MOVADO GROUP INC (MOV)·Q2 2026 Earnings Summary

Executive Summary

• Revenue of $161.8M grew 3.1% YoY and beat consensus ($156.8M*) while GAAP EPS of $0.13 and adjusted EPS of $0.23 missed the EPS consensus of $0.306*; gross margin held at 54.1% despite tariff headwinds .
• Operating income improved to $4.0M GAAP and $7.0M adjusted on lower marketing spend, partially offset by higher taxes and tariff costs; other income declined YoY, and adjusted tax rate rose to 32.9% vs 19.1% last year .
• Management reiterated no FY26 outlook given tariff/macro uncertainty; pricing actions took effect July 1 and inventory was pulled forward to the U.S. to mitigate new Swiss import tariffs, with a substantial portion of the year’s needs covered .
• International strength (Europe/LatAm/India) and licensed brands momentum (Q2 +9.5% reported) offset U.S. softness (-1.6% YoY); outlet/company stores trends improved sequentially .
• Board declared a $0.35 quarterly dividend; share repurchases continued with $48.4M remaining authorization, supporting capital return while the company maintains $180.5M cash and no debt .

What Went Well and What Went Wrong

What Went Well

• Licensed brands posted strong growth (+9.5% reported; +6.5% constant), driven by trend-right products and Gen Z engagement across digital platforms (e.g., Coach, Hugo Boss, Tommy Hilfiger, Lacoste, Calvin Klein) .
• International sales rose 6.9% YoY (+3.9% constant), led by Europe, Latin America and India; digital channels grew globally, helping overall sell-through .
• Quote: “We are pleased with our second quarter results… increased net sales, a healthy gross margin despite tariff impacts, and a significant increase in operating income year over year.” — Efraim Grinberg (CEO) .

What Went Wrong

• U.S. sales fell 1.6% YoY with continued tariff pressure; gross margin dipped 20 bps YoY (54.1% vs 54.3%) due to increased U.S. tariffs and FX, partially offset by mix .
• Adjusted EPS ($0.23) missed the one-estimate consensus ($0.306*), with higher adjusted tax provision (32.9%) and lower other income vs prior year weighing on earnings .
• Non-GAAP adjustments persisted: $2.1M professional fees related to the Dubai investigation and $0.9M cost-savings provision; owned brands declined and the Middle East remains in rebuild mode .

Financial Results

Headline Metrics vs Prior Periods and Estimates

Q2 2026 Actual vs Wall Street Consensus (S&P Global)

Values retrieved from S&P Global.

Geography and Channel KPIs (YoY)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic focus: “Our growth in a challenging environment reflects the power of our iconic portfolio of watch and jewelry brands, our compelling innovation, and the discipline with which we execute.” — Efraim Grinberg (CEO) .
• Tariff mitigation: “Most of our strategic pricing actions to partially offset the impact of tariffs became effective July 1… we built a strong position in inventory of Swiss made watches in the U.S.” — Efraim Grinberg .
• Cost discipline: “Operating expenses were $80.6 million… driven by a strategic reduction in marketing expenses, partially offset by an increase in performance-based compensation.” — Sallie DeMarsilis (CFO) .
• Capital returns: “Board declared the payment… of a cash dividend in the amount of $0.35… As of July 31, 2025, the Company had $48.4 million remaining… under the share repurchase program.” .

Q&A Highlights

• Product sizing trend: Management sees mini/micro women’s watches (23–28mm) drawing young consumers, aided by social media layering with jewelry; opportunity spans luxury down to accessible price points .
• Digital momentum: Strong performance with digitally focused retailers (e.g., Amazon/Zalando) globally across the brand portfolio .
• Inventory strategy: Inventory was rebuilt from low year-end levels; ~$16M of U.S.-based inventory pulled forward to manage tariffs; plan to normalize by year-end .
• Restructuring/charges: Restructuring largely complete; investigation-related costs expected to diminish; savings offset some cost inflation and FX .

Estimates Context

• Consensus vs actual: Revenue beat ($161.8M vs $156.8M*), while EPS missed (GAAP $0.13 / Adjusted $0.23 vs $0.306*), with higher adjusted tax rate (32.9%) and tariff costs pressuring earnings despite improved operating performance .
• Coverage: Only one estimate on both EPS and revenue for Q2, limiting visibility; expect models to tweak tax rate, tariff pass-through timing, and other income assumptions (interest) based on company commentary [GetEstimates Q2 2026].

Values retrieved from S&P Global.

Key Takeaways for Investors

• Mixed print: Clear top-line beat, but EPS below a thin consensus; margin resilience despite tariffs indicates pricing/mix actions are gaining traction .
• Tariff mitigation: Pricing took effect July 1 and inventory was pre-positioned in the U.S.; expect near-term GM noise but improving trajectory as mitigation flows through H2 .
• International/licensed engine: Europe/LatAm/India strength and licensed brand growth provide diversification against U.S. softness; watch for continued women’s mini and men’s jewelry momentum .
• Cost discipline: ~$10M annualized savings and reduced marketing spend are now visible in OpEx; monitor the balance between brand investment and profitability as mix shifts .
• Capital returns/Balance sheet: $180.5M cash, no debt, $0.35 dividend maintained and buybacks ongoing ($48.4M remaining); supports downside protection amid macro uncertainty .
• Model updates: Raise revenue modestly vs prior, temper EPS on tax rate and tariff timing; incorporate lower other income vs prior year and gradual GM recovery .
• Near-term catalyst: H2 product launches and continued digital/department store POS upgrades; a resolution or clarity on tariff rates could be a key stock driver .