Luxury watch company Movado (NYSE: MOV) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 3.6% year on year to $131.8 million. Its GAAP profit of $0.06 per share decreased from $0.13 in the same quarter last year.
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Movado (MOV) Q1 CY2025 Highlights:
- Revenue: $131.8 million (3.6% year-on-year decline)
- Operating Margin: 0.2%, down from 2.4% in the same quarter last year
- Market Capitalization: $387.4 million
StockStory’s Take
Movado’s first quarter results reflected the ongoing challenges faced by luxury goods companies amid a volatile economic backdrop. CEO Efraim Grinberg cited pockets of both growth and weakness across regions and brands, with discretionary spending pressures evident in the United States and Europe. Management pointed to continued investment in product development—such as the Mini Bangle and Bold Mini Quest collections—and emphasized the importance of social media partnerships to boost engagement. CFO Sallie DeMarsilis noted that efforts to reduce operating expenses through cost-saving initiatives were offset by unrealized currency losses, which stemmed from sharp exchange rate movements late in the quarter. Both executives acknowledged the unpredictable impact of tariffs and currency on reported results.
Looking forward, Movado’s management remains focused on navigating macroeconomic uncertainty and managing the evolving tariff landscape, which they note could shift rapidly depending on trade negotiations and legal challenges. Grinberg highlighted the company’s strategy to mitigate cost increases through selective price adjustments and supply chain flexibility. He also pointed to resilience in key product categories, especially women’s watches and men’s jewelry, as a potential driver for future growth. Despite withholding formal guidance, management expressed cautious optimism regarding improved operating cash flow in the second half of the year, supported by inventory normalization and further cost discipline. The company will continue prioritizing innovation and brand building, particularly targeting younger demographics through trend-forward offerings and digital marketing.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to ongoing macroeconomic pressures, cost-saving efforts, and targeted brand investments, while highlighting the unpredictable effects of tariffs and currency movements.
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Brand refresh initiatives: Movado advanced its brand repositioning with the introduction of new collections like the Mini Bangle and Bold Mini Quest, aiming to elevate market perception and appeal to younger consumers. These launches, combined with high-profile partnerships such as the one with NBA player Tyrese Haliburton, are intended to drive engagement and broaden reach.
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Licensed brand momentum: Sales of licensed brands, including Coach and Hugo Boss, showed high single-digit growth. Management noted that collections like Coach’s Sammy and Cast and Hugo Boss’s Sky Traveler and Lucy are resonating with Gen Z and millennial customers, helping offset softer performance in some owned brands.
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Cost reduction efforts: Operating expenses declined slightly year over year, driven by reduced marketing and payroll costs. However, these savings were partly offset by unrealized foreign exchange losses stemming from late-quarter currency volatility, which impacted intercompany balances.
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Tariff-related uncertainty: The company continues to face uncertainty from U.S. tariffs on imported goods. Management stated that while current tariff rates can be partially mitigated through selective price increases and supply chain adjustments, ongoing trade negotiations and legal proceedings add unpredictability to future cost structures.
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Outlet division stabilization: The outlet channel saw improved trends, with sales declining only modestly. Management indicated that this segment’s performance has continued to improve into the second quarter, suggesting some stabilization within the broader retail environment.
Drivers of Future Performance
Movado’s outlook is shaped by its ability to manage tariff risk, currency headwinds, and ongoing investments in brand and product innovation.
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Tariff and economic uncertainty: Management repeatedly referenced the unpredictability of U.S. trade policy and its impact on costs. While current tariffs can be partly mitigated by raising prices and adjusting sourcing, Grinberg acknowledged that legal decisions and negotiations could alter the company’s cost profile quickly, creating planning challenges for the rest of the year.
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Focus on younger consumers: The company aims to drive future growth by expanding collections that appeal to Gen Z and millennials. Initiatives include new product launches, digital marketing, and leveraging influencers on social media platforms such as Instagram and TikTok. Management believes these efforts are key for long-term brand relevance and sales momentum.
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Operational discipline and cash flow: Inventory normalization and continued cost discipline are expected to support improved operating cash flow later this year. CFO Sallie DeMarsilis emphasized that reduced inventory levels and operating expense controls should strengthen the balance sheet and help offset external pressures.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) how effectively Movado mitigates tariff-related cost increases and manages trade policy changes, (2) whether new product launches and digital marketing campaigns generate sustained demand among younger consumers, and (3) the pace of inventory normalization and improvements in operating cash flow. The ability to offset external pressures through pricing and supply chain agility will also be critical signposts.
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