NEW YORK (TheStreet) -- Shares of Movado Group, Inc. (MOV) are tanking, down 28.98% to $27.35 in late afternoon trading Friday after the luxury watchmaker issued lower-than-expected earnings and sales guidance for the third quarter and fourth quarter, as both the U.S. and European markets are showing slower growth.
The Paramus, NJ-based company said it expects third-quarter earnings in a range of 86 cents to 87 cents per share, less than analysts' estimates of $1.13 per share.
Movado expects net sales between $188.6 million to $189.7 million for the third quarter, below the consensus estimate of $218.32 million.
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The company said certain brands, including Lacoste and Scuderia Ferrari, did not perform as well as expected.
"I am disappointed in our third-quarter performance and our expectations for this trend to continue into the fourth quarter, which combined has caused us to reduce guidance for the full year," chairman and CEO Efraim Grinberg said in a statement this morning.
For the fourth quarter, the company now forecasts earnings in the range of 18 cents to 23 cents per share, missing analysts' estimates of 50 cents per share.
Movado expects net sales between $132 million and $137 million for the fourth quarter, also below the consensus estimate of $153.89 million.
For the fiscal year 2015, the company lowered its adjusted earnings forecast to a range of $1.80 to $1.85 per share, from its previous estimate of $2.44 per share and below the $2.40 per share analysts are expecting.
The company also adjusted its net sales forecast for the full year to a range of $585 million to $590 million, from its previous $640 million and less than the revenue of $635.18 million analysts are expecting.
Separately, TheStreet Ratings team rates MOVADO GROUP INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MOVADO GROUP INC (MOV) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MOV's revenue growth trails the industry average of 17.4%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- MOV has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.16, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for MOVADO GROUP INC is rather high; currently it is at 56.19%. Regardless of MOV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.46% trails the industry average.
- MOVADO GROUP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MOVADO GROUP INC reported lower earnings of $1.97 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($2.40 versus $1.97).
- You can view the full analysis from the report here: MOV Ratings Report