Movado Group, Inc. — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Net sales for the second quarter of fiscal 2027 reached $169.8 million, a 4.9% increase from $161.8 million in the second quarter of fiscal 2026, or 4.4% on a constant-dollar basis.
• Gross margin for the second quarter was 59.4%, compared to 54.1% in the prior-year quarter; excluding $3.2 million in IEEPA duty refunds, the margin was 57.5%.
• Operating income was $14.9 million in the second quarter, compared to $4.0 million in the second quarter of fiscal 2026.
• Adjusted operating income was $15.1 million in the second quarter, compared to $7.0 million in the prior-year quarter.
• Diluted earnings per share (EPS) were $0.53 in the second quarter, compared to $0.13 in the prior-year quarter.
• Adjusted diluted EPS were $0.54 in the second quarter, compared to $0.23 in the prior-year quarter.
• Net income for the second quarter was $12.3 million ($0.53 per diluted share), compared to $3.0 million ($0.13 per diluted share) in the prior-year quarter.
• Adjusted net income for the second quarter was $12.5 million ($0.54 per diluted share), compared to $5.3 million ($0.23 per diluted share) in the prior-year quarter.
• For the first six months of fiscal 2027, net sales were $312.2 million, a 6.3% increase from $293.6 million in the first six months of fiscal 2026, or 4.5% on a constant-dollar basis.
• Gross margin for the first six months was 58.4%, compared to 54.1% in the prior-year period.
• Operating income for the first six months was $21.9 million, compared to $4.3 million in the prior-year period.
• Adjusted operating income for the first six months was $22.6 million, compared to $7.9 million in the prior-year period.
• Net income for the first six months was $19.2 million ($0.84 per diluted share), compared to $4.4 million ($0.20 per diluted share) in the prior-year period.
• Adjusted net income for the first six months was $19.7 million ($0.86 per diluted share), compared to $7.2 million ($0.32 per diluted share) in the prior-year period.
• Operating expenses were $85.9 million in the second quarter (50.6% of net sales), compared to $83.6 million (51.6% of net sales) in the prior-year quarter.
• Operating expenses were $160.5 million for the first six months (51.4% of net sales), compared to $154.6 million (52.7% of net sales) in the prior-year period.
• The company ended the quarter with $211.6 million in cash and no debt.
• Net cash provided by operating activities for the first six months of fiscal 2027 was $6.5 million, compared to net cash used of $11.0 million in the prior-year period.
• Capital expenditures were $2.3 million for the first six months of fiscal 2027, compared to $2.8 million in the prior-year period.

Guidance and Future Outlook

• The company has discontinued providing an annual outlook, focusing instead on the execution of its long-term strategy.
• For the second half of fiscal 2027, the company expects topline growth in the mid-single-digit range.
• The company expects gross margin for the second half of fiscal 2027 to be in the range of 55% to 56%, excluding any additional IEEPA duty refunds.

Business Segments and Product Lines

• Net sales increases were driven by broad-based growth across owned and licensed brands, direct and wholesale channels, and key geographies including the U.S. and Europe.
• U.S. net sales increased 4.9% in the second quarter and 6.6% in the first six months compared to the prior-year periods.
• International net sales increased 4.9% (4.1% constant-dollar) in the second quarter and 6.1% (2.9% constant-dollar) in the first six months compared to the prior-year periods.
• Growth was supported by innovation and marketing efforts, particularly in smaller-sized watches and distinctive shapes.
• The company operates Movado Company Stores in the United States and Canada.

Market and Competitive Landscape

• The company noted a dynamic environment but expressed confidence in its ability to navigate it through execution and strategic priorities.
• The company highlighted the strength of its business model and successful execution of its strategy.

Risks and Challenges

• The second quarter included a $0.2 million pre-tax charge ($0.01 per diluted share) related to an investigation of misconduct within the Dubai branch of the Company's Swiss subsidiary.
• The first six months included a $0.2 million pre-tax charge ($0.01 per diluted share) related to the Dubai misconduct investigation.
• The second quarter of fiscal 2026 included a $2.1 million pre-tax charge related to the Dubai misconduct investigation and a $0.9 million pre-tax charge related to a corporate cost-savings initiative.
• Forward-looking statements cite risks including general economic conditions, inflation, interest rates, geopolitical concerns, tariffs, supply chain disruptions, consumer spending trends, and cybersecurity risks.

Management Commentary and Tone

• Efraim Grinberg, Chairman and CEO, described the results as strong top- and bottom-line performance, capping an excellent first half.
• Management noted that gross profit margin expanded by 340 basis points and adjusted diluted EPS increased by approximately 87% in the second quarter, excluding the impact of IEEPA duty refunds.
• Management expressed excitement about the third quarter, citing compelling innovation and marketing efforts.
• Management stated the company is well-positioned to generate long-term profitable growth and value creation for shareholders.

Other Key Points

• The Board declared a quarterly cash dividend of $0.40 per share, payable on September 22, 2026, to shareholders of record as of September 8, 2026.
• The company returned $16.6 million to shareholders through year-to-date dividend payments.
• During the first six months of fiscal 2027, the company repurchased 61,000 shares under its share repurchase program.
• As of July 31, 2026, $44.6 million remained available under the share repurchase program.
• The company received $3.3 million in cash from IEEPA duty refunds (including $0.1 million interest) as of July 31, 2026, and is pursuing approximately $10.0 million in total refunds.
• The $3.2 million IEEPA duty refund was reflected as a benefit to cost of sales in the second quarter.
• The adjusted tax rate for the second quarter was 22.1%, compared to 32.9% in the prior-year quarter.
• The adjusted tax rate for the first six months was 22.1%, compared to 32.4% in the prior-year period.