Tuesday, Movado Group, Inc. (MOV), a designer and marketer of fine watches, reported a net loss for the first quarter compared to earnings last year, hurt by lower sales. The Paramus, New Jersey-based company also provided outlook for fiscal 2010.
Net loss for the quarter amounted to $9.0 million or $0.37 per share compared with net income of $1.2 million or $0.05 per share in the corresponding period last year. On average, three analysts polled by Thomson Reuters expected the company to incur a loss of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.
Quarterly net sales slid to $67.6 million from $101.4 million in the same period last year and came in line with three Street analysts' estimate of $67.63 million. Net sales for the quarter included $4.3 million of sales of excess discontinued product.
Gross profit was $37.0 million or 54.8% of sales, compared to $65.0 million or 64.2% of sales in the year-ago quarter. Excluding excess discontinued product sales, adjusted gross margin in the first quarter was 59.7% of sales.
The company said as a result of cost saving initiatives embarked upon last year operating expenses declined 24% from the year-ago period and the company expects these programs to generate annualized cost savings of between $50 million and $60 million.
Rick Cote, executive vice president and chief operating officer, said, "we remain focused on cash flow management and are taking significant actions to lower our inventory, the benefits of which we believe we will begin to see during the second half of the year. Importantly, we expect to return to being free cash flow positive this year."
Looking ahead, Movado Group now estimates fiscal 2010 earnings to be approximately $0.50 per share compared to earnings of $0.09 per share recorded in fiscal 2009. Currently, Street analysts expect the company to incur a loss of $0.09 per share for fiscal 2010.
Movado said this guidance is predicated on an improvement in sales trends during the second half of fiscal 2010, as retailers purchase inventory in preparation for the holiday season, resulting in an expected high single-digit sales decline for the full year.
MOV closed Monday's regular trading session at $8.10.
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