~ Net Sales of $144.9 million ~
~ Operating Income of $10.9 million;
Adjusted Operating Income of $11.6 million ~
~ EPS of $0.40 and Adjusted EPS of $0.43
~
~ Board Approves Quarterly Dividend of $0.35
Per Share ~
Movado Group, Inc. (NYSE: MOV) today announced first quarter
fiscal 2024 results for the period ended April 30, 2023.
Fiscal 2024 First Quarter
Highlights (See attached table for
GAAP and Non-GAAP measures)
- Delivered net sales of $144.9 million versus $163.4 million in
the prior year period;
- Generated gross margin of 56.6% as compared to 59.2% in the
first quarter of fiscal 2023;
- Generated operating income of $10.9 million as compared to
$25.3 million in the prior year period; Adjusted operating income
of $11.6 million as compared to $26.1 million;
- Achieved diluted earnings per share of $0.40 as compared to
$0.79 in the prior year period; Adjusted diluted earnings per share
of $0.43 as compared to $0.82; and
- Ended the quarter with cash of $198.3 million and no debt.
Efraim Grinberg, Chairman and Chief Executive Officer, stated,
“We began the year in line with our expectations amidst a
challenging macro environment and following our best-ever first
quarter performance last year. Despite this backdrop, our teams
continued to execute against our strategic priorities to maximize
the power of our brands with exceptional innovation.”
Mr. Grinberg continued, “As we look ahead, we continue to
believe we will face a difficult consumer environment in the U.S.
and Europe, our two largest regions. However, we believe we are
well positioned to capture the opportunities in the marketplace and
will continue to execute with discipline. We are excited about our
product innovation pipeline across our owned and licensed brands,
and we will continue to invest in support of our teams, regions and
brands with continued focus on Movado’s refreshed marketing message
as we build on its strength and heritage. We will do all this while
controlling costs and leveraging the strength of our balance sheet
with $198 million in cash and no debt as of quarter end.”
Non-GAAP Items (See attached table for GAAP and Non-GAAP
measures)
First quarter fiscal 2024 results of operations included the
following charge:
- 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
acquisitions of Olivia Burton and MVMT.
First quarter fiscal 2023 results of operations included the
following charge:
- $0.8 million pre-tax charge, or $0.6 million after tax,
representing $0.03 per diluted share, associated with the
amortization of acquired intangible assets and deferred
compensation related to the acquisition of Olivia Burton and
MVMT.
In this press release, reference to “adjusted” results exclude
the impact of the above charges from the first quarter of fiscal
years 2024 and 2023. Please refer to the attached table of GAAP and
Non-GAAP measures for a detailed reconciliation of the Company’s
reported results to its adjusted, non-GAAP results.
First Quarter Fiscal 2024
Results
- Net sales decreased 11.3% (-10.1% on a constant dollar basis)
to $144.9 million compared to $163.4 million in the first quarter
of fiscal 2023. The decrease in net sales reflected declines in
wholesale customers’ brick and mortar stores, online retail and
Movado Company Stores due to the challenging macro environment.
U.S. net sales decreased 15.7% as compared to the first quarter of
last year. International net sales decreased 8.1% (-6.0% on a
constant dollar basis) as compared to the first quarter of last
year.
- Gross profit was $82.0 million, or 56.6% of net sales, compared
to $96.7 million, or 59.2% of net sales in the first quarter of
fiscal 2023. The decrease in gross margin percentage was primarily
the result of the unfavorable changes in channel and product mix
and the unfavorable impact of foreign currency exchange rates,
partially offset by reduced shipping costs.
- Operating expenses decreased to $71.1 million in the first
quarter of fiscal 2024 from $71.4 million in the first quarter of
fiscal 2023. Adjusted operating expenses were $70.4 million
compared to $70.6 million in the prior year period. The slight
decrease was primarily due to lower marketing expenses and
performance-based compensation, mostly offset by higher
payroll-related expenses. As a percent of sales, adjusted operating
expenses increased to 48.6% of sales from 43.2% in the prior year
period due to lower sales.
- Operating income was $10.9 million compared to operating income
of $25.3 million in the first quarter of fiscal 2023. Adjusted
operating income was $11.6 million for the first quarter of fiscal
2024 and $26.1 million for the prior year period.
- The Company recorded a tax provision of $2.5 million, as
compared to a tax provision of $6.0 million in the first quarter of
fiscal 2023. Based upon adjusted pre-tax income, the adjusted tax
provision was $2.7 million, or an adjusted tax rate of 21.6%, as
compared to an adjusted tax provision of $6.2 million, or an
adjusted tax rate of 23.7%, in the first quarter of fiscal
2023.
- Net income for the first quarter of fiscal 2024 was $9.1
million, or $0.40 per diluted share, compared to net income of
$18.5 million, or $0.79 per diluted share, for the same period in
the prior year. Adjusted net income for the fiscal 2024 period was
$9.7 million, or $0.43 per diluted share, compared to adjusted net
income of $19.1 million, or $0.82 per diluted share, for the first
quarter of fiscal 2023.
Fiscal 2024 Outlook
The Company continues to expect fiscal 2024 net sales to be in a
range of approximately $725.0 million to $750.0 million, gross
profit of approximately 56.0% of net sales, and operating income in
a range of $80.0 million to $85.0 million. Assuming no changes to
the current tax regulations, the Company anticipates an effective
tax rate of approximately 22% for the fiscal year and earnings of
$2.70 to $2.90 per diluted share. The outlook excludes
approximately $2.1 million of amortization of acquired intangible
assets for fiscal 2024 related to the Olivia Burton and MVMT
brands. For the first half of fiscal 2024, the Company continues to
expect sales to decline in a range of 9% to 12% relative to the
prior-year period as it anniversaries the record first half results
of fiscal 2023. 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 that on May 25, 2023, the Board of
Directors approved the payment on June 21, 2023 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 7, 2023.
During the first quarter of fiscal 2024, the Company repurchased
approximately 14,000 shares under its share repurchase program. As
of April 30, 2023 , the Company had $20.6 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, May 25th, 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 25, 2023 until 11:59 p.m. ET on
June 8, 2023 and can be accessed by dialing (844) 512-2921 and
entering replay pin number 13738816.
Movado Group, Inc. designs, sources, and distributes MOVADO®,
MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, CALVIN KLEIN®, COACH®,
TOMMY HILFIGER®, HUGO BOSS®, and LACOSTE®, 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,
2023
2022
Net sales
$
144,905
$
163,424
Cost of sales
62,902
66,739
Gross profit
82,003
96,685
Total operating
expenses
71,104
71,391
Operating income
10,899
25,294
Non-operating income/(expense): Other income, net
1,025
83
Interest expense
(113
)
(112
)
Income before income taxes
11,811
25,265
Provision for income taxes
2,534
6,011
Net income
9,277
19,254
Less: Net income attributable to noncontrolling interests
149
741
Net income attributable to Movado Group, Inc.
$
9,128
$
18,513
Diluted Income Per Share Information Net income
per share attributable to Movado Group, Inc.
$
0.40
$
0.79
Weighted diluted average shares outstanding
22,672
23,397
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In
thousands, except for percentage data) (Unaudited)
Three Months Ended April 30, %
Change
2023
2022
Total net sales, as reported
$
144,905
$
163,424
-11.3
%
Total net sales, constant dollar basis
$
146,851
$
163,424
-10.1
%
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In
thousands, except per share data) (Unaudited)
Net Sales Gross Profit Total Operating
Expenses Operating Income Pre-tax Income
Provision for Income Taxes Net Income Attributable to
Movado Group, Inc. Diluted EPS Three Months Ended
April 30, 2023 As Reported (GAAP)
$
144,905
$
82,003
$
71,104
$
10,899
$
11,811
$
2,534
$
9,128
$
0.40
Olivia Burton and MVMT Costs (1)
-
-
(707
)
707
707
170
537
0.03
Adjusted Results (Non-GAAP)
$
144,905
$
82,003
$
70,397
$
11,606
$
12,518
$
2,704
$
9,665
$
0.43
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 and MVMT Costs (1)
-
-
(769
)
769
769
151
618
0.03
Adjusted Results (Non-GAAP)
$
163,424
$
96,685
$
70,622
$
26,063
$
26,034
$
6,162
$
19,131
$
0.82
(1) Related to the amortization of acquired
intangible assets for Olivia Burton and MVMT and MVMT's deferred
compensation, where applicable.
MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (In
thousands) (Unaudited) April 30,
January 31, April 30,
2023
2023
2022
ASSETS Cash and
cash equivalents
$
198,257
$
251,584
$
225,256
Trade receivables, net
94,037
94,282
92,744
Inventories
195,235
186,203
180,003
Other current assets
25,804
24,212
23,558
Income taxes receivable
12,057
10,908
3,421
Total current assets
525,390
567,189
524,982
Property, plant and equipment, net
19,075
18,699
18,434
Operating lease right-of-use assets
76,194
80,897
79,717
Deferred and non-current income taxes
45,049
44,490
42,854
Other intangibles, net
8,996
9,642
11,990
Other non-current assets
66,792
66,788
62,007
Total assets
$
741,496
$
787,705
$
739,984
LIABILITIES AND EQUITY
Accounts payable
$
24,443
$
32,085
$
44,140
Accrued liabilities
48,858
46,720
54,698
Accrued payroll and benefits
7,597
17,343
7,822
Current operating lease liabilities
17,558
17,681
16,588
Income taxes payable
17,557
28,591
15,141
Total current liabilities
116,013
142,420
138,389
Deferred and non-current income taxes payable
14,540
15,163
19,385
Non-current operating lease liabilities
66,743
70,910
70,440
Other non-current liabilities
49,287
48,668
47,301
Redeemable noncontrolling interest
-
-
2,251
Shareholders' equity
491,971
507,606
459,650
Noncontrolling interest
2,942
2,938
2,568
Total equity
494,913
510,544
462,218
Total liabilities, redeemable noncontrolling interest and
equity
$
741,496
$
787,705
$
739,984
MOVADO GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (In thousands) (Unaudited)
Three Months
Ended
April 30,
2023
2022
Cash flows from operating activities: Net income
$ 9,277
$ 19,254
Depreciation and amortization
2,557
2,932
Other non-cash adjustments
1,917
1,239
Changes in working capital
(36,022)
(43,676)
Changes in non-current assets and liabilities
774
(501)
Net cash used in operating activities
(21,497)
(20,752)
Cash flows from investing activities: Capital
expenditures
(2,257)
(1,381)
Long-term investments
(600)
(1,850)
Trademarks and other intangibles
(26)
(22)
Net cash used in investing activities
(2,883)
(3,253)
Cash flows from financing activities: Dividends paid
(29,901)
(7,940)
Stock repurchase
(381)
(14,439)
Stock awards and options exercised and other changes
-
(405)
Other
-
(85)
Net cash used in financing activities
(30,282)
(22,869)
Effect of exchange rate changes on cash, cash
equivalents, and restricted cash
1,349
(5,026)
Net change in cash, cash equivalents, and restricted cash
(53,313)
(51,900)
Cash, cash equivalents, and restricted cash at beginning of period
252,179
277,716
Cash, cash equivalents, and restricted cash at end of
period
$
198,866
$
225,816
Reconciliation of cash, cash equivalents, and
restricted cash: Cash and cash equivalents
$
198,257
$
225,256
Restricted cash included in other non-current assets
609
560
Cash, cash equivalents, and restricted cash
$
198,866
$
225,816
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ICR, Inc. Rachel Schacter/Allison Malkin 203-682-8200
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