Movado posts big loss -- don't waste your time on this stock


Movado Group (NYSE: MOV), maker of watches, reported numbers for the fourth quarter. Really bad numbers. Net sales dropped over 32%. For the bottom line, there was a net loss of $0.42 per share on an adjusted basis. In last year's Q4, Movado generated adjusted income of $0.40 per share. That is one hell of a drop. Furthermore, the market wasn't even close to anticipating this ugly performance. According to this source, analysts thought that the company would only bleed about $0.02 per share.

You know, I haven't worn a watch in a long time. Maybe a lot of people are thinking like me, that they don't really need watches since we have so much access to clocks via cell phones and other devices (I don't own a cell phone, but I'm content to simply seek out a clock if I'm out and about). Of course, I'm being a little facetious here. Movado is merely suffering through a bad economy. And it's perhaps in need of some better management. The company sells timepieces based on licensed brands such as Coach (NYSE: COH) and Tommy Hilfiger. Consumers are apparently satisfied with purchasing cheap, non-branded watches. Can't blame them.

Movado's finances are kind of in a mess right now. The company decided to eliminate its dividend. Movado further stated that it is not in compliance with a financial covenant. Without a doubt, this should scare any potential investor away from the stock. Believe me, the fundamentals on the business are not as pristine as the fundamentals of the company's watches (I've never owned a Movado watch, but I assume they're pretty good products). As I write this, shares are down over 9% on high volume. If you look at the stock on a one-month basis, it does look good. But I'd ignore that in this case. If you want to participate in the new bullish sentiment that has gripped the markets, go for quality. Translation: don't spend time owning Movado.

Disclosure: I don't own any company mentioned; positions can change without notice.

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Last updated: February 10, 2012: 11:44 AM

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