Why Luxury Watchmaker Movado Shares Are Plummeting Today

  • Movado Group Inc MOV shares are plunging over 17% during Thursday's trading session following its disappointing FY24 outlook and warning on difficult retail market conditions.
  • MOV reported a fourth-quarter FY23 sales decline of 5.7% year-on-year to $194.27 million, beating the estimate of $184.40 million.
  • The decrease in net sales reflected a decline in wholesale sales, partially offset by an increase in Movado Company stores.
  • U.S. net sales fell 6.3%, and International net sales decreased 5.0%.
  • Gross margin for the quarter compressed 250 basis points to 56.2%, reflecting unfavorable changes in channel and product mix and unfavorable impact of foreign currency exchange rates.
  • Operating margin was 13.4%, and operating income for the quarter fell 31.6% to $26.1 million.
  • The company held $251.6 million in cash and equivalents as of Jan. 31, 2023.
  • Inventories at the end of Q4 increased 16.2% to $186.2 million.
  • Adjusted EPS of $1.03 beat the analyst view of $0.86.
  • Dividends: The company's Board of Directors approved a special dividend of $1.00 per share, in addition to the regular quarterly dividend of $0.35 per share. Both dividends are payable on Apr. 19, 2023, to shareholders of record on Apr. 5, 2023.
  • As of Jan. 31, 2023, the company had $21.0 million remaining available under the share repurchase program.
  • "As we look ahead, we believe we will continue to face a difficult retail market in our largest regions, the U.S. and Europe," said CEO Efraim Grinberg.
  • Outlook: Movado sees FY24 sales of $725 million - $750 million, missing the Street view of $814 million and below the FY23 sales of $751.9 million.
  • The company expects FY24 EPS of $2.70 - $2.90, below the estimate of $4.61. The company's FY23 EPS was $4.12, and the Adjusted EPS was $4.22.
  • For the first half of fiscal 2024, the company expects sales to decline 9% - 12% relative to the prior-year period.
  • Price Action: MOV shares are trading lower by 17% at $27.42 on the last check Thursday.
  • Photo Via Company
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