Reflecting the anemic retail environment, Movado Group Inc. posted double-digit declines in third-quarter income and sales, and lowered guidance for the year.
For the three months ended Oct. 31, the Paramus, N.J.-based watch company said income fell 40.7 percent to $15.7 million, or 62 cents a diluted share, compared with $26.5 million, or 97 cents, in the year-ago quarter. Sales declined 24.6 percent to $135.8 million from $180.2 million. Adjusted earnings per share for the most recent quarter was 53 cents, 24 cents below the consensus estimate.
Rick Cote, executive vice president and chief operating officer, said the firm expects the slowdown to continue into next year. Movado already implemented a cost-reduction plan to generate annualized savings of $25 million. Cote said he expects more moves to generate another $25 million to $30 million in annualized cost savings in 2010.
For fiscal 2009, the company projected sales from $470 million to $480 million, and diluted EPS between 80 cents and $1. Earlier projections had been for a profit of $1.65 to $1.72 a share. Fiscal 2008 diluted EPS was $1.71.
Shares of Movado declined $2.15, or 15.9 percent, to close Thursday at $11.41 in New York Stock Exchange trading.
“Our licensed brand category delivered a solid performance as we continue to gain market share and expand into new doors,” said Efraim Grinberg, president and chief executive officer.
He described the firm as “a well-diversified global company with a powerful portfolio of nine brands that offer compelling price-value propositions, from the more affordable fashion watch category to the high end of the luxury watch market.”
The company had about $85 million in cash at the end of the quarter, Grinberg said, adding, “our balance sheet remains strong.”
For the nine months, income dropped 39 percent to $25.1 million, or 97 cents, from $41.2 million, or $1.51, a year ago. Sales decreased 12.8 percent to $366.9 million from $421 million.