Movado Group, Inc. Q3 FY2026 earnings call

Management Statement and Operational Highlights

• Quarterly Results: Revenue grew 3.1% to $186,100,000. Excluding the Middle East, growth was 5.9%. Gross margin improved to 54.3% (80 basis points) despite incremental U.S. Tariffs. Adjusted operating income increased over 40% to $12,600,000. Positive operating cash flow of $1,300,000 for the first nine months vs. use of cash last year. Strong balance sheet with $183,900,000 in cash and no debt, and a quarterly dividend approved.
• Strategic Initiatives: Progress in strengthening brands, driving innovation, and improving financial results. Positive dynamics in fashion and accessible luxury watch categories, driven by innovation and interest from women and younger consumers. Strong momentum in fashion jewelry, including men's jewelry.
• Branding Efforts: Movado's holiday campaign features collaborations with celebrities to deepen consumer engagement and drive POS performance. Licensed brands continued to perform well with new collections and family expansions.

Segment Performance

• Movado Brand: In company stores, sales grew 9.4% on a comparable store basis, with Movado brand sales up 17.7%. Product innovation like the Museum collection, BANGL collection, and new diamond collection for holiday with Jessica Alba and Julianne Moore, as well as the men's Automatic Museum Imperial collection with Christian McCaffrey, contributed. Movado Heritage's 1917 collection based on a vintage design launched successfully with support from basketball star Tyrese Halliburton.
• Licensed Brands: Overall growth of 6.4% and 2.9% on a constant currency basis. Coach drove double-digit growth led by the SAMI collection. Hugo Boss performed well with hero families like Sky Traveler, Grand Prix, and Principal Tank Watch. Tommy Hilfiger's T.H. Oxford family gained traction. Lacoste was strong in jewelry, especially the Metropole collection and LC33 anti-digital line. Calvin Klein built leadership in women's watches. Olivia Burton saw healthy growth in the US and UK led by the Mini Grove Collection.

Guidance

• The company is not providing fiscal 2026 outlook due to current economic uncertainty and unpredictable impact of tariff developments. Will adjust mitigation strategy based on recent U.S.-Switzerland trade agreement lowering U.S. tariff rate on Swiss watches to 15%.

Risks

• Global economic and political uncertainty. - Unpredictable impact of tariff developments on costs and margins.

Question and Answer

Q: Hi. Good morning. So first, I just wanted to ask you, the success you're seeing with many of your watches and brands, is that coming from your, you know, influencers, your, you know, the spokespeople that you have, or is that because of the design and it's just trending well with with Gen z?

A: Well, I think it's a combination of both, Amit. Thank you. A good question. And so what you're seeing is is an increased coverage of of these products on social media and obviously, the bulk of our campaigns are also on digital media, and and and so that resonates they're resonating, with with younger, consumers across the spectrum. I think it's also the combination of innovation of new shapes and sizes. And the embrace of younger consumers to the the watch category. And and that's occurring pretty much on a global basis. So it's it's nice to see.

Q: Okay. And then as far as the commentary you made about many of your brands being selling well or being sold out, Do you want the sold out conditions? I mean, would that that impair your sales?

A: So, I think it's really on some select product families across, I think I mentioned Tommy Hilfiger in some markets and some of our other brands. And and and and I think that that that what you know, this is not a in some cases, we also in the case of the ludicrous watch and Movado, it was a limited edition. So it was planned to be sold out. We still have one model available. Which we expect to sell out in the next few weeks. So I think it's always good to have a balance of supply and demand, and we'll be able to replenish most of the styles into the first early first quarter or the end of the fourth quarter of this year. So I think it's a good balance to have. And part of it is as the category comes back and the innovation has has increased and consumers are drawn back into the category. Obviously, the levels of demand change. And that's also very good to see.

Q: And the success you're seeing in sales, does that change your commentary coming into the calendar year about you know, what your spending levels would be for the the fiscal year?

A: I think it's really a balance. And our focus has been on improving profitability. And you saw that through the first nine months of this year and particularly in quarter. So it's really we will continue to invest in in in our brand building efforts. But at the same time, we have made it a goal and we're very serious about it. Of of driving improved profitability at the company.