“Movado winds down retail jewelry stores”

Posted: 27 May 2010 06:56 PM PDT

Time is up for Movado's retail experiment.

Movado Group Inc., the Swiss watchmaker and jeweler, plans to close its money-losing retail division by the end of June in a move to turn around the company.

The closure of 27 U.S. stores, including three in the Chicago area, means Movado will no longer be in the fine jewelry business at a time when jewelers are coming back from a brutal downturn during the Great Recession.

Instead, Movado will focus on its core watch business, selling its namesake brand and an array of licensed brands such as Coach and Juicy Couture to retailers, including Zales Corp., Saks Fifth Avenue, Neiman Marcus and independent jewelers.

"While the boutiques offered valuable opportunity to enhance our Movado brand and test new product concepts, they have never been profitable," said Richard J. Cote, executive vice president and chief operating officer at Paramus, N.J.-based Movado, during a Thursday conference call.

The retail division was losing an average of $10 million a year and was expected to lose $7 million in fiscal 2011, Cote said. The stores, which average 2,200 square feet, are too big to be profitable in the current economic environment, he said.

Movado stores debuted in 1998 as part of an effort to tout the more-than-century-old name (well known for its blank-faced Movado Museum Watch) as a broader, lifestyle brand. The stores numbered as many as 31 and expanded beyond watches to sell fine jewelry, clocks, pens, leather goods and tabletop accessories.

"We believe that the negative effects on our business caused by the unprecedented level of U.S. jewelry retailers closing their operations and liquidating inventory last year are behind us," said Efraim Grinberg, chairman and CEO of Movado Group, in the conference call. "And we are now focused on executing the strategies that will return our business to growth."

The stores, scheduled to close by June 30, include locations at Woodfield mall in Schaumburg, Oakbrook Shopping Center in Oak Brook and Water Tower Place in Chicago. The company will continue to operate its flagship at Rockefeller Center in New York as well as its 31 outlet stores. A Movado store at Northbrook Court in Northbrook closed in 2007 after four years.

The company said it doesn't intend to run any store closing or liquidation sales, a move to protect its brand name.