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Bear of the Day: Movado (MOV)

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Headquartered in Paramus, NJ, Movado Group (MOV) is one of the world’s premier watchmakers, designing, manufacturing, and distributing high-end timepieces and fashion watches. Its brand portfolio includes Coach, Tommy Hilfiger, Hugo Boss, Concord, and Movado.

Shares Slump on Underwhelming Q3 Earnings

Non-GAAP earnings came in at 82 cents per share, well below our consensus estimate of $1.03. Revenue fell 1.6% year-over-year to $205.6 million; analysts expected sales of $220 million.

Movado’s Q3 performance was hurt by declining sales and increasing marketing investments, and lowered its full-year revenue outlook as a result.

Analysts have turned bearish on Movado, with one cutting estimates in the last 60 days for fiscal 2019.

Earnings are expected to see double-digit negative growth for the year, and the Zacks Consensus Estimate has dropped 64 cents for that same time period from $2.27 to $1.63 per share.This sentiment has stretched into 2021, though sales growth is expected to be positive.

MOV is now a Zacks Rank #5 (Strong Sell).

Shares of the watchmaker are down almost 36% since January, and the stock took a major hit after its Q3 earnings release; MOV plunged 24.6% in the wake of the report. The S&P 500 is up about 28% this year in comparison.

Bottom Line                                               

Movado has been impacted by currency headwinds and the underperforming watch category and overall retail environment. It now expects fiscal 2020 revenue to fall between $690 million to $700 million compared to the previous range of $725 million and $740 million.

Investors who are interested in adding a Retail-Jewelry peer to their portfolio could take a look at Zacks Rank #2 (Buy) ranked Signet Jewelers (SIG), which is seeing positive estimate revisions for fiscal 2020.

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