Paramus, NJ—Although Movado Group Inc. (MOV.N) posted a narrower-than-expected quarterly loss on Thursday, it will close its Movado-brand retail boutiques, which would cut watch company’s 2010 revenue by $30 million.
The company, which distributes watch brands such as Movado, Concord, Tommy Hilfiger and Hugo Boss, said it was shutting down the Movado Retail Group, effective June 30, to streamline its business and redirect investment towards higher return businesses. Only its 31 outlet store and its New York flagship at Rockefeller Center will remain open.
Movado now plans to sell its products primarily through the wholesale channel and sees restructuring charges related to the closure of $21.6 million over the remainder of 2011. The company estimates the cash portion of the charges at about $20 million and expects to pay it with existing funds.
“We are confident the closure of our retail boutiques is in the best long-term interests of our company and all of our stakeholders, and we look forward to focusing on new opportunities we see in our wholesale business,” stated Efraim Grinberg, chairman and ceo.
The company also forecast 2011 outlook of a loss of 12 cents to earnings of 8 cents a share.
For the first-quarter ended April 30, the company posted a net loss of $10.7 million, or 43 cents a share, wider than the net loss of $9.9 million, or 41 cents a share, a year earlier.
Excluding items, Movado Group posted a loss of 19 cents a share. However, revenue jumped 17 percent to $78.9 million during the quarter. Analysts were expecting a loss of 43 cents a share, on revenue of $73.13 million, according to Thomson Reuters.