Citing general weakness in the watch category and with a number of its brands, Movado Group Inc. has joined the ranks of companies reducing its guidance for sales and profits.
Shares of Movado dropped 31.8 percent to close at $26.25 in trading Friday on the New York Stock Exchange.
On a preliminary basis, Movado said that sales for the third quarter ended Oct. 31 were $188.6 million, down from $189.7 million in last year’s period and below the $218.3 million anticipated, on average, by analysts. Earnings are projected to come in at between 86 and 87 cents a diluted share, below 89 cents in the 2013 period and the $1.13 analysts’ consensus estimate.
Movado now expects full-year EPS of between $1.80 and $1.85 a share, below guidance, issued in August, of $2.44 and analysts’ consensus estimates for $2.40. Sales, earlier projected to reach $640 million, are expected to be between $585 million and $590 million.
“The overall watch category is experiencing slower growth and retailers are focusing on driving improved productivity,” said Efraim Grinberg, chairman and chief executive officer. “Moreover, certain of our brands did not perform as well as planned, including Movado in international markets.”
While sales of Movado have been healthy in the U.S. and sell-throughs of licensed brands have “trended positively,” according to Grinberg, bright spots haven’t compensated for overall softness.
Rick Coté, vice chairman and chief operating officer, said the company’s portfolio of licensed brands “substantially underperformed” the company’s expectations, with particular weakness in Lacoste, expected to be down versus last year as the company works to “refine their global brand positioning.” Although up 17 percent for the nine months, sales of Scuderia Ferrari also fell short of Movado’s expectations.