Movado Group, Inc. History

Address:

125 Chubb Avenue
Lyndhurst, New York 07071
U.S.A.

Telephone: (201) 460-4800
Fax: (201) 460-8384

Public Company
Incorporated: 1961 as North American Watch Company
Employees: 800
Sales: $237 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: MOVA
NAIC: 334518 Watch, Clock, & Part Manufacturing

Company Perspectives:

Movado Group, Inc. is one of the world's premiere watchmakers. The

Company History:

Movado Group, Inc. is a leading manufacturer, marketer and distributor of luxury watches. The company is an amalgamation of several historic fine watchmakers, including the Swiss Movado and Concord companies, and it also makes watches under the brand names Vizio and ESQ. It has a licensing agreement to make watches under the Coach brand, a name long associated with fine leather goods, and also distributes the top-of-the-line handmade Swiss watches of Corum and Piaget. The company operates several retail Movado stores, which not only sell its watches but home and office accessories and jewelry as well. Perhaps its most recognizable product is the Movado Museum Watch. The watch's black, numberless face is adorned only with a single dot at 12 o'clock. The company was formerly known as North American Watch Company.

Early Years

Several roots led to the current Movado Group. In the United States, the company dates back to 1961, with the founding of the North American Watch Company. This company was run by Gedalio Grinberg, an immigrant from Cuba. He owned 50 percent of the company, in partnership with a Swiss watchmaker and a consortium of three U.S. businessmen. In 1969, North American Watch became the parent company of Concord, an old Swiss watchmaker. It was the U.S. distributor for two other Swiss watches, Piaget and Corum, as well. Concord was founded in Bienne, Switzerland, in 1908. The company made fine luxury watches, and was especially noted for its skill in producing ultra-thin designs. Since its beginnings, Concord was associated with some of the world's leading jewelers, including Tiffany's and Cartier, for whom it designed private-label watches. Another unique design from Concord was a watch with a coin for a face. Its first coin watch premiered in 1946, and the company still makes these unusual and distinctive watches.

An even older company was Movado, which dated back to 1881. This company was at first the workshop of a young Swiss, Achille Ditesheim, who moved with his family from Alsace, France, to the village of La Chaux-de-Fonds in the Swiss Jura Mountains in 1876. In 1881 Ditesheim was 19, and he set himself up in business with six craftsmen to manufacture watches. His small workshop grew quickly, so that by 1897 it employed 80 watchmakers. It had become one of the largest watch manufacturers in all Switzerland, and was noted for its technological sophistication. Early for its time, Ditesheim's company used electricity and advanced machinery in place of the simple hand tools of other watchmakers. Achille Ditesheim gave his company the name Movado in 1905, choosing a word meaning "always in motion" in the then flourishing international language of Esperanto.

Movado was always an admired innovator in technology and design. In 1912 its Polyplan watch pioneered a curved design, with movements specially engineered to conform to an elongated case that followed the plane of the wearer's wrist. Movado's designs also won top awards at the Paris, Brussels, and Liege world expositions. The company became internationally prominent, and by 1920 Movado was making more than 700 different wristwatch models. Two of its most famous watches from the 1920s were the Valentino and the Ermeto. The Valentino was inspired by the glamorous star of the silent screen Rudolf Valentino. It was encased in sensuous snakeskin. The Ermeto was a handheld watch in a small box, the forerunner of the travel clock. Opening the case revealed the timepiece, and the motion automatically wound the watch. It was an ingenious design, which the company promoted with extensive advertising. Movado produced its Ermeto watch in a variety of styles, including etched gold or silver, and several enameled versions such as a striking black and white checkerboard design. The more luxurious Ermeto watches were trimmed with precious stones.

Movado continued to produce complicated and innovative watches in ensuing decades. In the 1930s the company manufactured one of the first digital watches, and as early as 1935 Movado was making water-resistant watches in both round and rectangular styles. In 1945 the company debuted the world's first automatic winding wristwatch. This was called the Tempomatic. By 1956 the Tempomatic had been retooled into the Kingmatic. This was an automatic watch designed to be extremely rugged, and it was one of Movado's best sellers in the 1950s and 1960s. Movado's signature Museum Watch was first manufactured for sale in 1962. An American artist, Nathan George Horwitt, designed the stark, black, numberless dial watch in 1947, and in 1960 Horwitt donated his prototype to the Museum of Modern Art in New York. Movado agreed to produce the Horwitt watch in 1962, and it went on to become one of the world's bestselling dial designs.

North American Watch in the 1970s

In 1969, Gedalia Grinberg's North American Watch Company purchased the Swiss watchmaker Concord. This was an interesting moment in the history of watch technology, because in 1968 Swiss watchmakers first developed the quartz watch. These watches combined an integrated circuit with a battery-powered quartz crystal which oscillated at thousands of vibrations per second. The resulting watch was more accurate than the meticulously handcrafted mechanical watches the Swiss were so famed for making. It took only a few years for the technology to spread to other countries. In the United States, Texas Instruments began selling plastic quartz watches for under $10. Though cheap and perhaps not fashionable, they were every bit as functional as an expensive mechanical watch. K. Hattori & Co., a Japanese company, began promoting its Seiko brand watches by 1972, cutting deeply into Swiss market share. While nearly 40 percent of watches on the U.S. market in 1971 were imported from Switzerland, by 1976 less than 20 percent were Swiss.

Consequently, North American Watch, which also distributed the Swiss Piaget and Corum brands, had rather limited corporate success in the early 1970s. Swiss watches were falling out of vogue. In 1976 North American Watch had sales of $8.1 million, and its net income was a measly $209,000. This led Grinberg to adopt a new marketing strategy in 1977. While other Swiss watchmakers had shied away from the new quartz technology, Grinberg asked that 90 percent of his watches have quartz works. By comparison, the prestigious Rolex company was making only about 15 percent of its watches with quartz works in the late 1970s. Thus the watches had the latest technological advantage, yet North American's products remained classic in other ways. They were gold, studded with diamonds, and had no alarms or calculators. They were the old-fashioned luxury Swiss watches in every way but the inside. Then Grinberg upped North American's ad spending. In 1977 the company spent $1.4 million on advertising, and by 1980 it was spending $6 million annually. In another unusual move, North American eschewed the standard print ads and went to television. The company wished to reach out to middle-income Americans, who would see owning a gold Swiss watch as both status symbol and investment. The watches were expensive, ranging from about $400 in 1980 to as much as $60,000 for the Concord Delirium, and North American tried to market them as hedges against inflation. Few middle-income Americans could plunk down $60,000 for a watch in 1980, but there were apparently many who would pay up to $10,000 for a model from the more moderate Concord Nine Line collection. Grinberg's revamping of North American was successful almost immediately. From the sluggish figures of 1976, sales went up almost sixfold by 1980. The company pulled in $45 million in sales for 1980, with profits of $3 million. Although previously not a serious competitor, it now found itself outselling some of the larger and better-known names in Swiss watches.

Expanding Product Lines in the 1980s

Though the percentage of watches imported from Switzerland to the United States continued to plummet, hanging just above six percent in 1981, North American Watch did not suffer. It spent more each year on advertising, dedicating some $14 million in 1982. Sales were still soaring in the early 1980s, reaching close to $86 million in 1982. North American competed with more than a dozen different brands that made up the luxury watch market in the United States in the early 1980s, and the company was recognized within the industry as the most successful Swiss watch distributor. In 1983 North American added another Swiss watch brand to its portfolio, Movado. After its great success earlier in the century, Movado was ailing. In fact the company was losing money at the time of the acquisition. But it was a good match for North American Watch, forming the least expensive end of its four brands. Movado watches were priced from around $200 to $2,500, while Concord watches ran from around $500 to $10,000. Piaget and Corum, the two brands North American distributed but did not own, were even more expensive.

North American Watch made the most of Movado. The black Museum Watch was already well known, and the company expanded the line to include dozens of variants. There were at least 24 different watches being sold under the name Movado Museum Watch in 1986, and some of these were a far cry from the gaunt simplicity of Horwitt's original design. One watch even had numbers on the dial, and it was ringed with diamonds. The name "Museum Watch" had a certain cachet that the company's advertising exploited as well as it could. The Museum of Modern Art, which displayed the original Horwitt watch, even put up a disclaimer in 1984, noting that "the Movado watch is not a Museum of Art watch, nor is there any connection between the Museum of Modern Art and the Movado Watch Corporation." Sol Flick, a lawyer for North American Watch countered that the "museum" in "Museum Watch" might refer to any museum. "It could be the Museum of Natural History," he said in a November 1986 Consumer Reports article.

Nevertheless, North American's advertising continued to make references to the Museum of Modern Art. Capitalizing on the name even further, the company set up a division in 1987 called Movado Museum Designs International Ltd. This was to develop products such as desk accessories, luggage, jewelry, leathergoods, and handbags for sale in department stores that also handled Movado watches. In 1988, the company opened its first freestanding Movado store, on Madison Avenue in New York City.

North American Watch made a move into another luxury category, luggage, in the late 1980s. In 1987 it bought Wings, a formerly chic luggage maker that was now losing money. Similar perhaps to Movado, Wings had been a glamorous brand through the 1950s and 1960s, but sales had sagged afterwards and the company had not been able to market itself effectively. North American bought the company and then went back into its design history and brought out new versions of old classics. In keeping with its retro feel, a Wings ad for 1988 was a re-shot version of one from 1953. North American Watch promoted its new line heavily, allocating approximately $1 million of its total ad budget in 1989 for Wings.

Under Movado Name in the 1990s

In the early 1990s North American Watch continued to promote its products heavily through advertising, both in print and on television. For years the company had relied on an in-house advertising agency, though by the late 1980s North American also used outside agencies. Romantic, virtually wordless television ads were designed by Ogilvy & Mather to appeal to a worldwide audience, because the company had growing sales in Asia, the Middle East, Latin America, and Europe.

In 1992 North American introduced a new line of high-performance watches geared for sports enthusiasts and active people. At first called Esquire, the company shortened the name to ESQ in 1995. The watches were less expensive than North American's other Swiss watches, and were different in design, with lots of features packed on the dial. This gave North American a good product spread, with watches in every segment of the market except for the very cheapest. Then on September 30, 1993 North American Watch Company raised cash by going public. The company wanted to expand more into retailing, among other things, and the stock offering was expected to bring an influx of money. Apparently, the company did not make as big a splash as it had expected. Though its sales and profits had been increasing at respectable rates, the name North American Watch was not well known. So in 1996 the company officially adopted the name of its best-known brand and became the Movado Group, Inc.

The newly named company rolled out plans to expand its product line and to court new markets, principally in Japan, Hong Kong, and Taiwan. Movado also signed an agreement with Coach, a well-known luxury luggage maker, to produce a line of Coach watches. In an interesting mix, this got the luggage maker's name on watches just as Movado was trying to extend its brand name onto luggage, jewelry, and accessories. The company intended to put the Movado name on a bigger variety of items for its stand-alone Movado boutiques. Although in 1997 Movado's sales were principally through independent jewelers, jewelry chains such as Zales, Helzberg, and Sterling, or through premium department stores, including Saks, Macy's, and Nieman-Marcus, it had opened a small line of retail outlet stores. These 16 stores across the United States sold its discontinued merchandise, as well as samples and factory seconds. The New York Movado boutique was still the only one of its kind, while a second store the company operated sold only Piaget watches and jewelry. In 1998 Movado announced that it would open three new boutiques, with plans for four more the next year. The stores sold Movado brand jewelry and accessories as well as watches, with 500 products at a range of price levels. The new stores aimed to draw in the kind of customers who bought Movado watches, though the boutiques were emphatically not merely watch shops. The famous black face of the Museum Watch was transferred onto a wall clock that faced the store entrance, and the kind of spare, modern design epitomized by the Museum Watch was meant to carry through to the whole store. The 1998 stores opened in malls in Short Hills, New Jersey, and in White Plains, New York, while the third, in Rockefeller Center in Manhattan, replaced the first retail space the company had opened in New York ten years earlier.

Financially, Movado was doing very well in the late 1990s. Sales climbed steeply, from $161 million in 1995 to $237 million in 1998. Net income also kept pace. Movado continued to spend heavily on advertising worldwide. The company's strategy for the future hinged on reaching farther into international markets with its core brands and expanding its move into retailing. By 1998, just under 17 percent of the company's sales were international, up from 14 percent in 1997. In the same period, its domestic sales grew almost 11 percent. Movado signed a new licensing agreement, expanding into clocks through the Linden company. Linden was a leading clock maker, and it agreed to develop, produce and distribute clocks with the Movado name. The company was anxious to refine and improve the stores it opened in 1998, viewing them as prototypes for future rollouts of boutiques in malls across the United States and then internationally. With surging sales and an increasingly recognized brand name and design style, Movado seemed ready to handle more growth and expansion into the next century.

Principal Subsidiaries: SwissAm Inc.; Concord Watch Company, S.A. (Switzerland); Montres Movado, S.A. (Switzerland); Movado Watch Company, S.A. (Switzerland); N.A. Trading Ltd. (Switzerland); North American Watch of Canada, Ltd.

Movado Group, Inc. History

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