Q2 2027 Movado Group Inc Earnings Call Transcript
Key Points
- Sales increased 4.9% to $169.8 million, with growth in the U.S. and key international markets like Latin America and India.
- Gross margin improved significantly to 59.4% (57.5% excluding IEEPA refunds), a 340 basis point increase year-over-year.
- Adjusted EPS rose to $0.54 from $0.23, driven by higher sales and improved profitability.
- Strong balance sheet with $212 million in cash and no debt, supporting shareholder returns through dividends.
- Product innovation, such as the Movado Baby Face mini strap watch and Coach Iris, is resonating with younger consumers, driving sell-through rates.
- Sales declined in the Middle East due to ongoing geopolitical headwinds and reduced international tourism.
- Gross margin benefit from lower duty rates on legacy inventory is temporary and not expected to continue in the second half.
- Higher shipping costs, including fuel surcharges from Middle East conflict, partially offset margin improvements.
- Operating expenses increased by $5.2 million due to higher performance-based compensation and marketing spend.
- Company discontinued providing an annual outlook, reducing forward guidance transparency for investors.
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.
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
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