News At the end of a satisfactory 2002-2003 financial year, the American watch group Movado has set ambitious medium-term targets. It is however well equipped to achieve them.
In these times of political and economic uncertainty, companies, whatever their field of activity, are not very enthusiastic - and very understandably so - about revealing forecasts for the year ahead. It makes a welcome change therefore to see the Movado Group shake off the reserve that holds sway today by announcing ambitious medium-term targets: between now and 2007, i.e. over the next five years, it aims to achieve an annual increase in net profit of 10 to 15%, combined with an increase in turnover of from 8 to 10%!
While at first sight it may seem somewhat presumptuous to table advances of this magnitude, in-depth analysis indicates that the target is much less unrealistic than it may seem.
In the first place, 2002-2003 results (the financial year closes at the end of January for Movado) have given the group a good foundation: although turnover remained stable at 300 million dollars, net profit rose from 17.1% to 20.1 million dollars. These figures support forecasts made at the beginning of the financial year, and were attained thanks to a strategy based in particular on cost control and improved productivity gains. To these two elements must be added a reduction in debt, which is already at a reasonably low level (less than 10% of a total balance sheet amounting to 345 million dollars), and an improvement in cash-flow.
The group therefore seems to be well placed to - as CEO Efraim Grinberg puts it - "take advantage of the recovery when it comes." A range of brands extremely well positioned in relation to each other, both in terms of prices and markets, is not the least of the winning cards it holds up its sleeve.
At the top of the pyramid, Concord, with sales in the order of 35,000 pieces per year at prices ranging from 1,000 to 2,000,000 francs, then Movado (500,000-600,000 pieces from 800 to 3,000 francs); next come ESQ and Coach, two middle-of-the-range brands (200-800 francs) confined more or less to particular markets; lastly, Tommy Hilfiger, a newcomer sold under licence, on which the group is building big hopes in view of its popularity among young people and its price category (100-150 francs). It should be noted in passing that these five brands account for around 80% of the turnover of the group based in Paramus (New Jersey), which also distributes jewellery, office and decoration accessories and spectacles.
To meet its targets, the Movado Group is also relying on its stores, of which there are twelve at present, although this number is set to grow in the near future, and its "corners", not forgetting the 11,000 points of sale, spread over more than 60 countries, in which its products are represented.
On a final note, it goes without saying that the group is also banking on the success of the new products it will be launching over the next five years, starting with new versions of its Movado Elliptica (see photo), Museum, Concord Saratoga and La Scala ranges presented in Basel at the beginning of the month.
April 17, 2003
