Movado announces a unified strategy for its boutiques

26 Feb '08

4 min read

The Company's updated sales guidance includes the effects of lower holiday replenishment sales and a one-time accrual of $15 million for product returns associated with the Company's closing of certain wholesale doors, as described above.

Excluding the aforementioned discontinued product sales and accrual for product returns, fiscal 2008 net sales are projected to be approximately $543 million compared to the Company's previous guidance for net sales of approximately $560 million.

On a GAAP basis, Movado Group now projects fiscal 2008 diluted earnings per share will range between $2.15 and $2.20.

This includes an approximate $21 million net realized tax benefit, or $0.74 per fully diluted share, from the resolution of a tax examination by the Internal Revenue Service and the further utilization of the NOL acquired with Ebel in fiscal 2005.

This was partially offset by a $0.24 per fully diluted share impact related to the aforementioned accrual for product returns.

The Company anticipates fiscal 2008 adjusted diluted earnings per share will range between $1.65 and $1.70, excluding the aforementioned net tax benefit and the accrual for product returns.

This range compares to the Company's previous guidance of adjusted diluted earnings per share in the range of $1.74 to $1.78 and actual adjusted diluted earnings per share of $1.54 recorded in fiscal 2007.

Rick Cote, Executive Vice President and Chief Operating Officer, stated, "We believe now is the opportune time to further invest in our business and better position Movado for long-term growth.

We recognize the uncertain consumer spending environment, however, our Company has the financial strength and flexibility to successfully implement this strategy.

We continue to deliver on the fundamental metrics of our business with projected adjusted gross margins in excess of 63% excluding discontinued product sales and the accrual for product returns, exceptional cash flow generation and a strong cash position in excess of $160 million at year-end."

The Company also initiated financial guidance for fiscal 2009. Movado Group projects fiscal 2009 net sales will be in the range of $555 million to $565 million.

On a GAAP basis, diluted earnings per share for fiscal 2009 are expected to be approximately $1.65 to $1.72, based on a projected tax rate of 24%. This guidance reflects management's expectation of a continuing weak macroeconomic environment.

It also includes an approximate $0.20 per fully diluted share negative impact related to expected wholesale door closings, certain expenses related to the Company's ERP implementation, and severance costs to be completed as part of the Company's Movado brand strategy.

The Company's management will host a conference call tomorrow, February 26th at 8:30 a.m. Eastern Time to discuss the Movado brand strategy and updated business outlook. The conference call may be accessed by dialing.

A replay of the conference call will be available through Tuesday, March 4, 2008. The Company plans to announce its fully audited fourth quarter and fiscal 2008 results on March 27, 2008.

Movado Group Inc

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