CEO: Movado Group's international strength offsets U.S. weakness
Movado Group, Inc. (NYSE:MOV) CEO Efraim Grinberg said strength in the watchmaker’s international business offset a challenging retail and economic environment in the United States. Grinberg made the comments during a Thursday morning conference call.
“Our business in the Caribbean, Latin America, South America and Canada remains strong,” Grinberg said.
For 2009, Movado said in an early Thursday release that it expects sales to range from $555 million to $565 million. Wall Street anticipates $556 million in sales.
The Paramus, N.J.-based firm also maintained its fiscal 2009 earnings guidance of between $1.65 and $1.72 per share, which is in line with Wall Street’s projection of $1.69 per share.
“Our guidance continues to reflect a cautious outlook on the U.S. economic environment and favorable foreign exchange rates,” COO Rick Cote said. “This guidance also continues to include an approximate $0.20 per share negative impact related to wholesale door closings, certain expenses related to the company’s [enterprise resource planning system] implementation and severance costs to be completed as part of our Movado brand strategy.”
Cote said Movado is focused on accomplishing three key operating objectives during fiscal 2009. First, the firm wants to execute its brand strategy across its wholesale and retail channels. To accomplish this, Movado has already terminated certain wholesale relationships and Cote said Movado expects to close more wholesale channels during the second quarter. Second, Movado aims to maximize growth opportunities in its existing businesses, particularly in its licensed brand portfolio such as Coach, Hugo Boss, Tommy Hilfiger and Lacoste. Third, Movado plans to roll out a worldwide resource planning system. The system is slated to go live during February 2009.
Movado reported early Thursday that its first-quarter sales were steady at $101.4 million which matched the same total during the year-ago period. The sales results beat Wall Street’s expectation of $97.3 million. Excluding the sales of discontinued products a year earlier, net sales rose 2.7% compared with the same quarter in 2007.
“In the first quarter, our licensed watch portfolio delivered a very strong performance, posting a 44% increase in sales over last year,” Grinberg said.
The accessible luxury market in the United States remains challenging, Cote said.
“While department stores have been generating traffic with promotions, many mall-based jewelers and independents are having a harder time,” Cote said. “During the first quarter, we continued to be mindful of the current economic environment and took appropriate actions to limit our credit exposure. We are also cognizant of our expense infrastructure and expect to appropriately manage cost during these uncertain times.”
Net income during the three months ended April 30 totaled $1.2 million, or $0.05 per share, which was half the $2.4 million, or $0.09 per share, recorded a year ago. The quarterly profit also beat Wall Street’s expectation of earning $0.04 per share.
In midday Thursday trading, MOV shares are down 4.16% to $22.13.
