This article first appeared on GuruFocus .
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Revenue:$169.8 million, a 4.9% increase from $161.8 million in the prior year quarter.
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Gross Margin:Improved to 59.4% from 54.1% in the prior year quarter; excluding IEEPA duty refunds, gross margin would have been 57.5%, a 340 basis point improvement.
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Operating Income:$15.1 million, up from $7 million in the prior year quarter, including $3.2 million of IEEPA duty refunds.
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Net Income:$12.5 million, or $0.54 per diluted share, compared to $5.3 million, or $0.23 per diluted share, in the prior year quarter.
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Adjusted EPS:$0.54, including $0.11 per share attributed to IEEPA duty refunds.
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Cash Position:$211.6 million in cash with no debt at the end of the quarter.
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Inventory:Down $15 million, or 7.1%, below the same period last year.
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Shareholder Returns:Returned over $16 million to shareholders through quarterly dividend payments year-to-date.
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Segment Performance:U.S. net sales increased 4.9%; international net sales increased 4.9% (4.1% on a constant currency basis).
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Brand Performance:Olivia Burton sales increased 23% for the quarter; Movado.com sales increased 8% and Movado outlet stores sales increased 3%.
Release Date: August 26, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Sales increased 4.9% to $169.8 million, with growth in the U.S. and key international markets like Latin America and India.
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Gross margin improved significantly to 59.4% (57.5% excluding IEEPA refunds), a 340 basis point increase year-over-year.
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Adjusted EPS rose to $0.54 from $0.23, driven by higher sales and improved profitability.
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Strong balance sheet with $212 million in cash and no debt, supporting shareholder returns through dividends.
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Product innovation, such as the Movado Baby Face mini strap watch and Coach Iris, is resonating with younger consumers, driving sell-through rates.
Negative Points
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Sales declined in the Middle East due to ongoing geopolitical headwinds and reduced international tourism.
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Gross margin benefit from lower duty rates on legacy inventory is temporary and not expected to continue in the second half.
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Higher shipping costs, including fuel surcharges from Middle East conflict, partially offset margin improvements.
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Operating expenses increased by $5.2 million due to higher performance-based compensation and marketing spend.
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Company discontinued providing an annual outlook, reducing forward guidance transparency for investors.
Q & A Highlights
Q: How much of the 340 basis point gross margin expansion (excluding IEEPA benefit) is structural versus transitory? A: Efraim Grinberg (Chairman and CEO) stated the improvement is a mix of both. It reflects improved pricing and higher average selling prices, but also benefited from a one-time reversal of IEEPA tariffs accrued on legacy inventory. This transitory benefit is not expected to continue in the second half.
Q: Is the step-down in second-half gross margin guidance to 55%-56% solely due to the inventory benefit fading? A: Efraim Grinberg (Chairman and CEO) confirmed this is 100% the reason. The favorable impact from selling inventory carrying lower duty rates is temporary and will not persist.
Q: How significant is the higher shipping cost headwind, and are you locked into current freight rates? A: Sallie DeMarsilis (EVP and CFO) explained the increase was due to fuel surcharges from Middle East conflicts and higher e-commerce shipping related to events like Mother's Day. These factors are already built into the back-half guidance.
Q: Can you speak to broader trends in the fashion watch and jewelry category and how they are shaping strategy? A: Efraim Grinberg (Chairman and CEO) noted strong momentum, especially in the U.S., Mexico, Brazil, and India, where younger consumers are returning to traditional watches as fashion accessories. This trend is driving innovation in new shapes and sizes, positioning the company well for future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
