NEW YORK — Movado Group Inc. came out of a lackluster holiday season with sales down for the quarter and the year and plans to carry out a number of cost-saving measures in 2017, while refocusing the brand on digital and e-commerce.
Net sales for the fourth quarter dropped 8.7 percent to $130.8 million and net income fell by about 37 percent to $5.2 million. For 2016 as a whole, net sales fell 7.1 percent to $552.8 million and net income dipped by about 23 percent to $35.1 million.
Movado doesn’t see things improving during 2017 and anticipates sales falling again to between $515 million and $530 million during the year with net income in the range of $33 million to $36 million.
Despite a difficult year and an outlook Movado chairman and chief executive officer Efraim Grinberg characterized as “more conservative,” he said the company delivered “a solid year” that was in line with its previous outlook.
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Nevertheless, Grinberg noted an acceleration of shoppers buying on their smartphones and consuming digital media over the last 18 months has affected Movado, and the company intends to make a bigger digital presence and e-commerce sales its “number-one priority.”
The company’s president, Ricardo Quintero, pointed out during a call with analysts that Movado’s web site was its fastest-growing business unit over the last year.
Movado has also begun a “cost reduction plan” in an effort to maintain operating profit objectives, which has resulted in a number of unspecified employee positions being eliminated in the U.S. A similar process is set to begin in Switzerland this year.
“Eliminating positions is difficult,” Grinberg said during the call. “But we felt that it was necessary, in order to operate effectively and profitably in the evolving retail landscape.”
Movado expects to realize $12 million in savings next year with the layoffs, and about $15 million a year thereafter.
“We are decisive in our commitment to become a leaner, more agile organization, rightsizing to the current operating environment and making smart resource allocations against the biggest opportunities, with a focus on delivering sustainable profitable growth in the long run,” Quintero added.
The company is hopeful for the success of a new partnership with Google to develop a Movado smartwatch that will be launched this fall and another deal with Rebecca Minkoff to design a line of private-label watches for the designer.
“In the smartwatch space, there is a continued opportunity as technology improves and consumers are able to get the creative designs they desire to deliver the functionality that they are looking for,” Grinberg said.
He added that while the increased popularity of smartwatches has certainly been “disruptive to the fashion category,” Movado still believes there are “many opportunities with conventional watches differentiated by great brands and innovative design.”
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