~ Third Quarter Revenue of $179.8 Million
~
~ EPS of $0.87 and Adjusted EPS of $0.91
~
~ Board Declares Quarterly Dividend
~
Movado Group, Inc. (NYSE:MOV) today announced third quarter
results for the period ended October 31, 2016.
Efraim Grinberg, Chairman and Chief Executive Officer, stated,
“We are pleased to report third quarter financial results at the
high end of our internal expectations driven by the disciplined
execution of our strategy. In a challenging retail environment
which pressured sales growth, we delivered a 90 basis point
expansion in gross margin, demonstrating the ongoing power of our
portfolio of brands and the strength of our innovation. We believe
we are well positioned for the holiday season with a strong product
pipeline of traditional and connected watches. We are also excited
to announce a new collaboration with Rebecca Minkoff, the renowned
millennial fashion brand, with plans to launch both men’s and
women’s timepieces in Spring 2017.”
During the third quarter of fiscal 2017, the Company recorded a
charge to non-operating expense of $1.3 million, or $0.04 per
diluted share, for an impairment of a long-term investment in a
privately held company. During the first quarter of fiscal 2017,
the Company recorded a $1.1 million charge, net of tax of $0.7
million, 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 former
Vice Chairman and Chief Operating Officer (“COO’s retirement”).
During the first nine months of fiscal 2016, the Company recorded a
$2.5 million charge, net of tax of $0.2 million or $0.10 per
diluted share, in the first quarter related to operating efficiency
initiatives and other items.
Third Quarter Fiscal 2017 (See attached
table for GAAP and Non-GAAP measures)
- Net sales decreased 3.1% to $179.8
million compared to $185.6 million in the third quarter of fiscal
2016. Net sales on a constant dollar basis decreased 1.4% compared
to net sales in the third quarter of fiscal 2016.
- Gross profit was $98.6 million, or
54.8% of sales, compared to $100.1 million, or 53.9% of sales, in
the third quarter last year. The increase in gross margin
percentage was primarily the result of the favorable impact of
channel and product mix, and certain sourcing improvements
partially offset by the reduced leverage of certain fixed costs as
a result of lower net sales as well as unfavorable changes in
foreign currency exchange rates.
- Operating expenses increased $0.8
million, or 1.3%, to $67.5 million compared to $66.6 million in the
third quarter last year. This increase resulted primarily from a
$2.3 million increase in payroll related and performance based
compensation and an increase of $0.4 million in other selling
related expenses, partially offset by lower marketing expenses of
$1.0 million and the favorable effect of fluctuations in foreign
currency exchange rates of $1.0 million.
- Operating income decreased to $31.1
million compared to operating income of $33.5 million in the same
period last year.
- As mentioned above, other expense
included a $1.3 million, or $0.04 per diluted share, impairment
charge on a long-term investment in a privately held company.
- The Company recorded a tax provision of
$9.3 million, which equates to an effective tax rate of 31.5%, as
compared to a tax provision of $11.2 million or an effective tax
rate 33.9% in the third quarter of fiscal 2016. Based upon adjusted
pre-tax income, the adjusted tax provision was $9.7 million in the
third quarter of fiscal 2017.
- Net income was $20.2 million, or $0.87
per diluted share, compared to net income of $21.5 million, or
$0.92 per diluted share, in the third quarter of fiscal 2016. For
the third quarter of fiscal 2017, adjusted net income was $21.1
million, or $0.91 per diluted share, which excludes $0.9 million,
net of tax, related to the impairment charge on a long-term
investment in a privately held company.
Nine Month Results Fiscal 2017 (See
attached table for GAAP and Non-GAAP measures)
- Net sales decreased 6.6% to $422.0
million compared to $451.7 million in the same period of fiscal
2016. Net sales on a constant dollar basis decreased 5.5% compared
to net sales in the first nine months of fiscal 2016.
- Gross profit was $230.1 million, or
54.5% of sales, compared to $241.6 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 from the adjusted gross margin percentage from
the first nine months of last year was primarily the result of the
favorable impact of channel and product mix and certain sourcing
improvements as well as changes in foreign currency exchange rates,
partially offset by the reduced leverage of certain fixed costs as
a result of lower net sales.
- Operating expenses were $183.6 million
as compared to $183.0 million in the same period last year. For the
first nine months of fiscal 2017, adjusted operating expenses were
$181.8 million, which excludes $1.8 million of expenses related to
the COO’s retirement in the first quarter of fiscal 2017, as
compared to adjusted operating expenses of $181.0 million in the
first nine months of last year, which excludes $2.0 million of
expenses related to operating efficiency initiatives and other
items recorded in the first quarter of fiscal 2016. The $0.8
million increase in adjusted operating expenses resulted primarily
from increases of $1.5 million in payroll related and performance
based compensation, $1.2 million related to allowances for specific
uncollectible customer receivables and the unfavorable effect of
fluctuations in foreign currency exchange rates of $0.5 million,
partially offset by lower marketing expenses of $2.5 million.
- Operating income was $46.5 million
compared to operating income of $58.6 million in the same period
last year. Adjusted operating income for the first nine months of
fiscal 2017, which excludes $1.8 million of expenses related to the
COO’s retirement in the first quarter of fiscal 2017, was $48.3
million. 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.
- As mentioned above, other expense
included a $1.3 million, or $0.04 per diluted share, impairment
charge on a long-term investment in a privately held company in the
third quarter of fiscal 2017.
- The Company recorded a tax provision of
$14.5 million for the first nine months of fiscal 2017 as compared
to a tax provision of $20.5 million for the first nine months of
fiscal 2016. Based upon adjusted pre-tax income, the adjusted tax
provision was $15.5 million compared to an adjusted tax provision
of $20.6 million in the first nine months of fiscal 2016.
- Net income was $29.8 million, or $1.28
per diluted share, compared to net income for the first nine months
of fiscal 2016 of $37.2 million, or $1.55 per diluted share. For
the first nine months of fiscal 2017, adjusted net income was $31.8
million, or $1.37 per diluted share, which excludes $1.1 million in
expenses, net of tax, related to the COO’s retirement in the first
quarter of fiscal 2017, as well as $0.9 million, net of tax,
related to the impairment charge on a long-term investment in a
privately held company in the third quarter of fiscal 2017.
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.
Fiscal 2017 Outlook
The Company is maintaining its outlook for fiscal 2017. The
Company expects net sales will be in a range of $550.0 million to
$560.0 million and operating income will be approximately $50.0
million to $55.0 million. The Company anticipates net income in
fiscal 2017 to be approximately $33.0 million to $36.5 million, or
$1.40 to $1.55 per diluted share, reflecting a 32% anticipated
effective tax rate. The Company's outlook excludes the charges and
related tax benefits associated with the COO’s retirement as well
as the impairment of a long-term investment in a private company
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 also announced that on November 22, 2016, the Board
of Directors approved the payment on December 16, 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 December 2,
2016.
During the third quarter of fiscal 2017, the Company repurchased
approximately 18,000 shares under its share repurchase program. As
of October 31, 2016, the Company had $46.7 million remaining under
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, November 22nd at 9:00 a.m.
Eastern Time. The conference call may be accessed by dialing (877)
627-6581. 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 22, 2016 until 11:59 p.m. ET
on November 29, 2016 and can be accessed by dialing (877) 870-5176
and entering replay pin number 3266919.
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,
adjusted operating expenses and adjusted operating income, which
are gross profit, gross margin, operating expenses and operating
income, 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 tax
provision, which is the tax provision under GAAP, adjusted to
eliminate charges for the impairment of a long-term investment in a
private company, 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 impairment of
a long-term investment in a private company, 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 (including the impact of the June 23, 2016 referendum
advising that the United Kingdom exit from 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 Nine Months Ended October 31,
October 31,
2016
2015
2016
2015
Net sales $179,818 $185,629 $421,967 $451,659 Cost of
sales 81,268 85,537 191,837 210,080 Gross profit 98,550
100,092 230,130 241,579 Operating expenses 67,479 66,638
183,590 183,016 Operating income 31,071 33,454 46,540 58,563
Other expense (1,282) - (1,282) - Interest expense (333)
(319) (1,039) (727) Interest income 45 17 138 105 Income
before income taxes 29,501 33,152 44,357 57,941 Provision
for income taxes 9,286 11,242 14,450 20,458 Net income
20,215 21,910 29,907 37,483 Less: Net income attributed to
noncontrolling interests - 378 78 277 Net income attributed
to Movado Group, Inc. $20,215 $21,532 $29,829 $37,206
Per
Share Information: Net income attributed to Movado Group, Inc.
$0.87 $0.92 $1.28 $1.55 Weighted diluted average shares outstanding
23,230 23,411 23,259 23,966
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
2016
2015
Total Net sales $179,818 $185,629 -3.1% -1.4%
As Reported % Change Nine Months Ended
% Change Constant October 31, As
Reported Dollar
2016
2015
Total Net sales $421,967 $451,659 -6.6% -5.5%
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In
thousands, except per share data) (Unaudited)
Net Sales Gross Profit Operating Income
Pre-tax Income
Provisions for Income
Taxes
Net IncomeAttributed to
MovadoGroup, Inc.
EPS Three Months Ended October 31, 2016 As
Reported (GAAP) $179,818 $98,550 $31,071 $29,501 $9,286 $20,215
$0.87 Impairment of a Long-Term Investment (1) - - - 1,282 398 884
0.04
Adjusted Results (Non-GAAP) $179,818 $98,550 $31,071
$30,783 $9,684 $21,099 $0.91
Three Months Ended October
31, 2015 As Reported (GAAP) $185,629 $100,092 $33,454
$33,152 $11,242 $21,532 $0.92
Nine Months Ended
October 31, 2016 As Reported (GAAP) $421,967 $230,130
$46,540 $44,357 $14,450 $29,829 $1.28 Impairment of a Long-Term
Investment (1) - - - 1,282 398 884 0.04 Retirement Charge (2) - -
1,806 1,806 687 1,119 0.05
Adjusted Results (Non-GAAP)
$421,967 $230,130 $48,346 $47,445 $15,535 $31,832 $1.37
Nine Months Ended October 31, 2015 As Reported (GAAP)
$451,659 $241,579 $58,563 $57,941 $20,458 $37,206 $1.55 Operating
Efficiency Initiatives and Other Items (3) - 693 2,670 2,670 134
2,536 0.10
Adjusted Results (Non-GAAP) $451,659 $242,272
$61,233 $60,611 $20,592 $39,742 $1.65 (1) Related to
a charge for the impairment of a long-term investment. (2) Related
to a charge for the retirement of the Vice Chairman and Chief
Operating Officer. (3) 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,
2016
2016
2015
ASSETS
Cash and cash equivalents $199,758 $228,188 $181,180 Trade
receivables, net 130,076 71,030 124,438 Inventories 169,402 162,465
178,965 Other current assets 28,096 27,352 29,954 Total current
assets 527,332 489,035 514,537 Property, plant and
equipment, net 34,867 38,553 41,331 Deferred and non-current income
taxes 20,614 20,323 19,494 Other non-current assets 41,665 37,259
37,756 Total assets $624,478 $585,170 $613,118
LIABILITIES AND
EQUITY
Loans payable to bank, current $3,000 $5,000 $- Accounts
payable 22,443 27,308 29,514 Accrued liabilities 52,895 39,617
50,661 Income taxes payable 5,601 6,257 6,205 Total current
liabilities 83,939 78,182 86,380 Loans payable to bank
35,000 35,000 40,000 Deferred and non-current income taxes payable
3,145 2,640 3,911 Other non-current liabilities 32,297 28,201
29,918 Noncontrolling interests - 595 2,468 Shareholders' equity
470,097 440,552 450,441 Total liabilities and equity $624,478
$585,170 $613,118
MOVADO GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited) Nine
Months Ended October 31,
2016
2015
Cash flows from operating activities: Net income $29,907
$37,483 Depreciation and amortization 8,520 9,438 Other non-cash
adjustments 11,972 5,495 Operating efficiency initiatives and other
items - 2,670 Changes in working capital (59,668) (45,571) Changes
in non-current assets and liabilities (1,405) 725
Net cash (used
in) / provided by operating activities (10,674)
10,240 Cash flows from investing activities:
Capital expenditures (3,847) (5,827) Restricted cash deposits
(1,156) - Short-term investment (151) - Trademarks and other
intangibles (296) (193)
Net cash (used in) investing
activities (5,450) (6,020) Cash flows
from financing activities: Proceeds from bank borrowings 3,000
50,000 Repayments of bank borrowings (5,000) (10,000) Dividends
paid (8,951) (7,780) Stock repurchase (3,263) (45,932) Purchase of
incremental ownership of U.K. joint venture (1,320) - Other
financing (1,423) (587)
Net cash (used in) financing
activities (16,957) (14,299) Effect of
exchange rate changes on cash and cash equivalents 4,651 (8,593)
Net change in cash and cash equivalents (28,430) (18,672) Cash and
cash equivalents at beginning of period 228,188 199,852
Cash and cash equivalents at end of period $199,758
$181,180
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161122005284/en/
ICR, Inc.Rachel Schacter/Allison Malkin203-682-8200
Movado (NYSE:MOV)
Historical Stock Chart
From Aug 2024 to Sep 2024
Movado (NYSE:MOV)
Historical Stock Chart
From Sep 2023 to Sep 2024