UPDATE 3-Movado forecasts surprise FY10 profit; shares soar
* Q1 loss/shr $0.37 vs est loss $0.49
* Sales fall 33 pct to $67.6 mln
* Sees FY10 EPS $0.50 vs est loss $0.14
* Sees FY10 capex $10 mln vs $23 mln last year
* Shares up 22 pct (Adds conference call details, analyst comments, updates share movement)
By Renju Jose
BANGALORE, June 9 (Reuters) - Watch-maker Movado Group Inc (MOV.N) posted a narrower-than-expected quarterly loss, helped by lower expenses that offset a drop in sales, and forecast a surprise profit for fiscal 2010, sending its shares up as much as 22 percent.
"What they have been doing is cutting their expenses... and I think the year-long effort has finally started to pay off for them," Wall Street Strategies analyst Brian Sozzi said by phone.
The company expects to save $50 million to $60 million annually, a big portion of which will be realized this year.
As part of its cost-saving efforts, Paramus, New Jersey-based Movado has reduced marketing costs, cut jobs and lowered travel expenses.
The company said it secured a new $50 million asset-based loan agreement with Bank of America Corp that will be used to repay debt and finance its business on an ongoing basis.
For fiscal 2010, it forecast earnings of about 50 cents a share, while analysts were expecting a loss of 14 cents a share.
"Our fiscal 2010 guidance continues to be predicated on an improvement in sales trends during the second half of fiscal 2010, as retailers purchase inventory in preparation for the holiday season," Chief Operating Officer Richard Cote said in a conference call with analysts.
The company, which expects to be free cash flow positive this year, said it sees capital expenditure of about $10 million in fiscal 2010, compared with $23 million a year ago.
NARROWER-THAN-EXPECTED LOSS
Movado, which distributes watch brands like Concord, Ebel, Tommy Hilfiger and Hugo Boss, posted a first-quarter loss of $9.0 million, or 37 cents a share, compared with a profit of $1.2 million, or 5 cents a share, a year earlier. Continued...
