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The Company is a designer, manufacturer and distributor of quality watches with prominent brands in almost every price category comprising the watch industry.
Movado Group, Inc. is a manufacturer, distributor and retailer of watches and jewelry. Its portfolio of brands comprises of Movado, Ebel, Concord, ESQ SWISS, HUGO BOSS Watches and Tommy Hilfiger Watches. The company's wholesale segment, which contributes 80% to total revenue, includes the design, development, marketing and distribution of watches. The Retail segment generating the balance 20% revenue includes the Movado Boutiques. Revenue generated by the domestic segment is 80% while international segment contributes the rest.Movado is a leading player of the $275 billion Specialty Retail Industry which comprises of various groups of sub-sectors including clothing and shoes, electronics and appliances, jewelry, luxury goods and music. Luxury goods segment, offering products to affluent customers who have higher lifestyle expenses, is less affected by unstable economic situation and unemployment levels, which heavily affect the low priced specialty retail chains. Hence, the probable risk to Movado’s future includes sales shortfalls due to a slowdown in consumer discretionary spending on luxury goods. For the nine months ended October 2006, revenues of the company increased 13% while operating income increased 20%. Revenues and operating income reflect higher wholesale and retail sales in domestic as well as international markets and a proportionate decrease in operating and interest expense. Moreover, the results were fueled by new watch introductions and continued strength in existing brands. Movado is well positioned to increase its market share in 2008 considering the breadth of its watch and jewelry assortments in a growing global luxury goods market and limited exposure to the challenging lower end of the U.S. fashion watch market. Additionally, there is a strong likelihood of improving sales trends as management flows more in-fashion offerings to the store like Lacoste. With a great product range, innovative advertising and comprehensive marketing program Movado is expected to be a likely Outperformer.
The Specialty Retail Industry is comprised of various groups of sub-sectors including clothing and shoes, electronics and appliances, jewelry, sporting goods, toys, books, music, luggage and pet supplies. The company capped off 2006 with strong fourth quarter results, as consumers spent freely on upscale merchandise for the holidays. Net sales increased by 13% compared to year ago period quarter. Net profit increased by 374% supported by higher interest income. Earnings per share grew by 372% over the same period.In March 2007, the company announced it plans to implement SAP's end-to-end business enterprise solution as the core enterprise system for the company. The implementation of SAP will support the company's growth strategy and integrate its global sourcing, wholesale and retail operations. This new system will enable Movado to re-engineer its business processes, while further enhancing customer service capabilities. The implementation of this new enterprise system will be a key enabler toward improving overall cost structure and margin performance.In March 2006, the company signed a long-term worldwide licensing agreement with global lifestyle brand, LACOSTE, to design, produce, market, and distribute a collection of men and women timepieces, with effect from January 1 2007. The new timepiece collection will embrace the LACOSTE lifestyle proposition, which encompasses elegance, refinement and comfort, as well as a dedication to quality and innovation. Riding on the above, the company should have an interesting year in 2007.
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