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DATE

Wednesday, Aug. 26, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer - Efraim Grinberg
• Executive Vice President and Chief Financial Officer - Sallie DeMarsilis

TAKEAWAYS

• Net Sales -- $169.8 million, representing a 4.9% increase driven by broad-based growth across owned and licensed brands and company stores.
• Adjusted Diluted EPS -- $0.54, which includes an $0.11 per share benefit from IEEPA duty refunds, compared to $0.23 in the prior year period.
• Adjusted Operating Income -- $15.1 million, an improvement from $7 million last year, reflecting higher sales and expanded gross margins.
• Adjusted Gross Margin -- 57.5%, excluding IEEPA refunds, representing a 340 basis point improvement due to favorable channel and product mix and strategic pricing.
• GAAP Gross Margin -- 59.4%, compared to 54.1% last year, including a 190 basis point benefit from IEEPA duty refunds.
• IEEPA Duty Refunds -- $3.2 million received during the second quarter, representing a benefit to the cost of sales for duties previously paid between February 2025 and May 2026.
• Future IEEPA Recovery -- $6.8 million, representing the remaining duties the company expects to recover, though management will not recognize the gain until cash is received.
• U.S. Net Sales -- increased 4.9%, reflecting higher sell-through rates for both the Movado brand and licensed portfolios.
• International Net Sales -- grew 4.9%, led by strong performance in Latin America and India, partially offset by tourism-related declines in the Middle East.
• Constant Currency International Sales -- increased 4.1%, excluding the impact of foreign exchange fluctuations.
• Movado.com Sales -- increased 8%, as the brand leveraged elevated average selling prices and improved margins.
• Movado Outlet Store Sales -- grew 3%, driven by higher average selling prices and a more optimized product assortment.
• Olivia Burton Sales -- increased 23%, supported by the success of small shaped watch collections and focused efforts in the U.K. and U.S. markets.
• Cash and Cash Equivalents -- $211.6 million at quarter-end, compared to $180.5 million at the same time last year.
• Inventory -- $196.5 million, representing a 7.1% decrease versus last year due to the timing of receipts.
• Adjusted Operating Expenses -- $85.7 million, compared to $80.6 million last year, driven by higher performance-based compensation and marketing expenditures.
• Year-to-Date Dividend Payments -- $16.6 million returned to shareholders during the first six months of the fiscal year.
• Quarterly Dividend -- $0.40 per share, declared by the Board of Directors to be paid on Sept. 22, 2026.
• Share Repurchases -- 61,000 shares repurchased during the first half of the year, with $44.6 million remaining under the current authorization.
• Capital Expenditures -- $2.3 million for the first six months of the fiscal year.
• Adjusted Tax Rate -- 22.1% for the second quarter, compared to 32.9% in the prior year period.
• Dubai Branch Misconduct Charge -- $0.2 million pre-tax, related to an investigation of misconduct within a Dubai-based Swiss subsidiary branch.
• Second Half Top-Line Guidance -- projected to grow in the mid-single-digit range, building on first half momentum.
• Second Half Gross Margin Guidance -- expected to be between 55% to 56%, reflecting the normalization of duty rates on incoming inventory.
• Accounts Receivable -- $94.3 million, remaining flat compared to the previous year.

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RISKS

• Grinberg stated, "the region continues to face headwinds, particularly in the markets that rely heavily on international tourism," while noting a performance decline in the Middle East.
• DeMarsilis noted that gross margin was "partially offset by higher shipping costs" related to fuel surcharges and increased e-commerce shipping volume.
• Grinberg cautioned that the favorable mix of inventory carrying lower duty rates is "expected to be temporary and is not anticipated to continue in the second half of the fiscal year."

SUMMARY

Management reported a 4.9% increase in net sales for the second quarter, totaling $169.8 million. The company indicated that growth was broad-based across owned and licensed brands, with particular strength in the U.S. and European markets. Strategic focus remained on product innovation, digital storytelling, and margin expansion through optimized pricing and reduced promotional activity. Management also confirmed the expansion of its partnership with Tapestry to include the Kate Spade brand and announced the discontinuation of annual financial guidance to prioritize long-term strategy execution.

• The company is expanding its long-term partnership with Tapestry to launch Kate Spade watches starting in the next fiscal year, with Grinberg stating, "We have already begun to preview our introductory collection and are receiving a strong response from partners around the world."
• Management identified a resurgence in traditional watch interest among younger demographics, with Grinberg noting, "younger consumers are coming back pretty seriously into traditional watches, beginning again to collect traditional watches and have multiple products."
• The Movado Baby Face mini strap watch sold out its initial release of more than 400 units on movado.com in less than one month, prompting plans for new fall colorways.
• The company decided to discontinue providing an annual outlook to focus on sustainable, profitable growth and long-term value creation.
• Movado Group is celebrating its 145th anniversary with digital content featuring brand ambassadors including Ludacris, Julianne Moore, and Christian McCaffrey to drive consumer engagement.

INDUSTRY GLOSSARY

• Adjusted Results: Financial metrics that exclude specific non-recurring or non-operational charges to provide a clearer view of underlying business performance.
• Basis Points: A unit of measure for interest rates and other percentages equal to one one-hundredth of one percentage point (0.01%).
• Constant Currency: A reporting method that translates current period results using prior year exchange rates to eliminate the impact of currency fluctuations.
• IEEPA: The International Emergency Economic Powers Act, which authorized certain import duties that were repealed in February 2026.
• Milanese Bracelet: A watch strap made from thin metal wires woven into a dense, mesh-like pattern.
• Non-GAAP: Financial measures that are not calculated in accordance with Generally Accepted Accounting Principles.
• SKU: Stock Keeping Unit, a unique identifier used to track individual products in inventory.
• Tonneau: A watch case shape characterized by curved sides and flat ends, resembling the profile of a barrel.

Full Conference Call Transcript

Operator: Good day, everyone, and welcome to Movado Group, Inc. Second Quarter Fiscal 2027 Earnings Conference Call. As a reminder, today's call is being recorded and may not be reproduced in full or in part without permission from the company. At this time, I would like to turn the conference over to Allison Malkin of ICR. Please go ahead.

Allison Malkin: Thank you. Good morning, everyone. With me on the call today are Efraim Grinberg, Chairman and Chief Executive Officer; and Sallie DeMarsilis, Executive Vice President and Chief Financial Officer. Before we get started, I would like to remind you of the company's safe harbor language, which I'm sure you're all familiar with. The statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release.

If any non-GAAP financial measure is used on this call, a presentation of the most directly comparable GAAP financial measure to this non-GAAP financial measure will be provided as supplemental financial information in our press release. Now I would like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

Efraim Grinberg: Good morning. Thank you for joining us, and welcome to Movado Group's second quarter conference call. With me today is Sallie DeMarsilis, our Executive Vice President and Chief Financial Officer. Following our prepared remarks, we'll be happy to take your questions. We were very pleased with our results for the quarter and the first half of the year. We continue to see momentum across our business and strength in consumer demand despite the ongoing challenges related to the conflict in the Middle East, which reflects meaningful progress advancing our strategy and favorable trends in our categories. For the quarter, sales increased 4.9% to $169.8 million.

Adjusted operating profit increased to $15.1 million from $7 million last year and included $3.2 million of IEEPA duty refunds received in the quarter. Adjusted EPS increased to $0.54 from $0.23 last year and included $0.11 per share attributed to the IEEPA duty refunds. As I've done on previous calls, I'd like to reiterate our 4 key strategic priorities. First, putting the consumer at the center of our universe, learning more about who they are, how they relate to our brands and how we build long-lasting emotional connections across our portfolio. Second, driving innovation and delivering trend-right products while remaining true to each brand's DNA and their unique target customer.

Third, connecting with those consumers through compelling content and digital storytelling. There has never been a greater opportunity to tell our brand stories directly to customers. And fourth, driving profitability and strengthening gross margin through higher average selling prices, greater full price selling penetration and a more optimized product assortment and supply base. Our teams continue to make progress against these priorities during the quarter with sales growth in the U.S. and across our principal international markets. In the U.S., we saw increased sell-through rates in both Movado and our licensed brands. Internationally, we delivered strong growth in Latin America and India and low single-digit growth in Europe.

This was partially offset by a decline in the Middle East, where the region continues to face headwinds, particularly in the markets that rely heavily on international tourism. Gross margin for the quarter improved to 59.4% from 54.1%. Excluding the IEEPA duty refunds received, gross margin for the second quarter of fiscal 2027 would have been 57.5%, a 340 basis point improvement. Gross margin benefited from business mix and strategic pricing initiatives we implemented during the first quarter. I will go into this in further detail after I update you on our brands. We also ended the quarter with a very strong balance sheet with $212 million of cash and no debt.

And year-to-date, we returned over $16 million to shareholders through quarterly dividend payments. We continue to see strong results from our customer-centric approach, particularly from trend-right products in new shapes and sizes that are resonating with younger consumers as they increasingly engage with traditional watches. A great example is the Movado spring launch of our Baby Face mini strap watch. The product sold out quickly with more than 400 units sold on movado.com in less than a month. We plan to follow that success with new fall colorways available both on our website and through a limited group of retail partners where we would expect a similarly strong response.

As I review our brands, I'll highlight both the product innovation we're bringing to market and how we're connecting with today's consumers through storytelling initiatives, predominantly across digital platforms. Across our portfolio, we are seeing consumers respond to innovation that's both trend right and authentic to each brand. At Movado, 2 of our recent women's collections, Museum Bangle and Velura, are great examples of this strength. Velura is a beautiful new round Museum watch on a classic Milanese bracelet with and without lab-grown diamonds. On the men's side, this spring, we introduced the new BOLD Verso S and have quickly seen a strong customer response.

We will expand Verso S' collection over the next several quarters, including the introduction of the Verso S Chronograph during the third quarter. On the marketing front, we're elevating our engagement with consumers as we celebrate Movado's 145th anniversary. We have launched a compelling collection of digital content, highlighting Movado's heritage, iconic design and Swiss craftsmanship.

As we move into the second half, we will further amplify our consumer engagement and storytelling through our 145th anniversary content as well as through our Movado ambassadors, including Ludacris, Christian McCaffrey, Julianne Moore and Tyrese Haliburton. movado.com and our Movado outlet stores also continue to perform extremely well, with sales increasing 8% and 3%, respectively, as we continue to elevate average selling prices and drive improving margins. Consumer-focused innovation is also helping drive growth across our fashion brands. We have seen very strong momentum in Coach watches, particularly with Gen Z consumers driven by the continued success of Sammy and the recent introduction of Iris, a mini round jewelry-inspired collection.

We will continue that innovation in the second half with a new mini Sammy and the addition of Greta, a new Tonneau shaped collection for Coach. This fall, our marketing campaign will feature Lola Tung, star of "The Summer I Turned Pretty," helping us further connect the Coach brand with a younger generation of consumers. Innovation also continues to drive success at Tommy Hilfiger, led by the T.H. Oxford family, which offers a tailored look designed for today's customer. We also recently introduced the Bryant family of men's chronographs with beautiful dials and a 38-millimeter case size. Bryant is receiving a strong response from consumers.

As we continue to innovate within our women's assortment, we have seen women's watch penetration increase around the world. Collections such as Mia and Nora are now proven successes. On the jewelry side for Tommy Hilfiger, our heart charms continue to drive sales. Bryant, T.H. Oxford and Mia will be featured prominently in our Tommy Hilfiger storytelling this fall. At Lacoste, we continue to see success in our rugged LC33 collection while also driving innovation through new introductions that elevate average selling prices through a combination of materials, including rubber and metal. Our Lacoste jewelry business also continues to perform very well, led by the success of the Metropole collection, which will expand with new designs and feature crystals.

Our fall Lacoste content will feature both LC33 and Metropole jewelry across digital channels and at the point of sale. I am also encouraged by the improvement we are seeing in Calvin Klein watches, particularly in women's. Our new sophisticated square watch collection sold out quickly this spring across markets around the world. It is a great complement to our already successful Twisted Bezel collection and CK Pulse. We are equally committed to growing our Calvin Klein men's business and are excited by the response to our new cushion shape collection, aptly named Shape, which will be featured prominently in our upcoming campaign.

We have also received a strong response from retailers to the introduction of our new Command jewelry collection for men. At BOSS, we will continue to support our 2 leading hero collections, Grand Prix and Sky Traveler, while introducing the new Grand Prix Vitesse, which will be the focus of our fall campaign. We're also excited about the introduction of Archer jewelry collection for men. For women, we have received a strong response to Violet. Its distinctive shape and 21-millimeter size are right on trend, and it will be the focus of our women's marketing this fall.

At Olivia Burton, our strategy of focusing on the United Kingdom and the United States is working with sales increasing 23% for the quarter. Small shaped watches continue to drive the business, led by key collections, including Mini Grove and Mini Grosvenor. Our campaign watch for the fall will be the new Cambridge family, our first tonneau-shaped collection for the brand. The Olivia Burton campaign will evolve from our successful Mini to the Max concept with a new message, "Mini is more," further solidifying Olivia Burton's position as an authority in smaller women's watches.

Across our portfolio, innovation and compelling storytelling allows our brands to connect with customers, particularly younger consumers as they increase their engagement with traditional watches and learn more about the category. In that regard, we are excited to be expanding our long-term partnership with Tapestry. And beginning next fiscal year, we'll be launching Kate Spade watches. We have already begun to preview our introductory collection and are receiving a strong response from partners around the world. We are excited by the resurgence that we see in the watch category, and we believe our brands are well positioned to capitalize on it. As I previously mentioned, our fourth strategic priority is to expand margins and drive greater profitability.

As mentioned, excluding the IEEPA duty refunds, gross margin for the second quarter improved 340 basis points, reflecting improved sales mix, strategic pricing actions and reduced promotional activity. Gross margin also benefited from a favorable mix of inventory sold during the period, including inventory carrying lower duty rates following the repeal of IEEPA tariffs in February 2026. We continue to streamline our assortments, reducing SKU counts and improve efficiency across our value chain. We are driving higher levels of full price selling through stronger brand positioning while reducing promotional activity. At the same time, our brands remain focused on increasing average selling prices where appropriate while continuing to offer consumers compelling value.

As we look ahead, we remain pleased with the performance of our business and the positive trends we have now delivered for 5 consecutive quarters. We believe this momentum reflects the successful execution of our strategy and the strength of our brands, our teams and our consumer-focused approach. Going forward, we remain committed to providing transparency and meaningful insight into our business, our markets and the trends we are seeing. At the same time, we have decided to discontinue providing an annual outlook. We believe our focus is better served by executing our long-term strategy and making the right decisions to drive sustainable, profitable growth and create increased value.

We entered the second half encouraged by the momentum in our business, excited about the innovation and storytelling we have planned across our portfolio, and we are focused on continuing to execute against our strategic priorities. With that, I'll turn the call over to Sallie to review our financial results in greater detail.

Sallie DeMarsilis: Thank you, Efraim, and good morning, everyone. For today's call, I will review our financial results for the second quarter and year-to-date period of fiscal 2027. My comments today will focus on adjusted results. Please refer to the description of the special items included in our results for the second quarter and first 6 months of fiscal 2027 in our press release issued earlier today, which also includes a reconciliation table of GAAP and non-GAAP measures. Turning to a review of the quarter. Overall, we were pleased with our performance for the second quarter of fiscal 2027.

The execution of our strategy drove increases across our key financial metrics, while we maintained a strong balance sheet and generated positive cash flow. Sales were $169.8 million as compared to $161.8 million last year, an increase of 4.9%. In constant dollars, the increase in net sales was 4.4%. Net sales increased across licensed brands, company stores and owned brands. By geography, U.S. net sales increased 4.9% as compared to the second quarter of last year. International net sales also increased 4.9%. On a constant currency basis, international net sales increased 4.1% with strong performances in certain markets such as Asia, Europe and Latin America.

Gross profit as a percent of sales was 59.4% compared to 54.1% in the second quarter of last year. This quarter, we received $3.2 million of IEEPA duty refunds, which favorably increased our gross margin by 190 basis points. Excluding the IEEPA duty refunds, the second quarter gross margin would have been 57.5%, an increase of 340 basis points over the same period of last year. This 340 basis point increase was primarily driven by favorable channel and product mix, partially offset by higher shipping costs.

Similar to the first quarter, the second quarter of fiscal 2027 gross margin benefited from a favorable mix of inventory sold during the period, including inventory carrying lower duty rates following the repeal of IEEPA tariffs in February of 2026. This benefit is expected to be temporary and is not anticipated to continue in the second half of the fiscal year. In addition, we are pursuing refunds and expect to recover the remaining $6.8 million of IEEPA duties we had previously paid. However, we have elected to not recognize the gain until the cash refund is received. Operating expenses were $85.7 million as compared to $80.6 million for the second quarter of last year.

The $5.2 million increase was driven by higher performance-based compensation and increased selling and marketing expenses to support the higher sales. The combination of higher revenue and gross profit, including the IEEPA duty refunds, more than offset the increase in operating expenses and drove operating income to $15.1 million, an $8.1 million improvement from $7 million in the second quarter of fiscal 2026. We recorded approximately $1.1 million of other nonoperating income in the second quarter of both fiscal 2027 and fiscal 2026. Other nonoperating income is primarily comprised of interest earned on our global cash position.

Income tax expense totaled $3.6 million in the second quarter of fiscal 2027 as compared to $2.7 million in the second quarter of fiscal 2026. Net income in the second quarter was $12.5 million or $0.54 per diluted share, including a $2.5 million or $0.11 per diluted share after-tax benefit from the IEEPA duty refund, compared to $5.3 million or $0.23 per diluted share in the year ago period. Now to review the highlights of our year-to-date results. Sales for the 6-month period ended July 31, 2026, increased 6.3% to $312.2 million as compared to $293.6 million last year. Gross profit was $182.4 million or 58.4% of sales as compared to $158.9 million or 54.1% of sales last year.

Excluding the IEEPA duty refunds, gross margin for the first 6 months of fiscal 2027 would have been 57.4%, an increase of 330 basis points over the same period of last year. Operating expenses for the first half of 2027 were $159.9 million and included higher performance-based compensation and increased selling and marketing expenses to support the higher sales. For the 6 months ended July 31, 2026, operating income, which included $3.2 million in IEEPA duty refunds, was $22.6 million as compared to $7.9 million in fiscal 2026.

Net income was $19.7 million or $0.86 per diluted share, including a $2.5 million or $0.11 per diluted share after-tax benefit from the IEEPA duty refunds, as compared to $7.2 million or $0.32 per diluted share in the year ago period. Now turning to our balance sheet. Cash at the end of the second quarter was $211.6 million as compared to $180.5 million at the same period of last year. Accounts receivable was $94.3 million, flat to the same period of last year, primarily due to timing and mix of business. Inventory at the end of the quarter was down $15 million or 7.1% below the same period of last year due to timing of receipts.

With top sellers being replenished to support our third and fourth quarter top line, we feel comfortable with the composition and level of our inventory position. In the first 6 months of fiscal 2027, capital expenditures were $2.3 million, and we repurchased approximately $61,000 under our share repurchase program. As of July 31, 2026, we had paid $44.6 million remaining -- we had $44.6 million remaining under our authorized share repurchase program. Subject to prevailing market conditions and the business environment, we plan to utilize our share repurchase plan to offset dilution in fiscal 2027. As Efraim mentioned, we have decided to discontinue providing an annual outlook. We do, however, remain committed to providing transparency and insight into our business.

As such, consistent with the first half results, the company expects top line growth in the mid-single-digit range for the remainder of this fiscal year and second half gross margin to be in a range of 55% to 56%. I would now like to open the call up for questions.

Operator: [Operator Instructions] Our first question is from Owen Rickert with Northland Capital Markets.

Owen Rickert: Congrats on a great quarter. First for me, gross margin expanded 340 bps, excluding IEEPA benefit year-over-year. That was great to see. How much of that improvement is structural, maybe mix and pricing power versus transitory favorable FX, onetime cost reductions? Anything to call out there?

Efraim Grinberg: Well, I would think it's a mix of both, okay? So it's a mix of improved pricing and better average selling prices across the board. But it's also -- we did have a benefit of legacy inventory that was in our warehouses that we had accrued an IEEPA tariff on, and we immediately were able to reverse that during the first quarter. And so that benefited both the first and the second quarter. It's a little harder to understand, but because it's not -- it's inventory that was in our warehouse, and we were already anticipating having IEEPA tariff against it, and it was immediately removed.

And so it had no -- we paid duties on it, but it had no incremental tariffs. We're back now on current inventories and incoming inventory have now new tariffs. And that affects all companies, not just us.

Owen Rickert: Right. Got it. Okay. So yes, that kind of leads to my second question just on the back half of the year gross margin guidance of 55% to 56%, a little step down from 2Q performance. Is that just due to what you just mentioned on the inventory?

Efraim Grinberg: 100%.

Owen Rickert: Okay. Perfect. Perfect. And then you guys cited some higher shipping costs as a partial offset to that margin improvement. How significant is this headwind? Are you locked into current freight rates? Or do you have some flexibility to renegotiate?

Sallie DeMarsilis: Well, we always operate tightly and we try to get the best shipping costs. But what transpired in the second quarter was a few things, some fuel surcharges resulting from, obviously, what's happening in the Middle East, and we'll better be prepared to manage that. The other was because our e-com business was up and a lot of it was shipping related to Mother's Day and things like that. So good business sometimes creates a little bit more expense. So we have that all of those factors built into the back half of the year as well.

Owen Rickert: Okay. Super helpful. Super helpful. And then lastly for me, more of a fun question. You did allude to it a lot on the prepared remarks, but can you just speak to some of those broader trends you're seeing across the fashion watch and jewelry category right now and how those trends are shaping your strategy going forward?

Efraim Grinberg: So we're seeing some real momentum in the category on -- particularly in the United States and then markets like Mexico and Brazil and India, where younger consumers are coming back pretty seriously into traditional watches, beginning again to collect traditional watches and have multiple products. So it's a really nice trend to see. And that means that the Gen Z consumer as they become more mature and older and get -- and have higher availability of income, we will move into better watches as well. And so you're seeing it across social media channels. You're seeing an interest from the press and from retailers. So our retailers are seeing that momentum as well.

And I think it was -- there was a period of time coming with the introduction of the Apple Watch in the mid -- around 2015 that there was a lot of question marks about the fashion watch category. And what we've seen is that younger consumers are wearing other kinds of wearables and not watches as wearables. They're wearing watches as accessories and fashion statements.

Owen Rickert: Great. Super helpful.

Operator: There are no further questions at this time. I would like to turn the conference back over to management for closing remarks.

Efraim Grinberg: Okay. Thank you. We're very -- as you can tell, we're very pleased with our results, are optimistic about the journey that we're on for the future and how our teams are executing on a global basis. So we're very pleased with the results and look forward to continued success. With that, I want to wish everybody a very happy end of the summer, and thank you very much for attending today.

Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.