Movado's Q4 Earnings: A Mixed Bag in a Challenging Sector Landscape

Movado Group (NYSE: MOV) reported its fiscal Q4 2025 earnings results (ended January 31, 2025), revealing a mixed performance amid macroeconomic headwinds. While revenue grew modestly, margin pressures and cautious guidance underscored the challenges facing the luxury accessories sector. To contextualize Movado’s results, we analyze its performance against peers in the apparel and accessories space, including Capri Holdings (Michael Kors), VF Corp, and On Holding AG.

Movado’s Q4 Results: Revenue Growth, Margin Struggles

• Revenue: Rose 3.3% year-over-year to $181.5 million, driven by international wholesale and U.S. online sales. However, U.S. brick-and-mortar and Movado Company Stores saw declines.
• Net Income: Fell to $8.05 million ($0.36 diluted EPS), missing estimates by 7.2%. GAAP operating income dropped 15% to $9.2 million, though non-GAAP adjusted operating income surged 25% to $13.5 million.
• Margins:
• Gross Margin: Improved to 54.2%, aided by product mix and cost leverage.
• Operating Margin: Compressed to 5.1%, due to higher marketing spend and restructuring costs.

The company cited $10 million in annualized cost cuts and plans to reduce marketing expenses by $15–20 million in fiscal 2026. However, it avoided issuing formal guidance for 2026, citing "economic uncertainty and tariff impacts."

Peer Comparisons: Movado vs. Key Competitors

1. Capri Holdings (Michael Kors)

• Revenue: Fell 9.7% in Q4 to $822 million, with Asia declining 16%.
• Margin: Operating margin shrank to 14.1% (vs. 16.2% in 2023).
• Stock Performance: Down 59.2% since reporting, trading at $10.83.

2. VF Corp (Vans, The North Face)

• Revenue: Rose 1.9% to $2.83 billion, beating estimates by 1.2%.
• Margin: Gross margin compressed to 60.6%, but strong brand diversification offset risks.
• Stock Performance: Down 57.7% to $11.25, reflecting broader investor skepticism.

3. On Holding AG (ONON)

• Revenue: Soared 35.7% to CHF 606.6 million ($615 million), with gross margin hitting 62.1%.
• Guidance: Projects 27% constant currency growth in 2025.
• Stock Performance: Likely outperformed peers due to its premium positioning and brand momentum.

4. ThredUp (TDUP)

• Revenue: Grew 9.5% to $67.27 million but missed estimates.
• Margin: EBITDA beat expectations, driving a 47.3% stock surge to $3.30.

Key Takeaways

1. Margin Pressures Across the Sector:

2. Movado’s operating margin compression (to 5.1%) mirrored peers like Capri (14.1%) and VF Corp (60.6% gross margin but operational headwinds). Only On Holding (62.1% gross margin) demonstrated margin resilience.

3. Growth Divergence:

4. Movado’s 3.3% revenue growth lagged On Holding’s 35.7% surge but outperformed Capri’s 9.7% decline. The Swiss watch industry’s polarization—where Rolex and ultra-luxury brands thrived—also highlights Movado’s need to differentiate.

5. Stock Market Sentiment:

6. Movado’s stock fell 26.5% post-earnings, reflecting investor concerns about its lack of guidance and margin issues. In contrast, ThredUp’s stock soared despite revenue misses, signaling a focus on long-term potential.

7. Strategic Moves:

8. Movado’s cost-cutting and marketing discipline (reducing spend by $15–20 million) align with peers like Kontoor Brands (owner of Wrangler), which prioritized capital allocation and brand equity.

Conclusion: A Wait-and-See Stance for Investors

Movado’s Q4 results present a nuanced picture: modest revenue growth and strong cash reserves ($208.5 million) offer stability, but margin erosion and cautious guidance suggest risks ahead.

• Bull Case:
• Execution of cost cuts and selective price hikes could stabilize margins.

• Its strong liquidity provides flexibility to weather macro uncertainty.

• Bear Case:

• Weak U.S. sales and competition from ultra-luxury peers (e.g., Rolex) may limit growth.
• The apparel sector’s average 17.7% stock decline post-earnings reflects broader investor pessimism.

Investors should monitor Movado’s Q1 2026 performance, particularly its ability to leverage its cash reserves for strategic initiatives. While the company remains resilient financially, its valuation (trading at ~10x 2025E EPS) suggests limited upside unless it can reaccelerate top-line growth or expand margins meaningfully. In a sector where polarization between premium and mid-tier brands is stark, Movado’s path to outperformance hinges on innovation and disciplined execution.

Final Word: Movado’s Q4 results reflect a sector in flux. While its fundamentals are intact, investors must weigh its defensive liquidity against the headwinds of margin compression and sector underperformance. A "hold" rating seems prudent until clarity emerges on its 2026 strategy.