I can't help being impressed by the numbers some of the smaller specialty retail names are putting up these days. On Tuesday it was watch distributor Movado Group's turn.
Movado's (MOV) third-quarter revenue of $169.9 million, while down 17% year over year, was nearly $28 million ahead of "consensus" estimates (just one analyst covers the name). Sequential quarterly revenue was up 92% from the second quarter, which ended July 31; that's not a number we typically consider, but it does offer some perspective on how bad conditions were earlier in the pandemic.
Movado earned 70 cents a share for the third quarter, 22 cents ahead of "consensus." Gross margins increased by 100 basis points while operating expenses fell 200 basis points, which is a powerful combination. Sales were particularly strong in Europe. E-commerce sales, up 159%, also contributed.
The balance sheet remains solid. MOV ended the quarter with $163 million, or $7 per share, in cash and $37 million in debt. It currently trades at 2.62x net current asset value (putting it in triple-net land) and 1.15x tangible book value per share. Shares rose 11% on Tuesday. Don't count on any forward guidance from management, however, as the company will not provide a 2021 forecast. I can't blame them, but remain impressed by what Movado accomplished for the quarter.
Meanwhile, Fossil Group (FOSL) , which put up its own impressive third-quarter results two weeks ago, continues to run up. Shares have nearly doubled since the company reported and are now in positive territory year to date (up 46%) and over the past year (up 55%). Volume also has picked up considerably. Indeed, on Nov. 12, the day Fossil released its results, volume was 14.76 million shares, which is more than eight times normal average volume. It's uncertain to what extent short covering could be a factor; at this writing, about 19% of float is short.
Things could get even more interesting from here for names such as Movado and Fossil as we are knee-deep in the ever-important fourth quarter for retail. Despite the pandemic, consumers seem to be in spending mode, but we'll know soon enough.
Most importantly, have a wonderful Thanksgiving.
