~ Maintains Full Year Net Sales, Operating
Profit and Earnings per Share Guidance ~
~ Board Declares Quarterly Dividend
~
Movado Group, Inc. (NYSE:MOV) today announced third quarter
results for the period ended October 31, 2015.
Efraim Grinberg, Chairman and Chief Executive Officer, stated,
“We are pleased with our third quarter results which reflect the
successful execution of our growth and efficiency strategies during
an extremely challenging retail environment. Our solid results were
driven by both Movado and our licensed brands portfolio which
continue to outperform the overall watch category at retail. We are
very excited about our recent launches of both Movado Edge, a watch
collection developed in collaboration with world-renowned
industrial designer Yves Behar, as well as our connected Movado
timepieces which merge modern iconic design and technology. This
marks our first entrance into the wearable technology category. We
believe these new product launches, combined with the strength of
our existing brand portfolio, position us well for the upcoming
holiday season.”
The Company recorded no unusual items in the third quarter of
fiscal 2016. During the first quarter of fiscal 2016, the Company
recorded a $2.7 million pre-tax charge, or $0.10 per diluted share,
related to operating efficiency initiatives and other items. There
were no unusual items recorded in the first nine months of fiscal
2015.
Third Quarter Fiscal 2016 (See attached
table for GAAP and Non-GAAP measures)
- Net sales decreased 1.6% to $185.6
million compared to $188.6 million in the third quarter of fiscal
2015. Net sales on a constant dollar basis increased 2.1% compared
to net sales in the third quarter of fiscal 2015.
- Gross profit was $100.1 million, or
53.9% of sales, compared to $99.8 million, or 53.0% of sales, in
the third quarter last year. The increase in gross margin
percentage was primarily due to channel and product mix, selective
price increases and certain sourcing improvements, partially offset
by the unfavorable impact of changes in foreign currency exchange
rates.
- Operating expenses increased $0.1
million, or 0.2%, to $66.6 million compared to $66.5 million in the
third quarter last year. This increase was primarily the result of
an increase in compensation and benefit expenses mostly offset by
the favorable impact of foreign currency exchange rates, as well as
lower marketing and selling related expenses.
- Operating income increased to $33.5
million compared to operating income of $33.3 million in the same
period last year.
- The Company recorded a tax provision of
$11.2 million in the third quarter of fiscal 2016 as compared to a
tax provision of $10.9 million in the prior year. The effective tax
rate in the third quarter of fiscal 2016 was 33.9% compared to an
effective tax rate of 32.7% in the third quarter of fiscal
2015.
- Net income was $21.5 million, or $0.92
per diluted share, compared to net income of $22.2 million, or
$0.87 per diluted share, in the third quarter of fiscal 2015.
Nine Month Results Fiscal 2016 (See
attached table for GAAP and Non-GAAP measures)
- Net sales decreased 0.3% to $451.7
million compared to $453.1 million in the same period of fiscal
2015. Net sales on a constant dollar basis increased 4.1% compared
to net sales in the first nine months of fiscal 2015.
- Gross profit was $241.6 million, or
53.5% of sales, compared to $242.6 million, or 53.5% of sales in
the same period last year. Adjusted gross profit for the first nine
months of fiscal 2016, which excludes $0.7 million in charges
related to operating efficiency initiatives and other items in the
first quarter of fiscal 2016, was $242.3 million, or 53.6% of
sales. The increase in adjusted gross margin percentage was
primarily impacted by a favorable shift in channel and product mix,
selective price increases and certain sourcing improvements, mostly
offset by the unfavorable impact of changes in foreign currency
exchange rates.
- Operating expenses were $183.0 million
as compared to $181.2 million in the same period last year. For the
first nine months of fiscal 2016, adjusted operating expenses were
$181.0 million, which excludes $2.0 million of expenses related to
operating efficiency initiatives and other items recorded in the
first quarter. Adjusted operating expenses remained relatively flat
due to the favorable impact of foreign currency exchange rates as
well as lower marketing expenses mostly offset by an increase in
compensation and benefit expenses.
- Operating income was $58.6 million
compared to operating income of $61.4 million in the same period
last year. Adjusted operating income for the first nine months of
fiscal 2016, which excludes $2.7 million of expenses related to
operating efficiency initiatives and other items recorded in the
first quarter, was $61.2 million or 13.6% of net sales.
- The Company recorded a tax provision of
$20.5 million for the nine month period of fiscal 2016 as compared
to a tax provision of $19.2 million for the nine month period of
fiscal 2015. The effective tax rate in the fiscal 2016 period was
35.3% compared to an effective tax rate of 31.4% in the fiscal 2015
period. The adjusted effective tax rate for first nine months of
fiscal 2016 was 34.0%.
- Net income was $37.2 million, or $1.55
per diluted share, compared to net income for the nine month period
of fiscal 2015 of $41.7 million, or $1.63 per diluted share.
Adjusted net income for the first nine months of fiscal 2016 was
$39.7 million, or $1.65 per diluted share, which excludes $2.5
million in expenses, net of tax, related to operating efficiency
initiatives and other items in the first quarter of fiscal
2016.
Rick Coté, Vice Chairman and Chief Operating Officer, stated,
“Despite a difficult global marketplace, our third quarter results
are a testament to our continued focus on our strategic approach to
grow our business and capture the full potential of our brand
portfolio. We are particularly pleased with our performance in
Europe in the third quarter, where we continued to see strong sell
through at retail. The benefits from our price increases, operating
efficiencies and sourcing improvements across our supply chain are
materializing and we are continuing to manage our operating
expenses prudently.”
Mr. Coté continued “Additionally, our balance sheet remains
strong with approximately $181 million in cash and decreased
inventory levels in the third quarter compared to the prior year
period. We remain focused on returning value to shareholders as
demonstrated by the repurchase of approximately 275,000 of our
shares in the third quarter, as well as our Board’s approval of
another $0.11 per share regular quarterly dividend today.”
Fiscal 2016 Guidance
The Company continues to expect net sales to be in the range of
$590 million to $600 million, operating income to increase to
approximately $72.0 million to $75.0 million and earnings per share
(“EPS”) of $2.00 to $2.10 per diluted share. The Company now
anticipates net income for fiscal 2016 to be in the range of
approximately $47.5 million to $50.0 million, reflecting a higher
than previously anticipated effective tax rate. The Company’s EPS
guidance reflects the higher effective tax rate offset by a lower
share count resulting from its share repurchase program. The
Company's guidance reflects its current outlook and does not take
into account a potential worsening in the global economies or
retail environment. This guidance also assumes no further
significant fluctuations from prevailing foreign currency exchange
rates as well as no unusual items for fiscal 2016.
Quarterly Dividend and Share Repurchase
Program
The Company also announced that on November 24, 2015, the Board
of Directors approved the payment on December 18, 2015 of a cash
dividend in the amount of $0.11 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 December 4,
2015.
During the third quarter of fiscal 2016, the Company repurchased
approximately 275,000 shares under its share repurchase program. As
of October 31, 2015, the Company had $17.2 million remaining under
the $100.0 million share repurchase authorization.
Conference Call
The Company’s management will host a conference call and audio
webcast to discuss its results today, November 24th at 9:00 a.m.
Eastern Time. The conference call may be accessed by dialing
888-438-5525. 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 at 12:00 p.m. ET on November 24, 2015 until
11:59 p.m. ET on December 1, 2015 and can be accessed by dialing
(877) 870-5176 and entering replay pin number 894113.
Movado Group, Inc. designs, sources, and distributes MOVADO®,
EBEL®, CONCORD®, ESQ® Movado, COACH®, TOMMY HILFIGER®, HUGO BOSS®,
JUICY COUTURE®, LACOSTE® and SCUDERIA FERRARI® watches worldwide,
and operates Movado company stores in the United States.
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 and adjusted operating
expenses, which are relevant measures under GAAP, adjusted to
eliminate a charge for the operating efficiency initiatives and
other items. The Company is also presenting adjusted operating
income, which is operating income under GAAP, adjusted to eliminate
a charge for the operating efficiency initiatives and other items.
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 is net income,
earnings per share and effective tax rate under GAAP adjusted to
eliminate the after tax impact of the charge for the operating
efficiency initiatives and other items. 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 year. Comparisons of financial results
on a constant dollar basis are calculated by translating each
foreign currency at the same US 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, trends in consumer debt levels
and bad debt write-offs, general uncertainty related to possible
terrorist attacks, natural disasters, the stability of the European
Union and 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, the ability of the Company to
successfully implement its business strategies, competitive
products and pricing, 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 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, 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, the
continued availability to the Company of financing and credit on
favorable terms, business disruptions, disease, general risks
associated with doing business outside the United States including,
without limitation, import duties, 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
guidance in the future.
(Tables to follow)
MOVADO GROUP, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data)
(Unaudited)
Three
Months Ended Nine Months Ended October 31,
October 31,
2015
2014
2015
2014
Net sales $185,629 $188,557 $451,659 $453,069 Cost of
sales 85,537 88,715 210,080 210,470
Gross profit 100,092 99,842 241,579 242,599 Operating
expenses 66,638 66,509 183,016 181,177
Operating income 33,454 33,333 58,563 61,422 Interest
expense (319 ) (78 ) (727 ) (272 ) Interest income 17 51
105 97 Income before income taxes
33,152 33,306 57,941 61,247 Provision for income taxes
11,242 10,889 20,458 19,231 Net
income 21,910 22,417 37,483 42,016 Less: Net income
attributed to noncontrolling interests 378 208 277
291 Net income attributed to Movado Group,
Inc. $21,532 $22,209 $37,206 $41,725
Per Share Information: Net income attributed to
Movado Group, Inc. $0.92 $0.87 $1.55 $1.63 Weighted diluted average
shares outstanding 23,411 25,616 23,966 25,661
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In
thousands, except for percentage data) (Unaudited)
As Reported %
Change Three Months Ended % Change
Constant October 31, As
Reported Dollar
2015
2014
Total Net sales 185,629 188,557 -1.6% 2.1%
As Reported % Change Nine Months Ended
% Change Constant October 31,
As Reported Dollar
2015
2014
Total Net sales 451,659 453,069 -0.3% 4.1%
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In
thousands, except per share data) (Unaudited)
Net Sales Gross Profit Operating Income
Pre-tax Income
Net IncomeAttributed
toMovado Group,Inc.
EPS
Three Months Ended October 31, 2015 As Reported
(GAAP) $185,629 $100,092 $33,454 $33,152 $21,532 $0.92
Three Months Ended October 31, 2014 As Reported
(GAAP) $188,557 $99,842 $33,333 $33,306 $22,209 $0.87
Nine Months Ended October 31, 2015 As Reported
(GAAP) $451,659 $241,579 $58,563 $57,941 $37,206 $1.55
Operating Efficiency Initiatives and Other Items (1) - 693 2,670
2,670 2,536 0.10
Adjusted Results (Non-GAAP) $451,659
$242,272 $61,233 $60,611 $39,742 $1.65
Nine Months Ended
October 31, 2014 As Reported (GAAP) $453,069 $242,599
$61,422 $61,247 $41,725 $1.63 (1) Related to a charge
for severance, occupancy expenses and the write-off of certain
fixed assets.
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS (In thousands)
(Unaudited)
October 31, January 31,
October 31,
2015
2015
2014
ASSETS
Cash and cash equivalents $181,180 $199,852 $157,937 Trade
receivables, net 124,438 74,106 128,638 Inventories 178,965 170,788
182,663 Other current assets 35,972 40,532 37,927 Total current
assets 520,555 485,278 507,165 Property, plant and
equipment, net 41,331 46,673 45,340 Deferred income taxes 13,476
13,550 13,899 Other non-current assets 37,756 37,522 35,365 Total
assets $613,118 $583,023 $601,769
LIABILITIES AND
EQUITY
Accounts payable $29,514 $27,767 $29,746 Accrued liabilities
50,661 30,933 49,933 Deferred and current income taxes payable
6,951 7,372 12,713 Total current liabilities 87,126 66,072 92,392
Loans payable to bank 40,000 - - Deferred and non-current
income taxes payable 3,165 3,470 3,578 Other non-current
liabilities 29,918 29,196 28,989 Noncontrolling interests 2,468
2,076 2,472 Shareholders' equity 450,441 482,209 474,338 Total
liabilities and equity $613,118 $583,023 $601,769
MOVADO GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (In thousands) (Unaudited)
Nine Months Ended
October 31,
2015
2014
Cash flows from operating activities: Net income $37,483
$42,016 Depreciation and amortization 9,438 9,195 Other non-cash
adjustments 5,495 4,309 Operating efficiency initiatives and other
items 2,670 - Changes in working capital (45,571 ) (54,051 )
Changes in non-current assets and liabilities 725 (120 )
Net cash provided by operating activities 10,240
1,349 Cash flows from investing
activities: Capital expenditures (5,827 ) (7,485 ) Proceeds
from short-term investments - 33,736 Long-term investments - (1,200
) Other investing (193 ) 232
Net cash (used in) /
provided by investing activities (6,020 )
25,283 Cash flows from financing
activities: Proceeds from bank borrowings 50,000 - Repayments
of bank borrowings (10,000 ) - Dividends paid (7,780 ) (7,591 )
Stock repurchase (45,932 ) (13,150 ) Other financing (587 ) 1,242
Net cash (used in) financing activities
(14,299 ) (19,499 ) Effect of
exchange rate changes on cash and cash equivalents (8,593 ) (6,855
) Net change in cash and cash equivalents (18,672 ) 278 Cash and
cash equivalents at beginning of year 199,852 157,659
Cash and cash equivalents at end of period
$181,180 $157,937
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version on businesswire.com: http://www.businesswire.com/news/home/20151124005261/en/
ICR, Inc.Rachel Schacter/Allison Malkin203-682-8200
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