We’ve been following the Movado financial crisis since the first quarter a loss was reported. This week some good news came in from for the fourth fiscal quarter which ended at the end of January. Movado seems to have hit positive sales results.

According to Movado 61 of their retail stores were up 2.6 percent this quarter due to new merchandise and a consistent effort to turn a bad problem around to a good situation before it turned into a disaster.

Here’s the total scoop from Idex Online:

Highlights from Fourth Quarter and Year-End

The following are highlights from the company’s fourth quarter and full year results for the period ended January 2009 versus January 2008.

  • Movado’s management reported that global sales in the fine watch business were down double-digit levels in 2008.

  • One wholesale market performed better than average: the Middle East. Movado’s weakest wholesale markets were the U.S. and Brazil.

  • Management noted that three factors hurt wholesale demand for watches in the fourth quarter:

    • Retailers cut back dramatically on replenishment orders.
    • Retailers typically have at least one year of inventory on hand, so there was no compelling reason to add to their inventory levels.
    • Retailers adjusted their re-orders to sales levels, which were weak.

  • Movado’s focus over the past several months has been on cost savings. These are some of the cost and cash savings programs which have been implemented.

    • Management reduced employee benefits.
    • Executive pay was cut.
    • Capital expenditures were down significantly, a trend that will continue into 2009.
    • Its cash dividend was suspended, though we expect it to be reinstated later.
    • The company has reduced its own inventory levels.

  • Fourth quarter financial highlights were as follows:

    • Total corporate revenues were down 35 percent.
    • Wholesale sales were down 46 percent.
    • U.S. wholesale sales were down 61 percent. All categories were down, especially the luxury brands (Ebel, Concord) and the accessible luxury brands (Movado, ESQ). Sales of licensed brands were down less. Licensed brands include Coach, Tommy Hilfiger, Hugo Boss, Juicy Couture and LaCoste.
    • International wholesale sales declined by 34 percent. All categories of watches experienced weak sales.
    • Movado retail sales were up 2.6 percent.
    • Movado Boutique sales were down 14.8 percent.
    • Movado Outlet sales were up 19.7 percent
    • The company’s gross margin fell to 55.9 percent from 64.3 percent (adjusted) due to three factors: 1) unfavorable currency translation; 2) heavy price-based promotions in the Movado Boutiques units; and 3) an unfavorable sales mix.
    • The company spent less on marketing, which probably hurt sales.

  • Full year financial highlights were as follows:

    • Total sales were down 15 percent.
    • Wholesale sales were down 18 percent.
    • U.S. wholesale sales were down 30 percent. Sales of luxury and accessible luxury brands were down nearly 38 percent. Licensed brands were up just over 4 percent.
    • International wholesale sales were down 4 percent. Luxury and accessible luxury brand sales were down 17 percent, while sales of licensed brands were up 10 percent.
    • Retail sales were down 3.9 percent.
    • Sales in the Movado Boutiques were down 16.4 percent, with same-store sales down 17.3 percent.
    • Sales in the Movado Outlet stores were up 6.3 percent, with same-store sales up 6.9 percent.
    • Movado’s full year gross margin was 62.4 percent versus 64.0 percent (adjusted). Two factors were cited as depressing its gross margin: 1) price-based promotions in the Movado Boutiques; and, 2) an unfavorable sales mix.
    • Movado ended the year with too much inventory, and it is out of compliance on its debt covenants. During the current year, we look for the company to work down its inventory. It is currently working on a new asset-based lending agreement with its banks.

Movado management looks for continued weakness during the first half of 2009, with a gradual pickup in the second half. We expect a slight profit for the company in the fiscal year ending January 2010.