Movado Q4’FY14 adjusted operating income fuels 43.5% rise

March 27, 2014 - United States Of America

Movado Group, Inc. announced fourth quarter and fiscal year 2014 results for the periods ended January 31, 2014.
 
Efraim Grinberg, Chairman and Chief Executive Officer, stated, “The fourth quarter marked an excellent finish to a strong year of growth for Movado Group. We achieved our 16th consecutive quarter of solid financial performance highlighted by strong sales growth and expansion in adjusted operating margin, which fueled a 43.5% increase in adjusted operating income as compared to the fourth quarter of fiscal 2013. 
 
“Our consistent growth is a clear validation of our powerful innovation and developed infrastructure that enables us to drive sales increases across our Movado and licensed brands at increasing rates of profitability. In order to concentrate our resources and efforts on those brands delivering the highest return on investment, we made the strategic decision to reduce the presence of ESQ Movado in certain retail doors so that the case space can be reallocated to our more productive Movado collections. 
 
“This decision, which resulted in an $8.3 million pre-tax charge in the fourth quarter, will enable us to expand the presence of our best performing Movado products at the point of sale in these doors beginning in the second quarter of fiscal 2015. We are excited about the new products we are launching this year and are focused on continuing to deliver against our strategic plan.”
 
In the fourth quarter of fiscal 2014, the Company recorded a pre-tax charge of $8.3 million, or $0.20 per diluted share, in connection with its strategy of reducing the presence of ESQ Movado while expanding the Movado brand offering in certain retail doors. The Company expects to reallocate certain of the ESQ Movado retail space in the second quarter of fiscal 2015 to drive incremental sales of its more productive Movado brand watch families and will continue to offer ESQ Movado in select retail locations as well as its direct-to-consumer outlet stores.
 
The $8.3 million pre-tax charge consists of anticipated returns from affected customers and the write down of excess inventory, displays and point of sale materials related to this strategy. Partially offsetting this unusual item was a benefit of approximately $2.5 million, or $0.06 per diluted share, related to the previously announced pre-tax refund from U.S. Customs and Border Protection for duty payments made in the 2008 through 2011 period for imported watches subsequently exported out of the United States. Additionally, operating expenses for the fourth quarter of fiscal 2014 reflect a $2.0 million, or $0.05 per diluted share, pre-tax charge related to a charitable contribution to the Movado Group Foundation.
 
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