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Movado Sales +23%, Returns Profit of $32M

Movado Group reports a fiscal-year profit of $32 million compared with a loss of $47 million one year ago.
Mar 29, 2012 7:59 AM   By Jeff Miller
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RAPAPORT... Movado Group reported fiscal-year sales rose 22.5 percent year on year to $468.1 million for the period that ended on January 31. The company's cost of sales rose 6 percent to $211.8 million, which helped the retailer out of the red and to report net income of $32 million compared with a loss of $47.2 million one year ago. Movado's inventory as of January 31 fell 10 percent year on year to $163.7 million.

Efraim Grinberg, the chairman of Movado, said that strong results demonstrated the traction the brand has gained from strategic initiatives to reduce costs and improve margins. ''We have refined our product lines and introduced more frequent innovation, both of which have improved our competitive brand positioning while delivering more consistent sales and profit growth.  movado

''We believe we are only beginning to see the benefits from these initiatives and, with a solid foundation in place and consistent execution against these initiatives, remain confident in our ability to sustain positive momentum into fiscal 2013 and beyond," he said.

During the fourth quarter, Movado recorded a non-recurring pre-tax benefit of $2.3 million, or 7 cents per share,  related to a sale of mechanical movements.  Additionally, it recorded a net tax benefit of $3.1 million, which included the release of a $10.3 million Swiss valuation allowance and a $4.3 million settlement with the Swiss federal tax authorities.  Offsetting those items, Movado had a $3 million, or 12 cents per diluted share, pre-tax contribution to the Movado Group Foundation.

For the fiscal-year, gross margin improved to 54.8 percent of sales from 47.9 percent and the increase  was primarily the result of leverage gained on fixed costs from higher sales as well as a shift in channel and product mix. This improvement was partially offset by the unfavorable effect of fluctuations in foreign currency exchange rates.

Rick Cote, the president of Movado, said, ''We are very pleased with our robust performance during the fourth quarter and throughout fiscal 2012.  We believe these strong financial results demonstrate the effectiveness of our brand strategies, which have delivered consistently positive sales trends over the past eight quarters.  We are particularly pleased with the significant improvement we have achieved in profitability, even in the face of the challenging environment and rising costs. 

''We continued to exhibit broad-based growth in every brand category, driven by strong consumer demand and customer sell-through,'' Cote continued. ''Overall, we increased fourth quarter sales by 21 percent, allowing us to more than double adjusted operating income and grow adjusted EBITDA by more than 50 percent.  For the full year, we generated free cash flow of $78 million and increased our net cash position to $182 million, enabling us to reinvest in growing the business while returning value to shareholders.  We are also particularly pleased with the progress we have made in inventory management, having reduced inventory levels approximately 20 percent over the past two years while growing sales by 34 percent."

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Tags: inventory, Jeff Miller, Movado, net income, results, revenue, sales
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