0001193125-26-240712
SEC filingMovado Group's Q1 FY27 net sales rose 8.1% YoY, driven by favorable sales mix and foreign exchange tailwinds, expanding gross margin by 320 bps.
Movado Group reported net sales of $142.4 million for the three months ended April 30, 2026, an 8.1% increase from $131.8 million in the prior year period. Foreign currency fluctuations positively impacted net sales by $4.7 million; excluding this, sales would have grown 4.5%. Gross profit rose to $81.6 million (57.3% of sales) from $71.4 million (54.1% of sales), a 320 basis point margin expansion driven by favorable sales mix (approximately 260 bps) and cost leverage from higher volumes (approximately 90 bps), partially offset by a 30 bps negative FX impact. Selling, general and administrative (SG&A) expenses increased 5.0% to $74.6 million, primarily due to higher professional fees ($1.9 million, including $0.5 million for a misconduct investigation in Dubai), marketing expenses ($1.4 million), and performance-based compensation ($1.0 million), partially offset by lower foreign exchange losses ($1.2 million) and payroll expenses ($0.2 million). Operating income improved to $7.0 million from $0.3 million in the prior year. Net income attributable to Movado Group, Inc. was $6.9 million ($0.30 per diluted share) compared to $1.4 million ($0.06 per diluted share) in the prior year. The effective tax rate decreased to 22.0% from 34.0%, driven by excess tax benefits from stock-based compensation.
Watch and Accessory Brands segment net sales increased 7.7% to $123.7 million. Owned brands grew 7.5% ($2.5 million) and licensed brands grew 6.5% ($5.3 million). U.S. Watch and Accessory Brands sales rose 8.2% to $41.7 million, with owned brands up 5.3% and licensed brands up 15.6%. International Watch and Accessory Brands sales increased 7.5% to $82.0 million, including a $4.7 million positive FX impact; owned brands grew 14.9% (led by Asia) and licensed brands grew 5.0% (led by Europe, Americas, and Asia, partially offset by Middle East declines). Segment operating income was $6.6 million, compared to a near-zero loss in the prior year, driven by a $9.4 million gross profit increase partially offset by $2.8 million higher SG&A. Company Stores segment net sales increased 10.2% to $18.7 million, driven by favorable sales mix, online outlet growth, and a new store opening (57 stores vs. 56 a year ago). Operating income was $0.4 million, up from $0.3 million, as a $0.8 million gross profit increase was partially offset by $0.7 million higher SG&A.
Management highlighted ongoing tariff uncertainties, noting that the Company paid approximately $10.0 million in IEEPA tariffs between February 2025 and February 2026, with potential recoveries under evaluation but no receivable recognized. The transition to Section 122 tariffs (10% ad valorem) provides no assurance of future tariff levels. The Company continues its cost-savings initiative, with $0.5 million in severance and lease-related accruals expected to be paid during fiscal 2027. The One Big Beautiful Bill Act (OBBBA) did not have a material impact on the first quarter. No specific forward guidance on revenue or earnings was provided, but the Company maintains a strong liquidity position with $225.3 million in cash and cash equivalents and no borrowings under its $100 million revolving credit facility. The Board declared a $0.35 per share dividend ($7.7 million paid in Q1) and authorized a $50 million share repurchase program through December 2027, with $44.6 million remaining.
As of April 30, 2026, Movado Group holds $225.3 million in cash and cash equivalents, with no outstanding borrowings under its $100 million revolving credit facility. Total shareholders' equity stands at $505.5 million, and inventory is $182.0 million, up from $158.3 million at fiscal year-end. The company maintains a strong liquidity position with $99.7 million available under the credit facility.
The company's commitments primarily involve minimum annual royalty and advertising payments under license and endorsement agreements, but no aggregate dollar amount is disclosed. Movado also faces potential tariff-related contingencies, including $10.0 million in IEEPA tariffs paid in fiscal 2026, with possible recoveries not yet recognized.
In Q1, Movado repurchased 61,000 shares for $1.5 million under a $50 million program authorized in December 2024, leaving $44.6 million available. The company paid $7.7 million in dividends ($0.35 per share), unchanged from the prior year. No debt was issued or repaid, and capital expenditures totaled $1.2 million (0.8% of sales), primarily in the Watch and Accessory Brands segment.
Movado operates two segments: Watch and Accessory Brands (86.9% of net sales) and Company Stores (13.1%). Watch and Accessory Brands generated $123.7 million in revenue and $6.6 million in operating income, a significant improvement from a $9K loss a year ago. Company Stores contributed $18.7 million in revenue and $0.4 million in operating income. Geographically, international operations accounted for 58.2% of total net sales, led by Europe (34.7%), Americas excluding US (11.9%), Asia (7.5%), and the Middle East (4.1%).