Dec 9, 2009
Movado third quarter adjusted profit trails Street, shares fall
Dec 9, 2009
By Vidya Lakshmi
BANGALORE (Reuters) - Watch-maker Movado Group Inc (MOV.N) posted a lower-than-expected adjusted quarterly profit, hurt by high levels of destocking as retailers continued to focus on very tight inventory control, sending its shares down 20 percent.
Movado posted a third-quarter net loss attributable to the company of $20.9 million, or 85 cents a share, compared with a profit of $15.7 million or 62 cents a share, last year.
The loss included a 92-cent per share non-cash tax charge and a 6-cent per share charge for sales of excess discontinued product, the company said.
Excluding these items, Movado, which has been aggressively cutting costs, earned 12 cents a share.
Revenue fell 5 percent to $129.0 million.
Analysts on average were looking for a profit of 65 cents a share, before items, on revenue of $141.2 million, according to Thomson Reuters I/B/E/S.
The unprecedented level of U.S. jewelry retailers closing their operations and liquidating inventory has had a significant impact on the company's business, Chief Executive Efraim Grinberg said in a statement.
"The company's report suggests it is losing share in a still competitive accessible luxury marketplace, while having to battle with an increased percentage of licensed watch sales," Wall Street Strategies analyst Brian Sozzi said in an e-mail to Reuters.
The analyst said the earnings report went against his investment thesis that inventory re-stocking at wholesale customers, coupled with tight expense management, would generate above consensus holiday quarter and 2010 earnings.
The company, which distributes watch brands like Concord, Tommy Hilfiger and Hugo Boss, forecast a full-year loss of $1.40 to $1.50 a share.
Movado said its 2009 forecast includes a 94-cent non-cash tax charge, 8-cent charge for sale of excess discontinued product and a 3-cent charge for debt financing.
Last month rival Fossil Inc (FOSL.O) posted a quarterly profit that outpaced Wall Street expectations, buoyed by strong sales at company-owned stores and said its international accessories business would continue to gain momentum
Shares of Paramus, New Jersey-based Movado, which have risen 32 percent in the last 6 months, fell 19 percent to $8.75 in early trade Wednesday 9 December.
(Reporting by Vidya Lakshmi in Bangalore; Editing by Anne Pallivathuckal; Jarshad Kakkrakandy)
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