~ Net Sales Increase 21.2% to $163.4 million
~
~ Gross Margin Expansion of 420 bps vs.
Prior Year Period ~
~ EPS of $0.79 and Adjusted EPS of $0.82
~
~ Board Approves Quarterly Dividend of $0.35
Per Share ~
Movado Group, Inc. (NYSE: MOV) today announced first quarter
fiscal 2023 results for the period ended April 30, 2022.
Fiscal 2023 First Quarter
Highlights (See attached table for
GAAP and Non-GAAP measures)
- Delivered topline growth of 21.2% or 24.3% on a constant dollar
basis year over year;
- Expanded gross margin by 420 bps from prior year period to
59.2%;
- Decreased operating expenses as a percent of sales to 43.7%
from 45.2% in the prior year period;
- Decreased adjusted operating expenses as a percent of sales to
43.2% from 44.6% in the prior year period;
- Generated operating income of $25.3 million as compared to
$13.3 million in the prior year period;
- Generated adjusted operating income of $26.1 million as
compared to $14.1 million;
- Achieved diluted earnings per share of $0.79 as compared to
$0.40 in the prior year period;
- Achieved adjusted diluted earnings per share of $0.82 as
compared to $0.43; and
- Ended the quarter with cash of $225.3 million, a $38.3 million
increase from $187.0 million at the end of the first quarter of
fiscal 2022.
Efraim Grinberg, Chairman and Chief Executive Officer, stated,
“We are very pleased to continue the positive momentum from last
year reporting first quarter results that marked a strong start to
our fiscal year with record sales and profit. The quarter saw
growth across all key operating metrics highlighted by a 21.2%
increase in sales, a 420 basis-point expansion in gross margin and
84.7% growth in adjusted operating income to $26.1 million. These
results reflect the ongoing appeal of our powerful portfolio of
sought-after global brands, the strength of our elevated
omnichannel model and the discipline with which we execute our
strategies. The diversity of our business model continues to serve
us well as we successfully capitalized on growth opportunities
across our portfolio, channels and geographies, most notably in
Europe, the Middle East, India and Latin America.”
Mr Grinberg continued, “As we look ahead, we believe our Company
is well positioned to advance our strategic priorities in an
increasingly uncertain environment. We remain confident about our
growth prospects and expect to continue to benefit from our
compelling product innovation and diversified brand portfolio,
including the recent successful launch of Calvin Klein watches and
jewelry. We will continue to prioritize investing in our people and
brands while remaining prudent and fiscally responsible. Our strong
balance sheet allows us to invest in supporting our growth
initiatives and returning value to our shareholders through our
ongoing quarterly dividend and our share repurchase program. We
will continue to manage the business with intense discipline as we
navigate near-term headwinds. Overall, we expect fiscal 2023 to
represent another year of strong performance and significant
accomplishments for Movado Group.”
Non-GAAP Items (See attached table for GAAP and Non-GAAP
measures)
First quarter fiscal 2023 results of operations included the
following charges:
- $0.7 million pre-tax charge, or $0.6 million after tax,
representing $0.03 per diluted share, associated with the
amortization of acquired intangible assets related to the
acquisition of Olivia Burton; and
- $0.1 million pre-tax charge, or $0.1 million after tax,
representing $0.00 per diluted share, associated with the
amortization of acquired intangible assets and deferred
compensation related to the acquisition of MVMT.
First quarter fiscal 2022 results of operations included the
following charges:
- a $0.7 million pre-tax charge, or $0.6 million after tax,
representing $0.03 per diluted share, associated with the
amortization of acquired intangible assets related to the
acquisition of Olivia Burton; and
- a $0.1 million pre-tax charge, or $0.1 million after tax,
representing $0.00 per diluted share, associated with the
amortization of acquired intangible assets and deferred
compensation related to the acquisition of MVMT.
In this press release, reference to “adjusted” results exclude
the impact of the above charges from the first quarter of fiscal
years 2023 and 2022. Please refer to the attached GAAP and Non-GAAP
measures table for a detailed reconciliation of the Company’s
reported results to its adjusted, non-GAAP results.
First Quarter Fiscal 2023
Results
- Net sales increased 21.2% (24.3% on a constant dollar basis) to
$163.4 million compared to $134.8 million in the first quarter of
fiscal 2022. The increase in net sales reflected growth in
wholesale customers’ brick and mortar stores and in Movado Company
Stores. U.S. net sales increased 6.6% as compared to the first
quarter of last year. International net sales increased 35.3% as
compared to the first quarter of last year.
- Gross profit was $96.7 million, or 59.2% of net sales, compared
to $74.2 million, or 55.0% of net sales in the first quarter of
fiscal 2022. The increase in gross margin percentage was primarily
the result of favorable changes in channel and product mix
partially offset by increased shipping costs.
- Operating expenses increased to $71.4 million in the first
quarter of fiscal 2023 from $60.9 million in the first quarter of
fiscal 2022. Adjusted operating expenses were $70.6 million
compared to $60.1 million in the prior year period. This increase
was primarily due to higher marketing expenses, payroll and related
costs and an increase in certain other operating expenses to
support the increase in net sales. As a percent of sales, adjusted
operating expenses decreased to 43.2% of sales from 44.6% in the
prior year period primarily due to improved sales leverage.
- Operating income was $25.3 million compared to operating income
of $13.3 million in the first quarter of fiscal 2022. Adjusted
operating income was $26.1 million for the first quarter of fiscal
2023 and $14.1 million for the prior year period.
- The Company recorded a tax provision of $6.0 million, as
compared to a tax provision of $3.3 million in the first quarter of
fiscal 2022. Based upon adjusted pre-tax income, the adjusted tax
provision was $6.2 million, or an adjusted tax rate of 23.7%, as
compared to an adjusted tax provision of $3.5 million, or an
adjusted tax rate of 25.1%, in the first quarter of fiscal
2022.
- Net income for the first quarter of fiscal 2023 was $18.5
million, or $0.79 per diluted share, compared to net income of $9.4
million, or $0.40 per diluted share, for the same period in the
prior year. Adjusted net income for the fiscal 2023 period was
$19.1 million, or $0.82 per diluted share, compared to adjusted net
income of $10.1 million, or $0.43 per diluted share, for the first
quarter of fiscal 2022.
Fiscal 2023 Outlook
The Company expects fiscal 2023 net sales to be in a range of
approximately $780 million to $800 million, gross profit of
approximately 58.0% of net sales, and operating income in a range
of $125 million to $130 million, unchanged from previous
expectatons, however, with a heightened level of economic,
geopolitical and currency uncertainty. Assuming no changes to the
current tax regulations, the Company anticipates an effective tax
rate of approximately 25% for the fiscal year. The outlook excludes
approximately $3.0 million of amortization of acquired intangible
assets and deferred compensation for fiscal 2023 related to the
Olivia Burton and MVMT brands. This outlook does not contemplate
significant impact of increasing inflation, geopolitical unrest or
extended negative impact to supply chain and shipping costs, and
assumes no further significant fluctuations from prevailing foreign
currency exchange rates.
Quarterly Dividend and Share Repurchase
Program
The Company also announced that on May 26, 2022, the Board of
Directors approved the payment on June 22, 2022 of a cash dividend
in the amount of $0.35 for each share of the Company’s outstanding
common stock and class A common stock held by shareholders of
record as of the close of business on June 8, 2022.
During the first quarter of fiscal 2023, the Company repurchased
approximately 378,400 shares under its share repurchase program. As
of April 30, 2022, the Company had no remaining capacity under the
March 25, 2021 share repurchase program and $38.0 million remaining
available under the November 23, 2021 repurchase program.
Conference Call
The Company’s management will host a conference call and audio
webcast to discuss its results today, May 26th, at 9:00 a.m.
Eastern Time. The conference call may be accessed by dialing (877)
407-0784. Additionally, a live webcast of the call can be accessed
at www.movadogroup.com. The webcast will be archived on the
Company’s website approximately one hour after the conclusion of
the call. Additionally, a telephonic re-play of the call will be
available from 12:00 p.m. ET on May 26, 2022 until 11:59 p.m. ET on
June 9, 2022 and can be accessed by dialing (844) 512-2921 and
entering replay pin number 13729949.
Movado Group, Inc. designs, sources, and distributes MOVADO®,
MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, CALVIN KLEIN®, COACH®,
TOMMY HILFIGER®, HUGO BOSS®, LACOSTE®, and SCUDERIA FERRARI®
watches, and, to a lesser extent jewelry and other accessories, and
operates Movado Company Stores in the United States and Canada.
In this release, the Company presents certain financial measures
that are not calculated according to generally accepted accounting
principles in the United States (“GAAP”). Specifically, the Company
is presenting adjusted gross profit, adjusted gross margin,
adjusted operating expenses and adjusted operating income, which
are gross profit, gross margin, operating expenses and operating
income, respectively, under GAAP, adjusted to eliminate the
amortization of acquisition accounting adjustments related to the
Olivia Burton and MVMT acquisitions. The Company is also presenting
adjusted tax provision, which is the tax provision under GAAP,
adjusted to eliminate the impact of charges for the Olivia Burton
and MVMT acquisitions. The Company believes these adjusted measures
are useful because they give investors information about the
Company’s financial performance without the effect of certain items
that the Company believes are not characteristic of its usual
operations. The Company is also presenting adjusted net income,
adjusted earnings per share and adjusted effective tax rate, which
are net income, earnings per share and effective tax rate,
respectively, under GAAP, adjusted to eliminate the after-tax
impact of amortization of acquisition accounting adjustments
related to the Olivia Burton and MVMT acquisitions. The Company
believes that adjusted net income, adjusted earnings per share and
adjusted effective tax rate are useful measures of performance
because they give investors information about the Company’s
financial performance without the effect of certain items that the
Company believes are not characteristic of its usual operations.
Additionally, the Company is presenting constant currency
information to provide a framework to assess how its business
performed excluding the effects of foreign currency exchange rate
fluctuations in the current period. Comparisons of financial
results on a constant dollar basis are calculated by translating
each foreign currency at the same U.S. dollar exchange rate as in
effect for the prior-year period for both periods being compared.
The Company believes this information is useful to investors to
facilitate comparisons of operating results. These non-GAAP
financial measures are designed to complement the GAAP financial
information presented in this release. The non-GAAP financial
measures presented should not be considered in isolation from or as
a substitute for the comparable GAAP financial measures, and the
methods of their calculation may differ substantially from
similarly titled measures used by other companies.
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. The Company has tried, whenever possible, to identify
these forward-looking statements using words such as “expects,”
“anticipates,” “believes,” “targets,” “goals,” “projects,”
“intends,” “plans,” “seeks,” “estimates,” “may,” “will,” “should”
and variations of such words and similar expressions. Similarly,
statements in this press release that describe the Company's
business strategy, outlook, objectives, plans, intentions or goals
are also forward-looking statements. Accordingly, such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause the Company's
actual results, performance or achievements and levels of future
dividends to differ materially from those expressed in, or implied
by, these statements. These risks and uncertainties may include,
but are not limited to general economic and business conditions
which may impact disposable income of consumers in the United
States and the other significant markets (including Europe) where
the Company’s products are sold, uncertainty regarding such
economic and business conditions, including inflation, increased
commodity prices and tightness in the labor market, trends in
consumer debt levels and bad debt write-offs, general uncertainty
related to possible terrorist attacks, natural disasters and
pandemics, including the effect of the COVID-19 pandemic and other
diseases on travel and traffic in the Company’s retail stores and
the stores of its wholesale customers, supply disruptions, delivery
delays and increased shipping costs, adverse impact on the
Company’s wholesale customers and customer traffic in the Company’s
stores as a result of increased uncertainty and economic disruption
caused by the COVID-19 pandemic, the impact of international
hostilities, including the Russian invasion of Ukraine, on global
markets, economies and consumer spending, on energy and shipping
costs and on the Company’s supply chain and suppliers, defaults on
or downgrades of sovereign debt and the impact of any of those
events on consumer spending, changes in consumer preferences and
popularity of particular designs, new product development and
introduction, decrease in mall traffic and increase in e-commerce,
the ability of the Company to successfully implement its business
strategies, competitive products and pricing, including price
increases to offset increased costs, the impact of “smart” watches
and other wearable tech products on the traditional watch market,
seasonality, availability of alternative sources of supply in the
case of the loss of any significant supplier or any supplier’s
inability to fulfill the Company’s orders, the loss of or curtailed
sales to significant customers, the Company’s dependence on key
employees and officers, the ability to successfully integrate the
operations of acquired businesses without disruption to other
business activities, the possible impairment of acquired intangible
assets, risks associated with the Company’s minority investments in
early-stage growth companies and venture capital funds that invest
in such companies; the continuation of the Company’s major
warehouse and distribution centers, the continuation of licensing
arrangements with third parties, losses possible from pending or
future litigation and administrative proceedings, the ability to
secure and protect trademarks, patents and other intellectual
property rights, the ability to lease new stores on suitable terms
in desired markets and to complete construction on a timely basis,
the ability of the Company to successfully manage its expenses on a
continuing basis, information systems failure or breaches of
network security, complex and quickly-evolving regulations
regarding privacy and data protection, the continued availability
to the Company of financing and credit on favorable terms, business
disruptions, and general risks associated with doing business
outside the United States including, without limitation, import
duties, tariffs (including retaliatory tariffs), quotas, political
and economic stability, changes to existing laws or regulations,
and success of hedging strategies with respect to currency exchange
rate fluctuations, and the other factors discussed in the Company’s
Annual Report on Form 10-K and other filings with the Securities
and Exchange Commission. These statements reflect the Company's
current beliefs and are based upon information currently available
to it. Be advised that developments subsequent to this press
release are likely to cause these statements to become outdated
with the passage of time. The Company assumes no duty to update its
forward looking statements and this release shall not be construed
to indicate the assumption by the Company of any duty to update its
outlook in the future.
(Tables to follow)
MOVADO GROUP, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data)
(Unaudited) Three Months Ended April
30,
2022
2021
Net sales
$
163,424
$
134,798
Cost of sales
66,739
60,596
Gross profit
96,685
74,202
Total operating expenses
71,391
60,946
Operating income
25,294
13,256
Non-operating income/(expense): Other income
83
100
Interest expense
(112
)
(275
)
Income before income taxes
25,265
13,081
Provision for income taxes
6,011
3,330
Net income
19,254
9,751
Less: Net income attributable to noncontrolling interests
741
342
Net income attributable to Movado Group, Inc.
$
18,513
$
9,409
Diluted Income Per Share Information Net income
attributable to Movado Group, Inc.
$
0.79
$
0.40
Weighted diluted average shares outstanding
23,397
23,741
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES
(In thousands, except for percentage data)
(Unaudited) As Reported Three Months
Ended April 30, % Change
2022
2021
Total net sales, as reported
$
163,424
$
134,798
21.2%
Total net sales, constant dollar basis
$
167,581
$
134,798
24.3%
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In
thousands, except per share data) (Unaudited)
Net Sales Gross Profit Total OperatingExpenses
OperatingIncome/(Loss) Pre-taxIncome/(Loss)
Provision/(Benefit)for Income Taxes Net
Income/(Loss)Attributable toMovado Group, Inc. Diluted
EPS Three Months Ended April 30, 2022 As Reported
(GAAP)
$
163,424
$
96,685
$
71,391
$
25,294
$
25,265
$
6,011
$
18,513
$
0.79
Olivia Burton Costs (1)
-
-
(687
)
687
687
131
556
0.03
MVMT Costs (2)
-
-
(82
)
82
82
20
62
0.00
Adjusted Results (Non-GAAP)
$
163,424
$
96,685
$
70,622
$
26,063
$
26,034
$
6,162
$
19,131
$
0.82
Three Months Ended April 30, 2021 As
Reported (GAAP)
$
134,798
$
74,202
$
60,946
$
13,256
$
13,081
$
3,330
$
9,409
$
0.40
Olivia Burton Costs (1)
-
-
(721
)
721
721
137
584
0.03
MVMT Costs (2)
-
-
(131
)
131
131
33
98
0.00
Adjusted Results (Non-GAAP)
$
134,798
$
74,202
$
60,094
$
14,108
$
13,933
$
3,500
$
10,091
$
0.43
(1)
Related to the amortization of acquired intangible assets for
Olivia Burton.
(2)
Related to the amortization of acquired intangible assets and the
MVMT brand's deferred compensation, where applicable.
MOVADO
GROUP, INC. CONSOLIDATED BALANCE SHEETS (In
thousands) (Unaudited) April 30,
January 31, April 30,
2022
2022
2021
ASSETS Cash and
cash equivalents
$
225,256
$
277,128
$
186,950
Trade receivables, net
92,744
91,558
78,584
Inventories
180,003
160,283
169,966
Other current assets
23,558
16,974
23,649
Income taxes receivable
3,421
7,941
24,305
Total current assets
524,982
553,884
483,454
Property, plant and equipment, net
18,434
19,470
20,599
Operating lease right-of-use assets
79,717
68,599
72,836
Deferred and non-current income taxes
42,854
42,596
41,528
Other intangibles, net
11,990
13,507
16,300
Other non-current assets
62,007
63,104
59,989
Total assets
$
739,984
$
761,160
$
694,706
LIABILITIES AND EQUITY
Accounts payable
$
44,140
$
46,011
$
34,595
Accrued liabilities
54,698
48,522
45,687
Accrued payroll and benefits
7,822
25,117
9,727
Current operating lease liabilities
16,588
13,693
15,413
Income taxes payable
15,141
18,123
9,128
Total current liabilities
138,389
151,466
114,550
Loans payable to bank, non current
-
-
10,000
Deferred and non-current income taxes payable
19,385
19,614
21,280
Non-current operating lease liabilities
70,440
62,730
65,568
Other non-current liabilities
47,301
50,264
51,528
Redeemable noncontrolling interest
2,251
2,311
2,560
Shareholders' equity
459,650
472,808
426,777
Noncontrolling interest
2,568
1,967
2,443
Total equity
462,218
474,775
429,220
Total liabilities, redeemable noncontrolling interest and
equity
$
739,984
$
761,160
$
694,706
MOVADO GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (In thousands) (Unaudited)
Three Months Ended
April 30,
2022
2021
Cash flows from operating activities: Net income
$
19,254
$
9,751
Depreciation and amortization
2,932
3,173
Other non-cash adjustments
1,239
1,946
Changes in working capital
(43,676
)
(31,262
)
Changes in non-current assets and liabilities
(501
)
1,019
Net cash used in operating activities
(20,752
)
(15,373
)
Cash flows from investing activities: Capital
expenditures
(1,381
)
(407
)
Long-term investments
(1,850
)
-
Trademarks and other intangibles
(22
)
(44
)
Net cash used in investing activities
(3,253
)
(451
)
Cash flows from financing activities: Repayment of
bank borrowings
-
(11,140
)
Dividends paid
(7,940
)
(6,962
)
Stock repurchase
(14,439
)
(316
)
Stock awards and options exercised and other changes
(405
)
(1,385
)
Other
(85
)
-
Net cash used in financing activities
(22,869
)
(19,803
)
Effect of exchange rate changes on cash, cash equivalents,
and restricted cash
(5,026
)
(1,249
)
Net change in cash, cash equivalents, and restricted cash
(51,900
)
(36,876
)
Cash, cash equivalents, and restricted cash at beginning of period
277,716
224,423
Cash, cash equivalents, and restricted cash at end of
period
$
225,816
$
187,547
Reconciliation of cash, cash equivalents, and restricted
cash: Cash and cash equivalents
$
225,256
$
186,950
Restricted cash included in other non-current assets
560
597
Cash, cash equivalents, and restricted cash
$
225,816
$
187,547
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220526005244/en/
ICR, Inc. Rachel Schacter/Allison Malkin 203-682-8200
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