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Why Movado Stock Was Slammed on Tuesday

By Daniel Sparks - Nov 26, 2019 at 1:59PM

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Tough competition and a challenging retail environment are presenting challenges for the watchmaker.

What happened

Shares of fine-watch retailer Movado Group ( MOV -1.65% ) took a hit on Tuesday. The stock slid as much as 24.6%, but was down 22% as of 12:41 p.m. EST.

The decline followed the release of Movado's fiscal 2020 third-quarter results. Bearishness from investors was likely prompted primarily by the company's worse-than-expected revenue and non-GAAP (adjusted) earnings per share during the period.

A chalkboard sketch of a chart showing a stock price declining

Image source: Getty Images.

So what

Movado announced revenue of $205.6 million, down 1.6% year over year.

A combination of increased marketing investments and sales that fell short of expectations meant that Movado's bottom line came in significantly lower than expected. Non-GAAP earnings per share for the consumer goods company also came in lower, at $0.82 -- down from $1.18 in the year-ago quarter. Analysts, on average, were expecting revenue of $220 million and adjusted EPS of $1.03.

Now what

In light of its "results to-date and the challenging watch category and retail environment, and currency headwinds," management said in its third-quarter earnings release that it's lowering its full-year revenue outlook.

The company now expects fiscal 2020 revenue to be between $690 million and $700 million. Previously, Movado was expecting revenue during the period to be between $725 million and $740 million.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Movado Group, Inc. Stock Quote
Movado Group, Inc.
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