Movado Posts 3% Revenue Rise in Q2

Movado Group (MOV 1.83%), a watch and jewelry company known for its broad portfolio of owned and licensed brands, reported results for its fiscal second quarter ended July 31, 2025, on August 28, 2025. The company posted revenue (GAAP) of $161.8 million, up 3.1% from the previous year’s period. This growth stemmed from stronger international and licensed brand sales, even as U.S. business softened. Operating income (GAAP) jumped to $4.0 million from $2.6 million last year, while adjusted (Non-GAAP) earnings per share stood at $0.23. GAAP diluted EPS was $0.13, slightly below last year’s $0.15. Gross margin slipped to 54.1% from 54.3% last year, mainly due to tariffs and currency fluctuations. Movado continued its quarterly dividend of $0.35 per share, which remains above the current GAAP EPS of $0.13. The quarter showed modest improvement in several areas, although some headwinds and uncertainties persist, particularly in U.S. retail performance and margin pressure.

Overview of Movado Group’s Business and Focus Areas

Movado Group develops and sells watches and jewelry across luxury, accessible luxury, and moderate fashion price points. Its owned brands include Movado, Concord, and EBEL, while it also sells licensed lines such as Coach, Tommy Hilfiger, and Hugo Boss. The company serves department stores, independent jewelers, and retail outlets in countries around the world, with additional reach through its e-commerce shops like movado.com and mvmt.com.

The company’s results hinge on its ability to manage a diverse brand portfolio and adapt to consumer preferences across regions and segments. Recent strategies have emphasized growing its international footprint, expanding direct-to-consumer digital channels, and investing in product innovation—especially women’s watches and men’s jewelry. Managing inventory, maximizing distribution, and staying current in digital marketing are also critical to success.

Quarterly Performance: Detail and Developments

Net sales (GAAP) rose 3.1% compared to the prior year, helped by growth in licensed brands and greater international demand. Revenue in international markets climbed 6.9% (GAAP), partly boosted by demand for women's watch collections and men's jewelry. However, U.S. sales declined 1.6%, continuing a trend of weaker domestic retail performance that the company had flagged last quarter.

The company’s overall operating income jumped to $4.0 million under generally accepted accounting principles (GAAP), compared to $2.6 million last year. Adjusted operating income, which excludes $2.1 million in ongoing internal investigation-related costs and $0.9 million from cost-saving efforts, reached $7.0 million. The period’s growth was supported by lower marketing spending, although overall operating expenses rose about $1 million year over year and stood at 51.6% of sales. On an adjusted basis, operating expenses made up 49.8% of sales. An elevated effective tax rate of 32.9%, up from 19.1% last year on an adjusted basis, reduced net income and GAAP EPS to $0.13, down from $0.15.

Gross margin (GAAP) edged down to 54.1% from 54.3%. The decrease reflects higher tariff impacts on U.S. imports and unfavorable foreign currency swings, only partially mitigated by improvements in product and channel mix. Meanwhile, Inventory levels climbed sharply from both the prior year and the beginning of the fiscal year; inventory was $211.5 million at quarter-end, compared to $183.2 million in the same period last year and $156.7 million at January 2025 (FY2025 year-end). Cash on hand was $180.5 million, and the company reported zero debt—highlighting continued financial flexibility.

Several material one-time events affected profitability. The company incurred $2.1 million in professional fees related to an internal investigation of its Dubai branch, as well as $0.9 million in cost-savings charges. These adjustments are part of a multi-quarter trend and continue to influence operating results. In terms of shareholder return, Movado again paid a $0.35 per share quarterly dividend and repurchased approximately 100,000 shares in the first half of FY2026, leaving $48.4 million on its buyback authorization as of July 31, 2025. The quarterly dividend remained unchanged at $0.35 per share, but it still exceeds both GAAP diluted earnings per share ($0.13) and adjusted (non-GAAP) diluted earnings per share ($0.23).

Movado’s results were also shaped by its wide-ranging product lineup. Owned brands like Movado, Concord, and EBEL are positioned in accessible luxury and high-end segments, while licensed brands such as Coach, Tommy Hilfiger, and Hugo Boss target fashion-conscious buyers. Licensed brands outperformed, while core owned brands declined. The company specifically singled out ongoing success in women’s watches and men’s jewelry collections by these partners. Digital commerce, through its own e-commerce platforms, delivered growth again, although management did not disclose specific figures. These results mirror prior quarter trends, where innovation in women’s watch collections and digital outreach supported top line resilience.

Looking Forward: Outlook and Investor Matters

Movado did not provide financial guidance for FY2026, citing ongoing economic uncertainty and the unpredictable effects of tariffs. In the prior quarter, management also withheld formal guidance, noting that improved profitability would depend on cost controls. The outlook remains cautious, with management emphasizing a “economic environment” and external risks such as tariffs and foreign exchange.

Looking ahead, investors may want to watch for how the company manages its inventory build, navigates U.S. retail trends, and sustains operating cash flows relative to its dividend policy. Ongoing internal investigation costs, the impact of tariffs on margins, and the ability to return owned brands to growth are key issues. With $180.5 million in cash and no debt, the company retains financial flexibility, but cash reserves fell compared to last year, and operating cash flow remains negative for the first half of fiscal 2026. Management reiterated plans to invest in growth, new product introductions, and shareholder returns. The quarterly dividend was maintained at $0.35 per share, with no change declared this period. Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.