Movado Group Issues Weak Q3, Q4 Outlook, Slashes 2015 Outlook

(RTTNews) - Luxury watchmaker Movado Group, Inc. (MOV) on Friday provided earnings and sales guidance for the third quarter and the fourth quarter, both well below Street view. The company also slashed earnings and sales forecast for the full-year 2015.

Following the news, the company's shares are plunging $7.75 or 20.12 percent in pre-market trading.

"I am disappointed in our third quarter performance and our expectations for this trend to continue into the fourth quarter, which combined has caused us to reduce guidance for the full year," Chairman and CEO Efraim Grinberg said in a statement.

The company noted that there were a few factors that have impacted its guidance for the year, despite strong performance at retail. The overall watch category is experiencing slower growth in both the U.S. and European markets, and retailers are focusing on driving improved productivity.

Additionally, certain of Movado's brands such as Lacoste and Scuderia Ferrari, did not perform as well as planned, including Movado in international markets.

The Paramus, New Jersey-based company said its expects earnings for the third quarter earnings in a range of $0.86 to $0.87 per share, on net sales between $188.6 million and $189.7 million. Operating profit is projected in the range of $33.0 million to $33.3 million.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $1.13 per share on sales of $218.32 million for the third quarter. Analysts' estimates typically exclude special items.

The company said it expects to report financial results for the third quarter of fiscal 2015 on November 25, 2014.

Looking ahead to the fourth-quarter, the company forecasts earnings in the range of $0.18 to $0.23 per share, on projected net sales between $132 million and $137 million and operating profit of $6.5 million to $8.5 million. Analysts currently anticipate earnings of $0.50 per share on revenue of $153.89 million for the fourth quarter.

The company noted that operating profit is impacted due to continued investment in brand building and growth initiatives despite lower sales growth.

For fiscal 2015, the company now expects adjusted earnings in the range of $1.80 to $1.85 per share and net sales to increase about 1 to 2 percent to a range of $585 million to $590 million. However, operating profit is now expected to be down about 7 to 10 percent to about $68 million to $70 million.

Street is currently looking for full-year 2015 earnings of $2.40 per share on annual sales of $635.18 million.

Earlier, the company expected earnings of $2.44 per share and net sales to increase about 10.7 percent to $640 million.

The company had reiterated its earnings and sales forecast for the full-year in late August while reporting financial results for the second quarter.

"Our brand portfolio remains strong as does our balance sheet. We have strong plans in place for the upcoming holiday season that should continue to drive increased sell-through at retail. As we begin planning for next year, we are confident that we will return to sustainable profitable growth," Grinberg added.

MOV closed Wednesday's regular trading session at $38.51, down $0.27 on a volume of 0.18 million shares.