UPDATE 2-Movado Q2 misses as licensed brands weigh on margins

* Q2 adj loss from cont ops $0.04 vs est loss $0.01/shr

* Q2 sales $85.4 mln vs est $90.6 mln

* Reiterates FY earnings outlook

* Sees higher expenses in H2

* Shares fall 7 percent (Recasts; adds background, analyst comments, updates share movement)

By NR Sethuraman

BANGALORE, Sept 2 (Reuters) - Movado Group Inc's (MOV.N) second-quarter results missed estimates as the watch-maker was hurt by a shift towards low-margin licensed brands like Tommy Hilfiger and Hugo Boss, sending its shares down 12 percent.

The company, which has lagged rivals like Fossil Inc (FOSL.O), has seen demand for its in-house products wane and has been trying to lure customers by focusing more on popular licensed brands.

Sterne, Agee & Leach analyst Jennifer Milan said the company's licensed brands have held up well and expects them to remain strong due to their lower price range.

"(But) the outstanding questions are with the other core brands like Movado, Esq by Movado, EBEL brands," Milan said.

The company will be outlining strategies to reinvigorate its brands on Sept. 15.

The revamp is also set to increase expenses for Movado as it spends more on advertisements and brand promotions, the company said on a conference call with analysts.

Operating expenses at Movado rose 9 percent in the quarter and gross margins were down to 53 percent from 57 percent a year earlier.

Milan also expects Movado to get a boost from the upcoming holiday season, when its retail partners will increase inventory and restock its products.

Paramus, New Jersey-based Movado, which has closed all its retail stores except for its flagship store in New York, now depends on department stores and other retailers to sell its products. [ID:nWNAB4161]

For May-July, the company posted an adjusted loss of 4 cents a share from continuing operations, while analysts were looking at a loss of 1 cent, according to Thomson Reuters I/B/E/S. Movado also reaffirmed its view for 2011. [ID:nASA00PEA]

In August, Fossil reported second-quarter results that breezed past market expectations, helped by a growing consumer appetite for low-cost watches, and it raised its 2010 earnings view for the second time this year. [ID:nSGE6780H1]

Movado shares, which have lost 17 percent of their value in the past three months, were trading down 7 percent at $10.01 Thursday afternoon on the New York Stock Exchange. The larger S&P Retail Index .RLX was up 1.93 percent. (Reporting by NR Sethuraman in Bangalore; Editing by Anne Pallivathuckal)