~ First Quarter Revenue of $114.1 Million,
Reported EPS of $0.14 and Adjusted EPS of $0.19 ~
~ Updates Full Year Outlook to Sales of $565
Million to $580 Million and Operating Income of $55 Million to $60
Million ~
~ Board Declares Quarterly Dividend
~
Movado Group, Inc. (NYSE:MOV) today announced first quarter
results for the period ended April 30, 2016.
Efraim Grinberg, Chairman and Chief Executive Officer, stated,
“While we delivered results which were in line with our first
quarter expectations, given the current retail trends, particularly
in the fashion watch category in the United States, we feel it is
prudent to lower our annual outlook. As we look to the balance of
the year, we expect our brands to continue to increase market share
and we remain encouraged by our innovation pipeline as evidenced by
the early success of the Movado Edge collection, as well as our
beautifully designed connected Movado watches. Our strong balance
sheet allows us to continue to invest in our global brand building
efforts while maintaining a high level of flexibility in this
volatile environment.”
As expected, during the first quarter of fiscal 2017, the
Company recorded a $1.8 million pre-tax charge, or $0.05 per
diluted share, for the immediate vesting of stock awards and
certain other compensation related to the announcement of the
retirement of Rick Coté, the Company’s Vice Chairman and Chief
Operating Officer, in fiscal 2017 (“COO’s retirement”). In 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 in fiscal 2016.
First Quarter Fiscal 2017 Results (see
attached table for GAAP and non-GAAP measures)
- Net sales were $114.1 million compared
to $120.5 million in the first quarter of fiscal 2016. Net sales on
a constant dollar basis decreased 5.0% compared to net sales for
the fiscal 2016 first quarter.
- Gross profit was $61.3 million, or
53.8% of sales, compared to $62.4 million, or 51.8% of sales, in
the first quarter last year. Adjusted gross profit for the first
quarter of fiscal 2016, which excludes $0.7 million in charges
related to operating efficiency initiatives and other items, was
$63.1 million, or 52.4% of sales. The increase from adjusted gross
margin percentage was primarily the result of the favorable impact
of changes in foreign currency exchange rates as well as channel
and product mix, selective price increases and certain sourcing
improvements.
- Operating expenses were $55.9 million
as compared to $55.6 million in the first quarter of last year. For
the first quarter of fiscal 2017, adjusted operating expenses were
$54.1 million, which excludes $1.8 million of expenses related to
the COO’s retirement in fiscal 2017. For the first quarter of
fiscal 2016, adjusted operating expenses were $53.6 million, which
excludes $2.0 million of expenses related to operating efficiency
initiatives and other items. The increase in adjusted operating
expenses was primarily the result of the unfavorable effect of
fluctuations in foreign currency rates.
- Operating income was $5.4 million
compared to $6.9 million in the same period last year. Adjusted
operating income for the first quarter of fiscal 2017, which
excludes $1.8 million of expenses related to the COO’s retirement
in fiscal 2017, was $7.2 million. Adjusted operating income for the
first quarter of fiscal 2016, which excludes $2.7 million of
expenses related to operating efficiency initiatives and other
items, was $9.5 million.
- The Company recorded a tax provision of
$1.7 million as compared to a tax provision of $3.1 million, in the
first quarter last year. Based upon adjusted pre-tax income, the
adjusted tax provision for income tax was $2.4 million compared to
an adjusted tax provision for income tax of $3.3 million in the
first quarter of fiscal 2016.
- Net income was $3.3 million, or $0.14
per diluted share, compared to net income of $3.6 million, or $0.15
per diluted share in the same quarter last year. For the first
quarter of fiscal 2017, adjusted net income was $4.4 million, or
$0.19 per diluted share, which excludes $1.1 million in expenses,
net of tax, related to the COO’s retirement in fiscal 2017 compared
to adjusted net income of $6.2 million, or $0.25 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.
Updated Fiscal 2017
Outlook
The Company is updating its outlook for fiscal 2017. In fiscal
2017, the Company anticipates that net sales will be in a range of
$565.0 million to $580.0 million and operating income will be
approximately $55.0 million to $60.0 million. The Company
anticipates net income in fiscal 2017 to be approximately $36.5
million to $40.0 million, or $1.55 to $1.70 per diluted share,
reflecting a 32% anticipated effective tax rate. The Company's
outlook excludes the charge related to the COO’s retirement and
assumes no further significant fluctuations from prevailing foreign
currency exchange rates, as well as no other unusual items, for
fiscal 2017.
Quarterly Dividend and Share Repurchase
Program
The Company announced that on May 26, 2016, the Board of
Directors approved the payment on June 21, 2016 of a cash dividend
in the amount of $0.13 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, 2016.
During the first quarter of fiscal 2017, the Company repurchased
approximately 34,000 shares under its share repurchase program. As
of April 30, 2016, $0.9 million was utilized of the $50.0 million
share repurchase authorization.
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 (888)
587-0615. 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 at 12:00 p.m. ET on May 26, 2016 until 11:59 p.m. ET on
June 2, 2016 and can be accessed by dialing (877) 870-5176 and
entering replay pin number 4068038.
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, adjusted gross margin and
adjusted operating expenses, which are gross profit, gross margin
and operating expenses, respectively, under GAAP, adjusted to
eliminate charges for the COO’s retirement and operating efficiency
initiatives and other unusual items. The Company is also presenting
adjusted operating income and adjusted tax provision, which is
operating income and tax provision under GAAP, adjusted to
eliminate charges for the COO’s retirement and operating efficiency
initiatives and other unusual 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 are net income, earnings per
share and effective tax rate, respectively, under GAAP, adjusted to
eliminate the after tax impact of the charges for the COO’s
retirement and operating efficiency initiatives and other unusual
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 period. 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
outlook in the future.
MOVADO GROUP, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data)
(Unaudited) Three
Months Ended April 30, 2016
2015 Net sales $ 114,063 $ 120,461
Cost of sales 52,746 58,012
Gross profit 61,317 62,449 Operating expenses
55,939 55,574 Operating income 5,378
6,875 Interest expense (375 ) (152 ) Interest income
57 53 Income before income taxes 5,060
6,776 Provision for income taxes 1,723
3,135 Net income 3,337 3,641 Less: Net income
attributed to noncontrolling interests 29 19
Net income attributed to Movado Group, Inc. $ 3,308
$ 3,622
Per Share Information: Net
income attributed to Movado Group, Inc. $ 0.14 $ 0.15 Weighted
diluted average shares outstanding 23,349 24,569
MOVADO GROUP,
INC. GAAP AND NON-GAAP MEASURES (In thousands, except
for percentage data) (Unaudited)
As Reported % Change Three
Months Ended % Change Constant April 30,
As Reported Dollar
2016 2015 Total Net
sales $ 114,063 $ 120,461 -5.3 % -5.0 %
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 Income Attributed to Movado
Group, Inc.
EPS Three Months Ended April 30, 2016
As Reported (GAAP) $ 114,063 $ 61,317 $ 5,378 $ 5,060 $
3,308 $ 0.14 Retirement Charge (1) - - 1,806
1,806 1,119 0.05
Adjusted Results
(Non-GAAP) $ 114,063 $ 61,317 $ 7,184 $ 6,866 $ 4,427 $ 0.19
Three Months Ended April 30, 2015 As Reported
(GAAP) $ 120,461 $ 62,449 $ 6,875 $ 6,776 $ 3,622 $ 0.15
Operating Efficiency Initiatives and Other Items (2) -
693 2,670 2,670 2,536 0.10
Adjusted Results (Non-GAAP) $ 120,461 $ 63,142 $ 9,545 $
9,446 $ 6,158 $ 0.25 (1) Related to a charge for the
retirement of the Vice Chairman and Chief Operating Officer. (2)
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) April
30, January 31, April 30,
2016 2016
2015 ASSETS Cash and
cash equivalents $ 203,909 $ 228,188 $ 185,828 Trade receivables,
net 75,771 71,030 73,472 Inventories 178,388 162,465 183,904 Other
current assets 36,472 27,352 37,705 Total
current assets 494,540 489,035 480,909
Property, plant and equipment, net 37,247 38,553 44,354 Deferred
and non-current income taxes 20,697 20,323 19,791 Other non-current
assets 41,578 37,259 39,483 Total assets $
594,062 $ 585,170 $ 584,537
LIABILITIES AND
EQUITY Loans payable to bank, current $ - $ 5,000
$ 25,000 Accounts payable 27,677 27,308 25,647 Accrued liabilities
37,191 39,617 37,899 Income taxes payable 893 6,257
1,130 Total current liabilities 65,761 78,182
89,676 Loans payable to bank 35,000 35,000 - Deferred
and non-current income taxes payable 3,008 2,640 3,727 Other
non-current liabilities 30,875 28,201 30,484 Noncontrolling
interests 632 595 2,093 Shareholders' equity 458,786
440,552 458,557 Total liabilities and equity $ 594,062 $
585,170 $ 584,537
MOVADO GROUP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Three Months
Ended April 30, 2016
2015 Cash flows from operating
activities: Net income $ 3,337 $ 3,641 Depreciation and
amortization 2,901 2,981 Other non-cash adjustments 3,051 1,317
Operating efficiency initiatives and other items - 2,670 Changes in
working capital (29,167 ) (21,428 ) Changes in non-current assets
and liabilities (1,103 ) (355 )
Net cash (used in)
operating activities (20,981 )
(11,174 ) Cash flows from investing
activities: Capital expenditures (538 ) (1,461 ) Restricted
cash deposits (1,070 ) - Short-term investment (156 ) - Trademarks
and other intangibles (226 ) (94 )
Net cash (used
in) investing activities (1,990 )
(1,555 ) Cash flows from financing
activities: Proceeds from bank borrowings - 25,000 Repayments
of bank borrowings (5,000 ) - Dividends paid (2,983 ) (2,636 )
Stock repurchase (943 ) (22,154 ) Other financing (1,307 )
(471 )
Net cash (used in) financing activities
(10,233 ) (261 ) Effect
of exchange rate changes on cash and cash equivalents 8,925 (1,034
) Net change in cash and cash equivalents (24,279 ) (14,024 ) Cash
and cash equivalents at beginning of year 228,188
199,852
Cash and cash equivalents at end of
period $ 203,909 $ 185,828
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version on businesswire.com: http://www.businesswire.com/news/home/20160526005392/en/
ICR, Inc.Rachel Schacter/Allison Malkin, 203-682-8200
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