EPS of $0.13 decreased by 23.5% from previous year
Gross margin of 54.1%
Net income of 2.99M
"Sales grew by 3% to $161.8 million and adjusted operating profit more than doubled to $7 million from $2.6 million last year despite a $2.2 million impact from unmitigated U.S. tariff expenses." - Efraim Grinberg
Movado Group Inc (MOV) Q2 2026 Earnings Analysis: Resurgent Growth in Licensed Brands and International Markets Amid Tariff Uncertainty
Executive Summary
Movado Group reported a solid Q2 2026, with revenue of $161.8 million, up 3.1% year over year, and adjusted operating income of $7.0 million. The quarter demonstrated a return to growth in both sales and profitability, aided by strength in licensed brands and international markets, partially offset by tariff headwinds and a modest U.S. brand decline. Management highlighted a sharp push into digital channels, a broader marketing plan featuring high-profile icons, and continued product innovation across Movado and licensed brands. Despite tariff-related margin pressure, Movado maintained a strong balance sheet (cash >$180 million and no debt) and announced roughly $10 million of annualized savings from expense actions. Management did not provide full-year 2026 guidance due to tariff and macro retail uncertainty, but emphasized strategy execution and inventory readiness as key near-term levers.
Key takeaways for investors include: (1) licensing brands fueling growth (+9.5% reported; +6.5% in constant currency) and international strength (up 6.9% CC); (2) Movado brand momentum improving in wholesale and e-commerce, with notable success in women’s watches and the BOLD/Mini Quest lines; (3) tariff dynamics remain a key risk, with actionable pricing and inventory mitigation already in place; and (4) a robust capital position supporting buybacks and strategic investments as the company returns to sustainable profitability.
Key Performance Indicators
Revenue
161.83M
QoQ: 22.81% | YoY:1.58%
Gross Profit
87.57M
54.11% margin
QoQ: 22.73% | YoY:1.39%
Operating Income
4.01M
QoQ: 1 276.98% | YoY:32.24%
Net Income
2.99M
QoQ: 110.28% | YoY:-19.75%
EPS
0.13
QoQ: 116.67% | YoY:-23.53%
Revenue Trend
Margin Analysis
Key Insights
Q2 2026 net sales: $161.8 million, up 3.1% YoY; constant-currency growth approximately 1.4%.
Gross margin: 54.1% (vs. 54.3% in Q2 2025), a 2 bps margin headwind from tariffs and FX.
Operating income: $7.0 million; operating margin ≈ 4.3% for the quarter (7.0m / 161.8m).
Net income: $2.99 million; net margin 1.84%; EPS $0.13.
Net sales: $293.6 million, up 0.8% YoY; constant dollars up 0.3%.
Financial Highlights
Revenue and profitability:
- Q2 2026 net sales: $161.8 million, up 3.1% YoY; constant-currency growth approximately 1.4%.
- Gross margin: 54.1% (vs. 54.3% in Q2 2025), a 2 bps margin headwind from tariffs and FX.
- Operating income: $7.0 million; operating margin ≈ 4.3% for the quarter (7.0m / 161.8m).
- Net income: $2.99 million; net margin 1.84%; EPS $0.13.
Year-to-date (6 months ended 2025-07-31):
- Net sales: $293.6 million, up 0.8% YoY; constant dollars up 0.3%.
- Gross profit: $158.9 million; gross margin 54.1% (54.3% prior year).
- Operating income: $7.9 million; net income: $7.2 million; diluted EPS $0.32.
Geography and channel mix:
- U.S. net sales: down 1.6% YoY in Q2; international net sales up 6.9% (CC: up 3.9%).
- Licensed brands: +9.5% (reported), +6.5% CC. Movado brand revenue declined 5.6% in the quarter, offset by licensing growth and a rebound in wholesale/distribution.
- Outlet/online: outlet channel grew 2.4% in the quarter; Movado.com and digital partners showed solid momentum (6% growth on the company’s own site).
Balance sheet and liquidity:
- Cash and equivalents: ~$180.5 million; net debt: none.
- Inventory: up $28.3 million (15.5% YoY); approximately $16 million of the increase is US-inventory; $5.1 million FX impact; $4.6 million reciprocal tariffs embedded in on-hand inventory.
- Share repurchase: ~100,000 shares bought in Q2; remaining authorization ~$48.4 million.
Tariffs and pricing actions:
- Tariff headwinds persisted with a 39% tariff rate on Swiss imports noted; $2.2 million tariff impact in the quarter; pricing actions to offset tariffs began effective July 1, 2025.
Strategic initiatives and product highlights:
- Brand strategy focused on trend-right products; notable performance in Women’s watches and Movado BOLD/Verso/Quest lines; new campaigns featuring Ludacris, Jessica Alba, Julianne Moore, Christian McCaffrey, and Tyrese Haliburton; fall introductions include Museum Imperio and Heritage 1917.
- Licensed brands showing resilience and growth in a digital-driven environment (TikTok, Reels, YouTube).
Outlook:
- Management elected not to provide fiscal 2026 outlook due to tariff and macro retail uncertainty. Anticipated annualized savings of about $10 million from cost-reduction actions to be realized over the year. Inventory readiness and ongoing tariff mitigation efforts remain critical near-term considerations.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
161.83M
1.58%
22.81%
Gross Profit
87.57M
1.39%
22.73%
Operating Income
4.01M
32.24%
1 276.98%
Net Income
2.99M
-19.75%
110.28%
EPS
0.13
-23.53%
116.67%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key insights from the earnings call organized by theme:
Strategy and growth priorities
- Efraim Grinberg emphasized a return to growth and profitability, noting: “Sales grew by 3% to $161.8 million and adjusted operating profit more than doubled to $7 million from $2.6 million last year despite a $2.2 million impact from unmitigated U.S. tariff expenses.” This underpins Movado’s focus on authentic brand building, expanded POS coverage, and digital-first content.
- The company highlighted that licensed brands grew 6.5% in constant currency (9.5% reported), reflecting strong demand in HUGO BOSS, Tommy Hilfiger, Lacoste, Calvin Klein, and Coach franchises.
Product and marketing execution
- Movado’s product portfolio benefited from Women’s watches, the Mini Quest, and the BOLD line (Verso Automatic, Quest Automatic) contributing to wholesale and department-store sell-through improvements.
- Marketing investment is shifting toward icon-based campaigns (Ludacris, Jessica Alba, Julianne Moore, Christian McCaffrey, Tyrese Haliburton) and digital-first content to drive brand relevance.
Channel and geography dynamics
- International growth was robust (6.9% in USD; 3.9% CC), led by Europe, Latin America, and India; Middle East headwinds due to team rebuilding were acknowledged.
- U.S. sales declined modestly (-1.6%), as the company rebalances its jewelry-store distribution but with stronger performance in department stores and e-commerce channels.
Tariffs and inventory management
- The tariff environment remains a material risk; Movado built a strong Swiss-made watch inventory position in the U.S. to cover near-term needs and to offset tariff exposure where possible. “We would expect a substantial portion of the year’s needs are covered.”
- Sallie DeMarsilis noted approximately $28 million of additional inventory, with about $16 million in the U.S., and expects to work inventory down by year-end.
Capital allocation and balance sheet
- The company continued to deploy capital through a modest share-repurchase program and maintained a debt-free balance sheet with over $180 million in cash, reinforcing financial flexibility amid macro uncertainty.
Sales grew by 3% to $161.8 million and adjusted operating profit more than doubled to $7 million from $2.6 million last year despite a $2.2 million impact from unmitigated U.S. tariff expenses.
— Efraim Grinberg
The inventories got very low at year-end. So we began to rebuild inventory in Q1 of this year and now into Q2. We would expect our inventories to be in line by year-end... we have about $28 million of additional inventory at this time. We do expect to work it down by the end of the year to something more reasonable. But of that $18 million, about $16 million of it is in the U.S.
— Sallie A. DeMarsilis
Forward Guidance
Outlook assessment and risk factors:
- Management did not provide a full-year 2026 outlook due to tariff uncertainty and a fragile macro retail environment. This stance acknowledges potential volatility in consumer demand, foreign exchange, and tariff policy, particularly given the U.S. tariff on Swiss-made watches.
- Near-term catalysts include: (1) ongoing pricing actions to offset tariffs that began July 1, 2025, (2) inventory positioning that reduces near-term supply constraints and improves sell-through in the U.S., and (3) continued international expansion and licensed-brand acceleration.
- Financial resilience levers: roughly $10 million of annualized savings from cost-reduction initiatives; a debt-free balance sheet; and approximately $48.4 million remaining under the share-repurchase program. These provide flexibility to navigate a volatile tariff and retail backdrop while investing in product launches and digital channels.
- Key indicators investors should monitor: tariff policy developments and potential rate changes; trajectory of international markets (Europe, Latin America, India); consumer demand in the U.S. department-store and e-commerce channels; effectiveness of price realization and promotional activity; progression of Movado-brand wholesale sell-through and licensing-brand momentum; and the cadence of inventory normalization into fiscal year-end.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
MOV Focus
54.11%
N/A
N/A
N/A
MYTE
50.90%
-1.14%
-1.13%
-31.88%
ELA
24.30%
4.21%
3.12%
19.30%
TPR
74.40%
22.40%
23.20%
11.67%
CPRI
64.30%
-3.52%
1.55%
50.83%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Baseline thesis: Movado is transitioning from a period of profitability restoration to sustainable growth, led by licensing-brand momentum, international expansion, and a refreshed Movado lineup complemented by trend-right women’s watches and BOLD-series prestige. The absence of a 2026 outlook reflects tariff risk, but the company’s balance sheet resilience, cash generation capacity, and ongoing cost-savings programs support a constructive longer-term trajectory. Investors should: (1) monitor tariff policy developments and price realization effectiveness, (2) track licensed-brand growth and digital-channel performance, (3) assess inventory normalization progress and its impact on working capital, and (4) observe the cadence of revenue growth in international markets and wholesale channels. In a base-case scenario with tariff stability and continued licensing strength, Movado could deliver mid-single-digit revenue growth with margin expansion from pricing actions and savings, supported by a cash-rich balance sheet and optionality via buybacks.
Key Investment Factors
Growth Potential
Licensing brands continue to drive growth with a 9.5% reported increase in Q2 2026 and a 6.5% constant-currency growth; international markets showed resilient expansion (6.9% CC). The women’s watch segment and BOLD/heritage lines offer expansion opportunities, aided by digital marketing and icon-driven campaigns.
Profitability Risk
Tariff exposure remains the principal margin risk (Swiss imports tariffs) with a $2.2 million tariff impact in Q2; U.S. market rebalancing and Middle East headwinds could weigh on near-term profitability. Ongoing macro retail volatility and FX translations add to earnings risk.
Financial Position
Balance sheet remains strong: cash >$180 million and no long-term debt; $48.4 million remaining under the buyback authorization; inventory elevated by $28.3 million (+15.5%), with a portion US-based to mitigate tariff risk. The company has liquidity to fund product launches, marketing, and selective share repurchases while pursuing margin optimization.
SWOT Analysis
Strengths
Strong liquidity and zero debt posture (cash >$180 million) support flexibility in a volatile tariff environment
Diversified brand portfolio with solid licensed-brand growth (6.5% CC) and 6.9% international growth (CC)
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