~ Q1 Operating Profit Increases 60.5% from LY ~ ~ Company Raises FY07 EPS Projections ~
PARAMUS, N.J., June 1, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Movado Group, Inc.
(NYSE: MOV), today announced first quarter results for the period ended April
First Quarter Fiscal 2007
-- Net sales increased 11.4% to $97.7 million compared to $87.8 million
-- Comparable store sales at the Company's Movado boutiques increased 4.5%
versus a 3.2% increase in the year-ago period.
-- Gross margin improved to 61.0% compared to 60.2% last year.
-- Operating profit increased 60.5% to $3.4 million compared to
$2.1 million in the year-ago period.
-- Net interest expense was $0.1 million versus $0.8 million last year:
- Interest expense for the quarter was the same as the year-ago
period, $0.9 million, with average borrowings in the quarter of
$106.5 million at an average borrowing rate of 3.4%.
- Interest income for the quarter was $0.9 million due to short term
investments of cash-on-hand resulting from the repatriation of
foreign earnings under the American Jobs Creation Act. This
compares to interest income of $0.1 million in the year-ago period.
-- Income tax expense of $0.6 million reflects a 17.5% tax rate in the
first quarter compared to income tax expense of $0.3 million, or a
25.0% tax rate, recorded last year. The favorable tax rate benefited
first quarter diluted earnings per share by $0.01 and reflects the
further utilization of a Swiss net operating loss carryforward (NOL)
acquired with the Ebel brand in fiscal 2005. The Company anticipates
maintaining the 17.5% tax rate for the balance of fiscal 2007.
-- Net income and earnings per diluted share more than doubled to
$2.9 million and $0.11, respectively, versus net income of $1.0 million
and earnings per diluted share of $0.04 in the year-ago period.
Efraim Grinberg, President and Chief Executive Officer, stated, "We are
very pleased with the strength of our first quarter performance, which
continued to be driven by the appeal of our diverse portfolio of brands and
the focused execution of our operating strategies. Fiscal 2007 was jump-
started by an excellent response from our retail partners to the powerful
array of new products debuted at the Basel Watch Fair. In our luxury
category, Ebel sparked excitement with the introduction of Brasilia, an
important new collection that is already showing encouraging initial sell-
Rick Cote, Executive Vice President and Chief Operating Officer, stated,
"In addition to the robust sales performance in the first quarter, our global
team demonstrated strong operating disciplines which translated into expanded
gross margins and operating profit growth. We continue to invest behind our
Movado Boutiques, the worldwide growth of Ebel and the development of our
licensed brands. As we begin to reap the benefits of these investments, we
expect to grow our operating margin through a combination of gross margin
improvement and the leveraging of our existing infrastructure."
Movado Group increased its guidance for fiscal 2007 and now anticipates
diluted earnings per share to range between $1.53 and $1.58. This new
guidance continues to include an approximate $0.08 per diluted share expense
associated with the adoption of FASB 123R and the shift in the composition of
the Company's equity-based compensation plan from options toward restricted
stock. These projections compare with the Company's previously issued
guidance for diluted earnings per share to range between $1.35 and $1.39.
Approximately $0.14 of the increase in guidance is based on projected benefits
resulting from the further utilization of the Company's NOL, with the balance
of the increase attributed to improved operating performance. The Company now
estimates fiscal 2007 year-over-year net sales growth to be at the higher end
of its previously issued range of 9% to 11%.
The Company's management will host a conference call today, June 1, 2006
at 10:00 a.m. Eastern Time to discuss its first quarter financial results. 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. The
Company plans to launch Juicy Couture watches in the fall of 2006 and LACOSTE
watches in the spring of 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, 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, 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)
Three Months Ended
Net sales $97,744 $87,756
Cost of sales 38,154 34,918
Gross profit 59,590 52,838
Selling, general and administrative
expenses 56,156 50,699
Operating profit 3,434 2,139
Interest expense 943 878
Interest income (891) (69)
Minority interest (79) -
Income before income taxes 3,461 1,330
Income tax 606 333
Net income $2,855 $997
Net income per diluted share $0.11 $0.04
Shares used in per share computation 26,395 26,020
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
April 30, January 31, April 30,
2006 2006 2005
Cash and cash equivalents $82,560 $123,625 $49,641
Trade receivables, net 116,523 109,852 102,115
Inventories 213,763 198,582 202,498
Other 34,199 26,596 35,055
Total current assets 447,045 458,655 389,309
Property, plant and equipment, net 51,003 52,168 53,389
Other assets 39,774 39,069 37,548
$537,822 $549,892 $480,246
LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $0 $0 $18,000
Current portion of long-term debt 5,000 5,000 0
Accounts payable 33,432 35,529 35,289
Accrued liabilities 35,748 43,065 35,830
Deferred and current taxes payable 1,158 8,227 5,131
Total current liabilities 75,338 91,821 94,250
Long-term debt 97,323 104,955 45,000
Deferred and non-current
income taxes 13,181 11,947 12,046
Other liabilities 20,244 19,491 16,425
Minority interest 231 - -
Shareholders' equity 331,505 321,678 312,525
$537,822 $549,892 $480,246
SOURCE Movado Group, Inc.
Investor Relations - Suzanne Michalek, Vice President, Corporate Communications,
or Rachel Albert of Financial Dynamics, +1-212-850-5600,
Movado Group, Inc.