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While Movado Group Inc.’s fourth quarter was impacted by a charge in connection with the repositioning of the Coach watch brand, the company said it expects annual sales growth of 10 percent through 2017 along with a 20 percent annual gain in operating profits for the same period.
Net income for the three months ended Jan. 31 fell 25.9 percent to $7.9 million, or 31 cents a diluted share, from $10.7 million, or 42 cents, last year. The quarter was impacted in part by a $4.9 million charge to reposition the Coach watch brand as it better aligns with Coach’s lifestyle strategy. Adjusting for one-time charges and tax benefits in both the current and year-ago quarters, net income would have been $10.5 million, or 41 cents a diluted share, compared with $5.9 million, or 24 cents, a year ago. Net sales for the quarter rose 1 percent to $123.6 million from $122.4 million. On an adjusted basis for the Coach repositioning, sales rose 7.6 percent to $128.5 million.
For the year, net income rose 78.4 percent to $57.1 million on a net sales gain of 8 percent to $505.5 million.
Richard J. Coté, president and chief operating officer, said during a conference call to Wall Street analysts, “From a global perspective, the watch category continues to perform well and we continue to experience strong sell-through performance across our retail partners. Based on our plans, we expect to continue our positive sales growth performance in fiscal year 2014, although we are cognizant that the world economies remain tenuous.”
Coté told analysts that, given the firm’s ongoing initiatives — which include in part continued globalization of its Movado brand and expansion of its licensed brand division, as well as increasing its direct wholesale market sales — the company expects a “10 percent sales growth per year and approximately 20 percent operating profit growth per year.” Coté said fiscal year 2017 sales are forecast at $750 million, a 50 percent increase from fiscal year 2013.
Efraim Grinberg, chairman and chief executive officer, said, “Throughout the course of fiscal 2013, we implemented several strategies to position our company well in fiscal 2014 and the longer term.…We also made progress on our international expansion goals by increasing our direct ownership and our U.K. joint venture, which is expected to result in faster growth in this important market.”
Grinberg said during the question-and-answer session that Coach’s price points after the repositioning will focus on the $148 to $398 range.
For fiscal year 2014, the company is forecasting a 12 percent gain in net sales to a range of $570 million to $575 million, with net income rising to $48 million, or $1.80 a diluted share.
Separately, the company said its board has approved a share buyback program through which it may purchase up to $50 million of its outstanding common shares. The authorization expires on Jan. 31, 2016.