Movado Group reported significant margin expansion during the fiscal second quarter of 2027, with profitability improving both with and without the benefit of refunds on previously paid IEEPA duties.
Gross margin increased to 59.4% from 54.1%, an expansion of 530 basis points.
However, approximately $3.2 million of IEEPA duty refunds contributed 190 basis points to the year-over-year margin improvement.
Excluding the refund benefit, Movado’s gross margin would have been 57.5%, still approximately 340 basis points above the prior-year level.
Net sales increased 4.9% to $169.8 million from $161.8 million, with growth across both owned and licensed brands.
U.S. sales rose 4.9%, while international revenue also increased 4.9%, or 4.1% on a constant-currency basis.
Operating income increased to $14.9 million from $4 million, while adjusted operating income more than doubled to $15.1 million from $7 million.
Diluted EPS increased to $0.53 from $0.13, while adjusted EPS rose to $0.54 from $0.23.
The duty refunds and related interest provided approximately $2.5 million of after-tax benefit, equivalent to $0.11 per diluted share.
Even excluding that benefit, management said adjusted diluted EPS increased approximately 87%.
Movado could receive additional refunds. The company is pursuing approximately $10 million of total IEEPA duty recoveries and had received $3.3 million, including interest, as of July 31.
Movado ended the quarter with $211.6 million in cash and no debt.
KEY QUOTE:
“Gross profit margin expanded by 340 basis points and adjusted diluted earnings per share increased by approximately 87%, in each case excluding the impact of IEEPA duty refunds.”
Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group
