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Monthly Archives: September 2015

Movado posts gain and gets coach license

Movado Group Inc. made news on two fronts on Tuesday: It reported a 12.9 percent gain in its third-quarter profits and announced a licensing agreement to produce a full line of watches under the Coach brand.

The licensing agreement is the first for the prominent Coach leather goods brand. The 10-year contract gives fine watchmaker Movado the exclusive worldwide rights to design, manufacture and distribute Coach watches for men and women.

The Coach watch collection will debut at the Basel Watch Fair in Switzerland in April 1998, and it be launched in Coach stores and fine jewelry departments of select department and specialty stores beginning that spring. In addition, the line will be sold through Coach’s catalog, which is mailed to more than 8 million households in the U.S.

After the U.S. launch, the watches will be rolled out internationally in fall 1998, according to Lew Frankfort, chairman and chief executive officer of Coach.

Watches are a natural extension of the Coach franchise,” said Frankfort, interviewed along with Efraim Grinberg, Movado’s president. “According to our consumer research, fine watches are frequently associated with leather goods. Also, both are accessories, which are often sold in adjacent and similar environments.”

Frankfort added that quality and long-term value were the reasons behind choosing the higher-end watch market instead of the more volume-driven fashion watch arena.

“Our products need to provide lasting value. Both companies agreed that we needed to produce and position the watch line at a price that would meet and exceed our consumer’s expectations. We also found through our research that our customers own watches at and above these price levels,” Frankfort said.

This is Movado’s first foray into working with an established consumer brand outside of the watch field. While neither executive would give a sales projection, Grinberg predicted the venture will be a “home run,” positioned above such watch brands as Seiko and Citizen and very competitive with such names as Gucci, Raymond Weil and even his firm’s Movado brand.

“There is a big opportunity here. We are looking for voids in the marketplace. Coach will fill a void for classic dress and elegant sport watches,” said Grinberg.

The Coach line’s retail price range — from $195 to $795 — is higher than the Movado Group’s ESQ line and lower than its Movado line.

Coach watches will feature Swiss movements and both leather strap and bracelet models. Frankfort said the watch collection will also incorporate signature Coach elements like its range of colored leathers for straps, for example.

Coach, founded in 1941, is a division of Sara Lee Corp., with worldwide distribution of its products for men and women, which include handbags, business cases, belts, small leather goods and shoes. Coach men’s apparel, launched in September 1995, is sold in select U.S. markets.

Meanwhile, Movado’s profits in the third quarter ended Oct. 31 rose to $7.35 million, or $1.22 a share, from $6.5 million, or $1.08, a year ago. Sales also advanced 12.9 percent, to $76.9 million from $68.1 million.

“Gross margins improved throughout the year, benefiting from continued growth in our manufactured brands Movado, ESQ and Concord,” said Grinberg. Gross margins in the latest quarter increased to 55.9 percent of sales from 53.1 percent a year ago.

Grinberg said the company saw particularly strong performances of its new lines. “Veneto, our recent introduction in the Concord brand, and Vizio, our new Movado watch, have been well-received in both domestic and international markets,” he said.

In the nine months, profits rose to $8.6 million, or $1.42, from $6.9 million, or $1.15, after a $600,000 one-time pretax accounting charge in connection with adoption of new accounting standards relating to amortization of advertising production costs.

Sales moved ahead 13.1 percent to $158.6 million from $140.3 million. Gross margins rose to 55.4 percent of sales from 53 percent.

Although earnings in the latest quarter beat Wall Street estimates of $1.20, Movado’s stock in over-the-counter trading Tuesday slipped 3/4 to close at 26 1/2.

In addition to its Movado and ESQ watches, Movado manufactures and distributes Concordwatches. It also is the exclusive distributor of Swiss-made Piaget and Corum watches in the U.S., Canada, Central America and the Caribbean.

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Price rite

Perhaps Bob Barker has a point. When it comes to jewelry and watches, the past year has proven that consumers feel the price needs to be right.

With the exception of Rolex, Tiffany and Swiss Army Brands, most names on the category-specific top 10 list offer merchandise less than $100, and that’s an unusual feat in a sector where upscale brands have mammoth marketing budgets, frequently bombarding shoppers with eye-catching advertising visuals in media outlets from magazines and movies to prime time television.

It’s hardly surprising that the more mainstream brands have generally fared so well. In the post-2000 economic downturn, the upscale fine jewelry and watch sector was one of the hardest hit, even though it has rebounded and is now doing well. Customers typically delayed their high-end purchases, stashed their cash and stayed home to avoid the temptations offered in lofty retail environments such as exclusive jewelry salons.

Pricing became an issue and customers turned to the Internet and more moderate chains like Wal-Mart and J.C. Penney to find deals on diamonds. Brand recognition was and remains high for value-oriented brands.

Total jewelry and watch sales in the U.S. are estimated to have been $43.56 billion in 2003, according to 2 Degrees Freedom Ltd., a London-based marketing and research consultancy that began tracking jewelry sales last year. According to the Commerce Department, 2002 jewelry and watch sales were $42.3 billion in the U.S., and the department predicts 2004 sales of $48.3 billion.

To capitalize on the current momentum of better values in watches and jewelry, many companies have stepped up their marketing efforts and added value to their collections by offering more innovation and teaming up with fashionable designers.

Case in point is number one jewelry and watch brand Timex. The Middlebury, Conn.-based Timex Corp. has reengineered its legendary tag line, “It Takes a Licking and Keeps on Ticking,” after 50 years. The updated version reads simply, “Life is Ticking.” In addition, Timex is upping its design quotient and recently collaborated with industrial designer Karim Rashid, contemporary artist Dave Kinsey and fashion designer Matthew Williamson for new limited-edition Timex XFactor watches.

Number two Seiko hasn’t been resting on its laurels, either. The company, whose U.S. division is based in Mahwah, N.J., continues to wow customers with innovations, and is launching a Sportura chronograph (stopwatch) this fall.

The fourth most recognized watch brand in America is Casio, which has snared a youthful customer with its fun G-Shock collection, and also has stepped up its innovation in recent months by introducing watch designs that use solar technology. The Japanese brand also has been building consumer recognition with its growing assortment of electronic merchandise such as digital cameras and electronic musical instruments.

Placing fifth, Swatch continues to be noticed by consumers with its fun and whimsical collections, such as the recent Bunnysutra line, which featured illustrations of bunnies in suggestive positions, causing much controversy and press hype that ultimately served to heighten brand awareness.

In the women’s sector, number six Citizen has been building momentum with ladylike designs featuring diamonds, crystals and mother-of-pearl details in styles such as Stiletto, Riva and Aviara, but it, too, is playing the techno card: Its watches run on solar power instead of batteries. Citizen is particularly known to sports fans, as it is a sponsor of major tournaments.

Swiss Army Brands, which took the seventh spot, has been equally aggressive to build market share. A depressed economy might have hurt the company, known for its signature pocketknives, but Shelton, Conn.-based Swiss Army is building consumer recognition with its watches, apparel, travel gear and kitchen cutlery.

Close behind is Fossil, in eighth place. The company has been spreading its wings by making new acquisitions, such as its recent purchase of Tempus International Corp., which operates as MicheleWatches, and acquiring the licenses for Burberry and Zodiac watches.

Number nine Bulova, meanwhile, is looking to bolster its presence in consumer minds with an ad campaign this fall featuring its new diamond-adorned sport designs, as well as a renewed effort to enter the European market, particularly in Italy and Germany.

While there’s quite a bit of action in the moderate field, the high-end business anticipates a rosier future. Many upscale retailers said the free-spending customer has returned in recent months, and they look for a strong fourth quarter with up to 20 percent gains in sales, thanks to a rising stock market and a healthier job picture.

That’s good news for the likes of Tiffany and Rolex, which are expanding their assortments this year. Number three Rolex, for instance, made a departure of sorts by launching the roaringly wild Cosmograph Daytona watch featuring yellow sapphires on the bezel and a wild, animal-print strap. The new watch will surely attract a younger, if not more extroverted, customer that usually gravitates toward fashion brands.

At number 10, Tiffany & Co., meanwhile, has boosted its engagement collection earlier with the next Legacy ring, and in September, will be launching a complete “Atlas” collection of watches and jewelry.

The Top 10: Watches & Jewelry

1. Timex

2. Seiko

3. Rolex

4. Casio

5. Swatch

6. Citizen

7. Swiss Army

8. Fossil

9. Bulova

10. Tiffany

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Women’s watches have gone from the bold to the beautiful in a return to elegance

Dainty does it. Watchmakers, after a few seasons of issuing men’s wear-inspired clunkers made feminine with the addition of crystals or different colors like pink, are returning to fine jewelry¬†influences and petite proportions designed with the ladies in mind. The turnaround coincides beautifully with ready-to-wear’s resurgence of tailored suits, subdued colors and flirty, yet classic elements like trumpet skirts and polkadots.

Fashion dictates a smaller watch now,” said Patric Zingg, general manager of Hamilton, a watch line owned by The Swatch Group in Weehawken, N.J. Since Hamilton pioneered the concept of creating a stand-alone women’s watch collection in the early 20th century, according to Zingg, the brand’s recent transition to smaller timepieces has been seamless. “Ladylike looks are in our DNA,” he said.

One example Zingg cited is the revival of the Lady Hamilton style from the Thirties. Though designed in the same tonneau shape, the new Lady Hamilton is made of stainless steel instead of its original white gold or platinum. Two bracelet styles and a style with a leather strap in red, black or white retail between $295 and $500 at Macy’s East. A satin strap in black or white makes its debut late spring.

Zingg said one of the biggest selling factors with the new Lady Hamilton is the reasonable price. “This trend is usually represented through fine jewelry,” he explained.

Carried at Federated department stores for $58 or $72, Peugeot watches really deliver the trend for a steal. Peugeot’s biggest hit is a thin rectangular case in yellow gold with a leather strap in black, tan or turquoise. The company will add striped grosgrain ribbon for summer and leather in camel, royal blue or berry, and some possible tweeds and wools, for fall. Peugeot’s national sales manager Sean Sherman said anything white, such as a mother-of-pearl face with a white crocodile-printed leather strap, is also selling. Mother-of-pearl faces appear on gold or silver chain-link bracelets, too.

“The market overdid the bling-bling large trend, so it’s going back to traditional again,” said Sherman, who observed the changeover in the fourth quarter of 2004. Half the collection has more dainty proportions compared with 20 percent last year. “Smaller pieces are checking so much better that we may increase to 60 percent and reissue retro styles,” he said.

But it’s not just established watch houses with decades of meticulously kept archives that are looking back at ladylike, jewelry-influenced retro styles. BCBG, which launched its watch division in February, shows Thirties-inspired cocktail watches in materials like rose gold, stainless steel and mother-of-pearl. Leather straps are hot pink, brown, white or teal, and 40 percent of the collection is now allotted to metal bracelet watches. The looks retail between $95 and $350 at department stores including Bloomingdale’s, Macy’s and Marshall Field’s.

“People are going back to elegant. Big watches are completely dead for us,” said Dina Crisco, a national sales manager for Long Island City, N.Y.-based Geneva Watch Company, which licenses BCBG.

Crisco attributed the demise of bold watches to oversaturation, especially when retailers splashed the look all over holiday advertisements after it had already been done to death in spring 2004. “Everyone had oversized, glitzy, pink watches, and it backfired,” she said.

Estimating more than 60 percent of Geneva’s watch business is dedicated to small and even miniature styles, Crisco predicted the trend should run through spring 2006.

Kenneth Cole, another Geneva brand that sells for $75 to $125 at Nordstrom, Parisian and Federated department stores, features classic cases and neutral colors. “Cases aren’t in those crazy shapes anymore, and we’re seeing growth in earth-tone straps, yellow gold and textured faces like mother-of-pearl,” said Crisco, whose top seller is a narrow, rectangular shape with Roman numerals and a silver or white face.

Fossil, a Richardson, Tex.-based multibrand watch company that licenses Michael Michael Kors and DKNY, experienced a jump in sales this spring due to the emergence of women’s watches with a jewelry feel, according to Brad Beach, vice president of watch design and product development. “Small and feminine is the biggest trend now,” he said of the vintage-inspired pieces.

Beach said Michael Kors combines watch materials in a manner similar to how they are working with materials in sunglasses, like mixing leather and a metal chain or white plastic and gold. The line also incorporates gold or silver mesh, identification chain bracelets and charms for items that retail between $110 and $150 at Macy’s. “Bigger watches are just sportier by nature, whereas small sizes are more versatile and can go from casual to dressy to true evening much easier,” said Beach.

Basing its collection on the spirit of romance, DKNY shrinks its cases and decorates them with stones and leather straps in girly pinks and lilacs. Fluid silver mesh, which Beach said continues to be a strong platform, sends a feminine message, as well. Watches sell for $85 to $125 at Macy’s, Bloomingdale’s and DKNY retail stores.

Kim Anderson-Curry, senior vice president of marketing and product for Callanen, a watch designer, manufacturer and distributor in Norwalk, Conn., said small, tailored watches are important to its Guess brand. In January, Guess introduced a smaller, elongated case with crystals on a silver-toned metal bracelet for $85. For Mother’s Day, the company plans to add a rectangular, crystal-enhanced case in stainless steel with a mother-of-pearl face and leather strap in white, pink or black for $85. It also has designed a watch on a multistrand chain with an engraved locket for $85 in silver or $95 in gold.

We see a strong fine jewelry influence,” said Anderson-Curry, who oversees accounts at Macy’s and Watch Station in addition to Guess retail stores.

Since the brand’s broad audience means it can’t walk away entirely from oversized looks, it also is doing “bold watches with feminine twists like five-strand pearl bracelets or cases of gold-toned metal and crystals,” according to Anderson-Curry.

She added, however, that Thirties-inspired watches are what’s to come. “Based on the ready-to-wear trends,” she explained, “I see the small, retro trend having a longer life than 2005.”

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Watch world: watches are making timely advances

After a couple of relatively dull seasons, the watch arena is perking up.

With new product offerings in the fashion category and more entries in the burgeoning bridge segment, watches should be a strong classification from fall through the crucial fourth quarter.

Besides obvious additions like an injection of color and more high tech functions, there is a notable turn toward seemingly disparate themes like retro, modern or feminine, fine jewelry looks. While this sudden broad array of product may initially overwhelm retailers, in the end, buyers have a unique opportunity now to reassess assortments and add some punch to their presentations.

Bridge is among the most important areas to focus on. There, vendors are banking on a scenario similar to what took place several years ago in jewelry: Sterling silver took off in stores and has now earned a permanent place in jewelry departments. With consumers upgrading the quality of their accessories purchases in general, fashion vendors are starting to place more focus on improved movements and original details and styling, rather than the stock cases, bezels and bracelets that were previously seen ad nauseum across many brands. The result is an influx of names with a fashion following, at a price point in an area known more for stodgy brands with little fashion impact.

“In our [Guess] Collection line, we’re filling a void for watches priced in the $115 to $300 range, that also offer a look not seen in fashion watches,” said Cindy Livingston, president of Callanen International, who pointed out the dearth, until recently, of any quality, branded watches between the fashion and fine areas.

“The reaction to unique details has resulted in such tremendous sell-throughs that we’re moving into an even wider assortment for the third quarter and beyond,” she said. “We will have bridge presentations in about 250 doors by the end of this year.”

At Ecclissi, the strategy is to maintain what is considered to be a leadership position in the bridge area, according to president Robert Elizondo, who recently moved most of his firm’s operations here from its longtime base in El Paso, Tex.

“There’s no question that we’re increasing our product development efforts,” said Elizondo. “We needed access to more talent and suppliers to maintain our status as one of the first with sterling silver and the broadest assortment. Stores need to be able to choose from a large number of sku’s, which we provide. Now, we’re trying to address a wider range of price points and give many buyers an opportunity [to carry the brand].”

Ecclissi’s wholesale price range has been broadened to $50-$200 from $100-$170. Elizondo said the new products should give retailers gains of “at least 10 percent.”

“We’re seeing gains of over 30 percent through a mix of same-store sales and an expanded number of doors,” he said.

Jewelry designer Alejandro Toussier is launching his first collection of watches this month, hoping to build on recognition garnered from his bridge jewelry line and satisfy a longtime passion.

“I’ve collected vintage watches for years,” said Toussier. “And when my [jewelry] customers started asking for watches, it gave me the push I needed to give them a try.

“But I wanted to offer strong design and quality for half the price, making pieces that were comparable to those retailing in the $800 to $2,000 range.”

Toussier’s debut collection features about 155 styles, some with a distinctively retro feeling, while others are clean and contemporary. All have Swiss movements and cases with Italian or French bracelets and straps. They retail from $350 to $850.

Vendors sounded a note of caution about the potential success of bridge watch departments, however. They stressed that stores must be committed to merchandising, display and especially professional sales staffing capable of selling better watches.

The concern is so great that some firms — like Alfex of Switzerland — are limiting their distribution while waiting to see how retailers handle bridge before getting too involved.

Alfex currently only sells to Neiman Marcus and Saks Fifth Avenue because they are among the few retailers that have demonstrated the ability to sell bridge watches, according to Dan Bogue, director of sales and marketing at Alfex.

Meanwhile, the fashion segment is getting behind novel bracelet treatments, smaller scale and more feminine looks and new takes on sport watches.

“There are a lot of sleek, contemporary influences coming out of Japan and Asia now, and silver looks are still a definite trend,” said Callanen’s Livingston, referring to straps that are half bracelet, half bangle and often paired with rose or mink-colored faces.

Besides Callanen’s Guess brand, these looks are available from numerous other resources and will be seen increasingly as the year goes on.

At Anne Klein II, vice president Tammy Bernstein said the firm sees “a big trend for a bit more dressed-up lifestyle,” presenting a big opportunity for the brands’ classic ladylike looks. In fact, the company will launch Anne Klein II Classics — a series of signature styles featuring small-scale, fine jewelry-looking watches — at the end of May.

Bernstein said while sporty looks remain strong for the firm, “chunky sport has peaked for us.”

“Women now want simpler, more refined details in cleaner looks,” she added.

CK Calvin Klein is building on the minimal line launched last November with evolutions of its initial styles, “very graphic, active and sleek pieces,” that aptly represent Klein’s minimalist view, according to a spokesman.

The new pieces feature rubber straps where the holes are hidden, except for the one punctured by the wearer for the correct tightness. The watches are unisex, and the rubber is similar to the material used on the stopper of the designer’s CK Be fragrance, sending a strong, consistent message to consumers about the CK brand.

Also focused on maintaining brand image with the right product is Genender, which has laid out distinct characterizations for its Perry Ellis, Levi’s and Dr. Martens lines.

“Many fashion watches have strayed from their brand soul in an effort to maximize distribution,” said Ken Genender, president and chief executive officer.

The Perry Ellis line has an almost Fifties sensibility, with classical styling; Levi’s and its Silver Tab line are distinctly American and individualistic, with a Sixties flair, and Dr. Martens is the edgier, metal-trimmed street line.

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