Movado lowers FY24 outlook as Q2 sales decline 12.3 percent

Movado Group, Inc. net sales decreased 12.3 percent or 13.8 percent on a constant dollar basis to 160.4 million dollars in the second quarter.

The company said lower sales reflect declines in wholesale customers’ brick and mortar stores, online retail and Movado company stores due to the challenging environment for consumer discretionary products.

The company has lowered its previously provided outlook to reflect the continued expected impact of the challenging consumer discretionary environment on the business.

Commenting on the second quarter results, Efraim Grinberg, the company’s chairman and CEO, stated: “We managed our business well, delivering second quarter net sales and earnings within our range of expectations despite operating in a challenging retail environment for our category, particularly in the United States and Europe, our largest markets.”

Movado net sales drop 11.8 percent in H1

The company said in a statement that second quarter U.S. net sales decreased 12.4 percent, while international net sales decreased 12.1 percent or 14.9 percent on a constant dollar basis.

Net sales for the first six months of fiscal 2024 decreased 11.8 percent or 12.1 percent on a constant dollar basis to 305.3 million dollars.

U.S. net sales decreased 13.9 percent and international net sales decreased 10.2 percent or 10.6 percent on a constant dollar basis.

Movado generated gross margin of 55.7 percent in the quarter, operating income of 9.6 million dollars, adjusted operating income of 10.3 million dollars, diluted earnings per share of 36 cents and adjusted diluted earnings per share of 38 cents.

Gross profit for the first half period was 171.3 million dollars or 56.1 percent of net sales, operating income was 20.5 million dollars, adjusted operating income was 21.9 million dollars, net income was 17.2 million dollars or 76 cents per diluted share, and adjusted net income was 18.2 million dollars or 80 cents per diluted share.

Movado lowers fiscal 2024 outlook

For fiscal 2024, the company currently expects net sales in a range of approximately 690 million dollars to 700 million dollars compared to its previous expectation for net sales in the range of 725 million dollars to 750 million dollars.

Gross profit of approximately 55 percent of net sales, as compared to its previous expectation for gross profit of approximately 56 percent of net sales; operating income in a range of 62.5 million dollars to 65 million dollars, as compared to its previous expectation for operating income in a range of 80 million dollars to 85 million dollars.

Earnings are expected to reach 2.15 dollars to 2.25 dollars per diluted share, as compared to its previous expectation of 2.70 dollars to 2.90 dollars per diluted share.

“We expect the difficult environment for consumer discretionary products to persist into the back half of the year, which is reflected in our updated outlook that incorporates lower shipments across our wholesale partners in North America and Europe,” added Grinberg.

on August 24, 2023, the company’s board of directors approved the payment on September 21, 2023 of a cash dividend in the amount of 35 cents for each share.