What happened
Shares of Movado Group (NYSE: MOV) were pulling back today after the watch retailer missed estimates on the top line in its third-quarter earnings report, and lowered its guidance for the year.
As of 12:01 p.m. ET on Tuesday, the stock was down 11.1% on the news.
So what
Movado, which sells high-end watches, reported a 2.9% decline in revenue to $211.4 million, missing estimates at $225.6 million. On a constant-currency basis, revenue was 3.4% in the period.
Gross margin slipped 40 basis points to 57.3%, while operating margin remained strong at 18.4%, though that was down from 19% in the year-ago quarter. On the bottom line, adjusted earnings per share (EPS) fell slightly from $1.36 to $1.31, which topped expectations at $1.21.
CEO Efraim Grinberg said, "The disciplined execution of our strategy led to top-line growth in constant currency and solid profitability in an increasingly difficult macro environment." Grinberg pointed out the 10.2% increase in international sales on a constant dollar basis, with strong performance across all international regions.
Now what
Although the company said it was well positioned for the holiday season, management is trimming guidance due to inflationary pressure, a stronger dollar, and softer consumer demand.
The company now expects full-year revenue of $740 million to $750 million, or 1% to 2.4% growth from a year ago, down from a previous range of $780 million to $790 million. It didn't give EPS guidance, but also reduced its operating-income outlook from $125 million to $130 million to a range of $120 million to $125 million.
While the guidance cut isn't surprising in light of the macro headwinds, it's understandable why the retail stock is down on the news.
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