Movado Group has notified investors that it is setting aside almost $20 million (£16 million) for a restructuring that will involve an unspecified number of redundancies.
The group had already announced restructuring costs of $7.2 million (£5.7 million) in its first quarter financial report, and this week added an additional $9 million to $12 million (£7 million to £9.5 million) to the fund.
In a filing with the Securities and Exchange Commission, the company said that it is “committed to a restructuring plan as part of the company’s efforts to reduce operating expenses and adjust cash flows in light of the ongoing economic challenges resulting from the COVID-19 pandemic and its impact on the company’s business”.
Although Movado does not give details of any redundancies, it says that over half of the restructuring’s cost will be in costs relating to lay-offs.
“Approximately $8.5 million to $11.0 million [£6.7 million to £8.7 million] of the charges under the Restructuring Plan relate to employee severance and benefits costs and stock-based compensation charges for separated individuals, and approximately $0.5 million to $1.0 million [£400,000 to £800,000] represent costs to consolidate facilities,” the company’s filing describes.
Movado expects the restructuring to be completed during its second quarter, which runs to the end of July, although cash severance will be paid over time and such payments are expected to continue into the next fiscal year.
Today’s news comes a month after Movado Group announced significant changes to its leadership team designed to “accelerate the company’s digital transformation, speed decision making and position the company to better meet consumers’ preferences”.
Behzad Soltani was promoted from his position as president, direct to consumer and chief digital officer to executive vice president, commercial president and chief technology officer.
Mr Soltani will have responsibility for the group’s global wholesale business, Movado Company Stores, e-commerce, the Digital Center of Excellence and Global Information Technology.
Sallie DeMarsilis, Movado’s chief financial officer, was promoted to executive vice president, chief operating officer and chief financial officer, giving her control of finance and accounting, value chain, distribution and business controls.
“We are excited to announce the promotion of both Behzad and Sallie, who have been outstanding members of our executive team and have proven track records of success and strong leadership skills. This new management structure will support the unification of our distribution channels in our ongoing focus on putting consumers first and allowing them to connect with our great brands, designs and platforms wherever and whenever they choose to shop,” Movado Group chairman and chief executive Efraim Grinberg said in early June.
The organisational changes are expected to allow Mr Grinberg to increase his day-to-day focus on brand building for the company’s licensed and owned brands. He will take direct control of recent acquisitions MVMT and Olivia Burton along with the Movado brand.
Movado Group closed its 2020 financial year on January 31 with operating income down year on year by 37% to $50 million (£40 million), but the company said its balance sheet remained strong, ending the year with over $185 million (£146 million) in cash.