Luxury watch company Movado (NYSE: MOV) reported revenue ahead of Wall Street’s expectations in Q1 CY2026, with sales up 8.1% year on year to $142.4 million. Its GAAP profit of $0.30 per share was significantly above analysts’ consensus estimates.

Is now the time to buy MOV? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Movado delivered first quarter results that exceeded Wall Street’s expectations, with notable year-on-year revenue growth and significant expansion in non-GAAP profitability. Management attributed the strong performance to momentum in both owned and licensed brands, as well as robust direct-to-consumer and digital channel sales. CEO Efraim Grinberg highlighted increased retailer replenishment activity and improving consumer engagement, especially among younger buyers entering the traditional watch category. Challenges in the Middle East market were offset by strength in the U.S. and Europe, while a favorable product mix and reduced promotional activity contributed to higher operating margins.

Looking forward, Movado’s leadership is focused on maintaining brand momentum through new product launches and expanded digital engagement. Management expressed optimism about continued demand from younger consumers, especially as smaller case sizes and distinctive designs gain popularity. However, they cautioned that sales growth may moderate in the next quarter as retailer inventory normalizes following strong replenishment in Q1. CFO Sallie DeMarsilis noted that margin improvements are expected to persist, though not at the same elevated level, as “the actions that we are taking will have long term benefits in our gross margin improvement.”

Key Insights from Management’s Remarks

Management credited growth to strong direct-to-consumer performance, effective product innovation, and improved inventory management across key brands.

• Direct-to-consumer strength: Movado.com and company stores saw double-digit sales increases, driven by enhanced digital capabilities and analytics that enabled more targeted consumer engagement and product assortments.
• Younger consumer interest: There was a resurgence in fashion watch demand among younger customers globally, with Gen Z engagement particularly strong in the Coach brand and renewed interest in smaller, distinctive watch sizes and shapes.
• Retailer replenishment impact: U.S. and European retailers increased inventory orders following better-than-expected sales in the prior quarter, leading to temporary inventory shortages in some bestselling Movado styles.
• Margin expansion drivers: Improved channel and product mix, reduced promotional activity, and temporary tariff relief contributed to the gross margin expansion, with management expecting ongoing structural improvements from SKU rationalization and supplier optimization.
• Licensed brand momentum: Licensed brands such as Coach, Lacoste, and Tommy Hilfiger delivered solid growth, with new product collections and expanded jewelry offerings resonating across markets despite ongoing challenges in the Middle East region.

Drivers of Future Performance

Movado’s outlook is shaped by inventory normalization, ongoing product innovation, and continued investment in direct-to-consumer channels.

• Moderating sales growth: Management expects sales to grow at a slower pace in the next quarter due to retailers having replenished inventory in Q1, which may create a temporary lull before the holiday selling period.
• Margin improvement initiatives: Gross margin is anticipated to remain higher than last year, supported by ongoing efforts to reduce SKUs, optimize suppliers, and focus on full-price selling, although temporary tariff relief will not recur in the same magnitude.
• Product innovation focus: The company is prioritizing new launches like the Bold Verso S and Kingmatic collections, along with smaller-sized watches and expanded jewelry, aiming to sustain consumer interest and drive further engagement, particularly among younger demographics.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) whether inventory normalization dampens sales growth or if new product launches drive consumer demand, (2) if gross margin improvements can be sustained as temporary tariff relief fades, and (3) the pace at which younger consumer cohorts continue to adopt traditional watches and jewelry. Execution in direct-to-consumer channels and successful replenishment of bestsellers will also be important.

Movado currently trades at $35.22, up from $29.82 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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