In an era of cellphones and bare wrists, Movado is bucking the trend with fashionable watches.
The American watchmaker’s stock surged Thursday morning after improving on both top and bottom lines for the most recent quarter.
For the fourth quarter of fiscal year 2019, or the three-month period ending Jan. 31, 2019, revenues increased 33.6 percent to $199.4 million, up from $149.2 million the year before. Income also rose to $17.1 million, compared with only $13.3 million during 2018’s fourth quarter.
Shares of Movado Group shot up Thursday as a result, closing 22.77 percent higher to $40.06 a piece.
“Fiscal 2019 marked another year of progress on our strategies — to deliver innovation across our portfolio of powerful brands in an omnichannel market, capitalize on our strong balance sheet and cash flow to acquire new brands and develop our digital presence,” Efraim Grinberg, chairman and chief executive officer of Movado, said in a statement. “While we continue to operate in an evolving and challenging global marketplace for both retail and the watch category, we expect to continue to deliver growth on both the top line and bottom line in fiscal 2020 through continued product innovation, effective marketing and disciplined execution of our strategies and growth priorities.”
Grinberg said on the conference call with analysts Thursday morning that while in-store traffic was down for the quarter, e-commerce grew.
In fact, the company has been investing in its online presence for some time in an attempt to win share in the international fashion watch market and expand e-commerce channels globally, with an eye on Millennial shoppers.
In the last two years, Movado has acquired two private watch and accessory companies, MVMT and London-based Olivia Burton. In the most recent quarter, Millennial-focused brand MVMT had its largest quarter for online sales.
In the coming year, Grinberg said the company will be focusing on new innovation in smartwatches, including the release of its Movado Connect 2.0 this fall, and even venturing into sunglasses and jewelry in the year ahead, including the launch of a Hugo Boss jewelry line in the second half of the year.
“We believe [Movado] has a big opportunity as a lifestyle brand on a global basis,” Grinberg said.
“Fiscal [year] 2020 we are focusing on continuing to expand our positioning in key Asian markets, like Singapore, Korea, Japan and China, and building increased brand awareness in the U.S. and Latin America,” Grinberg added and said he sees “significant opportunity with both Tmall and online marketplace specifically for Chinese consumers and JD.com.”
Oliver Chen of Cowen rated the stock “outperform” and said he prefers the watch and accessory market over apparel thanks to greater pricing leverage and less fragmentation in the market.
“We think that Movado’s portfolio innovation, combined with international diversification and thoughtful acquisitions of strategic lifestyle brands, positions the company for market share gains over the medium term,” the analyst wrote in a note.