Movado Weighs ‘Pricing Initiatives’ Amid Tariffs on Watches Taking Effect Sunday

Movado Group downgraded its forecast Wednesday in virtually all financial metrics for fiscal 2020 ending Jan. 31, blaming market volatility it sees worsening with the 15 percent List 4A Section 301 tariffs taking effect Sunday on fashion watches and smartwatches imported from China. Movado also faces “currency headwinds” from sharp fluctuations in the euro and the British pound, said Chief Financial Officer Sallie DeMarsilis on a fiscal Q2 call. It now expects sales for the year to be $725 million-$740 million, down from $750 million-$765 million in its May 30 forecast, she said. Gross margin will be flat to “slightly down” from last year, compared with flat to “slightly improved” in the previous forecast, she said. It projects operating income of $67 million-$70 million compared with $82 million-$85 million in the previous guidance, she said. The outlook “assumes no further changes in prevailing tariff rates,” she said. Shares closed 0.2 percent lower Thursday at $21.17. It's “very early on in the process” to forecast with any precision the impact of the List 4A tariffs taking effect in a few days, said CEO Efraim Grinberg. The tariffs will “definitely have an impact, I believe, on U.S. business,” he said. “We will take certain actions in terms of pricing initiatives, in terms of working with our suppliers,” to mitigate the fallout, he said. “Some will have an effect to gross profits.” Due for fall introduction is the new Movado Connect 2.0 powered by Google's OS Wear, said Grinberg. It’s “our first smartwatch available in two sizes for men and women,” he said.