$18.58
$39.99
bear $18.58
base $31.52
bull $39.99
margin of safety $19.00
market price* $32.84
Movado Group designs and sells watches, and to a lesser extent jewelry and accessories. It owns the Movado, Concord, EBEL, Olivia Burton and MVMT brands, and makes watches under licence for Coach, Tommy Hilfiger, Hugo Boss, Lacoste and Calvin Klein, with Kate Spade New York to be added from spring 2027. Licensed brands were 58.3% of fiscal 2026 sales (year ended January 31, 2026). Licences carry minimum royalties and can lapse, but the platform has shown it lasts: in the fiscal 2017 annual report the licences were Coach, Hugo Boss, Juicy Couture, Lacoste, Tommy Hilfiger and Scuderia Ferrari. Since then Juicy Couture and Ferrari have gone, Calvin Klein has been added and Kate Spade New York is coming, while the core four have been kept. Sales go mostly to wholesale customers, plus the company's own websites and outlet stores. 56.7% of sales are outside the United States. Licensed and fashion watches are developed through the company's Asia operations, including a Hong Kong subsidiary, and are made by contractors in Asia, which is why US tariffs matter here. The Grinberg family controls the voting power through ten-vote class A shares. Earning power. We measure the cash the owners could take out each year: operating cash flow, with working-capital swings removed, minus stock compensation and the capital spending needed to stand still. We also charge the yearly provisions for inventory and receivable write-downs. Obsolete watches are a real, recurring cost, so we do not add them back. On this basis the business produced per share: $1.73 (FY2017), $2.19, $2.02, $1.60, $1.69 (FY2021), $4.24, $4.20 (FY2022-23, the post-pandemic buying surge), $2.02 (FY2024), $0.95 (FY2025) and $1.37 (FY2026). Each year ties exactly to net income plus non-cash charges less upkeep capital spending. Large non-cash items were added back because they are sunk costs, not running costs. These include the $155.9M goodwill and intangible write-down in fiscal 2021 and the $45.0M 2017 tax-act charge in fiscal 2018. The $15.4M fiscal 2020 gain from reducing an acquisition earn-out liability was excluded for the same reason. Interest paid is only about $0.3M a year, so cash flow before lenders is essentially the same. We use the median of fiscal 2019-2026, about $1.90 per share (roughly $44M a year on 23.1M diluted shares). That window starts once Olivia Burton and MVMT were in the portfolio and covers a full cycle: pre-pandemic, the fiscal 2021 pandemic shutdown, the fiscal 2022-23 surge and the fiscal 2025 slump. It is not lifted by the surge years, which the median sets aside. The anchor is checked against current results. Fiscal 2026 owner earnings were $1.37 even after $9.6M of IEEPA tariffs expensed in cost of sales and $1.5M of severance. In the first half of fiscal 2027 (to July 31, 2026), sales rose 6.3% to $312.2M, gross margin rose to 58.4% from 54.1%, and operating income was $21.9M against $4.3M a year earlier. Those two quarters support a return to about $1.90. They do not support a higher level. Growth check. Owner earnings rose 44% in fiscal 2026 ($0.96 to $1.38 per share before interest). The base case's first year is set at the $1.90 anchor with 0% growth from there, below that trailing rate. No growth is credited in any case. Ten years of sales and per-share cash flow show no steady, self-funded growth engine. Sales went from $552.8M to $671.3M only with the help of two acquisitions, and per-share earning power is about where it was in fiscal 2017. Bear case, $18.58 per share. The business earns only its recent trough level, about $1.17 a year (the fiscal 2025-26 average), for ten years. Named pressures keep it there. US tariffs replaced the IEEPA duties: Section 122 duties are 10%, and the administration announced an intent to raise them to 15%. The owned brands are weakening: their wholesale sales fell 6.1% in fiscal 2026 while licensed brands rose 7.2%. And a large licence can be lost, as Juicy Couture and Ferrari were. Then earnings fade to nothing over years 11-20 as licences lapse without replacement. The business is worth about $11.22 per share ($259M), plus about $7.36 per share of surplus cash, and there is no debt. Base case, $31.52 per share. The business earns $1.90 a year for twenty years, twice the decade over which the licence platform has shown it can keep and replace partners, then fades to zero over years 21-30. Business value is $24.16 per share (about $558M), plus $7.36 of surplus cash, with no debt. Bull case, $39.99 per share. The company's own levers work. The cost-savings programme begun in fiscal 2025 delivers the roughly $10M of annual savings management expects. The Kate Spade New York licence launches as signed in spring 2027. The first-half fiscal 2027 margin recovery holds. Earnings reach $2.40 per share from year two, near the fiscal 2018-19 level plus the savings, hold through year 25 and fade over the next ten. Business value is $32.63 per share (about $754M), plus $7.36 of surplus cash. A refund of the $8.7M of IEEPA tariffs paid in fiscal 2026 is left out of every case: the company itself has booked no receivable because recovery is uncertain. Debt and cash. There are no borrowings. The $100M secured revolving credit facility with Bank of America was undrawn at January 31, 2026 and matures October 28, 2026, and the Swiss credit lines (6.5M Swiss francs) were also unused. Cash was $211.6M at July 31, 2026, a seasonal low ahead of the holiday season. We keep $40M of that as working cash for the seasonal inventory build, treat about $170M (after a $1.6M outside minority interest) as surplus, and divide by 23.1M diluted shares. Each case therefore carries no lender claim, and the debt-maturity risk is nil. Change since our previous analysis. Our values are lower than before (previously $27.69, $37.72 and $49.06). The main reasons are method rather than news. We now strip out working-capital swings and charge inventory write-downs, which lowers measured earning power. We no longer assume earnings grow forever after year ten: each case now ends when the evidence for it runs out. And we count only the cash beyond what the business needs to operate. The facts we now weigh are mixed. The first-half fiscal 2027 recovery confirms the earnings level, the Kate Spade New York licence adds a brand from 2027, and the quarterly dividend was raised to $0.40 from $0.35. Against that, the IEEPA tariffs have been replaced by Section 122 duties, and the Dubai restatement shows weaker controls than previously assumed. Margin-of-safety price, $19.00. The range from bear to bull is wide. Fashion watches are a discretionary, fashion-driven category. Most sales depend on licences the company does not own. And in April 2025 the company had to restate fiscal 2023 and 2024 after finding that its Dubai branch had overstated and prematurely recorded sales from about fiscal 2021 on. A material weakness in internal control was identified at the same time. The restatement did not change operating cash flow, which our figures are built on, but it is a reason for caution. At $19, close to the bear value, the bear case implies roughly no gain or loss. If the base case is recognised within three years, the base case implies about 24% a year including dividends. If it takes four years, about 19%. Above roughly $21, a three-year path to the base case no longer reliably implies 20%. What would make this wrong. On the downside, the loss of a top licence (Coach, Tommy Hilfiger, Hugo Boss, Lacoste or Calvin Klein) without a replacement, tariffs staying at 15% or more, or further control failures. On the upside, the fiscal 2027 margin gains proving durable across the holiday quarters, or a tariff refund.