For the quarter ended Oct. 31, Movado posted net income of $23 million, or 89 cents a share, compared with $34.5 million, or $1.34 a share, a year ago. Excluding items, adjusted earnings were $23, or 89 cents a share, ahead of analysts’ estimate for 87 cents a share.
Net sales were up 18.4% to $189.7 million.
‘Well Positioned’ for Holidays
According to Efraim Grinberg, chairman/ceo, “Sales continue to be driven by our Movado and licensed brands, which include a positive customer response to our repositioned Coach watch brand and introduction of our 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.”
Gross profit was $101.3 million, or 53.4% of sales, compared to $90.4 million, or 56.4% of sales, in the third quarter last year. The narrowed gross margin was primarily “the result of a shift in channel and product mix and the unfavorable impact of fluctuations in foreign currency exchange rates partially offset by the leverage gained on certain fixed costs.”
Operating expenses increased $1.8 million, or 2.7%, to $67.2 million compared to $65.4 million in the third quarter last year. Adjusted operating expenses, which exclude the $3 million charitable contribution to the Movado Group Foundation, were $62.4 million. The increase in operating expenses was primarily the result of higher marketing expense and other operating expenses, partially offset by lower compensation expense primarily related to the accrual for performance-based compensation.
For its fiscal full year forecast, Movado forecast earnings per share of $1.90 with revenue at $580 million. Analysts’ consensus is for $1.95 a share on sales of $579.36 million.
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