Movado Group Inc. said Thursday it will close all but one of its 27 boutiques by the end of June after several years of losses.
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The Paramus, N.J.-based watchmaker estimated the move, which came after a strategic review, would lower annual revenues by about $30 million. The company expects an immediate impact on its bottom line.
“We believe that closing our retail boutiques, all of which are located in the U.S., is an important step in our U.S. operations’ return to profitability,” Efraim Grinberg, chairman and chief executive officer, said on a conference call. “Going forward, our primary focus will be on increasing our market share in our wholesale watch business.”
Along with its wholesale operations, the company said it will continue to operate 31 retail outlet stores and will maintain its boutique in Manhattan’s Rockefeller Center as a flagship.
Movado operates 27 boutiques where it sells watches alongside fine jewelry and other items, according to the firm’s latest annual report, filed with the Securities and Exchange Commission last month. The stores average 2,200 square feet in size and have leases that are to expire between January 2011 and June 2017.
The firm included a $3.4 million impairment charge related to the closings in its first-quarter results and expects to record another $21.6 million in similar charges through the rest of its fiscal 2011.
Investors reacted favorably to the decision and to better-than-expected first-quarter results from the watchmaker Thursday, sending shares up $1.62, or 14.6 percent, to close at $12.70 in New York Stock Exchange trading.
In the three months ended April 30, Movado reported that its net loss widened to $10.7 million, or 43 cents a diluted share, from $10 million, or 41 cents a share, a year ago. Adjusted for charges, the watchmaker’s loss totaled 19 cents a share. The firm’s net sales increased 16.7 percent to $78.9 million in the quarter from $67.6 million a year ago.
Analysts polled by Yahoo Finance had expected a loss per share of 43 cents on revenues of $73.1 million, on average.
On a GAAP basis, the company said it expects a full-year net loss from continuing operations of between 8 cents and 12 cents a share in fiscal 2011. Movado based the estimate on sales gains of between 12 percent and 15 percent for the year, excluding the sale of discontinued 2010 product.