June 1, 2010 (FinancialWire) — Movado Group, Inc. (NYSE: MOV) said that  the company's retail subsidiary, Movado Retail Group, Inc., will close its retail boutique division effective June 30, 2010, following a strategic assessment of its retail boutique performance.

The company said it is making the move in an effort to streamline the retail group’s business, redirect investment toward higher return businesses and improve the company's overall profitability.

Movado said it will continue to sell its watch products primarily through its wholesale model, where it expects to increase its market share by further expanding relationships with existing wholesale customers and enhancing its relationships with independent retailers.

The retail group will continue to sell all of the company's watch brands directly to consumers through its 31 outlet stores and will keep the Movado Boutique located in New York's Rockefeller Center open as a flagship store.

Rick Cote, president and COO of Movado Group, said the decision to close the boutique division followed, “several years of unprofitability and a strategic review of the business.”

Movado said it anticipates that closing the retail boutique division will lower annual revenues by around $30 million, but will immediately improve profitability for the 2011 fiscal year on an adjusted basis and have a favorable impact on the multi-year profitability and cash flow plan it expects to present later this year.

The company has recorded a $3.4 million pre-tax impairment charge related to the closure of the retail boutiques and anticipates recording additional pre-tax restructuring charges of around $21.6 million over the remainder of fiscal 2011. Costs associated with the retail boutique division closure include rent settlements, severance, third-party fees and asset write-offs. The cash portion of these charges, which is estimated to be around $20 million, will be paid with existing funds.

New Jersey-based Movado Group designs, sources, and distributes Movado, Ebel, Concord, ESQ by Movado, Coach, Tommy Hilfiger, HUGO BOSS, Juicy Couture and Lacoste watches worldwide, and operates Movado boutiques and company stores in the United States.

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