FinancialsMar 20, 2024
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Movado’s Full-Year Sales Sink 11%
The company plans to invest $25 million in marketing initiatives to boost awareness around its namesake and licensed brands.
Model Georgia May Jagger, daughter of model Jerry Hall and Rolling Stones frontman Mick Jagger, stars in the new campaign for Tommy Hilfiger, a licensed brand in Movado’s portfolio. Movado’s fourth-quarter and full-year sales declined.
Paramus, N.J.—Movado Group ended its fiscal year 2024 on a low note, with full-year sales down double digits.
“For the past year, we’ve been operating in a challenging retail environment in our largest markets, the United States and Europe,” CEO Efraim Grinberg said on an earnings call Tuesday morning.
“A continuation of post-COVID dynamics, a rebound in travel spending, multiyear inflationary pressures, and increasing geopolitical uncertainty are all affecting consumer demand for discretionary products.”
Grinberg noted that Movado’s holiday marketing initiatives and new product introductions in both watches and jewelry were “favorably received.”
In the fourth quarter ending Jan. 31, net sales fell 8 percent year-over-year (9 percent on a constant dollar basis) to $179.6 million.
Quarterly sales in the U.S. were down 12 percent year-over-year while international sales fell 3 percent.
Gross profit was $96.8 million, or 54 percent of net sales, compared with $109.3 million, or 56 percent of net sales in the previous fourth quarter.
For the full-year, net sales were down 11 percent year-over-year (12 percent on a constant dollar basis) to $672.6 million.
The company said sales declined across all channels—online, in its company-owned and -operated stores, and at its wholesale customers’ brick-and-mortar stores.
Full-year sales in the U.S. fell 13 percent year-over-year while international sales declined 9 percent.
Gross profit was $370.4 million, or 55 percent of net sales, compared with $433.9 million, or 58 percent of net sales, in the previous fiscal year.
The decrease in gross margin percentage in the full year and Q4 was attributed to higher fixed costs and lower sales, the “unfavorable” impact of foreign currency exchange rates, and changes in channel and product mix.
For the full year, this was partially offset by reduced shipping costs.
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“For the past year, we’ve been operating in a challenging retail environment in our largest markets, the United States and Europe,” CEO Efraim Grinberg said on an earnings call Tuesday morning.
“A continuation of post-COVID dynamics, a rebound in travel spending, multiyear inflationary pressures, and increasing geopolitical uncertainty are all affecting consumer demand for discretionary products.”
Grinberg noted that Movado’s holiday marketing initiatives and new product introductions in both watches and jewelry were “favorably received.”
In the fourth quarter ending Jan. 31, net sales fell 8 percent year-over-year (9 percent on a constant dollar basis) to $179.6 million.
Quarterly sales in the U.S. were down 12 percent year-over-year while international sales fell 3 percent.
Gross profit was $96.8 million, or 54 percent of net sales, compared with $109.3 million, or 56 percent of net sales in the previous fourth quarter.
For the full-year, net sales were down 11 percent year-over-year (12 percent on a constant dollar basis) to $672.6 million.
The company said sales declined across all channels—online, in its company-owned and -operated stores, and at its wholesale customers’ brick-and-mortar stores.
Full-year sales in the U.S. fell 13 percent year-over-year while international sales declined 9 percent.
Gross profit was $370.4 million, or 55 percent of net sales, compared with $433.9 million, or 58 percent of net sales, in the previous fiscal year.
The decrease in gross margin percentage in the full year and Q4 was attributed to higher fixed costs and lower sales, the “unfavorable” impact of foreign currency exchange rates, and changes in channel and product mix.
For the full year, this was partially offset by reduced shipping costs.
Grinberg shared updates about Movado’s various brands during the call.
The company’s brand portfolio includes its eponymous brand as well as in-house and licensed brands, like Coach and Tommy Hilfiger.
Its namesake brand has been undergoing a “refresh” since last fall, which Movado said has paid off, noting increased brand awareness across the market in key demographic targets.
It’s planning to debut a new advertising campaign for the brand in the third quarter of fiscal 2025 and into fiscal 2026.
The Movado brand recently launched a new “Bold Quest” timepiece, with a starting price point of $595. Inspired by a 1970s design, it features an integrated case-bracelet combination and a boldly colored dial.
It will also introduce a new chronograph to its “Movado Bold Horizon 2.0” collection this spring.
For Tommy Hilfiger, Movado will continue to expand the “TH 85” collection and bolster it via marketing support.
The brand also has announced that model Georgia May Jagger, daughter of rock legend Mick Jagger and model Jerry Hall, will front its advertising campaign for watches and jewelry.
The Hugo Boss brand introduced the “Candor” family over the holiday season, while its “Sky Travel” collection received a “strong” response from retailers, said Movado.
As for Hugo Boss’ jewelry offerings, the brand is capitalizing on the growing men’s jewelry category by introducing “bolder, iconic looks,” said Grinberg.
The Coach brand will focus on driving growth in the U.S. market this spring, giving support to its “Cary” and “Elliot” lines, while also growing its Amazon business, which launched late last year.
The company also aims to grow its Calvin Klein businesses, focusing on its “Elemental” jewelry collection and its “Glean” watch line.
“As part of our emphasis on expanding automatic watches for all of our brands, we will focus on driving the success of our CK iconic family with translucent skeleton dials that reveal intricate mechanical movements,” said Grinberg.
Its Lacoste brand has seen success in its “Boston” and “L12.12” collections while its recently introduced jewelry offerings have seen “a very strong response.”
The company has new introductions planned for the brand in the second half of the year.
MVMT has seen increased profitability while Olivia Burton has also seen an improved performance, particularly its “Grosvenor” line and its “Hexa” jewelry offerings.
Looking to the year ahead, Movado plans to invest an incremental $25 million in marketing initiatives, focusing on the Movado brand in the U.S. and its licensed brands in Europe via its retail partners.
“While this is expected to cause a moderation in profit in the short term, we believe this is the right move to support our brands and customers and, importantly, deliver accelerated and consistent growth within the future,” said Grinberg.
Movado expects fiscal 2025 net sales to be between $700 million and $710 million, with gross profit of approximately 55 percent of net sales, and operating income in the range of $32 million to $35 million.
For the first half of fiscal 2025, the company anticipates net sales will be relatively flat on a year-over-year basis, as it uses marketing spend to drive top-line growth.
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