Movado Group (MOV 22.30, -1.30) has retreated 5.5% after missing expectations for the fourth quarter and announcing cost savings initiatives.
The watchmaker reported below-consensus earnings of $0.22 per share on an 8.7% year-over-year decline in revenue to $130.80 million, which was also shy of expectations.
Similar to other high-end brands, Movado faced a tough finish to 2016, seeing little respite from the holiday period. The company is well aware of the rising interest in smartwatches, and has two of its own products in that space. However, competition from Apple has been tough to gauge since the world's largest tech company does not report unit sales of its watches.
Gross margin declined to 49.5% from 52.6% one year ago. An unfavorable shift in channel and product mix was partially offset by benefits from foreign exchange translations.
Movado does not expect to see a swift improvement in the business environment, which prompted the company to outline plans for cost saving measures. The company will step up investments in digital and e-commerce arenas while reducing its workforce in North American and Swiss operations. Savings in fiscal year 2018 are expected to total $12 million with the annual figure increasing to $15 million in the following year. The initiatives will result in a pre-tax charge between $7 million and $10 million, the bulk of which is expected to be recorded in the first fiscal quarter of 2018.
Looking ahead, revenue for the fiscal year is expected between $515 million and $530 million, which is shy of market estimates. Similarly, earnings are expected between $1.40 and $1.55 per share, which is also below analysts' expectations.
With today's decline, shares of Movado are back near this year's low ($21.40) and not far above their lowest level of 2016 ($19.14). The stock is down more than 22.0% year-to-date versus a 6.3% gain in the S&P 500.