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Movado announced that they are closing 26 of their 27 regular price boutiques in an effort to streamline their business and focus on wholesale and retail outlets. They are keeping their Flagship store in Rockefeller Center in New York as the only shop selling regular priced product, while they have 31 outlet stores. The closing of the 26 stores will result in a decrease in revenue of about $30 million a year, but the retail operation has been a drag on profits and the hope is that this will help right the ship. The company had a loss of $55 million in 2009 on revenues of $378 million compared to a small profit of $2 million on $461 million revenue for 2008 and a profit of $61 million on $560 revenue for 2007.
Retailsails believes the problems go beyond retail though. While it is true that the luxury watch/jewelry sector suffered more than other businesses in the recession, Movado has additional issues to deal with. Their own brands are well-known and well-regarded, but the styling is a bit tired. Additionally, and most importantly, the two top trends for the past several years have been big and oversized or expensive limited edition mechanical, and Movado missed the boat on both of those. As for their licensed labels, the names are better than the actual merchandise.
They have been slow to address these concerns, and have also been slow to cut costs commensurate with the revenue drop. The cost of sales for the 5 years from 2005-2008 were consistently between 38-40%. In 2009 it jumped to 51%.
They did report an increase in sales for the most recent quarter of 16.7% which hopefully is a sign of things to come. But, they still have to show improvement on product development and marketing to be viable. Movado markets their own watch brands under Movado, Concord, Ebel and ESQ and also has licenses for Coach, Hugo Boss, Juicy Couture, Lacoste and Tommy Hilfiger.
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