MOVADO 4TH QUARTER BACK IN BLACK

Byline: Vicki M. Young

NEW YORK — Boosted by comparable-store sales increases at its retail boutiques and improvements in its operating cost structure, Movado Group returned to profitability in the fourth quarter.
For the quarter ended Jan. 31, the watch manufacturer reported income of $3.6 million, or 31 cents a diluted share, compared with an $8.8 million loss, or 68 cents, in the year-ago period. Sales were up 9.3 percent to $86.2 million from $78.8 million. Gross margin for the quarter improved to 63.1 percent versus 46.3 percent in the year-ago quarter, which included one-time charges related to inventory, asset write-downs and lease termination costs.
Efraim Grinberg, president of Movado, said in a statement, “Our retail boutiques continue to be extremely well received by consumers as evidenced by our strong 20 percent fourth-quarter comp-store sales increase. Additionally, during fiscal 2001, we generated positive cash flow from operations of $24 million even with a planned increase in our inventory. While we are somewhat cautious regarding the overall health of the economy, particularly during the first half of the year, we firmly believe in the strategic growth direction that we have established for our brands.”
For the year, income skyrocketed 51.4 percent to $20.8 million, or $1.75 a diluted share, from $13.7 million, or $1.06, in the prior year, which included one-time charges of $8.3 million and a net after-tax gain of $3.7 million related to the sale of the Piaget distribution business in Feb. 1999. Sales for the year were up 8.7 percent to $320.8 million from $295.1 million, while comps rose 27 percent at the boutiques. Gross margin improved to 61.5 percent from the prior year’s 57.1 percent.