Movado Corporation's Q2 2026 Earnings Conference Call Transcript
Date: August 28, 2025, 9:00 a.m. ET
The Movado Group, a leading watch and accessory company, has announced its financial results for the second quarter of 2025. The company reported a net income of $5.3 million, or $0.23 per diluted share, and a net sales increase of 3.1% to $161.8 million.
Despite the implementation of a 39% tariff rate on Swiss imports by the United States, effective after the quarter ended, Movado Group has managed to maintain its financial performance. A substantial portion of the year's needs for Swiss-made watches in the United States has been covered due to inventory built up after the quarter ended.
The company's cost-saving efforts are expected to deliver approximately $10 million in annualized reductions for fiscal 2026. These reductions result from actions taken late last year to reduce operating expenses.
Inventory levels are also a point of focus for Movado Group. The company has established a "strong position in inventory of Swiss-made watches in the United States" to cover anticipated demand due to the new tariff. Efraim Grinberg, the company's CEO, stated that inventories are expected to be in line by year-end.
The company's outlet stores segment grew by 2.4% in the fiscal second quarter, while international sales increased by 6.9% (reported) and 3.9% (constant currency). International growth outpaced the U.S., with Europe, Latin America, and India leading performance.
In terms of product launches, Movado Group is introducing the Arthur and Crocodile families to complement the best-selling Metropole bracelet collection in Lacoste jewelry. The company is also excited about new women's watches led by the May family with a petite square shape in Tommy Hilfiger, a new black and gold version of the iconic LC 33 collection and a new oval version of the Tang Parisienne in Lacoste, a new mini version of the best-selling Pulse collection, and a new 18-millimeter contemporary collection in Calvin Klein.
Recent trends in mini and microwatch sizes have drawn young women back to the category, creating product opportunities across the brand portfolio. The company is also launching a new black and gold version of the iconic LC 33 collection and a new oval version of the Tang Parisienne in Lacoste.
The company's gross margin was 54.1%, down 20 basis points due to higher tariffs and currency headwinds. Operating expenses fell by $2.0 million to $80.6 million (adjusted). Management referenced the completion of most restructuring charges.
U.S. sales decreased 1.6% due to strategic changes in distribution channels. However, the company's flagship brand, Coach, continues to perform well, particularly in the United States, and is now showing momentum in Europe as well.
In Hugo Boss, the Time Traveler and Candor collections experienced strong growth. The company's CFO explained that approximately $4.6 million of reciprocal tariff costs remained embedded in inventory at the end of the fiscal second quarter.
There are no available search results or public information indicating that Efraim Grinberg or Sallie DeMarsilis specified any enterprises or institutions with which they had contractual tariff cost agreements in the second quarter to mitigate the impact of U.S. tariffs on the profitability of the Movado Group before the publication of its Q2 report on August 28, 2025.
The Movado Group also announced share repurchases, having repurchased 100,000 shares with $48.4 million remaining on the authorization. The company's cash balance is $180.5 million with no debt reported.
Management expects restructuring charges to be reduced significantly in future quarters. Movado Group remains optimistic about its future prospects, with the company's CEO stating that the company is "excited about the opportunities ahead."
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