Movado Lowers Guidance as Q2 Sales Slip

CEO Efraim Grinberg pointed to a challenging consumer spending environment, particularly in the watch category.

Lenore Fedow lenore.fedow@nationaljeweler.com

A set of Movado Connect 2.0 watches. The company reported declining sales in its recent second quarter results.

Paramus, N.J.—Movado Group posted declining sales in its second-quarter results, lowering its fiscal guidance for the year ahead as consumer spending on watches remains “difficult.”

“While increased marketing investment coupled with our initiatives to enhance retail performance drove improvement in our sales trend from the first quarter, second quarter sales and earnings were below our expectations due to the challenging consumer spending environment compounded by increased expenses to support future growth,” CEO Efraim Grinberg said.

The company previously announced its plan to increase marketing spend to $25 million, which ramped up in the second quarter.

It recently launched a new Movado campaign called “When I Move You Move,” a nod to the lyrics in Ludacris’ song “Stand Up,” which is featured in the campaign.

The retailer is hoping the new campaign, featuring famous faces like Ludacris, Julianne Moore, Jessica Alba, Tyrese Haliburton, and Christian McCaffrey, will bolster sales.

In the second quarter ending July 31, net sales fell about 1 percent year-over-year (less than 1 percent on a constant dollar basis) to $159.3 million.

Net sales for the first half were down 3 percent to $296 million.

Movado attributed the decrease to mixed sales at brick-and-mortar stores owned by wholesale customers, as well as those operated by Movado, partially offset by an increase in U.S. online retail.

“While we are excited by the initiatives that we have put in place, the consumer spending environment in the watch category continues to be difficult in many markets around the world and we believe this will have an impact on our second half results,” said Grinberg.

On an earnings call Thursday morning, Grinberg noted that its retail partners, especially in the U.S. and Europe, placed orders “cautiously.”

There were some bright spots in the quarter, said Grinberg, which the retailer plans to capitalize on in the second half of the year.

Movado brand sales were up 1 percent, noting significant growth in the direct-to-consumer channel as Movado.com sales rose 21 percent. The rise was partially offset by a 6 percent decline in its wholesale channel.

Grinberg noted the success of its “Movado Bold Quest” collection, which features a design inspired by a vintage Movado watch from the 1970’s.

“Opening at $595, Bold Quest fills more accessible price points that we had previously vacated,” he said.

As for its jewelry offerings, Grinberg noted on the call that “jewelry is actually outperforming watches in our fashion brands and seems to be doing very well.”

“That continues to represent a big opportunity for the company as we grow that business, [which is] particularly strong in markets like Europe and Mexico.”

The Movado brand will refresh its jewelry assortment, beginning early next year, he said.