PARAMUS, N.J., June 9 /PRNewswire-FirstCall/ -- Movado Group, Inc.
(NYSE: MOV), today announced first quarter results for the period
ended April 30, 2009. First Quarter Fiscal 2010 -- Net sales in the
first quarter of fiscal 2010 were $67.6 million compared to $101.4
million. Net sales for the quarter included $4.3 million of sales
of excess discontinued product. -- Gross profit was $37.0 million,
or 54.8% of sales, compared to $65.0 million, or 64.2% of sales
last year. Excluding excess discontinued product sales, adjusted
gross margin in the first quarter was 59.7% of sales. -- Operating
expenses decreased $15.3 million, or 24.1%, to $48.1 million versus
$63.4 million last year. -- A net loss of $9.0 million, or $0.37
per fully diluted share, was recorded in the first quarter of
fiscal 2010 versus net income of $1.2 million, or $0.05 per fully
diluted share, last year. Efraim Grinberg, President and Chief
Executive Officer, stated, "Considering the ongoing difficult
economic environment, we are pleased with our first quarter
performance. In our seasonally smallest quarter, we experienced a
sales decline but maintained a solid gross margin. We also took
advantage of opportunities to convert excess discontinued product
into cash. This coupled with cost reduction initiatives and
stringent expense management led to better than expected results
for the quarter. While we continue to be challenged by our retail
customers' relentless focus on lowering their inventory, we expect
to see an improvement in these trends beginning in the second half
of this year as our customers start to replenish inventory ahead of
the holiday season. We remain confident that our strong portfolio
of brands provides a compelling value proposition to our consumer
base at all levels, from the high end of the luxury watch market to
the more affordable fashion watch category. The strength of our
brands, along with a well-diversified global business, strongly
positions Movado Group to gain market share and to benefit from
improvements in the marketplace." Rick Cote, Executive Vice
President and Chief Operating Officer, stated, "The decisive cost
savings initiatives we embarked upon last year are clearly
materializing in our results, as first quarter operating expenses
declined 24% from the year-ago period. We continue to execute these
programs, which are expected to generate annualized cost savings of
between $50 million and $60 million, most of which we expect to
realize this year. Additionally, as expected, we have secured a new
$50 million asset-based loan agreement with Bank of America. This
three year facility replaces our current domestic debt outstanding
and we expect that, together with cash from operations, it will be
sufficient to finance our business on an ongoing basis. At the same
time, we remain focused on cash flow management and are taking
significant actions to lower our inventory, the benefits of which
we believe we will begin to see during the second half of the year.
Importantly, we expect to return to being free cash flow positive
this year." Fiscal 2010 Guidance While the economic environment
remains uncertain, Movado Group now estimates fiscal 2010 fully
diluted earnings per share to be approximately $0.50 compared to
fully diluted earnings per share of $0.09 recorded in fiscal 2009.
This guidance is predicated on an improvement in sales trends
during the second half of fiscal 2010, as retailers purchase
inventory in preparation for the holiday season, resulting in an
expected high single-digit sales decline for the full year. The
Company's management will host a conference call today, June 9th at
10:00 a.m. Eastern Time. A live broadcast of the call will be
available on the Company's website: http://www.movadogroup.com/.
This call will be archived online within one hour of the completion
of the conference call. Movado Group, Inc. designs, sources, and
distributes Movado, Ebel, Concord, ESQ, Coach, Tommy Hilfiger, HUGO
BOSS, Juicy Couture and Lacoste watches worldwide, and operates
Movado boutiques and company stores in the United States. In this
release, the Company presents certain adjusted financial measures
that are not calculated according to generally accepted accounting
principles in the United States ("GAAP"). These non-GAAP financial
measures are designed to complement the GAAP financial information
presented in this release and management believes they present
information regarding the Company that is useful to investors. The
non-GAAP financial measures presented should not be considered in
isolation from or as a substitute for the comparable GAAP financial
measure. The Company is presenting net sales and gross margin
excluding sales of excess discontinued product because the Company
believes that it is useful to investors to eliminate the effect of
these unusual items in order to improve the comparability of the
Company's results for the periods presented. 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 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: actual or perceived weakness in
the U.S. and global economy and fluctuations in consumer spending
and disposable income, the Company's ability to successfully
implement the new Movado brand strategy, the ability of the new
Movado brand strategy to improve the Company's net sales,
profitability and other results of operations, the Company's
ability to successfully introduce and sell new products, the
Company's ability to successfully integrate the operations of newly
acquired and/or licensed brands without disruption to its other
business activities, changes in consumer demand for the Company's
products, risks relating to the fashion and retail industry, import
restrictions, competition, seasonality, commodity price and
exchange rate fluctuations, changes in local or global economic
conditions, 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. MOVADO GROUP, INC. Consolidated Statements of
Income (in thousands, except per share data) (Unaudited) Three
Months Ended April 30, ------------------ 2009 2008 ---- ---- Net
sales $67,575 $101,353 Cost of sales 30,552 36,333 ------ ------
Gross profit 37,023 65,020 Selling, general and administrative
expenses 48,142 63,407 ------ ------ Operating (loss) / income
(11,119) 1,613 Interest expense (545) (706) Interest income 51 957
-- --- (Loss) / income before income taxes and noncontrolling
interests (11,613) 1,864 (Benefit) / provision for income taxes
(2,703) 567 Net income attributed to noncontrolling interest 50 48
-- -- Net (loss) / income $(8,960) $1,249 ======= ====== Net (loss)
/ income per diluted share $(0.37) $0.05 Number of shares
outstanding 24,464 26,565 MOVADO GROUP, INC. CONSOLIDATED BALANCE
SHEETS (in thousands) (Unaudited) April 30, January 31, April 30,
2009 2009 2008 ---- ---- ---- ASSETS ------ Cash and cash
equivalents $74,568 $86,621 $127,475 Trade receivables, net 66,110
76,710 89,510 Inventories 241,603 228,884 231,402 Other current
assets 55,185 47,863 51,417 ------ ------ ------ Total current
assets 437,466 440,078 499,804 ------- ------- ------- Property,
plant and equipment, net 62,903 66,749 71,115 Deferred income taxes
23,215 23,449 19,908 Other non-current assets 31,357 33,714 38,825
------ ------ ------ Total assets $554,941 $563,990 $629,652
======== ======== ======== LIABILITIES AND EQUITY
---------------------- Loans payable to banks $40,000 $40,000 $-
Current portion of long-term debt 25,000 25,000 10,000 Accounts
payable 19,408 20,794 27,651 Accrued liabilities 46,092 47,686
44,698 Deferred and current income taxes payable 433 430 7 --- ---
--- Total current liabilities 130,933 133,910 82,356 -------
------- ------ Long-term debt - - 61,435 Deferred and non-current
income taxes payable 6,527 6,856 7,078 Other non-current
liabilities 19,975 22,459 25,121 Noncontrolling interest 1,855
1,805 1,913 Shareholders' equity 395,651 398,960 451,749 -------
------- ------- Total liabilities and equity $554,941 $563,990
$629,652 ======== ======== ======== DATASOURCE: Movado Group, Inc.
CONTACT: Leigh Parrish, or Stephanie Rich, both of Financial
Dynamics, for Movado Group, Inc., +1-212-850-5600 Web Site:
http://www.movadogroup.com/
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