Movado 3Q Net Sales Up 8.3%

Movado Group, Inc. said its net sales for the third quarter increased 8.3 percent to $180.2 million. Same-store sales grew 8.8 percent at the Movado boutiques for the period ended Oct. 31, versus a 0.5 percent gain achieved during the third quarter of 2006.

Gross profit for the quarter was $109.9 million, or 61 percent of sales, compared to $97.9 million, or 58.9 percent of sales last year. Excluding excess discontinued product sales from the current quarter and year-ago period, adjusted gross profit was $109.2 million, or 64.7 percent of sales and $97.9 million, or 63.5 percent of sales, respectively.

Operating profit was $28.5 million versus $19.8 million last year. Year-ago operating profit included two unusual items, which resulted in a combined $3.8 million non-cash charge. Excluding these items, year-ago adjusted operating profit was $23.6 million. 

On a reported basis, net income was $26.5 million, versus net income of $21.9 million in the year-ago period.

Adjusting for unusual items recorded in fiscal 2008 and fiscal 2007, third quarter net income increased 23.7 percent to $21.3 million from $17.2 million last year.

For the first nine months of the fiscal year, Movado net sales increased 7.8 percent to $421 million. Same-store sales rose 1.1 percent at the company’s Movado boutiques versus a 5 percent gain achieved last year.

Gross profit was $254.9 million, or 60.5 percent of sales, compared to $236 million, or 60.4 percent of sales last year. Excluding excess discontinued product sales from the current nine-month period and year-ago period, adjusted gross profit was $254.6 million, or 63.9 percent of sales and $236 million, or 62.4 percent of sales, respectively.

Operating profit was $47.6 million versus $37.3 million last year. Year-ago operating profit included the previously mentioned unusual items recorded in the third quarter. Excluding these items, year-ago adjusted operating profit was $41.1 million. 

On a reported basis, net income was$41.2 million, versus net income of $36.1 million in the year-ago period.

Adjusting for unusual items recorded in fiscal 2008 and fiscal 2007, net income for the nine-month period increased 18.9 percent to $35.8 million from $30.1 million last year.

“Third quarter results were strong as we positioned each of our brands in the marketplace with bold new products, aspirational advertising campaigns, including Movado’s milestone celebration of 60 years of modern design, and fully integrated marketing programs,” said said Efraim Grinberg, Movado president and chief executive officer. “We have made great strides in building our international business, which grew 33 percent from last year and represented over 40 percent of wholesale revenue during the third quarter.”

Movado said it recognizes there is a growing sense of uncertainty surrounding the outlook of the U.S. economy. Results for the full year will depend on the strength of the holiday season and retailer replenishment in January.

Based on the company’s results for the first nine months of fiscal 2008 and assuming that the U.S. economic environment does not deteriorate, Movado Group said it now projects fiscal 2008 net sales to be approximately $560 million.