dip in the fourth quarter.

“Over the course of fiscal 2023, we saw the effects of a U.S. consumer who is no longer benefiting from COVID-related stimulus programs, global headwinds from the war in Ukraine that began last March, growing inflationary pressures, and rising interest rates,” said CEO Efraim Grinberg on an earnings call Thursday morning.

Here are five takeaways from Movado’s recent earnings report.

Full-year sales were positive, while fourth-quarter sales slipped.

In the fourth quarter, net sales fell 6 percent year-over-year to $194.3 million, which Movado attributed to a decline in wholesale sales, somewhat offset by strong sales in Movado-owned stores.

Gross profit was $109.3 million, or 56 percent of net sales, compared with $120.8 million, or 59 percent of net sales in the previous fourth quarter.

The decline in gross margin was due to “unfavorable changes in channel and product mix” and the impact of foreign currency exchange rates, said Movado.

The full-year results paint a brighter picture, with net sales up 3 percent year-over-year to $751.9 million.

The sales boost was attributed to the growth of its international wholesale business and Movado-owned stores.

Gross profit was $433.9 million, or 58 percent of net sales, compared to gross profit of $419.1 million, or 57 percent of net sales, in fiscal 2022.

The increase was due to favorable changes in its channel and product mix, said Movado, though foreign currency exchange rates and rising shipping costs took a toll.

Its outlet stores faced “a more challenging environment in Q4,” said Grinberg, though that was somewhat offset by its digital channel.

Its brick-and-mortar sales were down 9 percent in the quarter and 2 percent for the year. Adding in its digital channel, sales were up 5 percent for the year and 3 percent for the quarter.

“Our financial results were highlighted by an increase in global net sales, strong gross margin performance, and operational discipline,” Chief Financial Officer Sallie DeMarsilis said on the call.

Its U.S. sales continue to struggle while international sales rise.

In the U.S., Movado’s quarterly sales were down 6 percent year-over-year, while full-year sales slipped 4 percent compared with fiscal 2022.

Its international performance was mixed, with net sales down 5 percent in the quarter but up 8 percent for the full year.

Its European sales struggled, particularly in Germany, the U.K., and France, as customers battled inflation and the fallout driven by the war in Ukraine, said Grinberg.

Strong performances in Latin America, the Middle East, India, and Australia partially offset the declines.

Movado previously predicted it would face challenges in the fourth quarter, particularly in the U.S. and Europe.

Grinberg said, “We believed we would continue to see a difficult consumer landscape in the U.S. and Europe, our two largest markets. Consumers pulled back on discretionary purchases as more of their disposable income was affected by inflationary pressures and they shifted spending toward other categories, like travel and restaurants.”

He added that the unsettled environment in the banking system may also “place increased pressures” on companies and consumers, citing higher interest rates and banks being more cautious about extending credit.

 Related stories will be right here … 

Movado has newness ready for this spring in its in-house and licensed brands.

Movado’s brand portfolio includes its eponymous brand as well as in-house and licensed brands, like Coach and Tommy Hilfiger.

The Movado brand posted a single digit decline in sales for the full year, said Grinberg, up against strong growth in the prior year period.

For this spring, the brand will introduce a new addition to its “Bold” collection. “Bold Horizon” will be a slimmer, more refined style, said Grinberg, with prices starting at $695.

It will support the collection with a new TV commercial, and also produce new content for Mother’s Day and Father’s Day.

Movado’s licensed brands posted a 3 percent decline for the quarter, but a 9 percent increase for the year.

The Tommy Hilfiger brand is introducing two new watches in “bolder and larger sizes,” said Grinberg, including the 46 mm “Lars” and the 50 mm “Wild,” a sporty offering with a tie-dyed strap.

It’ll introduce “Pippa” and “Norris” models to appeal to cost-conscious European shoppers. It also touted a partnership with European soccer player Thiago Alcântara.

Hugo Boss also will partner with a professional athlete, Italian tennis player Matteo Berrettini. The brand will also introduce new offerings below €300 ($325).

Lacoste is expanding its “L1212” line, adding aluminum versions in bright colors via the “L1212 Go” collection. There will also be increased marketing efforts in France around the French Open, since the brand is a major sponsor of the tennis event.

Coach added “Katy,” a smaller rectangular watch, and retro-inspired “Hidden Time.” The brand has seen an improved performance in China as the market reopened.

The Calvin Klein brand, launched under Movado last year, has received positive feedback from retailers and shoppers, said Movado.

The brand is introducing the “CK Sensation,” a “modern” watch starting at $160, and “CK Force” for men, a 45 mm sports watch starting at $190.

“We continue to believe CK has a tremendous global potential within the watch and jewelry space,” said Grinberg.

Its Olivia Burton brand introduced a new product assortment, starting with watches, though jewelry is slated to follow. Its new U.K. marketing program, “Postcards from London,” is designed to bolster the brand in its home market as it faces economic challenges.

The MVMT brand’s higher-priced watches are doing especially well.

“We are focused on a strategy that will build the brand to be less dependent upon customer acquisition, and more focused on building brand equity as we reinvigorate our brand message geared towards MVMT’s maverick consumer,” said Grinberg.

Some higher price point watches performed better than entry-level items.

MVMT wasn’t the only brand seeing its higher-priced watches sell well.

The Movado brand had “stronger results in our higher price points, and we were more challenged in our entry-level price points, which had been increased earlier in the year,” noted Grinberg.

Movado has the largest share in the $500 to $1,500 price point in the U.S., he said, and plans to build on that position, while also supporting its higher-end watches.

The Movado Alta models, priced around $4,000, performed well during the holiday season.

Though some shoppers still seek out expensive items, many consumers are looking for value as inflationary pressures weigh on wallets.

Still, Grinberg said he wasn’t concerned about markdown risk.

“I do believe the marketplace has been and will continue to be somewhat more promotional through this year as consumers are challenged with inflation,” he said.

“Sometimes we have to refill price points that we have vacated, still at very strong gross margins. That’s what we’re initiating throughout the year in both our licensed brands, and then in several families for Movado Bold.”

He added he does not expect the average unit retail (AUR), or the average selling price for an item, to increase this fiscal year.

“If we want to motivate consumers, you do have to offer them value and at every price point, but it still becomes more challenging to increase your AUR.”

Movado predicts declining sales in fiscal 2024.

“As we look into fiscal 2024, we remain cautious due to growing economic concern, overall weaker spending environment, and increasing interest rates and inflation,” said DeMarsilis.

Movado expects full-year net sales to be in the range of $725 million to $750 million.

Gross profit is forecast to be 56 percent of net sales while operating income may be in the range of $80 million to $85 million.

First-quarter net sales are expected to fall 12 to 15 percent year-over-year.

In the first half of the fiscal year, Movado expects sales to decline 9 to 12 percent year-over-year due to tough comps. It reported record first-half results in fiscal 2023.

“We believe we will continue to operate in a volatile economic retail and consumer environment in our largest markets, the U.S. and Europe. Despite this, we are focused on the opportunities,” said Grinberg.

The Latest

Los Angeles wildfires
Policies & IssuesJan 22, 2025
Jewelers Mutual Steps Up Aid for LA Jewelry Businesses

The company also is matching donations made to Jewelers of America and the Diamond Council of America’s Jewelers Relief Fund.

Holiday wrapped gift boxes
SurveysJan 22, 2025
Holiday Sales Hit Record High, Says NRF

Core retail sales during the 2024 holiday season surpassed the National Retail Federation’s forecast.

National Jeweler columnist Sherry Smith
ColumnistsJan 22, 2025
On Data: How Did Independent Jewelers Fare in 2024?

Sherry Smith shares data on the year gone by, including the breakdown between natural and lab-grown diamond sales.

Resolutions - 2025.jpg
Brought to you by
3 New Year’s Resolutions for Jewelry Lovers

The new year feels like a clean slate, inspiring reflection, hope, and the motivation to become better versions of ourselves.

Foundrae Reach for Life collection campaign
CollectionsJan 22, 2025
Foundrae’s New Collection Channels the Power of Now

The “Reach for Life” collection uses feather and arrow motifs to invite growth and inner curiosity.

Weekly QuizJan 16, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Jewelers of America 20 Under 40 graphic
Events & AwardsJan 22, 2025
JA Seeking Nominations for Its Next ‘20 Under 40’ Class

Now in its fourth year, the program is expanding to include a list of “20 Under 40” for jewelry suppliers.

National Jeweler columnist Peter Smith
ColumnistsJan 21, 2025
Peter Smith: Sales Training’s Dirty Little Secret

Peter Smith pulls back the curtain on the often misinterpreted, and sometimes maligned, world of sales training.

ride_or_die_1872x1052.png
Brought to you by
A Diamond Is Forever Celebrates "Forever Present" Holiday Campaign

A Diamond is Forever hosted a holiday celebration in honor of their new marketing campaign, ‘Forever Present.’

Lord Jewelry brown and white diamond ring
TrendsJan 21, 2025
Amanda’s Style File: Decadent Mocha Mousse

Pantone’s 2025 Color of the Year takes the form of jewelry through gemstones and enamel that look just as delicious as mocha mousse.

Charms from designer Jenna Blake
Policies & IssuesJan 21, 2025
These Designers and Retailers Are Raising Money for LA Wildfire Relief

From raffles to auctions to donations, the industry is working to aid charities in Los Angeles amid the raging wildfires.

Diamonds Do Good
SourcingJan 21, 2025
Diamonds Do Good Adds 2 Board Members

Julia Hackman Chafé and Monica Elias have joined the organization’s board of directors.

Picchiotti Classic Blue and Green Necklace
CollectionsJan 17, 2025
Piece of the Week: Picchiotti’s Transformable ‘Classic Blue and Green’ Necklace

The necklace features a sapphire drop weighing more than 9 carats that detaches to transform into a ring.

Jameel Mohammed
MajorsJan 17, 2025
Tiffany & Co., CFDA Name First Winner of Jewelry Designer Award

Jameel Mohammed, founder of Afrofuturist brand Khiry, will receive a cash prize and a one-year paid fellowship with Tiffany & Co.

Gold jewelry boxes with Lux Bond & Green logo
IndependentsJan 16, 2025
Lux Bond & Green to Open Sixth Location

The 127-year-old jeweler is planning to open a new store in Mystic, Connecticut.

Timex National Park Collection
WatchesJan 16, 2025
Timex Launches Collection of National Park Watches

The watches’ dials feature artwork celebrating the vibrant energy and unique landscapes of six of America’s national parks.

Elizabeth Taylor diamond line bracelet
AuctionsJan 16, 2025
Elizabeth Taylor’s Diamond Line Bracelet Going up for Auction

Offered by U.K. auction house Woolley & Wallis, the yellow diamond bracelet was a gift from Taylor’s good friend Michael Jackson.

JCK open registration graphic
Events & AwardsJan 16, 2025
JCK Las Vegas 2025 Open for Registration

The jewelry trade show returns to The Venetian Expo and The Venetian Resort in Las Vegas from June 6 to 9.

Iris Apfel
EditorsJan 15, 2025
The Jewelry I’d Bid On in Christie’s Iris Apfel Auction

Associate Editor Natalie Francisco highlights her favorite fashion jewelry pieces from the upcoming “Unapologetically Iris” auction.

Macy’s Herald Square New York City store
MajorsJan 15, 2025
Macy’s to Close 66 Stores as Part of Turnaround Strategy

The closures are part of the retailer’s plan to close 150 locations over a three-year period.

Jewelers Vigilance Committee Americans with Disabilities Act guide cover
Policies & IssuesJan 15, 2025
JVC Debuts Guide to Americans with Disabilities Act Compliance

The online guide is available for free and written with the jewelry industry in mind.

Jose Hess Design Award Trophy
Events & AwardsJan 15, 2025
Jose Hess Design Awards Open for Submissions

The awards honor the late Jose Hess, a founding member of AJDC and an award-winning jewelry designer.

Susan Jacques
GradingJan 14, 2025
GIA CEO, President Susan Jacques to Retire at the End of 2025

The grading lab said the search for her successor is underway.

Jewelry designer and National Jeweler guest columnist Jules Kim
ColumnistsJan 14, 2025
Jules Kim: Building Bridges Between Creators and Industry

In this special op-ed, designer Jules Kim calls on big brands to collaborate with independent creators instead of copying their designs.

Henry A. Hänni
GradingJan 14, 2025
Former SSEF Director Henry A. Hänni Dies

A pioneering figure in gemology, he is remembered for his spirit of generosity, curiosity, and joy.

Edouard Schneider
MajorsJan 14, 2025
Edouard Schneider Joins Messika as Chief Brand Officer

Schneider brings over 20 years of luxury and fashion industry experience to his role as a key member of the brand’s global leadership team.

Gemfields emeralds
SourcingJan 13, 2025
Zambia Reinstates 15% Export Duty on Precious Gemstones, Shocking Gemfields

Gemfields said the Zambian government revoked the 2019 suspension of the tax with no warning.

Woman’s silhouette with smart ring on finger
TechnologyJan 13, 2025
Ultrahuman Unveils Luxury Smart Ring

With versions in 18-karat gold and platinum, the wearables company is blending health technology and fine jewelry.

×

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