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RAPAPORT... Movado Group reported that its sales rose almost 1 percent year on year to $123.6 million for the fourth quarter that ended on January 31. The retailer's cost of sales jumped 7.4 percent to $60.9 million and gross profit was 50.7 percent of sales, compared with 53.7 percent of sales one year ago. Net income attributed to the Movado Group plunged 26 percent to $7.9 million or 31 cents per share. The company's fiscal year revenue, however, increased 7.9 percent year on year to $505.5 million, while cost of sales rose 7.6 percent to $227.6 million. Gross profit for the year rose slightly to 55 percent of sales compared with 54.8 percent of sales the previous year. Net income for the year surged 78 percent to $57.1 million or $2.22 per share. During the fourth quarter, Movado recorded a pre-tax charge of $4.9 million from a sales allowance for its Coach repositioning initiative, and this was partially offset by an $800,000 benefit related to various tax adjustments and a partial reversal of a valuation allowance on deferred tax assets. Adjusted net sales increased 7.6 percent year on year to $128.5 million and adjusted operating income increased 17.2 percent to $10 million, according to the company. Efraim Grinberg, the chairman of Movado Group, said, “During the fourth quarter we took a $4.9 million charge to reposition the Coach watch brand into the fast growing fashion watch segment beginning in the second half of fiscal 2014. We are excited about the growth opportunities for Coach watches as we more closely align ourselves with Coach’s recently announced lifestyle strategy. We are also excited to announce our multi-year strategic plan that positions us well for future growth in both sales and profitability.” Movado anticipates that sales will increase approximately 12 percent year on year into a range of $570 million to $575 million this fiscal year and that its gross margin will be approximately 54 percent and net income will increase to approximately $48 million or $1.80 per diluted share. In addition, the company provided a multi-year strategic plan through fiscal year 2017 in which it anticipates approximately a 10 percent annual rate of growth along with a 20 percent jump in operating profits. Movado's board of directors approved a share buyback program funding up to $50 million for outstanding common shares from time to time, depending on market conditions, share price and other factors. This authorization expires on January 31, 2016. Shares will be purchased primarily to mitigate the dilutive impact of equity grants during the course of the next few years. Grinberg stated that the share buyback program should allow Movado to maintain a consistent share count as it continues to grow.
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