| View printer-friendly version|
|Movado Group, Inc. Announces Second Quarter and Six-Month Results|
- Second Quarter Operating Profit Increases 16% Over Last Year -
PARAMUS, N.J., Sept. 6 /PRNewswire-FirstCall/ -- Movado Group, Inc.
(NYSE: MOV), today announced second quarter results for the period ended July
Second Quarter Fiscal 2008
First Half Fiscal 2008
- Net sales increased 10.2% to $139.5 million compared to $126.6 million
last year. Net sales for the quarter included $8.3 million of excess
- Comparable store sales decreased 2.3% at the Company's Movado boutiques
versus a 9.3% increase in the year-ago period.
- Gross profit was $83.3 million, or 59.8% of sales, compared to $78.5
million, or 62.0% of sales last year. Excluding excess discontinued
product sales, adjusted gross profit was $83.4 million, or 63.6% of
sales, an improvement of 160 basis points over the year-ago period.
- Operating profit increased 16.1% to $16.3 million, or 11.7% of sales,
versus $14.1 million, or 11.1% of sales in the year-ago period.
- Net interest income was $0.2 million versus net interest expense of
$0.3 million last year.
- Income tax expense of $4.1 million reflects a 24.9% tax rate in the
second quarter compared to income tax expense of $2.4 million, or a
17.5% tax rate, recorded last year. Last year's favorable tax rate
benefited second quarter diluted earnings per share by $0.04 and
reflected the continued utilization of a Swiss net operating loss
carryforward (NOL) acquired with the Ebel brand in fiscal 2005.
- Net income increased to $12.3 million, or $0.45 per diluted share,
compared to net income of $11.3 million, or $0.43 per diluted share, in
the prior year period.
- Net sales increased 7.4% to $240.8 million from $224.3 million last
year. Net sales for the year-to-date period included $11.0 million of
excess discontinued product.
- Comparable store sales decreased 1.9% at the Company's Movado boutiques
versus a 7.0% increase in the year-ago period.
- Gross profit was $145.0 million, or 60.2% of sales, compared to $138.1
million, or 61.6% of sales last year. Excluding excess discontinued
product sales, adjusted gross profit was $145.4 million, or 63.3% of
sales, an improvement of 170 basis points over the year-ago period.
- Operating profit increased 9.1% to $19.1 million versus $17.5 million
in the year-ago period.
- Net interest income was $0.6 million versus net interest expense of
$0.4 million last year.
- Income tax expense of $4.8 million reflects a 24.2% tax rate for the
year-to-date period compared to income tax expense of $3.0 million, or
a 17.6% tax rate, recorded last year. Last year's favorable tax rate
benefited diluted earnings per share by $0.05 and reflected the
continued utilization of a Swiss net operating loss carryforward (NOL)
acquired with the Ebel brand in fiscal 2005.
- Net income was $14.7 million, or $0.54 per diluted share, compared to
net income of $14.2 million, or $0.54 per diluted share, in the prior
Efraim Grinberg, President and Chief Executive Officer, commented, "Our
strong results for the first half of the year reflect the continued customer
appeal of our diverse portfolio of brands. We are especially pleased with the
strength of our international business reflecting the growing prominence of
Ebel and the expansion of our licensed brands' global presence. At the end of
the second quarter, we launched our compelling new LACOSTE watch collection to
retailers around the world."
"As we enter the second half of this year, we have unique strategies and
programs in place to support each of our brands. Celebrating 60 years of
modern design leadership, we are very excited to pay tribute to the iconic
Movado museum dial this fall season. Dynamic product and marketing
initiatives will showcase this milestone achievement as we demonstrate the
power of the Movado brand."
Rick Cote, Executive Vice President and Chief Operating Officer, stated,
"We are encouraged by the continued momentum we experienced in the second
quarter with solid expansion achieved in both our adjusted gross margin and
operating margin results. These metrics underscore the strong growth and
profitability of our business model and strategy, as we deliver improved
returns to our shareholders. Additionally, during the first half of this
year, we maximized opportunities to convert discontinued product into cash,
thereby improving our inventory mix."
The Company recognizes there is increased volatility in the financial
markets and a growing sense of uncertainty as to the outlook for the U.S.
economy. Assuming current business trends remain intact, Movado Group
continues to project fiscal 2008 diluted earnings per share of approximately
$1.72 based on an estimated 25% tax rate. This compares to fiscal 2007
adjusted diluted earnings per share of $1.54. Fiscal 2007 adjusted diluted
earnings per share exclude the impact of the tax benefit resulting from the
further utilization of the NOL acquired with Ebel in fiscal 2005 and
previously disclosed one-time items related to accounts receivable, foreign
currency and sale of a non-operating asset. On a GAAP basis, fiscal 2007
diluted earnings per share were $1.87 with a 5.4% tax rate. Fiscal 2008 net
sales are projected to be approximately $560 million.
The Company's management will host a conference call today, September 6,
2007 at 10:00 a.m. Eastern Time to discuss its second quarter financial
results. A live broadcast of the call will be available on the Company's
website: www.movadogroup.com. This call will be archived online within one
hour of the completion of the conference call.
Movado Group, Inc. designs, manufactures, 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
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 because
management believes they present information regarding the Company that
management believes 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 excluding excess discontinued product
sales (and gross profit excluding such sales) because the Company believes
that it is useful to investors to eliminate the effect of these unusual sales
in order to improve the comparability of the Company's results for the periods
presented. Adjusted gross margin is based on net sales excluding excess
discontinued product sales, which did not contribute to gross profit in any of
the periods presented.
For a reconciliation of fiscal 2007 adjusted diluted earnings per share to
2007 earnings per share on a GAAP basis, please see the Company's press
release, dated March 29, 2007.
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, trends, 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: 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, reduced discretionary spending by consumers due to the
recent tightening of credit, 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 Operations
(in thousands, except per share data)
Three Months Ended Six Months Ended
July 31, July 31,
2007 2006 2007 2006
Net sales $139,467 $126,588 $240,830 $224,332
Cost of sales 56,121 48,076 95,832 86,230
Gross profit 83,346 78,512 144,998 138,102
Selling, general and
administrative expenses 67,009 64,438 125,889 120,594
Operating profit 16,337 14,074 19,109 17,508
Interest expense (872) (919) (1,751) (1,862)
Interest income 1,062 616 2,309 1,507
Income before income taxes and
minority interest 16,527 13,771 19,667 17,153
Income tax 4,117 2,407 4,764 3,013
Minority interest 146 15 239 (64)
Net income $12,264 $11,349 $14,664 $14,204
Net income per diluted share $0.45 $0.43 $0.54 $0.54
Shares used in per share
computation 27,272 26,584 27,259 26,506
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
July 31, January 31, July 31,
2007 2007 2006
Cash $112,456 $133,011 $78,126
Trade receivables, net 100,611 111,417 128,416
Inventories 215,557 193,342 215,461
Other current assets 37,443 35,109 34,712
Total current assets 466,067 472,879 456,715
Property, plant and equipment, net 61,040 56,823 51,931
Deferred income taxes 27,863 12,091 7,364
Other non-current assets 37,417 35,825 33,100
Total assets $592,387 $577,618 $549,110
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt $5,000 $5,000 $5,000
Accounts payable 30,708 32,901 34,797
Accrued liabilities 38,037 45,610 37,459
Deferred and current taxes payable 5,717 5,946 2,550
Total current liabilities 79,462 89,457 79,806
Long-term debt 62,475 75,196 91,978
Deferred and non-current
income taxes 32,181 11,054 13,278
Other liabilities 24,384 23,087 20,112
Minority interest 1,467 443 245
Shareholders' equity 392,418 378,381 343,691
Total liabilities and equity $592,387 $577,618 $549,110
Impact of adoption of FIN 48:
As a result of the adoption of FIN 48, the Company recorded a reduction
to the February 1, 2007 retained earnings in the amount of $7.7 million
representing the cumulative effect of the adoption.
SOURCE Movado Group, Inc.
CONTACT: Suzanne Rosenberg, Vice President, Corporate Communications of
Movado Group, Inc., +1-201-267-8000; or Leigh Parrish or Melissa Merrill, both
of Financial Dynamics, +1-212-850-5600
Web site: http://www.movadogroup.com