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RAPAPORT... Movado Group reported that revenue improved 1.2 percent year on year to $133.9 million, based upon generally accepted accounting principles (GAAP), for the fourth quarter that included Christmas and ended on January 31. However, revenue declined 4.4 percent when compared with adjusted net sales during the prior year, due to the impact of a $7.8 million charge for the anticipated sales returns related Movado's ESQ reallocation strategy. This year, cost of sales rose 5.6 percent to $66.5 million and profit jumped 35.5 percent to $9.9 million, while net income attributable to Movado Group increased 39.7 percent to $10.1 million or 40 cents per share. The company stated that no unusual items were recorded during this quarter or the fiscal year. Sales during the year rose 2.9 percent, based on GAAP measures, to $587 million, while cost of sales increased 4.5 percent to $277 million. Sales improve just 1.5 percent by non-GAAP measure, however. Profit attributable to the group during the fiscal year improved 1.8 percent to $51.8 million or $2.02 per share. Movado's financial performance beat most estimates, sending shares 13 percent higher to about $29 on the New York Stock Exchange midday on March 31. Trading volume was running 10-times higher than average. Efraim Grinberg, the chairman and CEO of Movado, said, “Our brands and businesses performed above our revised expectations and led to fourth quarter and fiscal year 2015 earnings surpassing our guidance. The overall watch category experienced slower growth than in previous years and we saw retailers curtailing their purchasing to more tightly manage their inventory. In addition, extreme fluctuation in foreign currency exchange rates late in the year impacted our results. "As we look toward fiscal 2016 we expect currency headwinds to continue and that we will continue to see a slow growth retail environment. We are taking a number of actions intended to improve our results in this coming year, including selective price increases and continued focus on operating expenses, while continuing to invest in product innovation and global growth initiatives. We are pleased with the positioning of our brands and businesses as we begin fiscal 2016,” Grinberg said. Rick Coté, the vice chairman and chief operating officer, stated, “The dramatic foreign-exchange-rate changes in our core currencies such as the euro, the Swiss franc and the U.S. dollar have had a significant impact on our fiscal 2016 financial plans. To deal with these external realities we are taking decisive actions to mitigate their impact. First, we will be taking selective price increases. Second, we are streamlining certain aspects of our business to provide greater operating efficiencies and, third, our supply chain organization is focusing on sourcing improvement opportunities. We expect that these actions will allow us to deliver financial performance improvements and return us to delivering sustainable profitable growth. “Our balance sheet remains exceptionally strong with approximately $200 million in cash. We also delivered another strong year of cash flow from operations of approximately $60 million in fiscal 2015. This strong financial position has allowed us to repurchase close to 834,000 shares for $26.4 million this year and our Board of Directors has approved a 10 percent increase in our quarterly dividend to 11 cents per share,” Coté explained.
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