Movado cutting back on distribution of ESQ brand
March 27, 2014
Paramus, N.J.--The Movado Group Inc. announced Wednesday that it is reducing distribution of its ESQ Movado brand in order to focus on “more productive” watches.
The watch design and distribution company said beginning in the second quarter, it will reallocate the case space once afforded to ESQ Movado in order to “drive incremental sales of more productive Movado brand watch families,” but will not drop the brand entirely. The watches will still be available at select retail locations, in its direct-to-consumer outlet stores and at Movado.com.
The Movado Group said the decision resulted in an $8.3 million pre-tax charge in the fourth quarter that consisted of returns from affected customers as well as the write-down of excess inventory, displays and point-of-sale ESQ Movado materials.
The announcement came as Movado announced its fourth quarter and full-year results for the fiscal year 2014 ended Jan. 31, and as the Baselworld show kicked off in Switzerland.
According to results released by the company, net sales in the fourth quarter rose 3 percent year-over-year from $123.6 million to $132.3 million, led by growth in sales of licensed brands. Gross profit was 52.4 percent of sales compared with 50.7 percent of sales in the fourth quarter last year.
Net income fell from $7.9 million to $7.2 million.
For fiscal 2014, adjusted net sales rose 13 percent from $510.4 million to $578.1 million. Adjusted gross margin was 53.7 percent of sales, down from 55.4 percent of sales last year. Adjusted net income was $53.6 million, up from $42.1 million in the prior year.
In fiscal 2015, the company said it expects an 11 percent increase in net sales to $640 million while operating income is anticipated to hit $90 million.
Based in Paramus, Movado Group designs, sources and distributes Movado, Ebel, Concord, ESQ Movado, Coach, Tommy Hilfiger, Hugo Boss, Juicy Couture, Lacoste and Scuderia Ferrari watches worldwide, and operates Movado company stores in the United States.