~ Second Quarter Adjusted Diluted Earnings Per Share of $0.06 and
$0.02 on a GAAP Basis ~ ~ Company Remains on Track to Reach
Annualized Cost Savings Goal ~ PARAMUS, N.J., Sept. 3
/PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today
announced second quarter and six-month results for the period ended
July 31, 2009. For the second quarter, adjusted diluted earnings
per share were $0.06 compared to $0.39 in fiscal 2009 (see attached
table for reconciliation of GAAP to non-GAAP measures). On a GAAP
basis, diluted earnings per share were $0.02 and included a $1.3
million pre-tax charge in interest expense related to the
refinancing and repayment of the Company's former credit and note
agreements. Second Quarter Fiscal 2010 -- Net sales in the second
quarter of fiscal 2010 were $89.7 million compared to $129.7
million. -- Gross profit was $52.7 million, or 58.7% of sales,
compared to $83.2 million, or 64.1% of sales last year. --
Operating expenses decreased $22.5 million, or 31.2%, to $49.5
million versus $72.0 million last year. -- Operating profit was
$3.1 million compared to $11.1 million in the year-ago period. --
Net income in the quarter was $0.5 million. Excluding the after-tax
effect of the aforementioned charge, adjusted net income was $1.4
million compared to adjusted net income of $9.8 million in the
prior year period, which excludes a charge related to the Company's
expense reduction plan. First Half Fiscal 2010 -- Net sales in the
first six months of fiscal 2010 were $157.3 million compared to
$231.0 million. -- Gross profit was $89.7 million, or 57.0% of
sales, compared to $147.5 million, or 63.8% of sales last year. --
Operating expenses decreased $37.1 million, or 27.5%, to $97.7
million versus $134.8 million last year. -- Operating loss was $8.0
million compared to operating income of $12.8 million in the
year-ago period. -- Net loss was $8.4 million compared to net
income of $9.4 million in the year-ago period. Excluding the effect
of the charge recorded in the second quarter of fiscal 2010,
adjusted net loss was $7.6 million, or $0.31 per diluted share,
compared to adjusted net income of $11.0 million, or $0.42 per
diluted share, which excludes a charge related to the Company's
expense reduction plan. Efraim Grinberg, President and Chief
Executive Officer, stated, "We are pleased with our results during
the quarter and our ability to return to profitability earlier than
anticipated. We maintained our disciplined approach to managing our
business, while continuing to offer compelling marketing and
advertising campaigns that differentiate our brands in the
marketplace. As consumers continue to be conservative with their
spending, we remain focused on delivering value in each of our
brands, from the high end of the luxury market to the more
affordable fashion watch category. We have a strong portfolio of
brands and a well-diversified global business which, combined with
our improved productivity, will enable us to emerge even stronger
as the economy improves." Rick Cote, Executive Vice President and
Chief Operating Officer, stated, "The aggressive actions we took
last year to enhance our operational efficiencies are continuing to
translate into tangible improvement in our financial results.
Through continued execution of our expense management program, we
remain on track to reach our goal of annualized cost savings of
between $50 to $60 million, most of which we expect to realize in
the current fiscal year. Additionally, we are continuing to focus
on cash flow as well as reducing inventory levels to align with
current sales trends. We remain confident in our ability to return
to being free cash flow positive this year." Fiscal 2010 Guidance
Movado Group reiterated today that it estimates fiscal 2010 fully
diluted earnings per share to be approximately $0.50, including the
one-time charge recorded in the second quarter, compared to fully
diluted earnings per share of $0.09 recorded in fiscal 2009. This
guidance continues to be 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, September
3rd 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 operating income excluding
severance related expense and presenting net income excluding
severance related expenses and refinancing related expenses 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 Six Months Ended July 31, July 31,
2009 2008 2009 2008 ---- ---- ---- ---- Net sales $89,701 $129,689
$157,276 $231,042 Cost of sales 37,037 46,527 67,589 83,539 ------
------ ------ ------ Gross profit 52,664 83,162 89,687 147,503
Selling, general and administrative expenses 49,547 72,022 97,689
134,750 ------ ------ ------ ------- Operating income / (loss)
3,117 11,140 (8,002) 12,753 Interest expense (2,301) (794) (2,846)
(1,500) Interest income 149 523 200 1,480 --- --- --- ----- Income
/ (loss) before income taxes and noncontrolling interests 965
10,869 (10,648) 12,733 Provision for / (benefit from) income taxes
481 2,669 (2,222) 3,236 (Loss) / income attributed to
noncontrolling interest (44) 64 6 112 --- -- - --- Net income /
(loss) $528 $8,136 $(8,432) $9,385 ==== ====== ======= ====== Net
income / (loss) per diluted share $0.02 $0.32 $(0.34) $0.36 Number
of shares outstanding 24,744 25,384 24,485 26,033 MOVADO GROUP,
INC. Reconciliation tables (in thousands, except per share data)
(Unaudited) Three Months Six Months Ended Ended July 31, July 31,
2009 2008 2009 2008 ---- ---- ---- ---- Operating income / (loss)
(GAAP) $3,117 $11,140 ($8,002) $12,753 Severance related expenses
(1) - 2,192 - 2,192 - ----- - ----- Adjusted operating income /
(loss) (non-GAAP) $3,117 $13,332 ($8,002) $14,945 ====== =======
======= ======= Three Months Six Months Ended Ended July 31, July,
31 2009 2008 2009 2008 ---- ---- ---- ---- Net income / (loss)
(GAAP) $528 $8,136 ($8,432) $9,385 Refinancing expenses and fees
(2) 839 - 839 - Severance related expenses (1) - 1,644 - 1,644 -
----- - ----- Adjusted net income / (loss) (non-GAAP) $1,367 $9,780
($7,593) $11,029 ====== ====== ======= ======= Adjusted net income
/ (loss) per share (non-GAAP) $0.06 $0.39 $(0.31) $0.42 Number of
shares outstanding 24,744 25,384 24,485 26,033 (1) Charges related
to the implementation of the Company's expense reduction plans. (2)
Expenses and fees associated with the refinancing and repayment of
the Company's former credit and note agreements which included a
non-cash pre-tax charge of $0.2 million related to the accelerated
recognition of deferred financing costs and a pre-tax charge of
$1.1 million for fees due to the former lenders. Both charges were
recorded in Interest Expense on the Consolidated Statements of
Income. MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (in
thousands) (Unaudited) July 31, January 31, July 31, 2009 2009 2008
---- ---- ---- ASSETS ------ Cash and cash equivalents $47,474
$86,621 $84,503 Trade receivables, net 76,689 76,710 96,372
Inventories 248,187 228,884 238,736 Other current assets 41,560
47,863 48,352 ------ ------ ------ Total current assets 413,910
440,078 467,963 ------- ------- ------- Property, plant and
equipment, net 60,920 66,749 71,472 Deferred income taxes 27,020
23,449 20,223 Other non-current assets 24,502 33,714 38,404 ------
------ ------ Total assets $526,352 $563,990 $598,062 ========
======== ======== LIABILITIES AND EQUITY ----------------------
Loan payable to banks $- $40,000 $- Current portion of long-term
debt - 25,000 10,000 Accounts payable 13,607 20,794 21,331 Accrued
liabilities 38,445 47,686 43,543 Deferred and current income taxes
payable 3,463 430 568 ----- --- --- Total current liabilities
55,515 133,910 75,442 ------ ------- ------ Long-term debt 40,000 -
49,776 Deferred and non-current income taxes payable 810 6,856
6,577 Other non-current liabilities 20,190 22,459 24,306
Noncontrolling interest 1,700 1,506 1,960 Shareholders' equity
408,137 399,259 440,001 ------- ------- ------- Total liabilities
and equity $526,352 $563,990 $598,062 ======== ======== ========
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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