Movado Group, Inc.

Second-quarter sales were $169.8 million, up 4.9% from $161.8 million a year ago; adjusted operating profit was $15.1 million versus $7 million last year; and adjusted EPS was $0.54 versus $0.23, including a $0.11 per share benefit from $3.2 million of IEEPA duty refunds. Gross profit as a percent of sales was 59.4% versus 54.1%; excluding the refund, gross margin was 57.5%, up 340 basis points. For the first half, sales increased 6.3% to $312.2 million, gross margin was 58.4% (57.4% excluding refunds), and adjusted EPS was $0.86. For the rest of fiscal 2027, management expects top-line growth in the mid-single-digit range and second-half gross margin of 55% to 56%.

Efraim Grinberg said the company was “very pleased” with the quarter and described momentum across the business despite Middle East-related challenges. He emphasized four priorities: consumer focus, product innovation, digital storytelling, and profitability through higher ASPs, more full-price selling, and a more optimized supply base. He also highlighted younger consumer engagement with traditional watches, strong responses to new launches like Baby Face, and expanding partnerships such as the upcoming Kate Spade watches launch next fiscal year.

Sallie DeMarsilis said the quarter benefited from higher revenue, gross profit, and a strong balance sheet, while operating expenses rose to $85.7 million from $80.6 million due to higher performance-based compensation and selling/marketing spend. She noted cash of $211.6 million, no debt, accounts receivable of $94.3 million, and inventory down $15 million, or 7.1%, year over year. She also said the company expects to recover the remaining $6.8 million of previously paid IEEPA duties, but will not recognize that gain until cash is received, and that share repurchases remain available with $44.6 million left under authorization.

Analysts focused on how much of the 340-basis-point gross margin improvement was structural versus temporary. Management said it was a mix of better pricing/ASP, favorable mix, and the temporary benefit of legacy inventory tied to the repeal of IEEPA tariffs, and confirmed that the second-half margin guide of 55% to 56% reflects that rollover. On shipping costs, management pointed to fuel surcharges linked to Middle East disruptions and higher e-commerce shipping tied to Mother’s Day demand, and said those factors are built into the back half. Management also elaborated on category trends, saying younger consumers are returning to traditional watches as fashion accessories rather than wearables.