MOVADO GROUP INC Q3 FY2025 earnings call

• Made significant progress on strategic initiatives like new product families and marketing revitalization. - Despite net sales decline, investments strengthened brands. - Focus on holiday season, building cost-effective business model for next year, reducing costs, rationalizing marketing, growing jewelry and India/Southeast Asia, returning Movado and North America to profitability. - Strong balance sheet with $182 million cash and no debt, new $50 million share repurchase plan approved. - Retailers tightly managed inventories in US and Europe; US affected by late Thanksgiving and election uncertainty. - Movado's campaign with new brand ambassadors received positive feedback; website sales up. - Licensed brands showed growth in various collections. - US business down 7.1%, international up 0.4% with regions offsetting declines. - Company stores performed similarly to first six months, focusing on holiday selling period.

In the third quarter of Fiscal 2025, net sales were $182.7 million, down 2.6% from $187.7 million last year. In constant dollars, the decrease was 3.5%. Net sales decreased across owned brands and company stores, partially offset by an increase in licensed brands. US net sales decreased 7.1%, while international net sales increased 0.4%. On a constant currency basis, international net sales decreased 1.1% with Europe softening. In Movado, quarterly sales on movado.com increased 16.9% with September and October sales up over 25%. Licensed brands saw 3.8% growth, with Coach's Sammy and Automatic Charter collections performing well, Tommy Hilfiger's TH 85 Chronograph and Henry family, Lacoste's jewelry including Metropole Bracelet and LC33 collection, and CK brand's jewelry and watch collections driving growth.

• Net sales expected to be approximately $665 million, low end of previous range. - Gross profit expected to be approximately 54% of sales for the year. - Operating income expected to be approximately $23 million, low end of previous guidance. - Anticipate 25% effective tax rate with earnings of $0.90 per diluted share. - Focus on delivering meaningful improvement in profitability for Fiscal 2026 with $6.5 million annualized savings from recent cost-saving initiatives.

• Challenging environment in category and key markets like US and Europe. - Retailers tightly managing inventories in US and Europe. - US retail environment affected by late Thanksgiving and election uncertainty, with digital marketing costs escalating then moderating. - Economic and market uncertainties impacting consumer purchasing behavior.

Q: On the new stock buyback authorization, is there any change to your usage of it as far as being active in stock buyback versus just offsetting dilution.

A: Right now, it's focused on offsetting dilution. And then as we hopefully will generate more cash, we're open to change that as well.

Q: You mentioned that inventory levels at retail are light. Can you talk about historic when you see trends [Technical Difficulty] A: Yeah, I can hear you. Sure. So I think the inventory levels now are pretty -- getting to a historic historically low level in both the US and Europe, which are the two markets for us that are the most developed and the markets that are most sensitive and focused on that. Historically, as the economic environment improves and retail improves, I think that we've seen a bounce back and an openness to rebuild inventories as retailers realize that they're losing sales. I think one of the differences in the dynamic today is that people have built e-commerce businesses that carry less inventory than in-store businesses. But in really no cases is the dot-com business more than 20% to 25% of a retailer's overall business.