Movado Group Q3 Earnings Top View, But Sales Miss; Backs Outlook

(RTTNews) - Luxury watchmaker Movado Group, Inc. (MOV) reported Tuesday a profit for the third quarter that decreased from last year, reflecting lower gross margins and a sales decline. However, earnings per share topped analysts' expectations by a penny, while quarterly net sales missed their estimates by a whisker.

The company also reaffirmed its earnings and sales guidance for the fourth quarter and for the full-year 2015, which was provided just more than a week ago.

Additionally, the company announced that its board has approved an increase in share buyback program authorization to $100 million, as well as a quarterly dividend of $0.10 per share, payable on December 19 to all shareholders of record as of the close of business on December 5, 2014. The share buyback authorization expires on January 31, 2016.

"Our third quarter results were in line with the updated guidance we issued on November 14, 2014 and reflected softer than expected sales and earnings that were impacted by our strategic investment in initiatives that position our Company to drive long-term growth," Chairman and CEO Efraim Grinberg said in a statement.

The Paramus, New Jersey company reported net income of $22.21 million or $0.87 per share for the third quarter, lower than $23.02 million or $0.89 per share in the prior-year quarter.

On average, five analysts polled by Thomson Reuters expected the company to report earnings of $0.86 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter edged down 0.6 percent to $188.56 million from $189.69 million in the same quarter last year, driven by a decline in the luxury brand category and certain licensed brands, and missed three Wall Street analysts' consensus estimates of $188.70 million by a whisker.

"Our largest brand, Movado, continues to perform very well in the United States and, although the brand had recent weaker than expected performance overseas, we believe it continues to have significant international growth opportunities in the future. On the licensed brand front, our largest brands continue to experience growth," Grinberg noted.

Gross profit margin for the quarter contracted 40 basis points to 53.0 percent from last year's 53.4 percent, driven by a shift in channel and product mix as well as the unfavorable impact of foreign currency, partially offset by a reduction of certain fixed costs.

Looking ahead to the fourth quarter, the company continues to anticipate adjusted earnings in a range of $0.18 to $0.23 per share, on projected net sales between $132 million and $137 million. Analysts currently expect earnings of $0.20 per share on revenues of $133.29 million in the fourth quarter.

For fiscal 2015, Movado still expects adjusted earnings in the range of $1.80 to $1.85 per share. On projected net sales between $585 million and $590 million. Street is currently looking for full-year 2015 earnings of $1.83 per share on annual revenues of $587.39 million.

Movado said it expects to record a $3 million one-time pretax charge, which is excluded from the outlook, in either the fourth quarter of fiscal 2015 or early in fiscal 2016.

"As we begin the fourth quarter, we believe we are well positioned to capitalize on the holiday season with our powerful portfolio of brands, strong product innovation and high impact advertising campaigns," Grinberg added.

MOV closed Monday's regular trading session at $26.93, up $0.36 on a volume of 0.31 million shares.