|Movado Group, Inc. Announces Second Quarter Results|
~ Gross Margin Expands to 62% ~
PARAMUS, N.J., Sept. 7 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced second quarter results for the period ended July 31, 2006.
Second Quarter Fiscal 2007 * Net sales increased 9.8% to $126.6 million from $115.3 million last year. * Comparable store sales increased 9.3% at the Company's Movado boutiques versus a 2.3% increase in the year-ago period. * Gross margin improved 130 basis points to 62.0% compared to 60.7% last year. * Operating profit increased 14.6% to $14.1 million, or 11.1% of sales, versus $12.3 million, or 10.7% of sales in the year-ago period. * Net interest expense was $0.3 million versus $0.9 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 $99.3 million at an average borrowing rate of 3.7%. * Interest income for the quarter was $0.6 million due to short term investments of cash-on-hand resulting from the repatriation of foreign earnings under the American Jobs Creation Act. * Income tax expense of $2.4 million reflects a 17.5% tax rate in the second quarter compared to income tax expense of $2.9 million, or a 25.0% tax rate, recorded last year. The favorable tax rate benefited second quarter diluted earnings per share by $0.04 and reflects the continued 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 increased to $11.3 million, or $0.43 per diluted share, compared to net income of $8.6 million, or $0.33 per diluted share, in the prior year period. First Half Fiscal 2007 * Net sales increased 10.5% to $224.3 million from $203.1 million last year. * Comparable store sales increased 7.0% at the Company's Movado boutiques versus a 2.7% comparable store sales gain in the year-ago period. * Gross margin was 61.6% compared to 60.5% last year. * Operating profit was $17.5 million versus $14.4 million in the year-ago period. * Net interest expense was $0.4 million versus $1.7 million last year: * Interest expense for the first half of fiscal 2007 was $1.9 million compared to $1.8 million in the year-ago period. Average borrowings for the year-to-date period were $102.8 million at an average borrowing rate of 3.6%. * Interest income for the first half of fiscal 2007 was $1.5 million due to short term investments of cash-on-hand resulting from the repatriation of foreign earnings under the American Jobs Creation Act. * Net income was $14.2 million, or $0.54 per diluted share, compared to net income of $9.5 million, or $0.37 per diluted share, in the prior year period.
Efraim Grinberg, President and Chief Executive Officer, commented, "We are very pleased with our performance for the first half of this year. Our strong results reflect the continued customer appeal of our diverse portfolio of brands, including the growing prominence of Ebel around the world, the introduction of our new Hugo Boss watch collection, and the very successful launch and delivery of Series 800, a bold new sport collection from Movado. Looking ahead to the fall season, we are excited about the multitude of powerful marketing programs we have in place to support each of our brands."
Rick Cote, Executive Vice President and Chief Operating Officer, stated, "Improving our financial returns -- namely operating margin -- remains a top priority for our company. We are encouraged by the continued momentum we experienced in the second quarter with solid expansion achieved in both our gross margin and operating margin results."
Movado Group continues to project fiscal 2007 diluted earnings per share to range between $1.53 and $1.58. This guidance includes 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.
The Company's management will host a conference call today, September 7, 2006 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 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 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) (Unaudited) Three Months Ended Six Months Ended July 31, July 31, 2006 2005 2006 2005 Net sales $126,588 $115,326 $224,332 $203,082 Cost of sales 48,076 45,340 86,230 80,258 Gross profit 78,512 69,986 138,102 122,824 Selling, general and administrative expenses 64,438 57,701 120,594 108,400 Operating profit 14,074 12,285 17,508 14,424 Interest expense (919) (926) (1,862) (1,804) Interest income 616 42 1,507 111 Minority interest (15) - 64 - Income before income taxes 13,756 11,401 17,217 12,731 Income tax 2,407 2,850 3,013 3,183 Net income $11,349 $8,551 $14,204 $9,548 Net income per diluted share $0.43 $0.33 $0.54 $0.37 Shares used in per share computation 26,584 26,126 26,506 26,074 MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) July 31, January 31, July 31, 2006 2006 2005 ASSETS Cash and cash equivalents $78,126 $123,625 $50,323 Trade receivables, net 128,416 109,852 108,775 Inventories 215,461 198,582 203,047 Other 34,712 26,596 33,392 Total current assets 456,715 458,655 395,537 Property, plant and equipment, net 51,931 52,168 52,687 Other assets 40,464 39,069 38,519 $549,110 $549,892 $486,743 LIABILITIES AND SHAREHOLDERS' EQUITY Loans payable to banks $0 $0 $37,500 Current portion of long-term debt 5,000 5,000 - Accounts payable 40,266 35,529 35,283 Accrued liabilities 31,990 43,065 41,129 Deferred and current taxes payable 2,550 8,227 4,756 Total current liabilities 79,806 91,821 118,668 Long-term debt 91,978 104,955 45,000 Deferred and non-current income taxes 13,278 11,947 9,031 Other liabilities 20,112 19,491 17,363 Minority interest 245 - - Shareholders' equity 343,691 321,678 296,681 $549,110 $549,892 $486,743
SOURCE Movado Group, Inc.
|"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.|