Movado had been struggling heading into the second quarter, with its shares down more than 20% on the year by mid-August. The watchmaker quickly erased most of those losses, however, when investors were able to sink their teeth into its Q2 results.
Movado's net sales inched up 0.5% to $128.8 million, which was a welcome surprise considering that Wall Street had been expecting a 7% decline in sales. Even better, Movado's adjusted earnings per share surged 59% to $0.43, handily surpassing the average analyst estimate of $0.23. The company also hiked its fiscal 2018 full-year sales and profit forecast, and it announced a new $50 million stock buyback program.
Looking ahead, Movado is excited about the potential of its Connect line of smartwatches, as well as its recently acquired Olivia Burton brand. Management believes that these product lines will help Movado better resonate with younger consumers, which, if true, could provide a needed source of new growth.
Still, Movado's U.S. wholesale business is contracting amid the continued struggles of its traditional retail partners. The company is investing heavily in its e-commerce platform in hopes of offsetting some of these losses. But for the time being, investors may want to take a wait and see approach with Movado, so as to ascertain whether these new growth initiatives are gaining traction before buying shares.