Luxury watch company Movado (NYSE:MOV) reported Q4 CY2023 results beating Wall Street analysts' expectations, with revenue down 7.5% year on year to $179.6 million. The company's full-year revenue guidance of $705 million at the midpoint also came in 2.2% above analysts' estimates. It made a GAAP profit of $0.53 per share, down from its profit of $1.00 per share in the same quarter last year.
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Movado (MOV) Q4 CY2023 Highlights:
- Revenue: $179.6 million vs analyst estimates of $174.8 million (2.8% beat)
- EPS: $0.53 vs analyst estimates of $0.39 (35.9% beat)
- Management's revenue guidance for the upcoming financial year 2025 is $705 million at the midpoint, beating analyst estimates by 2.2% and implying 4.8% growth (vs -10.6% in FY2024)
- However, Management's EPS guidance for the upcoming financial year 2025 is $1.25 missed analyst estimates of $2.06 due to lower anticipated profitability
- Gross Margin (GAAP): 53.9%, down from 56.2% in the same quarter last year
- Free Cash Flow of $67.81 million is up from -$3.87 million in the previous quarter
- Market Capitalization: $585.6 million
With its watches displayed in 20 museums around the world, Movado (NYSE:MOV) is a watchmaking company with a portfolio of watch brands and accessories.
Apparel, Accessories and Luxury GoodsWithin apparel and accessories, not only do styles change more frequently today than decades past as fads travel through social media and the internet but consumers are also shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some apparel, accessories, and luxury goods companies have made concerted efforts to adapt while those who are slower to move may fall behind.
Sales GrowthA company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one may grow for years. Movado's revenue declined over the last five years, dropping 2.1% annually. Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Movado's recent history shows its demand has decreased even further as its revenue has shown annualized declines of 4.2% over the last two years.
This quarter, Movado's revenue fell 7.5% year on year to $179.6 million but beat Wall Street's estimates by 2.8%. Looking ahead, Wall Street expects sales to grow 2.6% over the next 12 months, an acceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, Movado has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 8.1%, subpar for a consumer discretionary business.
Movado's free cash flow came in at $67.81 million in Q4, equivalent to a 37.8% margin and down 10.3% year on year. Over the next year, analysts predict Movado's cash profitability will fall. Their consensus estimates imply its LTM free cash flow margin of 10.2% will decrease to 9%.
Key Takeaways from Movado's Q4 Results We liked that both revenue and EPS beat this quarter. We were also glad its full-year revenue guidance came in higher than Wall Street's estimates. On the other hand, its full-year earnings forecast missed by a wide margin due to lower-than-expected profitability. Overall, this quarter's results were mixed. The stock is flat after reporting and currently trades at $26.52 per share.