Movado Group, Inc. Announces First Quarter Results

- EPS Increases to $0.04 from $0.03 LY -

PARAMUS, N.J., June 2 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced first quarter results for the period ended April 30, 2005. These results include the Ebel business, which was acquired on March 1, 2004.

First Quarter Fiscal 2006

  • Net sales increased 18.3% to $87.8 million from $74.2 million last year. Ebel accounted for net sales of $6.6 million in the first quarter of fiscal 2006 compared to net sales of $2.3 million in the year-ago period. Excluding Ebel, first quarter fiscal 2006 net sales grew 13.0% from last year.
  • Comparable store sales at the Company's Movado boutiques increased 3.2% on top of an 18.2% gain in the year-ago period.
  • Gross margin improved to 60.2% compared to 58.5% last year.
  • Operating profit increased 25.3% to $2.1 million versus $1.7 million in the year-ago period.
  • Net income grew 35.5% to $997,000, or $0.04 per diluted share, compared to net income of $736,000, or $0.03 per diluted share, in the prior year period.
  • Efraim Grinberg, President and Chief Executive Officer, commented, "We are pleased with our first quarter results which were achieved on top of a very strong first quarter delivered in the comparable period last year. Double digit gains in sales and profits reflect the power of our portfolio of brands and businesses, innovative new product offerings and consistent integrated marketing support. Our brands continue to perform extremely well at retail and we are especially pleased with our performance in our international markets."

    Rick Cote, Executive Vice President and Chief Operating Officer, stated, "In addition to our strong sales results, we are pleased with the improvement in our gross margin due to the full integration of Ebel into our supply chain and improved margins in our Movado boutiques. We believe this represents a level commensurate with where we expect gross margin to be for the fiscal year. Our balance sheet also remains strong with a cash position of approximately $50 million."

    Mr. Grinberg concluded, "We are encouraged by the strong reception that our brands received at the recently held annual watch and jewelry show in Basel, Switzerland. Looking ahead, we have comprehensive marketing and merchandising initiatives in place to support our brands and drive sell through at retail throughout fiscal 2006."

    Movado Group noted that due to the delay in the adoption of FASB 123R, the Company has increased its fiscal year 2006 guidance for diluted earnings per share to now range between $1.18 and $1.24. Included in this guidance is an expected $0.04 per diluted share expense related to equity compensation of restricted stock. The Company projects fiscal year 2006 sales to grow approximately 12% from last year.

    The Company's management will host a conference call today, June 2, 2005 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
                                               April 30,
    
                                            2005        2004
    
        Net sales                        $ 87,756    $ 74,187
    
        Cost of sales                      34,918      30,802
    
        Gross profit                       52,838      43,385
    
        Selling, general and
         administrative expenses           50,699      41,678
    
        Operating profit                    2,139       1,707
    
        Interest expense                      809         725
    
        Income before taxes                 1,330         982
    
        Income tax                            333         246
    
        Net income                       $    997     $   736
    
        Net income per diluted share     $   0.04     $  0.03
        Shares used in per share
         computation                       26,020      25,508
    
    
                                  MOVADO GROUP, INC.
                             CONSOLIDATED BALANCE SHEETS
                        (in thousands, except per share data)
                                     (Unaudited)
    
                                                 April 30,  January 31,  April 30,
                                                    2005       2005        2004
        ASSETS
    
    
           Cash and cash equivalents             $ 49,641    $ 63,782    $ 35,948
           Trade receivables, net                  99,925     102,622      99,546
           Inventories                            204,896     187,890     176,001
           Other                                   37,701      32,864      31,585
               Total current assets               392,163     387,158     343,080
    
           Property, plant and equipment,
            net                                    50,944      50,283      45,713
           Other assets                            37,139      39,509      36,149
                                                 $480,246    $476,950    $424,942
    
         LIABILITIES AND SHAREHOLDERS' EQUITY
    
    
           Loans payable to banks                $ 18,000    $      0   $  32,539
           Current portion of long-term
            debt                                        0           0       5,000
           Accounts payable                        35,289      38,488      26,281
           Accrued liabilities                     35,830      39,618      42,041
           Deferred and current taxes
            payable                                 5,131       5,250       5,798
               Total current liabilities           94,250      83,356     111,659
    
           Long-term debt                          45,000      45,000      25,000
           Deferred and non-current
            income taxes                           12,046      14,827      10,435
           Other liabilities                       16,425      17,209      11,820
           Shareholders' equity                   312,525     316,558     266,028
                                                 $480,246    $476,950    $424,942
    

    SOURCE Movado Group, Inc. -0- 06/02/2005 /CONTACT: Suzanne Michalek of Movado Group, Inc., Investor Relations, Director of Corporate Communications, +1-201-267-8000; Melissa Myron or Rachel Albert of Financial Dynamics for Movado Group, Inc., +1-212-850-5600 / /Web site: http://www.movadogroupinc.com / (MOV)

    "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Movado Group Inc's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.