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RAPAPORT... The Movado Group reported that sales fell 0.6 percent year on year to $188.6 million in the third quarter that ended on October 31. Cost of sales were reduced slightly, by 0.3 percent, to $88.7 million. Gross margin fell to 53 percent compared with 53.4 percent one year ago. Profit slipped 4.3 percent to $22.4 million. Cash and cash equivalents were unchanged at $157.9 million, but the value of inventory rose 0.7 percent to $182.7 million. Rick Coté, the vice chairman of Movado, said, “We remain confident in our ability to drive sustainable profitable growth for next year and the long term. Our brands are performing well in the marketplace and given what we are seeing in the strength of our brands, we would expect to continue to outperform the watch category at retail. Going forward, we expect wholesale and retail sales will trend together and our expenses will be in line with sales.” Efraim Grinberg, the CEO, said, “Our largest brand, Movado, continues to perform very well in the United States and, although the brand had recent weaker than expected performance overseas, we believe it continues to have significant international growth opportunities in the future. On the licensed brand front, our largest brands continue to experience growth. As we begin the fourth quarter, we believe we are well positioned to capitalize on the Christmas season with our powerful portfolio of brands, strong product innovation and high-impact advertising campaigns.” Movado anticipates that sales during the fourth quarter, which includes the Christmas season, will be in the range of $132 million to $137 million and that earnings per diluted share will range from 18 cents to 23 cents. Movado's board approved an additional $50 million for its current share buyback program, which totaled $100 million, and the authorization expires on January 31, 2016. Movado has used $23.6 million of the original amount as of October 31. Grinberg said, “The share buyback program was initially established with the principal intent of offsetting share dilution related to equity grants. Although that objective remains, we also believe that the current share price offers the company the ability to purchase shares at an attractive price, which will benefit our long-term shareholders. We remain confident in our brands and our business model and our ability to deliver sustainable, profitable growth going forward."
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