~ Net Sales of $159.3 million ~
~ Operating Income of $3.0 million ~
~ EPS of $0.16 ~
~ Updates Fiscal Year 2025 Outlook ~
~ Board Declares Quarterly Dividend of $0.35
Per Share ~
Movado Group, Inc. (NYSE: MOV) today announced second quarter
and six-month results for the periods ended July 31, 2024.
Efraim Grinberg, Chairman and Chief Executive Officer, stated,
“While increased marketing investment coupled with our initiatives
to enhance retail performance drove improvement in our sales trend
from the first quarter, second quarter sales and earnings were
below our expectations due to the challenging consumer spending
environment compounded by increased expenses to support future
growth. Despite this, the quarter exhibited some bright spots that
we expect to capitalize on during the second half of the year. The
quarter saw our Movado brand sales increase by 1.4% with
significant growth in the direct-to-consumer channel with
Movado.com sales increasing by 21%, partially offset by a 5.5%
decline in our wholesale channel. This reflected a strong response
to the innovation across our product offerings, particularly the
success of our Movado Bold Quest collection, which features a new
shaped design inspired by a vintage Movado from the 1970’s. Opening
at $595, Bold Quest fills more accessible price points that we had
previously vacated.
We expect to build upon this positive momentum with the launch
of a major marketing campaign in support of our Movado Icons
initiative, as announced yesterday. This new advertising campaign
features icons Julianne Moore, Jessica Alba, Ludacris, Tyrese
Haliburton, and Christian McCaffrey, and showcases Ludacris’ iconic
song, Stand Up. The campaign, which marks our largest campaign in
Movado brand history, will reach millions of consumers this fall in
multiple touchpoints such as print, social, outdoor, digital and
television.
While we are excited by the initiatives that we have put in
place, the consumer spending environment in the watch category
continues to be difficult in many markets around the world and we
believe this will have an impact on our second half results. As
such, we have updated our outlook for the balance of the year.
As we begin to plan for next fiscal year, we are committed to
reducing our operating expenses to improve profitability. At the
same time, we expect the combination of our upcoming marketing
initiatives, along with compelling innovation, to drive excitement
for our brands and business.
We continue to be in a strong financial position, concluding the
quarter with $198 million in cash and no debt, positioning us well
to execute our strategic plans moving forward.”
Second Quarter Fiscal 2025
Highlights
- Delivered net sales of $159.3 million versus $160.4 million in
the second quarter of fiscal 2024;
- Generated gross margin of 54.2% as compared to 55.7% in the
prior year period;
- Generated operating income of $3.0 million as compared to $9.6
million in the prior year period;
- Achieved diluted earnings per share of $0.16 as compared to
$0.36 in the prior year period; and
- Ended the quarter with cash of $198.3 million and no debt.
Second Quarter Fiscal 2025
Results
- Net sales decreased 0.7% (a 0.3% decline on a constant dollar
basis) to $159.3 million compared to $160.4 million in the second
quarter of fiscal 2024. The decrease in net sales reflected sales
mix in Movado Company Stores and wholesale customers’ brick and
mortar stores, partially offset by an increase in U.S. online
retail. U.S. net sales decreased 0.3% as compared to the second
quarter of last year. International net sales decreased 0.9% (a
0.3% decline on a constant dollar basis) as compared to the second
quarter of last year.
- Gross profit was $86.4 million, or 54.2% of net sales, compared
to $89.3 million, or 55.7% of net sales, in the second quarter of
fiscal 2024. The decrease in gross margin percentage was primarily
the result of the unfavorable changes in channel and product
mix.
- Operating expenses were $83.3 million compared to $79.6 million
in the second quarter of fiscal 2024. This increase was primarily
due to higher marketing expenses, partially offset by lower
performance-based compensation. As a percentage of sales, operating
expenses increased to 52.3% of net sales from 49.7% in the prior
year period, reflecting increased marketing spend to support
strategic growth opportunities.
- Operating income was $3.0 million compared to $9.6 million in
the second quarter of fiscal 2024.
- The Company recorded a tax provision of $0.9 million, or an
effective tax rate of 19.5%, as compared to a tax provision of $2.9
million, or an effective tax rate of 26.1%, in the second quarter
of fiscal 2024.
- Net income was $3.7 million, or $0.16 per diluted share,
compared to net income of $8.0 million, or $0.36 per diluted share,
in the second quarter of fiscal 2024.
First Half Fiscal 2025
Results
- Net sales for the first six months of fiscal 2025 decreased
3.1% to $296.0 million (a 3.1% decrease on a constant dollar basis)
compared to $305.3 million in the first six months of fiscal 2024.
The decrease in net sales reflected sales mix in wholesale
customers’ brick and mortar stores and in Movado Company Stores,
partially offset by an increase in U.S. online retail. U.S. net
sales decreased 3.0% as compared to the first six months of last
year. International net sales decreased 3.1% (a 3.1% decrease on a
constant dollar basis) as compared to the first six months of last
year.
- Gross profit was $161.9 million, or 54.7% of net sales,
compared to $171.3 million, or 56.1% of net sales in the first six
months of fiscal 2024. The decrease in gross margin percentage was
primarily the result of the unfavorable changes in channel and
product mix and decreased leverage of higher fixed costs on lower
sales, partially offset by reduced shipping costs.
- Operating expenses were $155.5 million, as compared to $150.7
million in the first six months of fiscal 2024. This increase was
primarily due to higher marketing and payroll-related costs,
partially offset by lower performance-based compensation. As a
percentage of sales, operating expenses increased to 52.5% of net
sales from 49.4% in the prior year period.
- Operating income was $6.3 million compared to operating income
of $20.5 million in the first six months of fiscal 2024.
- The Company recorded a tax provision of $3.2 million, or an
effective tax rate of 31.9%, as compared to a provision of $5.4
million, or an effective tax rate of 23.7%, in the first six months
of fiscal 2024.
- Net income was $6.6 million, or $0.29 per diluted share,
compared to net income of $17.2 million, or $0.76 per diluted
share, in the first six months of last year.
Fiscal 2025 Outlook
The Company is revising its previously provided outlook to
reflect second-quarter results and the expected continuing impact
of a challenging environment.
For Fiscal Year 2025, the Company currently expects:
- Net sales in a range of approximately $665.0 million to $675.0
million, as compared to its previous expectation of $700.0 million
to $710.0 million; second half sales are expected to be flat to
slightly positive as compared to last year;
- Gross profit of approximately 54% of net sales, as compared to
its previous expectation of 55%;
- Operating income in a range of $23.0 million to $26.0 million,
as compared to its previous expectation of $32.0 million to $35.0
million; this revised outlook contemplates approximately $20
million of incremental investments in brand-building initiatives as
compared to last year;
- An effective tax rate of approximately 25%, as compared to its
previous expectation of 22%; and
- Earnings of $0.90 to $1.00 per diluted share, as compared to
its previous expectation of $1.20 to $1.30 per diluted share.
This outlook does not contemplate further deterioration due to
the impact of economic uncertainty and assumes no further
significant fluctuations from prevailing foreign currency exchange
rates.
Quarterly Dividend and Share Repurchase
Program
The Company also announced today that on September 5, 2024, the
Board of Directors approved the payment on September 30, 2024, 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 September 16,
2024.
During the first six months of fiscal 2025, the Company
repurchased approximately 39,000 shares under its November 23,
2021, share repurchase program. As of July 31, 2024, the Company
had $16.8 million remaining available under the share repurchase
program.
Conference Call
The Company’s management will host a conference call and audio
webcast to discuss its results today, September 5, 2024, 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 replay of the
call will be available from 1:00 p.m. ET on September 5, 2024,
until 11:59 p.m. ET on September 19, 2024, and can be accessed by
dialing (844) 512-2921 and entering replay pin number 13748504.
Movado Group, Inc. designs, sources, and distributes MOVADO®,
MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, CALVIN KLEIN®, COACH®, HUGO
BOSS®, LACOSTE®, and TOMMY HILFIGER® watches, and, to a lesser
extent, jewelry and other accessories, and operates Movado Company
Stores in the United States and Canada.
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, elevated
interest rates, increased commodity prices and tightness in the
labor market, trends in consumer debt levels and bad debt
write-offs, general uncertainty related to geopolitical concerns,
the impact of international hostilities, including the Russian
invasion of Ukraine and war in the Middle East, on global markets,
economies and consumer spending, on energy and shipping costs, and
on the Company’s supply chain and suppliers, supply disruptions,
delivery delays and increased shipping costs, defaults on or
downgrades of sovereign debt and the impact of any of those events
on consumer spending, evolving stakeholder expectations and
emerging complex laws on environmental, social, and governance
matters, 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
internationally, including, without limitation, import duties,
tariffs (including retaliatory tariffs), quotas, political and
economic stability, changes to existing laws or regulations, and
impacts of currency exchange rate fluctuations and the success of
hedging strategies related thereto, 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
Six Months Ended
July 31,
July 31,
2024
2023
2024
2023
Net sales
$
159,313
$
160,390
$
295,982
$
305,295
Cost of sales
72,948
71,104
134,104
134,006
Gross profit
86,365
89,286
161,878
171,289
Total operating expenses
83,335
79,638
155,537
150,742
Operating income
3,030
9,648
6,341
20,547
Non-operating income/(expense): Other income, net
1,877
1,537
4,049
2,562
Interest expense
(110
)
(113
)
(228
)
(226
)
Income before income taxes
4,797
11,072
10,162
22,883
Provision for income taxes
936
2,885
3,238
5,419
Net income
3,861
8,187
6,924
17,464
Less: Net income attributable to noncontrolling interests
140
138
312
287
Net income attributable to Movado Group, Inc.
$
3,721
$
8,049
$
6,612
$
17,177
Diluted Income Per Share Information Net income per
share attributable to Movado Group, Inc.
$
0.16
$
0.36
$
0.29
$
0.76
Weighted diluted average shares outstanding
22,658
22,616
22,665
22,642
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES
(In thousands, except for percentage data)
(Unaudited)
Three Months Ended
July 31,
% Change
2024
2023
Total net sales, as reported
$
159,313
$
160,390
-0.7%
Total net sales, constant dollar basis
$
159,915
$
160,390
-0.3%
Six Months Ended
July 31,
% Change
2024
2023
Total net sales, as reported
$
295,982
$
305,295
-3.1%
Total net sales, constant dollar basis
$
295,962
$
305,295
-3.1%
MOVADO GROUP, INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
July 31,
January 31,
July 31,
2024
2024
2023
ASSETS Cash and
cash equivalents
$
198,251
$
262,059
$
218,909
Trade receivables, net
109,784
104,472
95,821
Inventories
176,396
148,031
181,448
Other current assets
26,421
17,962
25,206
Income taxes receivable
13,088
11,354
12,988
Total current assets
523,940
543,878
534,372
Property, plant and equipment, net
20,315
19,436
19,740
Operating lease right-of-use assets
85,350
82,661
71,358
Deferred and non-current income taxes
42,685
43,016
45,004
Other intangibles, net
6,645
7,493
8,432
Other non-current assets
80,253
72,598
70,791
Total assets
$
759,188
$
769,082
$
749,697
LIABILITIES AND EQUITY
Accounts payable
$
36,769
$
32,775
$
28,435
Accrued liabilities
45,074
38,695
47,135
Accrued payroll and benefits
9,778
7,591
10,976
Current operating lease liabilities
18,352
15,696
17,069
Income taxes payable
8,962
18,318
18,078
Total current liabilities
118,935
113,075
121,693
Deferred and non-current income taxes payable
1,028
8,234
8,321
Non-current operating lease liabilities
76,314
76,396
63,565
Other non-current liabilities
56,336
52,420
52,220
Shareholders' equity
504,116
516,798
500,784
Noncontrolling interest
2,459
2,159
3,114
Total equity
506,575
518,957
503,898
Total liabilities and equity
$
759,188
$
769,082
$
749,697
MOVADO GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
July 31,
2024
2023
Cash flows from operating activities: Net income
$
6,924
$
17,464
Depreciation and amortization
4,582
5,039
Other non-cash adjustments
4,690
5,427
Changes in working capital
(52,388
)
(19,999
)
Changes in non-current assets and liabilities
282
1,295
Net cash (used in)/provided by operating activities
(35,910
)
9,226
Cash flows from investing activities: Capital
expenditures
(3,913
)
(4,620
)
Long-term investments
(4,310
)
(1,407
)
Trademarks and other intangibles
(82
)
(54
)
Net cash used in investing activities
(8,305
)
(6,081
)
Cash flows from financing activities: Dividends paid
(15,547
)
(37,650
)
Stock repurchase
(1,086
)
(433
)
Stock awards and options exercised and other changes
(1,075
)
(92
)
Net cash used in financing activities
(17,708
)
(38,175
)
Effect of exchange rate changes on cash, cash equivalents,
and restricted cash
(1,900
)
3,131
Net change in cash, cash equivalents, and restricted cash
(63,823
)
(31,899
)
Cash, cash equivalents, and restricted cash at beginning of period
262,814
252,179
Cash, cash equivalents, and restricted cash at end of
period
$
198,991
$
220,280
Reconciliation of cash, cash equivalents, and restricted
cash: Cash and cash equivalents
$
198,251
$
218,909
Restricted cash included in other non-current assets
740
1,371
Cash, cash equivalents, and restricted cash
$
198,991
$
220,280
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240905992036/en/
ICR, Inc. Allison Malkin 203-682-8225
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