Movado Group Inc.

Disclaimer: This is not a financial advise. The article has been published on February 12th 2022. Current stock price: $38.33 (close of day)

What is Movado Group Inc,

Movado Group, Inc. (Movado) designs, sources, markets, and distributes watches globally.

The company’s portfolio of watch brands comprises owned brands MOVADO, CONCORD, EBEL, OLIVIA BURTON, and MVMT as well as licensed brands COACH, TOMMY HILFIGER, HUGO BOSS, LACOSTE, and SCUDERIA FERRARI. In addition, the company also designs, sources, markets, and distributes jewelry and other accessories under certain of its brands.

Movado operates through two segments:

  • Watch and Accessory Brands (88.3% of FY2021 sales) – This segment includes the designing, manufacturing, and distribution of watches, jewelry and other accessories, after-sales service activities, and shipping
  • Company Stores (11.7% of FY2021 sales) – This segment includes the company’s physical retail outlet locations in the United States and Canada.

Summary

RecommendationBuy
Recent PriceUS $38.33
Security No. (ISIN)US6245801062
(MOV)
Market Cap$885.64M
Company LocationUnited States
Main ExchangeNYSE
Average volume176.28K
52-week range20.48 – 48.66
Insider ownership28.4%
Fiscal year endJanuary

Valuation Metrics

Price to Earnings9.1
Price to Free Cash Flow7.5
EV to EBIT5.9
EV Free Cash Flow6.4
Price to Book1.8
Dividend Yield1.4%

Movado Group Inc Earnings

Report DateFiscal QuarterForecast/EPSLast Year’s EPSEPS YoY Change
Mar 25, 20222021 (Q4)0.80 / –0.84
Nov 23, 20212021 (Q3)1.01 / 1.360.794.29% (+0.66)
Aug 26, 20212021 (Q2)0.30 / 0.85-0.071314.29% (+0.92)
May 27, 20212021 (Q1)-0.09 / 0.43-0.56176.79% (+0.99)

Results in 2021

For the nine months ended 31 October 2021, the company generated sales of US$ 526.4 million, up 60.7% from the US$ 328.1 million reported during the same period in 2020.

Watch and Accessory Brands segment reported a 55.6% increase in sales to US$ 456.8 million from US$ 293.6 million, the previous year.

The increase in net sales was primarily due to increased volumes resulting from higher demand with growth in the company’s wholesale customers, growth in online retailers, both in the company’s owned and wholesale customers’ e-commerce websites and to a lesser extent, limited price increases.

Prior period net sales were negatively impacted by restrictions affecting some stores of the company’s wholesale customers during a portion of the period due to the COVID-19 pandemic. Some of these restrictions have continued into fiscal 2022. Both the United States and international locations of the Watch and Accessory Brands segment reported an increase in sales during this period.

Sales from the Company Stores segment increased 101.9% to US$ 69.6 million from US$ 34.5 million, primarily as a result of increased traffic in the company’s retail stores, the addition of three new store openings, and MCS.com.

Operating income amounted to US$ 79.3 million during the nine months ended October 2021 compared to an operating loss of US$ 168.0 million during the same period in 2020. In 2020 the company wrote off US$155.9m in goodwill and certain intangible assets. The company reported a net income of US$ 60.2 million compared to a net loss of US$ 141.8 million, and earnings per share of US$ 2.59 compared to a loss per share of US$ 6.11, during the previous year.

Source: Movado Annual Reports

Investment Thesis

Following the good results during the first nine months, the company has increased its outlook for the fiscal year 2022 and has given the below guidance.

  • Net sales in a range of approximately US$ 715 million to US$ 720 million (2021: US$ 506.4 million)
  • Gross profit of approximately 56.5% to 57.0% of net sales (2021: 53.4% of net sales)
  • Operating profit in a range of 15.0% to 15.5% of net sales (2021: Operating loss of US$ 142.1 million)
  • Diluted earnings per share of approximately US$ 3.35 to US$ 3.45 (2021: Loss per share of US$ 4.80).

Movado Group Inc. highlighted that this updated outlook does not contemplate significant additional COVID-19 related retail closures which can adversely impact results

Conclusion

Movado Group Inc. will benefit from retail re-opening with Covid restrictions easing and recommendation is buy.

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Movado (MOV) News

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    While broader markets face continued pressure amid recession fears, small-cap stocks stand out as an undervalued segment of the stock market. The Russell 2000 index, the popular benchmark for small-cap stocks, is currently down 18% over the past year.
  • Movado (MOV) Forms 'Hammer Chart Pattern': Time for Bottom Fishing?
    Alpha Scala News – 4 weeks ago
    After losing some value lately, a hammer chart pattern has been formed for Movado (MOV), indicating that the stock has found support. This, combined with an upward trend in earnings estimate revisions, could lead to a trend reversal for the stock in the near term.
  • 4 Stocks to Buy on the Rebound in August Retail Sales
    Alpha Scala News – 1 week ago
    Higher demand for goods is boosting retail sales amid inflationary pressures. This is helping stocks like TravelCenters of America (TA) , Movado Group (MOV), Arhaus (ARHS) and Designer Brands (DBI).
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