MOVADO’S GROUP’S NET UP 30.6% IN QUARTER
NEW YORK — Movado Group racked up a 30.6 percent earnings gain in the second quarter, driven by brisk sell-throughs of its Movado, Concord and ESQ watch brands.
Profits in the period ended July 31 climbed to $4.4 million, or 34 cents a share, from $3.4 million, or 25 cents.
Sales inched up 0.9 percent to $69.5 million from $68.9 million, although the year-ago period includes sales from Piaget, the luxury watch brand that Movado had been distributing in the U.S.. Excluding year-ago sales from Piaget, sales improved 9.2 percent from $63.7 million. In February, Movado sold that business to VLG North America, a subsidiary of Vendome Luxury Group, which owns the Piaget brand, for $28.4 million in cash.
Efraim Grinberg, president of Movado Group, said in a statement that in addition to ESQ, Concord and Movado, the Coach watch brand also continued to perform “extremely well” at retail. In a phone interview, he noted that the licensed Coach line, now in its second year, is being distributed in 750 doors.
Plans for the new licensed Tommy Hilfiger watches are proceeding on track, he said. Currently the line is in product development. The watches are scheduled to debut at retail in spring 2001.
Movado also distributes Corum watches in the U.S., Canada and the Caribbean.
Grinberg added that the company is happy with its retail operations.
Movado now has five stores, including four in metropolitan New York and one that opened this spring at the Venetian Resort Hotel and Casino complex in Las Vegas. There are no immediate plans to open any new units, he said.
During the quarter, the company increased sales of its manufactured watch brands, improved supply chain management and further leveraged its operating infrastructure, which enabled the firm to generate operating margins of 10.4 percent versus 8.6 percent last year, Grinberg said.
Gross margins also improved to 59.3 percent of sales from 57.4 percent last year.
“We are enthusiastic as we enter the fall selling season,” Grinberg noted.
“We recently launched several of our new fall advertising campaigns, which have received excellent initial response.” The campaigns include such slogans as “Be Late” and “How Do You Unwind?” for the Concord and ESQ brand, respectively.
Grinberg further noted that Movado will launch a new retail catalog this fall.
Boosted by an aftertax gain of $3.7 million from the Piaget sale, earnings in the half rose substantially to $8.7 million, or 67 cents a share, from $3.5 million, or 26 cents, a year ago. Excluding this gain, earnings surged 41.5 percent to $5 million, or 39 cents a share.
Sales in the year improved 6 percent to $117.2 million from $110.6 million, including sales of Piaget in the year-ago period. Excluding Piaget, sales gained 13.2 percent from $103.5 million.