Movado's Time Is at Hand

Watchmaker Movado Group Inc. (MOV, Financial) posted record earnings results on Thursday for its fourth quarter and fiscal year 2022. It also pleased investors by raising the quarterly dividend by an astonishing 40%.

For the quarter ended Jan. 31, 2022, the company reported that net sales increased 15.5% to $206 million, spurred by solid execution of its strategies and brand strength. Demand continues to be strong via its retailing partners and e-commerce platform.

Management also announced that Movado’s board of directors approved a 40% increase to the regular quarterly cash dividend to 35 cents per share from 25 cents. The dividend will be paid on April 20, 2022 for each share of the company's outstanding common stock and class A common stock held by shareholders of record as of the close of business on April 6.

Movado shares closed Friday at $38.07, up 44 cents, or 1.17%, on the positive news. In after-hours trading, however, shares fell back to $37.22, shares gave up all of those gains and more.

The Paramus, New Jersey-based company, which designs, sources, markets and distributes watches and accessories worldwide, delivered top-line growth of 44.6%, or 42.8% on a constant dollar basis, for the full year. Gross margin expansion was 380 basis points from the prior year, with the gross margin reaching 57.2%. The adjusted gross margin was 53.6% of sales in fiscal 2021.

The increase in net sales reflected growth in wholesale customers’ brick and mortar stores and in Movado company stores due to the partial recovery from the Covid-19 pandemic and the continued popularity of online retail. U.S. net sales increased 61.1% compared to last year (and increased 14.4% compared to pre-pandemic fiscal 2020).

For full fiscal 2023, the company's management says it expects net sales to be in the range of $780 million to $800 million, with a gross profit margin of approximately 58.0%, and operating income in a range of $125 million to $130 million. Executives warned, however, that the projections failed to consider the impacts of higher inflation, geopolitical unrest or impacts on the supply chain and shipping costs. They also assume no fluctuations from the foreign currency exchange rates.

Efraim Grinberg, Chairman and CEO, said in a statement, “We closed out the year with exceptional fourth quarter performance, resulting in record annual net sales of $732.4 million and operating profit margin of 16.0%.” He attributed the ongoing strength to the successful execution of its strategy with “powerful brands, excellent craftsmanship and desirable designs. This drove sales growth in our owned and licensed brands; in the U.S. and internationally; and across our channels of wholesale and direct-to-consumer.” Movado continued its digital advancement, reporting significant growth on its Movado.com site.

Grinberg added that, in addition to the 40% dividend increase, executives also plan to execute a share repurchase plan at an accelerated pace, subject to prevailing market conditions. “This reflects confidence in our business, as well as our recent results and balance sheet that included $277.1 million of cash at year end with no debt.”