Movado Group Inc. stock is falling after the watchmaker reported that it beat analyst estimates for the fourth quarter, but then guided below consensus for fiscal year 2017.
Net income for the quarter was $7.9 million, or 34 cents a diluted share, up from $10.1 million, or 40 cents, a year ago. Adjusted earnings per share totaled 40 cents and was 1 cent above the 39 cents that FactSet projected.
Net sales for the three months ended Jan. 30 increased 7 percent to $143.3 million from $133.9 million a year earlier. The FactSet estimate was for sales of $139 million in the quarter. For the full year, the company’s net sales rose 1.4 percent to $594.9 million compared to $587 million in fiscal 2015.
“Our sales increase of 5.5 percent on a constant currency basis, gross margin expansion and adjusted operating income growth of 3.7 percent in fiscal 2016 reflect our ability to navigate and execute in a challenging retail environment,” said Efraim Grinberg, chief executive officer at Movado.
Looking ahead, Grinberg said, “Our fiscal 2017 guidance reflects our expectation that the retail environment will remain challenging. As a result, we are planning for sales of $585 million to $600 million and diluted earnings per share of $1.85 to $2.” The Capital IQ estimate was for sales of $615 million. Movado stock fell by over 3 percent in early trading to $29.25.
Movado forecast net income for fiscal 2017 to be about $43.3 million to $46.7 million.
Gross profits were $75.4 million in the fourth quarter or 52.6 percent of sales, an improvement over last year’s $67.4 million, or 50.3 percent of sales. The increase was attributed to a favorable shift in channel and product mix, selective price increases and sourcing improvements. It was partially offset by foreign currency headwinds.
In addition to the earnings, Movado also revealed the retirement of Rick Cote, the chief operating officer and has no plans to replace Cote. He will retire in June after 16 years with the company.
The board also approved an 18 percent increase in the dividend to 13 cents a share. In addition to that, the board authorized a new share buyback plan in the amount of $50 million.