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Movado Group, Inc. Announces Second Quarter Results

PARAMUS, N.J., Sept 08, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- Movado Group, Inc. (NYSE: MOV), today announced second quarter results for the period ended July 31, 2005.

Second Quarter Fiscal 2006

    --  Net sales increased 17.9% to $115.3 million from $97.8 million last
        year.

    --  Comparable store sales increased 2.3% at the Company's Movado
        boutiques on top of an 11.8% comparable store sales gain in the
        year-ago period.

    --  Gross margin was 60.7% this year compared to 59.3% last year.

    --  Operating profit increased to $12.3 million versus $8.7 million in the
        year-ago period.

    --  Net income increased to $8.6 million, or $0.33 per diluted share,
        compared to net income of $7.1 million, or $0.28 per diluted share, in
        the prior year period. Net income in the year-ago period included a
        one-time gain of $0.03 per fully diluted share associated with a legal
        settlement the Company reached with Swiss Army Brands.

    First Half Fiscal 2006

    --  Net sales increased 18.1% to $203.1 million from $172.0 million
        last year.

    --  Comparable store sales increased 2.7% at the Company's Movado
        boutiques on top of an 18.4% comparable store sales gain in the
        year-ago period.

    --  Gross margin was 60.5% compared to 58.9%.

    --  Operating profit was $14.4 million versus $10.5 million in the
        year-ago period.

    --  Net income was $9.5 million, or $0.37 per diluted share, compared to
        net income of $7.8 million, or $0.31 per diluted share, in the prior
        year period.  Net income for the first half of last year included a
        one-time gain of $0.03 per fully diluted share associated with a legal
        settlement gain recorded in the second quarter of fiscal 2005.

Efraim Grinberg, President and Chief Executive Officer, commented, "The results we have achieved stem from remaining true to our vision; building brands with a commitment to long term success. Movado, Ebel, Concord, ESQ, Coach, and Tommy Hilfiger Watches -- are marked by exceptional quality and each possesses a distinct brand image in the marketplace. We consistently support our brands with compelling marketing and advertising support, while challenging our organization to keep our brands fresh through an ongoing process of reinvention and product innovation."

"Continued investment behind our brands and businesses demonstrates our commitment toward building long-term shareholder value. We are on-track with our strategy of rebuilding Ebel into a global luxury brand and we are very encouraged with our progress. Our Movado Boutiques now operate in 27 locations nationwide and we continue to develop and strengthen this business as we move toward converting our investment into a profitable operation. Finally, our team is preparing for the exciting launch of a new Hugo Boss watch collection in March of 2006."

Rick Cote, Executive Vice President and Chief Operating Officer, stated, "We are very pleased with the results we delivered during the first half of the year, which reflects the success of our brand and business investments, new product offerings and enhanced productivity. Fiscal 2006 is a year where we have made a strategic decision to invest significantly behind our brands and businesses as we position our company for accelerated growth. Consistent with our strategy, we continue to expect earnings growth to outpace sales growth."

Movado Group now anticipates fiscal 2006 net sales to grow approximately 14% from last year and fully diluted earnings per share for the full year to be at the upper-end of the Company's previously stated range of $1.18 to $1.24. Included in this guidance is an expected $0.05 per diluted share expense related to equity compensation of restricted stock. This guidance excludes any potential impact associated with the American Jobs Creation Act, which the Company continues to evaluate. To the extent that Movado Group repatriates any international earnings, the Company would incur a one time income tax charge.

The Company's management will host a conference call today, September 8th 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, manufactures, and distributes Movado, Ebel, Concord, ESQ, Coach, Tommy Hilfiger and Hugo Boss watches worldwide, and operates Movado boutiques and company stores in the United States.

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," "projects," "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: the Company's ability to successfully introduce and sell new products, the Company's ability to successfully integrate the operations of Ebel without disruption to its other business activities, changes in consumer demand for the Company's products, risks relating to the retail industry, import restrictions, competition, seasonality 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)
                                 (Unaudited)

                                   Three Months Ended      Six Months Ended
                                       July 31,               July 31,

                                     2005        2004      2005         2004

    Net sales                     $115,326     $97,788  $203,082     $171,975

    Cost of sales                   45,340      39,810    80,258       70,612

    Gross profit                    69,986      57,978   122,824      101,363

    Selling, general and
     administrative expenses        57,701      49,230   108,400       90,908

    Operating profit                12,285       8,748    14,424       10,455

    Income from litigation
     settlement, net                     -       1,444         -        1,444
    Interest expense                   884         783     1,693        1,508

    Income before income taxes      11,401       9,409    12,731       10,391

    Income tax                       2,850       2,352     3,183        2,598

    Net income                      $8,551       7,057    $9,548       $7,793

    Net income per diluted share     $0.33       $0.28     $0.37        $0.31
    Shares used in per share
     computation                    26,126      25,484    26,074       25,416



                              MOVADO GROUP, INC.
                         CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share data)
                                 (Unaudited)

                                            July 31,  January 31,   July 31,
                                              2005        2005        2004
    ASSETS


       Cash and cash equivalents             $50,323     $63,782     $27,438
       Trade receivables, net                105,533     102,622      95,841
       Inventories                           206,483     187,890     181,784
       Other                                  37,127      34,409      31,899
           Total current assets              399,466     388,703     336,962

       Property, plant and equipment, net     50,282      50,283      48,193
       Other assets                           36,348      37,964      37,672
                                            $486,096    $476,950    $422,827

    LIABILITIES AND SHAREHOLDERS' EQUITY


       Loans payable to banks                $37,500          $0     $25,000
       Current portion of long-term debt           0           0       5,000
       Accounts payable                       35,283      38,488      30,965
       Accrued liabilities                    40,482      39,618      30,223
       Deferred and current taxes payable      4,756       5,250       5,853
           Total current liabilities         118,021      83,356      97,041

           Long-term debt                     45,000      45,000      25,000
           Deferred and non-current
            income taxes                       9,031      14,827      11,936
           Other liabilities                  17,363      17,209      12,214
           Shareholders' equity              296,681     316,558     276,636
                                            $486,096    $476,950    $422,827

SOURCE Movado Group, Inc.

Investor Relations - Suzanne Michalek, Director of Corporate Communications of Movado Group, Inc., +1-201-267-8000; or Melissa Myron, or Rachel Albert, both of Financial Dynamics for Movado Group, Inc., +1-212-850-5600