Movado to reduce workforce for profitability, meets low end of fiscal year expectations
Movado on Monday reported its fourth quarter and full year financial results. The company was pleased with its brands’ performances that met expectations despite decreasing in both periods.
Chairman and CEO Efraim Grinberg noted that the Ultra Slim collections and the Movado Esperanza “resonated well with consumers” in the holiday season, and the company managed its expenses well in the fourth quarter, which will result in better investments in global brand building initiatives.
The company is also implementing cost savings initiatives, including reducing its workforce in North America and Switzerland, to better align its global infrastructure. Movado expects to realize $12 million in savings in fiscal 2018.
Net sales decreased 7.1%, or 6.0% on a constant dollar basis, to $552.8 million, which met expectations announced in the third quarter. Operating income and net income also met expectations at $54.0 million and $35.1 million, respectively. Both incomes decreased from the prior year.
Gross profit for the year was $294.8 million, or 53.3% of sales, and adjusted gross profit was $317.6 million, driven by reduced leverage of certain fixed costs as a result of lower net sales.
Fourth quarter net sales fell 8.7% to $130.8 million, operating income was $7.4 million compared to $11.5 million in the prior year, and net income was $5.2 million versus $7.9 million in the previous year. In addition, gross profit was $64.7 million, compared to $75.4 million in the prior year.
Grinberg added, “Looking at fiscal 2018, we anticipate the retail environment will remain difficult. We are seeing a significant shift from brick and mortar to e-commerce and a continuing challenged fashion watch market in the United States. As a result, we are taking a more conservative view for fiscal 2018 compared to fiscal 2017 and are implementing certain cost savings initiatives.”
In 2018, Movado expects net sales to range from $515.0 million and $530.0 million, operating income to range between $50.0 million and $55.0 million, and net income to range from $33.0 million to $36.3 million.
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