Movado Group Reports 3.1% Sales Increase and Net Income Decline in Q2 Fiscal 2026

Movado Group, Inc. reported its financial results for the second quarter of fiscal 2026, revealing a net sales increase of 3.1% to $161.8 million compared to $157.0 million in the same period last year. The company's gross profit for the quarter was $87.6 million, representing 54.1% of net sales, slightly down from 54.3% in the prior year. The increase in sales was attributed to higher demand from wholesale customers, particularly in the licensed brands category, which saw a 9.5% increase. However, the owned brands category experienced a decline of 7.2%. The company noted that fluctuations in foreign currency exchange rates positively impacted net sales by approximately $2.6 million.

In terms of profitability, Movado's net income attributable to the company was $3.1 million for the quarter, down from $3.6 million in the previous year. The decrease in net income was influenced by increased selling, general, and administrative (SG&A) expenses, which rose to $83.6 million, primarily due to higher professional fees related to an internal investigation and increased performance-based compensation. The effective tax rate for the quarter was 38.5%, significantly higher than the 19.1% recorded in the same quarter last year, reflecting changes in jurisdictional earnings mix and valuation allowances.

The company has also been actively managing its operational costs through a cost-savings initiative aimed at aligning expenses with sales. This initiative has led to accruals of $0.9 million and $1.5 million for severance and employee-related charges in the most recent quarter and the first half of the fiscal year, respectively. Additionally, Movado is navigating challenges posed by increased tariffs on imports, which have impacted its cost structure. The company has implemented selective price increases and is exploring changes to its sourcing strategies to mitigate these effects.

On the operational front, Movado's inventory levels increased to $211.5 million as of July 31, 2025, compared to $183.2 million a year earlier, as the company strategically built inventory to address potential supply chain disruptions and meet sales projections. The company also reported a decrease in cash and cash equivalents to $180.5 million from $198.3 million year-over-year, reflecting cash used in operating activities and investments.

Looking ahead, Movado Group, Inc. remains focused on enhancing its operational efficiency and addressing the challenges posed by market conditions, including inflation and changing consumer preferences. The company anticipates that its cost-savings initiatives will yield annual savings of approximately $10 million. Despite the current challenges, Movado is committed to maintaining its dividend policy, having declared and paid $15.6 million in dividends during the first half of the fiscal year.