Movado Group, Inc. Q4 FY2026 earnings call

• Revenue growth of 3.1% to $186.1 million, 5.9% excluding Middle East.
• Gross margin improved by 80 basis points to 54.3% despite tariff impact.
• Adjusted operating income grew more than 40% to $12.6 million.
• U.S. net sales increased 6.9%, led by fashion brand and direct-to-consumer business.
• International strong performances in Europe and Latin America, Middle East being rebuilt.
• Movado brand product innovation successful, including museum collection, new bangle collection, holiday lab-grown diamond style set, men's Automatic Museum Imperial collection.
• Licensed brands had strong performances with Coach, Hugo Boss, Tommy Hilfiger, Lacoste, Calvin Klein, and Olivia Burton showing growth and success.

For the third quarter, revenue was $186.1 million, a 3.1% growth. Excluding the Middle East, growth was 5.9%. Gross margin improved by 80 basis points to 54.3%. Adjusted operating income grew more than 40% to $12.6 million. U.S. net sales increased 6.9%. International net sales increased 0.6%, with strong performances in Europe and Latin America, offset by softer results in the Middle East. Licensed brands saw 6.4% overall growth. Movado brand product innovation resonated, with collections like museum collection, new bangle collection, and holiday lab-grown diamond style set performing well. Licensed brands like Coach, Hugo Boss, Tommy Hilfiger, Lacoste, Calvin Klein, and Olivia Burton had various growths and successes.

Given current economic uncertainty and unpredictable impact of tariff development, the company is not providing fiscal 2026 outlook. There has been a recent trade agreement impacting future Swiss tariff rates, and the company will adjust its mitigation strategy accordingly.

Ongoing global economic and political uncertainty, unpredictable impact of tariff development.

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

A: Well, I think it's a combination of both, Ahmed. Thank you. It's a good question. And so what you're seeing is an increased coverage of these products on social media. Obviously, the bulk of our campaigns are also on digital media, and so that resonates, and they're resonating 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 watch category. And that's occurring pretty much on a global basis. So it's nice to see.

Q: 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, wouldn't that impair your sales?

A: So I think it's really on some select product families across, I think I mentioned Tommy Hilfiger and some markets and some of our other brands. And I think 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 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 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 what your spending levels would be for the fiscal year?

A: I think, you know, 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 this quarter. So it's really, we will continue to invest in our brand building efforts. But at the same time, we have made it a goal, and we're very serious about it, of driving improved profitability at the company.