Movado Group reported a modest year-over-year revenue decline in the first quarter of fiscal 2026, with revenue of $131.8 million, down 1.9% from the year-ago period (1% in constant currency). The quarter showcased a resilient gross margin of about 54.1% alongside aggressive cost-saving initiatives, yet the bottom line was dampened by currency volatility and a contemporaneous FX unwind, leading to a near-breakeven operating result and modest GAAP net income of $1.42 million. Management underscored ongoing brand and product initiatives, along with strong momentum in licensed brands, even as it retained a cautious stance due to tariff-related and macroeconomic uncertainties and elected not to provide full-year guidance.
Key positives include: (i) solid liquidity with approximately $203 million in cash and a net cash position (no net debt) versus a headcount of a smaller net cash outflow typical of a seasonal quarter; (ii) robust brand and product momentum, notably in the Movado brand refresh (Mini Bangle and Bold Mini Quest) and the expansion of licensed brands (Coach, Hugo Boss, Lacoste, Calvin Klein, Tommy Hilfiger, Olivia Burton); (iii) improving performance in the Outlet channel and cost controls that helped offset currency headwinds. The principal overhangs remain macroeconomic softness in discretionary categories, tariff volatility, and currency fluctuations that can impact intercompany balances and future periods' profitability. The company resumed its emphasis on value-oriented innovation and selective price actions to offset anticipated cost pressures while maintaining financial flexibility.
Investment thesis: Movado’s near-term earnings visibility is modest due to external headwinds, but the balance sheet strength, brand equity in both owned and licensed lines, and a clear product roadmap position it to benefit from a more favorable macro backdrop or tariff resolution. Investors should monitor tariff policy developments, FX hedging effectiveness, inventory dynamics, and the pace of operating-cash-flow recovery in the second half of fiscal 2026.