Movado’s US Sales Up 42% in Q3
The watch company upped its fiscal guidance once again, feeling confident ahead of the holiday season.
Net sales in the third quarter were up 28 percent to $217.7 million, compared with $169.9 million in the previous year’s third quarter.
The company saw strong growth across all channels, including online (both on its owned and wholesale customers’ websites), in Movado stores, and in wholesale customers’ brick-and-mortar stores.
U.S. net sales surged 42 percent year-over-year, exceeding pre-pandemic fiscal 2020 sales by 8 percent.
International sales were up 20 percent year-over-year and up 4 percent compared to pre-pandemic fiscal 2020.
Movado recorded growth in the U.S. and Europe while its key markets of Latin America, the Middle East, and India slowly recovered.
Gross profit totaled $125.6 million, or 58 percent of net sales, compared with $92.5 million, or 54 percent of net sales, in the same period last year.
The increase was attributed to “favorable changes” in channel and product mix and an increase in some fixed costs due to higher sales, though it was partially offset by increased shipping costs, said Movado.
“The quarter saw strong sales growth across geographies and channels with robust growth in our Movado brand,” said CEO Efraim Grinberg in a press release about the results.
“We attribute our ongoing strength to the success of our digital transformation that began several years ago and has made us a more agile company with a strengthened platform to maximize the power of our global watch and jewelry brands.”
The brand has upped its marketing investments, taking a digital-first approach and planning more TV advertisements for the holiday season.
The company has had to navigate a market plagued by a pandemic, inflation, and currency volatility, noted Grinberg during an earnings call Thursday morning.
“As we look at the balance of the year, we believe these pressures will persist, so we will remain disciplined and agile in managing the business with focused attention on costs while also continuing to make the important investments to support the growth of our brands, including awareness-building marketing.”
Looking at the first nine months of fiscal 2022, sales were up 61 percent to $526.4 million compared with $328.1 million in the first nine months of fiscal 2021.
U.S. net sales were up 90 percent compared with last year’s first nine months and surpassed pre-pandemic fiscal 2020 sales by 15 percent.
International sales were up 42 percent year-over-year in the first nine months, but down 5 percent compared to pre-pandemic fiscal 2020.
Gross profit in the first nine months totaled $298.2 million, or 57 percent of net sales, compared with $169.7 million, or 52 percent of net sales, in the same period last year.
The Movado brand saw continued growth, noting a solid performance online and in its jewelry category, which saw a strong response from men and women, said Grinberg.
The Movado website saw sales up 25 percent as well as a rise in the average selling price.
Sales in Movado stores were up 32 percent in the quarter, noting an increase in foot traffic despite a decline in tourism.
Less promotional activity meant increased profitability as the average unit retail price increased.
Movado Group’s licensed brands, including Coach and Tommy Hilfiger, also put on a solid performance, with sales up 28 percent year-over-year in the quarter.
For the Tommy Hilfiger brand, the focus was on innovation, with new designs in jewelry introduced. The “Harley for Him” and “Kennedy for Her” lines will appear in a holiday campaign.
At Coach, the company is developing more sport luxury options for men and promoting the expanded Arden collection.
The Hugo Boss brand is focusing on sportier looks, like the Admiral watch, and promoting the Grand Course, which Grinberg described as a dressier chronograph. It’s also expanding its jewelry offerings in Europe.
Lacoste introduced new watches this fall, including a line of eco-friendly Peanuts watches, featuring the iconic Snoopy with vegan leather straps and a solar movement. (Swatch also recently introduced a line of Peanuts watches.)
The Olivia Burton brand will have its own commercial for the first time, airing in its home market of the U.K., featuring the brand’s “Celestial” watches and jewelry.
For the MVMT brand, the company is driving higher price points and plans to increase its TV advertising.
“We’ve received an excellent response to our Raptor collection, with an average price point exceeding $200,” said Grinberg.
The company is expected to launch its Calvin Klein watches and jewelry line in January 2022. It inked a five-year licensing agreement with the brand in August 2020 after Calvin Klein ended its 22-year licensing deal with Swatch Group.
Ahead of the holiday season, Grinberg didn’t express concern about the supply chain issues plaguing some retailers.
“We’ve had the right inventory at the right time; we feel like we’re going to continue that pattern. Fortunately for us, we’ve always loaned most of our inventory into markets, so we’ve not had [the] shipping delays that some have experienced,” he said.
Looking to Black Friday, Grinberg noted that the company is not in a highly promotional category but said shoppers can expect “good value” for the holiday season.
Movado remains optimistic for the remainder of the fiscal year, upping its fiscal 2022 guidance again.
Net sales are expected to be in the range of approximately $715 million to $720 million, up from its prior guidance of $680 million to $690 million.
Gross profit is to be 56.5 to 57 percent of net sales, up from prior guidance of 55.5 to 56 percent, while operating profit is expected to be in the range of 15 to 15.5 percent of net sales, up from prior guidance of 13 to 13.5 percent.
The updated outlook does not take into consideration additional COVID-related retail closures or significant changes in foreign currency exchange rates, Movado noted.
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