~ Net Sales of $173.9 million, an Increase of 96.4% from Fiscal 2021 and 10.2% from Fiscal 2020 ~
~ Operating Income Increases to $24.6 million from ($8.9) million in Fiscal 2021 and $8.8 million in Fiscal 2020 ~
~ Earnings Per Share of $0.82 ~
~ Ends Second Quarter with Cash of $199.7 million and No Debt ~
~ Board Declares Quarterly Dividend ~
PARAMUS, N.J.--(BUSINESS WIRE)-- Movado Group, Inc. (NYSE: MOV) today announced record second quarter and six-month results for the periods ended July 31, 2021, with robust growth in second quarter net sales, operating income and earnings per share as compared to the comparable quarter of fiscal 2021. Current period results also surpassed fiscal 2020 second quarter results, which were not negatively impacted by the pandemic.
Efraim Grinberg, Chairman and Chief Executive Officer, stated, “We reported a record second quarter performance finishing a strong first half for Movado Group and reflecting the successful implementation of our strategy to maximize the power of our watch and jewelry brands by accelerating our omni-channel presence while maintaining financial and operational discipline. I am proud of the efforts, dedication and commitment of our team who have continued to work effectively under the challenging pandemic-induced conditions to allow the company to produce these exceptional results.”
“During the second quarter we generated a 96% increase in net sales, a 540 basis point expansion in gross margin and a $26.1 million increase in adjusted operating income as compared to the second quarter last year,” Mr. Grinberg continued. “Sales were extremely strong in many areas of the business with our Movado brand leading the way. Our Movado.com ecommerce revenue grew by over 70% compared to the second quarter of fiscal 2021. We also had very strong growth in our U.S. wholesale and our Movado Company Stores against the second quarter of both fiscal 2021 and pre-pandemic fiscal 2020. Our overall performance was driven by design innovation across our brands supported by powerful marketing programs. We delivered strong cash flow during the quarter which brought our cash balance to close to $200 million after repaying all outstanding debt. We continue to prioritize capital allocation activities that support our growth and return value to our shareholders. During the quarter, we purchased over 300,000 common shares and today, the Board approved a quarterly dividend of $0.20 per share.”
“Overall, we remain excited about our opportunities as we begin the second half of the year, yet are cautious as we weigh the uncertainty stemming from COVID-19 variants.”
Due to the significant impact of COVID-19 on prior year figures, this release will include certain comparisons to fiscal 2020 to provide additional context.
Fiscal 2022 Second Quarter Highlights (See table below for GAAP and Non-GAAP measures)
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Second quarter fiscal 2022 results of operations included the following items:
Second quarter fiscal 2021 results of operations included the following items:
Second Quarter Fiscal 2022 (See attached table for GAAP and Non-GAAP measures)
First Half Fiscal 2022 (See attached table for GAAP and Non-GAAP measures)
Fiscal 2022 Outlook
The Company is increasing its outlook and currently expects fiscal 2022 net sales in a range of approximately $680 million to $695 million, gross profit of approximately 55.5% to 56.0% of net sales, operating profit in a range of 13.0% to 13.5% of net sales and diluted earnings per share of approximately $2.75 to $2.90. Assuming no changes to the current tax rules, the Company anticipates a 25% effective tax rate for the fiscal year. This updated outlook does not contemplate significant additional COVID-19 related retail closures which can adversely impact results. The outlook excludes approximately $3.0 million of amortization of acquired intangible assets and deferred compensation for fiscal 2022 related to the Olivia Burton and MVMT brands. The Company's outlook assumes no further significant fluctuations from prevailing foreign currency exchange rates.
Quarterly Dividend and Share Repurchase Program
The Company also announced today that on August 26, 2021, the Board of Directors approved the payment on September 22, 2021 of a cash dividend in the amount of $0.20 for each share of the Company’s outstanding common stock and class A common stock held by shareholders of record as of the close of business on September 8, 2021.
During the second quarter of fiscal 2022, the Company repurchased approximately 322,800 shares under its share repurchase program. As of July 31, 2021, the Company had $15.0 million remaining under the $25.0 million share repurchase authorization.
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today, August 26, 2021 at 9:00 a.m. Eastern Time. The conference call may be accessed by dialing (877) 407-0784. Additionally, a live webcast of the call can be accessed at www.movadogroup.com.The webcast will be archived on the Company’s website approximately one hour after the conclusion of the call. Additionally, a telephonic re-play of the call will be available at 12:00 p.m. ET on August 26, 2021 until 11:59 p.m. ET on September 9, 2021 and can be accessed by dialing (844) 512-2921 and entering replay pin number 13722542.
Movado Group, Inc. designs, sources, and distributes MOVADO®, MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, COACH®, TOMMY HILFIGER®, HUGO BOSS®, LACOSTE®, and SCUDERIA FERRARI® watches worldwide, and operates Movado company stores in the United States and Canada.
In this release, the Company presents certain financial measures that are not calculated according to generally accepted accounting principles in the United States (“GAAP”). Specifically, the Company is presenting adjusted gross profit, adjusted gross margin, adjusted operating expenses and adjusted operating income, which are gross profit, gross margin, operating expenses and operating income, respectively, under GAAP, adjusted to eliminate the amortization of acquisition accounting adjustments related to the Olivia Burton and MVMT acquisitions, corporate initiatives and the impairment of goodwill and certain intangible assets. The Company is also presenting adjusted tax provision, which is the tax provision under GAAP, adjusted to eliminate the impact of charges for the Olivia Burton and MVMT acquisitions, corporate initiatives, the impairment of goodwill and certain intangible assets and the gain on the sale of a non-operating asset. The Company believes these adjusted measures are useful because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. The Company is also presenting adjusted net income, adjusted earnings per share and adjusted effective tax rate, which are net income, earnings per share and effective tax rate, respectively, under GAAP, adjusted to eliminate the after-tax impact of amortization of acquisition accounting adjustments related to the Olivia Burton and MVMT acquisitions, corporate initiatives, the impairment of goodwill and certain intangibles and the gain on the sale of a non-operating asset. The Company believes that adjusted net income, adjusted earnings per share and adjusted effective tax rate are useful measures of performance because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. Additionally, the Company is presenting constant currency information to provide a framework to assess how its business performed excluding the effects of foreign currency exchange rate fluctuations in the current period. Comparisons of financial results on a constant dollar basis are calculated by translating each foreign currency at the same U.S. dollar exchange rate as in effect for the prior-year period for both periods being compared. The Company believes this information is useful to investors to facilitate comparisons of operating results. These non-GAAP financial measures are designed to complement the GAAP financial information presented in this release. The non-GAAP financial measures presented should not be considered in isolation from or as a substitute for the comparable GAAP financial measures, and the methods of their calculation may differ substantially from similarly titled measures used by other companies.
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 variations of such words 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 general economic and business conditions which may impact disposable income of consumers in the United States and the other significant markets (including Europe) where the Company’s products are sold, uncertainty regarding such economic and business conditions, trends in consumer debt levels and bad debt write-offs, general uncertainty related to possible terrorist attacks, natural disasters, pandemics, including the effect of the COVID-19 pandemic and other diseases on travel and traffic in the Company’s retail stores and the stores of its wholesale customers, supply disruptions and delivery delays from the Company’s suppliers as a result of the COVID-19 pandemic, adverse impact on the Company’s wholesale customers and customer traffic in the Company’s stores as a result of increased uncertainty and economic disruption caused by the COVID-19 pandemic, uncertainty relating to the availability and efficacy of vaccines and treatments for COVID-19, the impact of the United Kingdom’s exit from the European Union, defaults on or downgrades of sovereign debt and the impact of any of those events on consumer spending, changes in consumer preferences and popularity of particular designs, new product development and introduction, decrease in mall traffic and increase in e-commerce, the ability of the Company to successfully implement its business strategies, competitive products and pricing, the impact of “smart” watches and other wearable tech products on the traditional watch market, seasonality, availability of alternative sources of supply in the case of the loss of any significant supplier or any supplier’s inability to fulfill the Company’s orders, the loss of or curtailed sales to significant customers, the Company’s dependence on key employees and officers, the ability to successfully integrate the operations of acquired businesses without disruption to other business activities, the possible impairment of acquired intangible assets including goodwill if the carrying value of any reporting unit were to exceed its fair value, volatility in reported earnings resulting from changes in the estimated fair value of contingent acquisition consideration, the continuation of the Company’s major warehouse and distribution centers, the continuation of licensing arrangements with third parties, losses possible from pending or future litigation and administrative proceedings, the ability to secure and protect trademarks, patents and other intellectual property rights, the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis, the ability of the Company to successfully manage its expenses on a continuing basis, information systems failure or breaches of network security, complex and quickly-evolving regulations regarding privacy and data protection, the continued availability to the Company of financing and credit on favorable terms, business disruptions, and general risks associated with doing business outside the United States including, without limitation, import duties, tariffs (including retaliatory tariffs), quotas, political and economic stability, changes to existing laws or regulations, and success of hedging strategies with respect to currency exchange rate fluctuations, 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. The Company assumes no duty to update its forward looking statements and this release shall not be construed to indicate the assumption by the Company of any duty to update its outlook in the future.
(Tables to follow)
MOVADO GROUP, INC. | ||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
(In thousands, except per share data) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
July 31, | July 31, | |||||||||
2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Net sales | $ 173,874 | $ 88,538 | $ 308,672 | $ 158,204 | ||||||
Cost of sales | 75,421 | 43,182 | 136,017 | 80,955 | ||||||
Gross profit | 98,453 | 45,356 | 172,655 | 77,249 | ||||||
Operating expenses | 73,820 | 54,272 | 134,766 | 112,409 | ||||||
Impairment of goodwill and intangible assets | - | - | - | 155,919 | ||||||
Total operating expenses | 73,820 | 54,272 | 134,766 | 268,328 | ||||||
Operating income/(loss) | 24,633 | (8,916) | 37,889 | (191,079) | ||||||
Other income | 257 | 8 | 357 | 23 | ||||||
Gain on sale of a non-operating asset | - | 1,317 | - | 1,317 | ||||||
Interest expense | (174) | (590) | (449) | (861) | ||||||
Income/(loss) before income taxes | 24,716 | (8,181) | 37,797 | (190,600) | ||||||
Provision/(benefit) for income taxes | 5,315 | (1,559) | 8,645 | (33,889) | ||||||
Net income/(loss) | 19,401 | (6,622) | 29,152 | (156,711) | ||||||
Less: Net income/(loss) attributable to noncontrolling interests | (9) | (7) | 333 | (103) | ||||||
Net income/(loss) attributable to Movado Group, Inc. | $ 19,410 | $ (6,615) | $ 28,819 | $ (156,608) | ||||||
Diluted Income Per Share Information | ||||||||||
Net income/(loss) attributable to Movado Group, Inc. | $ 0.82 | $ (0.28) | $ 1.21 | $ (6.75) | ||||||
Weighted diluted average shares outstanding | 23,739 | 23,240 | 23,736 | 23,191 |
MOVADO GROUP, INC. | |||||||||
GAAP AND NON-GAAP MEASURES | |||||||||
(In thousands, except for percentage data) | |||||||||
(Unaudited) | |||||||||
As Reported | |||||||||
Three Months Ended | |||||||||
July 31, | % Change | ||||||||
2021 | 2020 | ||||||||
Total net sales, as reported | $ 173,874 | $ 88,538 | 96.4% | ||||||
Total net sales, constant dollar basis | $ 168,640 | $ 88,538 | 90.5% | ||||||
As Reported | |||||||||
Six Months Ended | |||||||||
July 31, | % Change | ||||||||
2021 | 2020 | ||||||||
Total net sales, as reported | $ 308,672 | $ 158,204 | 95.1% | ||||||
Total net sales, constant dollar basis | $ 299,080 | $ 158,204 | 89.0% |
MOVADO GROUP, INC. | ||||||||||||||||
GAAP AND NON-GAAP MEASURES | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Net Sales | Gross Profit | OperatingIncome/(Loss) | Pre-taxIncome/(Loss) | Provision/(Benefit)for Income Taxes | Net Income/(Loss)Attributable toMovado Group, Inc. | Diluted EPS | ||||||||||
Three Months Ended July 31, 2021 | ||||||||||||||||
As Reported (GAAP) | $ 173,874 | $ 98,453 | $ 24,633 | $ 24,716 | $ 5,315 | $ 19,410 | $ 0.82 | |||||||||
Olivia Burton Costs (1) | - | - | 726 | 726 | 138 | 588 | 0.03 | |||||||||
MVMT Costs (2) | - | - | 101 | 101 | 25 | 76 | 0.00 | |||||||||
Adjusted Results (Non-GAAP) | $ 173,874 | $ 98,453 | $ 25,460 | $ 25,543 | $ 5,478 | $ 20,074 | $ 0.85 | |||||||||
Three Months Ended July 31, 2020 | ||||||||||||||||
As Reported (GAAP) | $ 88,538 | $ 45,356 | $ (8,916) | $ (8,181) | $ (1,559) | $ (6,615) | $ (0.28) | |||||||||
Olivia Burton Costs (1) | - | - | 671 | 671 | 139 | 532 | 0.02 | |||||||||
MVMT Costs (2) | - | - | 284 | 284 | 108 | 176 | 0.01 | |||||||||
Gain On Sale of a Non-Operating Asset (3) | - | - | - | (1,317) | (474) | (843) | (0.04) | |||||||||
Corporate Initiatives (4) | - | - | 7,368 | 7,368 | 2,353 | 5,015 | 0.22 | |||||||||
Adjusted Results (Non-GAAP) | $ 88,538 | $ 45,356 | $ (593) | $ (1,175) | $ 567 | $ (1,735) | $ (0.07) | |||||||||
Net Sales | Gross Profit | OperatingIncome/(Loss) | Pre-taxIncome/(Loss) | Provision/(Benefit)for Income Taxes | Net Income/(Loss)Attributable toMovado Group, Inc. | Diluted EPS | ||||||||||
Six Months Ended July 31, 2021 | ||||||||||||||||
As Reported (GAAP) | $ 308,672 | $ 172,655 | $ 37,889 | $ 37,797 | $ 8,645 | $ 28,819 | $ 1.21 | |||||||||
Olivia Burton Costs (1) | - | - | 1,447 | 1,447 | 275 | 1,172 | 0.05 | |||||||||
MVMT Costs (2) | - | - | 232 | 232 | 58 | 174 | 0.01 | |||||||||
Adjusted Results (Non-GAAP) | $ 308,672 | $ 172,655 | $ 39,568 | $ 39,476 | $ 8,978 | $ 30,165 | $ 1.27 | |||||||||
Six Months Ended July 31, 2020 | ||||||||||||||||
As Reported (GAAP) | $ 158,204 | $ 77,249 | $ (191,079) | $ (190,600) | $ (33,889) | $ (156,608) | $ (6.75) | |||||||||
Olivia Burton Costs (1) | - | - | 1,356 | 1,356 | 258 | 1,098 | 0.05 | |||||||||
MVMT Costs (2) | - | - | 981 | 981 | 373 | 608 | 0.03 | |||||||||
Goodwill and Intangible Asset Impairment (5) | - | - | 155,919 | 155,919 | 24,867 | 131,052 | 5.65 | |||||||||
Gain On Sale of a Non-Operating Asset (3) | - | - | - | (1,317) | (474) | (843) | (0.04) | |||||||||
Corporate Initiatives (4) | - | 3,508 | 14,608 | 14,608 | 4,592 | 10,016 | 0.43 | |||||||||
Adjusted Results (Non-GAAP) | $ 158,204 | $ 80,757 | $ (18,215) | $ (19,053) | $ (4,273) | $ (14,677) | $ (0.63) |
(1) | Related to the amortization of acquired intangible assets for Olivia Burton. | ||||||||
(2) | Related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation of MVMT, where applicable. | ||||||||
(3) | Related to a gain on sale of a non-operating asset in Switzerland. | ||||||||
(4) | Related to provision due to the impact to the business of the COVID-19 pandemic, including restructuring plan. | ||||||||
(5) | Related to the impairment of goodwill and impairment of certain of MVMT's intangible assets. |
MOVADO GROUP, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
July 31, | January 31, | July 31, | |||||||
2021 | 2021 | 2020 | |||||||
ASSETS | |||||||||
Cash and cash equivalents | $ 199,721 | $ 223,811 | $ 170,195 | ||||||
Trade receivables, net | 89,710 | 76,931 | 60,128 | ||||||
Inventories | 183,289 | 152,580 | 173,374 | ||||||
Other current assets | 23,144 | 23,479 | 29,098 | ||||||
Income taxes receivable | 8,602 | 24,850 | 758 | ||||||
Total current assets | 504,466 | 501,651 | 433,553 | ||||||
Property, plant and equipment, net | 19,656 | 22,349 | 25,888 | ||||||
Operating lease right-of-use assets | 71,253 | 76,070 | 82,169 | ||||||
Deferred and non-current income taxes | 41,579 | 42,507 | 59,747 | ||||||
Other intangibles, net | 15,550 | 17,081 | 18,071 | ||||||
Other non-current assets | 58,394 | 59,599 | 60,261 | ||||||
Total assets | $ 710,898 | $ 719,257 | $ 679,689 | ||||||
LIABILITIES AND EQUITY | |||||||||
Accounts payable | $ 45,670 | $ 28,187 | $ 29,929 | ||||||
Accrued liabilities | 50,329 | 51,124 | 45,509 | ||||||
Accrued payroll and benefits | 13,864 | 18,047 | 12,431 | ||||||
Current operating lease liabilities | 14,863 | 15,861 | 14,766 | ||||||
Income taxes payable | 10,379 | 14,452 | 6,774 | ||||||
Total current liabilities | 135,105 | 127,671 | 109,409 | ||||||
Loans payable to bank, non current | - | 21,230 | 48,341 | ||||||
Deferred and non-current income taxes payable | 20,185 | 21,895 | 20,743 | ||||||
Non-current operating lease liabilities | 64,520 | 68,412 | 75,376 | ||||||
Other non-current liabilities | 51,686 | 50,115 | 48,124 | ||||||
Redeemable noncontrolling interest | 2,443 | 2,600 | 3,037 | ||||||
Shareholders' equity | 434,567 | 425,264 | 373,671 | ||||||
Noncontrolling interest | 2,392 | 2,070 | 988 | ||||||
Total equity | 436,959 | 427,334 | 374,659 | ||||||
Total liabilities, redeemable noncontrolling interest and equity | $ 710,898 | $ 719,257 | $ 679,689 |
MOVADO GROUP, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Six Months Ended | |||||||
July 31, | |||||||
2021 | 2020 | ||||||
Cash flows from operating activities: | |||||||
Net income/(loss) | $ 28,819 | $ (156,608) | |||||
Impairment of goodwill and intangible assets | - | 155,919 | |||||
Non-cash corporate initiatives | - | 6,608 | |||||
Depreciation and amortization | 6,283 | 7,200 | |||||
Other non-cash adjustments | 5,696 | (33,833) | |||||
Changes in working capital | (18,802) | 9,630 | |||||
Changes in non-current assets and liabilities | 682 | (292) | |||||
Net cash provided by/(used in) operating activities | 22,678 | (11,376) | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (1,786) | (1,891) | |||||
Proceeds from sale of a non-operating asset | - | 1,317 | |||||
Tradenames and other intangibles | (133) | (51) | |||||
Net cash used in investing activities | (1,919) | (625) | |||||
Cash flows from financing activities: | |||||||
Repayment of bank borrowings | (21,140) | (36,772) | |||||
Proceeds from bank borrowings | - | 30,879 | |||||
Dividends paid | (11,618) | - | |||||
Stock repurchase | (9,975) | - | |||||
Stock awards and options exercised and other changes | (1,030) | (474) | |||||
Debt issuance costs | - | (300) | |||||
Net cash used in financing activities | (43,763) | (6,667) | |||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (1,096) | 3,022 | |||||
Net change in cash, cash equivalents, and restricted cash | (24,100) | (15,646) | |||||
Cash, cash equivalents, and restricted cash at beginning of period | 224,423 | 186,438 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ 200,323 | $ 170,792 | |||||
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||
Cash and cash equivalents | $ 199,721 | $ 170,195 | |||||
Restricted cash included in other non-current assets | 602 | 597 | |||||
Cash, cash equivalents, and restricted cash | $ 200,323 | $ 170,792 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210826005236/en/
ICR, Inc.Rachel Schacter/Allison Malkin 203-682-8200
Source: Movado Group, Inc.