Tag Archives: NYSE:MOV

Movado: Zacks’ Bull of the Day Play

Movado Group, Inc. (MOVFree Report) has struggled to find itself as watches went out of favor and wearables came in. But is this Zacks Rank #1 (Strong Buy) finally finding its groove?

Movado Group makes watches in its Switzerland manufacturing facilities under the brands Movado, Ebel, Concord, ESQ Movado, Coach, Tommy Hilfiger, Hugo Boss, Juicy Couture, Lacoste and Ferrari. It also operates about 38 Movado retail stores globally.

Big Third Quarter Beat

On Nov 22, 2016, Movado reported its fiscal third quarter results and surprised by 20 cents on the Zacks Consensus Estimate. Earnings were $0.91 versus the consensus of $0.71.

Net sales still fell, but only by 3.1% to $179.8 million from $185.6 million in the year ago period. Net sales on a constant dollar basis only fell 1.4%.

Gross profit, however, rose by 90 basis points to 54.8% of sales compared to 53.9% in the third quarter of fiscal 2016. The increase was primarily due to the result of the favorable impact of channel and product mix and some sourcing improvements.

Is the Worst Over?

Movado has been in the unfortunate position of not just being a watchmaker as watches are becoming less popular, but also a luxury watchmaker.

But in November, it maintained its outlook for fiscal 2017 with earnings expected to be between $1.40 and $1.55 per share.

The Zacks Consensus Estimate has actually risen in the last 30 days to $1.55 from $1.51, which is the high end of the company’s range. That indicates the analyst is more bullish on the holiday quarter.

While that is a still a 25% earnings decline from fiscal 2016, the analyst is more bullish about fiscal 2018. Earnings are expected to be $1.69 which is a 9% increase over fiscal 2017.

Dividend and Share Buy Back

Movado pays a dividend, which is currently yielding a healthy 1.9%.

It also has been repurchasing shares. It repurchased about 18,000 shares during the fiscal third quarter. As of Oct 31, 2016, it still had $46.7 million of the $50 million share repurchase authorization in place.

Shares Get Election Bounce

Shares of Movado took off at the end of 2016 but have since pulled back off their highs.

They aren’t overly expensive. They are trading with a forward P/E of 17.1.

But is it too risky to buy a watchmaker in 2017?

I last wrote about Movado as a Bull of the Day in April 2014. In the interim, it was Bear of the Day twice in 2016.

But the rise in the earnings estimates for fiscal 2018 look promising. Despite all the talk that watches will only be found in museums going forward, there is still a contingent of consumers who wants an old-fashioned watch.

If you’re looking for an accessory retailer, then Movado is one to keep on your short list.

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Movado: Zacks’ Bear of the Day Play

Movado Group, Inc. (MOVSnapshot Report) continues to struggle in a depressed luxury retail environment. This Zacks Rank #5 (Strong Sell) recently cut its full year guidance for the second time this year.

Movado Group makes watches in its Switzerland manufacturing facilities under the brands Movado, Ebel, Concord, ESQ Movado, Coach, Tommy Hilfiger, Hugo Boss, Juicy Couture, Lacoste and Ferrari. It also operates about 38 Movado retail stores globally.

Earnings Miss and Sales Fall

On Aug 25, Movado reported fiscal second quarter 2017 results and missed on the Zacks Consensus Estimate by 4 cents. Earnings were $0.27 versus the consensus of $0.31.

It was the first earnings miss in the last 5 quarters.

Net sales fell 12% to $128.1 million from $145.6 million in the year ago quarter. On a constant dollar basis, they fell 11.2%.

The company called it a “challenging retail and economic environment.”

Cutting Full Year Guidance Again

Given the market conditions in both the fashion watch market and in luxury retail, in general, it’s not surprising that Movado cut its full year guidance for the second time this year.

It cut its full year EPS guidance last quarter by 30 cents.

Net sales for the year are now expected to be in the range of $550 million to $560 million.

However, it is optimistic about the upcoming holiday season, including increasing its television advertising to support Movado in the United States.

The analysts aren’t optimistic, however.

Fiscal 2017 earnings estimates were cut in the last 30 days. The Zacks Consensus Estimate has fallen to $1.41 from $1.61 just 90 days ago. Earnings are expected to decline 31% in fiscal 2017. The company made $2.06 last year.

Estimates are trending lower for fiscal 2018 as well. The fiscal 2018 Zacks Consensus has fallen to $1.54 from $1.73 over the last 30 days.

Are Shares Cheap?

Shares are up off the lows despite the cut in the full year guidance.

They’re not exceptionally cheap either. Movado trades with a forward P/E of 16.

Investors will get a dividend for their patience. It’s currently yielding 2.3%.

The rest of the jewelry industry doesn’t look much better for investors. It’s competitorFossil Group, Inc. (FOSLAnalyst Report) also has had its estimates cut. Earnings are expected to decline 67% this year.

More Stocks to Sell. Now.

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Movado: Zacks’ Bear of the Day Play

Are watch sales really that bad? In a surprise move, Movado Group Inc. (MOVSnapshot Report) recently guided lower for the full year as it blamed softening in the watch category. It has fallen to a Zacks Rank #5 (Strong Sell) as analysts moved to cut estimates.

Movado Group makes watches in its Switzerland manufacturing facilities under the brands Movado, Ebel, Concord, ESQ Movado, Coach, Tommy Hilfiger, Hugo Boss, Juicy Couture, Lacoste and Scuderia Ferrari. It also operates Movado company stores in the United States.

Movado focuses on the upscale watch market, which has been holding up well in the face of economic weakness in Europe and now in Asia.

Disappointing Sales and Lowered Guidance

However, on Nov 14, Movado shocked the Street by announcing preliminary third quarter sales which were below analyst forecasts.

Net sales for the third quarter are expected to fall to $188.6 million from $189.7 million a year ago. For the full fiscal year, net sales are only now expected to increase by 1% to 2%.

The company blamed it on slower growth in the overall watch category and that retailers are “focusing on driving improved productivity.”

Additionally, some of its brands didn’t perform as well as planned, including the flagship brand, Movado, in the international markets.

Earnings per share for the fiscal fourth quarter are expected in the range of $0.86 and $0.87. That is well below the Zacks Consensus of $1.14.

Fiscal full year guidance has been reduced to a range of $1.80 to $1.85.

That is well under the Zacks Consensus Estimate of $2.41.

Analysts moved to immediately cut estimates. The full year Zacks Consensus was cut to $1.81 which is at the low end of the company’s new range. That’s also an earnings decline of 12% from fiscal 2014.

Shares Fall to New 52-Week Low

Not surprisingly, the shares got crushed on the lowered guidance. They’re now trading at new 52-week lows.

Movado is now trading with a forward P/E of just 13.9.

But that doesn’t mean it’s a deal. Slashing your outlook as you head into the critical holiday shopping season is never a confidence booster.

If you are really interested in the watch space, you might want to consider Fossil Group Inc. (FOSLAnalyst Report) instead. While it makes watches on the lower end of the spectrum, it didn’t mention any problems with watch demand slowing in its last earnings report. Fossil is also expected to see 13% earnings growth this year.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.