-Company Projects $25 Million in Annualized Cost Savings
PARAMUS, N.J., Aug. 7 /PRNewswire-FirstCall/ -- Movado Group, Inc.
(NYSE: MOV), today announced initiatives designed to streamline operations,
reduce expenses, and improve efficiencies and effectiveness across the
Company's global organization.
Following an extensive review of the Company's current cost structure,
Movado Group has implemented an expense reduction plan. As part of the plan,
the Company will reduce its payroll expense by approximately 10%, which
represents approximately 90 currently filled positions and 6% of the Company's
full-time workforce. The payroll reductions are spread primarily across its
corporate and shared service departments predominantly in the Company's North
American and European operations. The Company will streamline its operations
to simplify its organizational reporting structure and generate efficiencies.
This includes the consolidation of certain geographical functions such as
distribution, finance, administration and procurement. Additional projected
annualized cost savings from this plan are expected to come from reductions in
Movado Group expects its expense reduction plan to result in on-going
annualized pre-tax cost savings of approximately $25.0 million, or 8.0% of the
Company's operating expenses. The Company expects to realize approximately
$6.0 million of these savings in fiscal 2009. Throughout the balance of
fiscal 2009, the Company expects to record a total pre-tax charge of
approximately $9.0 million related to the completion of this program.
Efraim Grinberg, President and Chief Executive Officer, commented,
"Streamlining our organization is a difficult decision, because it impacts the
people who have contributed to Movado Group. We are extremely grateful to
each of our employees and are very proud of their many contributions to the
Company. However, we recognize that it is necessary to make decisions that
not only respond to the current challenging economic environment, but that
will also strengthen Movado Group for the long-term."
Movado Group has established a program to offer employees directly
affected by the payroll reduction severance packages, and out placement
Mr. Grinberg concluded, "Our actions are creating a stronger and leaner
organization that will operate more efficiently. A streamlined cost structure
will allow the Company to be more nimble as it responds to current market
conditions while capitalizing on future growth prospects, as the economy
recovers. There are significant opportunities ahead for our company as we
maintain our long-term focus on the success of our brands and our businesses.
Our solid balance sheet and financial flexibility enables us to continue to
invest in our business and execute our strategic initiatives."
Excluding the charge and cost savings associated with Movado Group's
expense reduction plan, and recognizing the limited visibility on the economic
environment, the Company is maintaining its fiscal 2009 diluted earnings per
share guidance of approximately $1.65 to $1.72, based on a projected tax rate
The Company plans to announce its second quarter fiscal 2009 results in
early September 2008.
Movado Group, Inc. designs, sources, and distributes Movado, Ebel,
Concord, ESQ, Coach, Tommy Hilfiger, HUGO BOSS, Juicy Couture and Lacoste
watches worldwide, and operates Movado boutiques and company stores in the
This press release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. The Company
has tried, whenever possible, to identify these forward-looking statements
using words such as "expects," "anticipates," "believes," "targets," "goals,"
"projects," "intends," "plans," "seeks," "estimates," "may," "will," "should"
and similar expressions. Similarly, statements in this press release that
describe the Company's business strategy, including its expense reduction
plan, outlook, objectives, plans, intentions or goals are also forward-looking
statements. Accordingly, such forward-looking statements involve known and
unknown risks, uncertainties and other factors that could cause the Company's
actual results, performance or achievements and levels of future dividends to
differ materially from those expressed in, or implied by, these statements.
These risks and uncertainties may include, but are not limited to: actual or
perceived weakness in the U.S. and global economy and fluctuations in consumer
spending and disposable income, the Company's ability to successfully
implement its expense reduction plan, the Company's ability to successfully
introduce and sell new products, the Company's ability to successfully
integrate the operations of newly acquired and/or licensed brands without
disruption to its other business activities, changes in consumer demand for
the Company's products, risks relating to the fashion and retail industry,
import restrictions, competition, seasonality, commodity price and exchange
rate fluctuations, changes in local or global economic conditions, and the
other factors discussed in the Company's Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission. These statements reflect
the Company's current beliefs and are based upon information currently
available to it. Be advised that developments subsequent to this press release
are likely to cause these statements to become outdated with the passage of
SOURCE Movado Group, Inc.
CONTACT: Investor Relations, Suzanne Rosenberg,
Corporate Communications, for Movado Group, Inc.,
Parrish of Financial Dynamics,
Web site: http://www.movadogroupinc.com