Movado's 3Q Revenue +18%, Profit -33%

Nov 26, 2013 7:58 AM By Deena Taylor

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RAPAPORT... Movado Group reported that revenue increased 18 percent year on year to $189.7 million in the third quarter that ended on October 31, led by sales growth in the accessible luxury and licensed brand categories. Cost of sales jumped 21 percent to $63.5 million, so gross margin as a percentage of sales slipped to 53.4 percent compared with 56.4 percent one year ago. Movado's profit dropped 33 percent to $23 million.

Efraim Grinberg, the chairman and CEO of Movado, noted that the group's sales were fueled by the growth of its Movado and licensed brands in addition to positive customer response to the company's repositioned Coach watch brand and the introduction of the company's Scuderia Ferrari watch brand. "We believe we are well positioned for the holiday season, supported by powerful innovation and high-impact advertising campaigns, which is reflected in our annual guidance,” he said.

Movado increased its operating income guidance for fiscal 2014 despite an increased tax rate for the year and it expects sales growth of approximately $580 million compared to previous guidance of $575 million to $580 million.

The group reported over $160 million in cash and no debt at the end of the quarter.

Rick Cote, Movado's president, said, "Our consistent cash flow generation enables us to continue to invest in our future growth as we remain focused on our long-term business strategies, which we believe will allow us to deliver sustainable profitable growth."

For the first nine months of 2013, the company's revenue grew 14.7 percent to $438 million. Gross profit margin was 53.9 percent of sales compared with 56.4 percent one year ago. The decrease was primarily a result of a shift in channel and product mix partially offset by favorable foreign-exchange rates. Cost of sales rose 21 percent to $202 million, while net income declined 11 percent to $44.2 million.

Tags: Deena Taylor, Movado, watch, watches