Movado Group Inc . (NYSE:MOV), a renowned watchmaker, has extended its licensing agreement with Tommy Hilfiger Licensing LLC for an additional five years, the company disclosed in a recent SEC filing. The extended agreement, which now runs until December 31, 2029, includes commitments to minimum sales targets and an increased marketing budget.
The original licensing agreement, which began on January 1, 2020, allows Movado Group to design, manufacture, and sell watches and jewelry under the Tommy Hilfiger brand. The extension reaffirms the partnership between the two companies and is expected to continue contributing to Movado's branded watch segment.
Movado Group, headquartered in Paramus, New Jersey, is known for its portfolio of watch brands, including Movado, Ebel, and Concord, as well as licensed brands such as Tommy Hilfiger and Hugo Boss (LON:0Q8F) (ETR:BOSSn). The company's strategic decision to renew this partnership underscores its commitment to maintaining a strong presence in the branded fashion watch market.
In other recent news, Movado Group Inc. has extended its licensing agreements with Tapestry (NYSE:TPR), Inc. and HUGO BOSS AG, securing their partnerships until 2028 and 2031, respectively. These extensions involve adjustments to sales minimums, royalty rates, minimum royalties, and minimum advertising expenditures. The agreements reflect the mutual commitment of Movado, Tapestry, and HUGO BOSS to continued collaboration in the design, marketing, and distribution of watches.
On the financial front, Movado reported flat net sales and a decrease in operating profit to $3 million for the second quarter of 2025. Despite a challenging consumer spending environment, 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 (EPA:TTEF) net sales dipped by 3.1% compared to the previous year, with a net income of $6.6 million. For the fiscal year, Movado projects a gross profit of approximately 54% of sales and anticipates an operating income between $23 million and $26 million.
InvestingPro Insights
Movado Group's recent extension of its licensing agreement with Tommy Hilfiger aligns well with its financial position and market performance. According to InvestingPro data, Movado has a market capitalization of $437.81 million and a P/E ratio of 12.14, suggesting a relatively attractive valuation. This could indicate that the market has not fully priced in the potential benefits of the extended partnership.
InvestingPro Tips highlight that Movado "holds more cash than debt on its balance sheet" and "cash flows can sufficiently cover interest payments." These factors provide the company with financial flexibility to meet the increased marketing budget commitments outlined in the extended agreement.
Additionally, Movado "pays a significant dividend to shareholders" with a current dividend yield of 7.21%. This high yield, combined with the fact that the company "has raised its dividend for 3 consecutive years," may appeal to income-focused investors looking for stable returns alongside potential growth from strategic partnerships like the Tommy Hilfiger agreement.
It's worth noting that InvestingPro offers 8 additional tips for Movado Group, providing investors with a more comprehensive analysis of the company's financial health and market position.
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