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RAPAPORT... Movado Group's net sales increased 7 percent year on year to $132.3 million for the fourth quarter that ended on January 31, as measured by generally accepted accounting principles (GAAP). Cost of sales rose 3.4 percent to $63 million. Net income attributed to the Movado Group fell 9.2 percent year on year to $7.2 million or 28 cents per share. Movado recorded a pre-tax charge of $8.3 million, or 20 cents per diluted share, in connection with reducing the presence of ESQ Movado, while expanding the namesake brand in certain retail doors. The charge consists of anticipated returns from affected customers and the write downs of excess inventory, displays and point-of-sale materials. There was, however, a benefit of approximately $2.5 million, or 6 cents per share, related to a pre-tax refund from U.S. Customs and Border Protection for duty payments made in the 2008 through 2011 period. Excluding the ESQ charge, adjusted net sales on a non-GAAP basis increased 9 percent to $140 million and net income rose 12 percent to 46 cents per share. Rick Coté, Movado Group's president and chief operating officer, said, “Our strong fourth quarter and full year financial results reflect the continued positive momentum and pace of our business. For the full year, we increased adjusted net sales by 13.3 percent and grew adjusted operating income 31.9 percent and adjusted earnings per share to $2.07 from $1.64 last year. We are proud of our many achievements in fiscal 2014 including the repositioning of our Coach watch brand within the fashion watch category at an improved price-value proposition; the launch of the Scuderia Ferrari brand globally in April 2013; and the continued growth of our Movado brand. We also continued to invest in geographical infrastructure allowing us to continue driving international growth. These business milestones have positioned us well to deliver on our strategic plan initiatives of 10 percent annualized sales growth and 20 percent annualized operating profit growth. The first year of this strategic plan generated 13 percent sales growth and 32 percent adjusted operating profit growth.” For the full fiscal year, on a GAAP basis, net sales improved 12.8 percent to $570.3 million, while cost of sales increased 16.4 percent to $265 million. Net income for the group fell 10.9 percent to $50.9 million or $1.97 per share. Looking ahead, Movado anticipates fiscal 2015 net sales to increase almost 11 percent to $640 million on a non-GAAP basis, with gross margin percent unchanged and net income of approximately $64 million or $2.44 per diluted share. Coté said, “Looking at fiscal 2015, our strategies are in place to continue this momentum with the ESQ reallocation strategy announced today, as well as continued benefit from Coach and Ferrari. Our balance sheet remains exceptionally strong with our net cash position of $190 million, including short term investments at year end. With this strong performance and financial position we are pleased to announce that our board of directors has approved a 25 percent increase in our quarterly dividend to 10 per share.” Efraim Grinberg, Movado's chairman and CEO, said, “Our consistent growth is a clear validation of our powerful innovation and developed infrastructure that enables us to drive sales increases across our Movado and licensed brands at increasing rates of profitability. In order to concentrate our resources and efforts on those brands delivering the highest return on investment, we made the strategic decision to reduce the presence of ESQ Movado in certain retail doors so that the case space can be reallocated to our more productive Movado collections. This decision, which resulted in an $8.3 million pre-tax charge in the fourth quarter, will enable us to expand the presence of our best performing Movado products at the point of sale in these doors beginning in the second quarter of fiscal 2015. We are excited about the new products we are launching this year and are focused on continuing to deliver against our strategic plan.”
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