Business News: How Movado Group Bounced Back
By Joe Thompson
For the past several years, the Movado Group has been at the center of the storm. Since the arrival of the Apple Watch in April 2015, no segment of the global watch market has been buffeted like the fashion-watch business in the United States. That market is dominated by two giant, publicly traded U.S. watch groups, Fossil Inc., with 17 watch brands, and the Movado Group, with 11.
“I will tell you that 2014 and 2015 were challenging,” Movado Group Inc. (MGI) chairman and CEO Efraim Grinberg told HODINKEE in an interview last September. “They were for the whole industry. It was the combination of the saturation of the fashion-watch industry and the introduction of wearables and connected watches.”
The next two years were no picnic either, as the decline of department stores, the rise of e-commerce, reduced mall traffic, the changing tastes of millennials, and a stronger dollar intensified the smartwatch migraine.
All of that sent MGI into a slump. For calendar 2016, (which MGI reports as fiscal 2017 because its fiscal year ends January 31), net sales dropped 7% to $552.8 million. Net profit was down 23% to $35.1 million.
When we have to reinvent ourselves, we reinvent ourselves.
Movado Group Chairman & CEO Efraim Grinberg
The next year, sales rose slightly, but MGI fell $15.5 million into the red.
In 2018, though, MGI came storming back. It reported the best sales and operating profit in its history for FY 2019, ended January 31. Net sales increased 19.7% to $679.6 million. Operating income rose 44% to $62.2 million. And net income soared, propelling the company $61.6 million back into the black.
The group’s total U.S. sales, including at its 43 outlet stores, increased 18.3% to $308.4 million. Total international sales increased by 20.8% to $371.1 million.
So, what happened?
A lot, MGI executives say. Over the past three years, Grinberg and his team have, in effect, remade the Movado Group. The goal was to refashion it to compete in what Grinberg described in a May 7 letter to MGI shareholders as “a challenging and evolving landscape for both retail in general and the watch category in particular.”
“Our strategic vision,” he said, is to become “the leading global omni-channel company in our industry.”
Grinberg is an MGI veteran. Next year marks his 40th year with the firm …read more