Paramus, New Jersey-based watch maker Movado Group, Inc. reported significantly reduced earnings of $3.9 million, or $0.17 per diluted share, in Q1 2020 on Thursday, down from $8.1 million, or $0.35 per diluted share in the prior-year period.
The company’s net sales actually rose 15.3% to $146.5 million during the quarter, up from $127.1 million in Q1 2019. On a constant currency basis, sales increased 18.9%.
However, this progress was offset by increases in operating expenses, which totaled $73.9 million, compared to $59.4 million in the same period in the previous year. This rise was largely related to an increased marketing spend resulting from the addition of the MVMT brand to the company’s portfolio, as well as expenses incurred in connection with efforts to drive sales growth across the group and with the launch of a new joint venture in Spain.
“We had a strong start to the year, reporting double digit growth in sales and significant expansion in gross margin driven by the strength of our innovation and heightened global demand for our compelling portfolio of brands,” said Movado Chairman and CEO Efraim Grinberg in a release. “During the quarter, we accelerated our growth in e-commerce driven by our Digital Center of Excellence and increased investment in marketing activities to capitalize on the significant growth that lies ahead for our portfolio, including MVMT and Olivia Burton.”
In light of its first-quarter results, Movado has maintained its full-year outlook for fiscal 2020, and expects to report net sales in the range of $750.0 million to $765.0 million. Net income is predicted to be between $64.0 million and $66.4 million, or $2.70 to $2.80 per diluted share.