Movado Group Inc. returned to profitability after two consecutive quarters of losses, but second-quarter earnings fell 93.5 percent compared with last year even as the firm tried to streamline its cost structure.
This story first appeared in the September 4, 2009 issue of WWD. Subscribe Today.
Net earnings fell to $528,000, or 2 cents a diluted share, from $8.1 million, or 32 cents, a year earlier. Factoring out a charge related to refinancing, adjusted earnings for the quarter fell to 6 cents a share, well ahead of the 21-cent loss analysts projected. Sales for the quarter ended July 31 fell 30.8 percent $89.7 million from $129.7 million a year earlier.
The Paramus, N.J.-based watch firm lost money in the fourth quarter of last year and the first quarter of this one.
“We are neither expecting nor are we planning our business around any type of fast recovery in the world economy,” Efraim Grinberg, president and chief executive officer, said on a conference call with analysts.
“We’re beginning to see some stability in the market, particularly in the U.S.,” he said. “We’re beginning to see more consistent orders from many of our retail customers in the U.S. after significant destocking late last year and early this year.”
The company cut selling, general and administrative expenses by $22.5 million in the quarter and anticipates cost savings of $50 million to $60 million annually.
Rick Cote, executive vice president and chief operating officer, said capital expenditures would total no more than $10 million this year versus $23 million last year.
For the first half, Movado registered losses of $8.4 million, or 34 cents a share, which compared with profits of $9.4 million, or 36 cents, a year earlier. Sales retreated 31.9 percent to $157.3 million.
The firm stood by previous guidance for the year, calling for earnings of 50 cents a share.
Shares of Movado rose 5.4 percent to $12.09 on Thursday.