MOVADO GROUP INC Q4 FY2025 earnings call

• Dubai sales office irregularities led to restatement of financials for prior years. - Fiscal 2025 sales declined 1.7% but Q4 2025 sales increased 3.3%. Adjusted operating income in Q4 2025 was $13.5 million, up $2.8 million from the prior year. - Lowered expense base for challenging consumer discretionary environment. - Focus on marketing strategy with greater emphasis on digital venues and conversion with retail partners. - Brand building efforts across brands: Movado's comprehensive refresh, new campaigns and products; Coach's Sammy bangle and Cass collection success; Tommy Hilfiger's good, better, best positioning; Lacoste's LC33 collection and new introductions; Hugo Boss's classic revivals; Calvin Klein's new collections. - Outlet business improvements with new fixtures and enhanced assortments.

For fiscal year 2025, sales were $653.4 million, a 1.7% decline from $664.4 million the previous year. In the fourth quarter of 2025, sales were $181.5 million, a 3.3% increase from $175.8 million in the same period last year. Gross profit as a percentage of sales was 54.2% in the fourth quarter of 2025, compared to 53.5% in the same period last year. For fiscal 2025, gross profit was $353.1 million, 54% of sales. Geographically, US net sales decreased 2.9% in the fourth quarter of 2025, while international net sales increased 8.8%. For fiscal 2025, US net sales declined 4%, international sales decreased 0.2% but increased 0.6% on a constant currency basis.

• The company has elected not to provide fiscal 2026 outlook due to economic uncertainty and unpredictable impact of tariffs. - Plan to utilize share repurchase plan to offset dilution in fiscal 2026. - Monitoring tariffs and evaluating strategies to mitigate cost increases, including implementing selective price increases while engaging with supply chain partners and customers.

• Irregularities in Dubai sales office leading to restatement of financials. - Economic uncertainty and global trade friction. - Impact of tariffs on costs, including 10% tariffs on global imports and over 100% on Chinese bracelets/leather straps for fashion watches, affecting gross margin.

Q: Could you talk about your marketing strategy this year given that you plan to spend less?

A: We will focus a greater preponderance of our marketing effort this year in digital venues, allowing for more timely adjustments versus our sales and where our sales are tracking. And at the same time, we're also going to focus more of our messaging across our brands on conversion with our retail partners around the world.

Q: Is there a product lines that you would focus on or price points you would focus on?

A: We're trying to understand the tariff structure and see where we will be implementing some price increases but do it in a way that is sustainable for the long term and manageable with both our retail partners and consumers. We will still always have some value-oriented price points across each of our brands for when the consumer becomes more challenged economically.

Q: As far as the cost savings initiatives go, is there more cost savings that you could have to justify generating free cash flow this year?

A: Our intention is to generate free cash flow this year, and we're very focused also on our inventory levels. Our marketing expenses are generally somewhat variable and what the digital aspect allows us to do is commit closer to the time of execution versus more traditional media. My hope is that our sales can sustain the level that we've planned at for the year.