PARAMUS, NJ-based Movado Group Inc . (NYSE:MOV) announced on Thursday the extension of its licensing agreement with Tapestry (NYSE:TPR), Inc., formerly known as Coach , Inc. This amendment extends the partnership until June 30, 2028, solidifying a long-term relationship between the two companies.
The Fifth Amendment to the Amended and Restated License Agreement, originally dated January 13, 2015, includes adjustments to sales minimums, royalty rates, minimum royalties, and minimum advertising expenditures for the contract period up to June 30, 2028. These revisions are designed to align with the strategic goals and market presence of both Movado and Tapestry.
The agreement, which was signed on September 12, 2024, by Movado's wholly owned Hong Kong subsidiary Swissam Products Limited (SPL) and Tapestry, Inc., reflects both parties' commitment to continued collaboration in the design, marketing, and distribution of watches.
Movado Group, identified by its industrial classification in watches, clocks, and clockwork operated devices/parts, has not disclosed the specific financial terms of the agreement. However, the company plans to seek confidential treatment for certain terms of the amendment when it files the document with its upcoming quarterly report on Form 10-Q for the fiscal quarter ending October 31, 2024.
In other recent news, Movado Group Inc. has extended its licensing agreement with HUGO BOSS AG till December 31, 2031. The revised terms include updated minimum sales targets, marketing and advertising expenditure requirements, and new pricing arrangements for sales. The extension also provides for a further five-year extension possibility, subject to certain conditions, and a one-time payment to celebrate the HUGO BOSS brand's 100th anniversary.
In financial developments, Movado reported flat net sales and a decrease in operating profit to $3 million for the second quarter of 2025. This was due to increased marketing investments and a challenging consumer spending environment. Nevertheless, the company maintained a healthy gross margin and saw growth in unit volume for licensed brands and direct-to-consumer sales for the Movado brand.
Total net sales saw a 3.1% dip compared to the previous year, with a net income of $6.6 million. Despite these challenges, the company's CEO, Efraim Grinberg, announced plans to revamp the Movado jewelry assortment following its outperformance over watches in their fashion brands.
Looking ahead, Movado projects a gross profit of approximately 54% of sales and anticipates an operating income between $23 million and $26 million for the fiscal year. These recent developments reflect Movado's strategic efforts to maintain resilience in a challenging market.
InvestingPro Insights
Movado Group's recent extension of its licensing agreement with Tapestry aligns well with the company's current financial position and market performance. According to InvestingPro data, Movado has a market capitalization of $431.8 million and a P/E ratio of 11.85, suggesting a relatively modest valuation. This could be attractive for investors considering the company's strategic moves.
InvestingPro Tips highlight that Movado "holds more cash than debt on its balance sheet" and "pays a significant dividend to shareholders," with a current dividend yield of 7.22%. These factors indicate financial stability and a commitment to shareholder returns, which could be reassuring for investors in light of the extended partnership with Tapestry.
However, it's worth noting that Movado's stock has faced challenges recently, with InvestingPro data showing a 20.14% price decline over the past three months. This context makes the Tapestry agreement extension particularly significant, as it may provide a foundation for future growth and potentially improve investor sentiment.
For readers interested in a more comprehensive analysis, InvestingPro offers 7 additional tips for Movado Group, providing deeper insights into the company's financial health and market position.
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