CONTACT:
|
ICR, Inc.
|
|
Rachel Schacter/Allison Malkin
|
||
203-682-8200
|
• |
Delivered topline results ahead of expectations with sequential improvement from the second quarter fiscal 2021
|
• |
Drove adjusted gross margin expansion of 100 bps to 54.5%
|
• |
Decreased adjusted operating expenses as a percent of sales 200 bps to 39.7%
|
• |
Generated adjusted operating income of $25.1 million as compared to $24.3 million in the prior year period, despite pandemic impacts
|
• |
Tightly managed inventories, which declined 12% from prior year and are well positioned heading into the holiday selling season
|
• |
Ended third quarter with cash of $163.2 million
|
• |
$0.7 million pre-tax charge, or $0.5 million after tax, representing $0.02 per diluted share, associated with the amortization of acquired intangible assets related to the acquisition
of Olivia Burton;
|
• |
$0.6 million pre-tax charge, or $0.3 million after tax, representing $0.02 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation
related to the acquisition of MVMT; and
|
• |
$0.8 million pre-tax charge, or $0.6 million after tax, representing $0.03 per diluted share, related to corporate initiatives primarily in response to the COVID-19 pandemic.
|
• |
$0.7 million pre-tax charge, or $0.5 million after tax, representing $0.03 per diluted share, associated with the amortization of acquired intangible assets related to the acquisition
of Olivia Burton; and
|
• |
$0.9 million pre-tax charge, or $0.7 million after tax, representing $0.03 per diluted share, associated with the amortization of acquired intangible assets and deferred compensation
related to the acquisition of MVMT.
|
• |
Net sales decreased 17.4% to $169.9 million as compared to $205.6 million in the third quarter of fiscal 2020. Net sales on a constant dollar basis decreased 19.4% as compared to net
sales in the third quarter of fiscal 2020.
|
• |
Gross profit was $92.5 million, or 54.4% of net sales, as compared to $110.1 million, or 53.5% of net sales, in the third quarter last year. Adjusted gross profit in the third quarter
of fiscal 2021 was $92.5 million, or 54.5% of net sales, which excludes $0.1 million associated with corporate initiatives related to the impact on the business of the COVID-19 pandemic. There were no adjustments to gross profit in the third
quarter of fiscal 2020. The increase in adjusted gross margin percentage was primarily the result of favorable changes in channel and product mix and favorable foreign currency exchange rates.
|
• |
Operating expenses decreased $18.0 million to $69.4 million, as compared to $87.4 million in the third quarter last year. Adjusted operating expenses, which excludes the operating
expense charges mentioned above in the Non-GAAP Items section, were $67.4 million and $85.8 million for the third quarter of fiscal 2021 and fiscal 2020, respectively. The decrease in adjusted operating expenses was primarily due to the
Company’s initiative to minimize all operating expenses, including non-essential operating expenses, such as certain marketing, selling and payroll related expenses.
|
• |
Operating income was $23.1 million compared to operating income of $22.6 million in the third quarter of fiscal 2020. Adjusted operating income, which excludes the fiscal 2021 charges
listed above in the Non-GAAP Items section, was $25.1 million and $24.3 million for the third quarter of fiscal 2021 and fiscal 2020, respectively.
|
• |
The Company recorded a tax provision of $7.5 million, as compared to $5.0 million in the third quarter of fiscal 2020. Based upon adjusted pre-tax income, the adjusted tax provision was
$8.0 million or an adjusted tax rate of 32.7% as compared to an adjusted tax provision of $5.3 million or an adjusted tax rate of 22.1% in the third quarter of fiscal 2020. The increase in the adjusted tax rate is due to the impact of the
U.S. tax on GILTI as a result of the mix of jurisdictional earnings, partially offset by the NOL carryback provision of the CARES Act.
|
• |
Net income was $14.8 million, or $0.63 per diluted share, as compared to net income of $17.8 million, or $0.76 per diluted share, in the third quarter of fiscal 2020. Adjusted net
income for the fiscal 2021 period was $16.4 million, or $0.70 per diluted share, which excludes the third quarter fiscal 2021 net charges listed above in the Non-GAAP Items section after the associated tax effects. This compares to adjusted
net income for the third quarter of fiscal 2020 of $19.0 million or $0.82 per diluted share, which excludes the third quarter fiscal 2020 net charges listed above in the Non-GAAP Items section after the associated tax effects.
|
• |
Net sales decreased 35.7% to $328.1 million as compared to $510.0 million in the same period of fiscal 2020. Net sales on a constant dollar basis decreased 36.4% as compared to net
sales in the first nine months of fiscal 2020.
|
• |
Gross profit was $169.7 million, or 51.7% of net sales, as compared to $274.3 million, or 53.8% of net sales, in the same period last year. Adjusted gross profit for the first nine
months of fiscal 2021 was $173.3 million, or 52.8% of net sales, which excludes $3.6 million in corporate initiative charges related to the impact on the business of the COVID-19 pandemic. This compares to adjusted gross profit of $274.4
million, or 53.8% of net sales for the first nine months of fiscal 2020, which excludes $0.1 million in adjustments associated with the amortization of acquisition accounting adjustments related to the MVMT acquisition. The decrease in
adjusted gross margin percentage was primarily the result of unfavorable changes in channel and product mix and U.S. special tariff headwinds, partially offset by favorable foreign currency exchange rates.
|
• |
Operating expenses were $337.7 million as compared to $237.9 million in the same period last year. For the first nine months of fiscal 2021, adjusted operating expenses were $166.4
million, which excludes $155.9 million in adjustments related to the impairment of goodwill and certain intangible assets, $11.8 million in corporate initiative charges related to the impact to the business from the COVID-19 pandemic, $2.0
million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton and $1.5 million in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to
the MVMT acquisition. For the first nine months of fiscal 2020, adjusted operating expenses were $232.7 million, which excludes $2.1 million of expenses associated with the amortization of acquired intangible assets related to Olivia Burton
and $3.4 million in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition, partially offset by $0.3 million in adjustments associated with the change in estimate
of the remaining accrual for the fiscal 2018 cost saving initiatives. The decrease in adjusted operating expenses was primarily due to the Company’s initiative to minimize all operating expense, including non-essential operating expenses,
such as certain marketing, selling and payroll related expenses.
|
• |
Operating loss was $168.0 million as compared to operating income of $36.4 million in the same period last year. Adjusted operating income for the first nine months of fiscal 2021 was
$6.9 million, which excludes the fiscal 2021 charges listed in the immediately preceding bullet, compared to adjusted operating income of $41.7 million for the first nine months of fiscal 2020, which excludes the fiscal 2020 net charges
listed in the immediately preceding bullet.
|
• |
The Company recorded a tax benefit of $26.4 million as compared to a tax provision of $10.5 million for the first nine months of fiscal 2020. Based upon adjusted pre-tax income, the
adjusted tax provision was $3.7 million in the first nine months of fiscal 2021 as compared $8.4 million in the first nine months of fiscal 2020.
|
• |
Net loss was $141.8 million, or a loss of $6.11 per diluted share, as compared to net income for the first nine months of fiscal 2020 of $39.2 million, or $1.68 per diluted share.
Adjusted net income for the first nine months of fiscal 2021 was $1.7 million, or $0.07 per diluted share, which excludes $131.1 million, net of $24.9 million of tax, in adjustments related to the impairment of goodwill and certain intangible
assets, $10.7 million, net of $4.7 million of tax, in corporate initiative charges related to the impact on the business from the COVID-19 pandemic including restructuring, $1.6 million, net of $0.4 million of tax, of expenses associated with
the amortization of acquired intangible assets related to Olivia Burton and $1.0 million, net of $0.6 million of tax, in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT
acquisition, and $0.8 million, net of $0.5 million of tax, associated with a gain on the sale of a non-operating asset in Switzerland. This compares to adjusted net income for the first nine months of fiscal 2020 of $33.0 million, or $1.41
per diluted share. This amount excludes expenses of $1.7 million, net of $0.4 million of tax, associated with the amortization of acquired intangible assets related to Olivia Burton; expenses of $2.7 million, net of $0.8 million of tax,
related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation related to MVMT; a gain of $10.4 million, net of $3.3 million of tax, associated with the remeasurement of the contingent
consideration liability associated with the MVMT acquisition; and a gain of $0.2 million, net of $0.1 million of tax, in adjustments associated with the change in estimate of the remaining accrual for the fiscal 2018 cost saving initiatives.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
October 31,
|
October 31,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Net sales
|
$
|
169,863
|
$
|
205,618
|
$
|
328,067
|
$
|
509,983
|
||||||||
Cost of sales
|
77,410
|
95,549
|
158,365
|
235,702
|
||||||||||||
Gross profit
|
92,453
|
110,069
|
169,702
|
274,281
|
||||||||||||
Operating expenses
|
69,386
|
87,431
|
181,795
|
237,893
|
||||||||||||
Impairment of goodwill and intangible assets
|
-
|
-
|
155,919
|
-
|
||||||||||||
Total operating expenses
|
69,386
|
87,431
|
337,714
|
237,893
|
||||||||||||
Operating income/(loss)
|
23,067
|
22,638
|
(168,012
|
)
|
36,388
|
|||||||||||
Non-operating (expense)/income:
|
||||||||||||||||
Gain on sale of a non-operating asset
|
-
|
-
|
1,317
|
-
|
||||||||||||
Change in contingent consideration
|
-
|
-
|
-
|
13,627
|
||||||||||||
Interest expense
|
(608
|
)
|
(240
|
)
|
(1,469
|
)
|
(689
|
)
|
||||||||
Interest income
|
8
|
18
|
31
|
63
|
||||||||||||
Income/(Loss) before income taxes
|
22,467
|
22,416
|
(168,133
|
)
|
49,389
|
|||||||||||
Provision/(Benefit) for income taxes
|
7,524
|
4,955
|
(26,365
|
)
|
10,543
|
|||||||||||
Net income/(loss)
|
14,943
|
17,461
|
(141,768
|
)
|
38,846
|
|||||||||||
Less: Net income/(loss) attributable to noncontrolling interests
|
118
|
(304
|
)
|
15
|
(349
|
)
|
||||||||||
Net income/(loss) attributable to Movado Group, Inc.
|
$
|
14,825
|
$
|
17,765
|
$
|
(141,783
|
)
|
$
|
39,195
|
|||||||
Diluted Income Per Share Information
|
||||||||||||||||
Net income/(loss) attributable to Movado Group, Inc.
|
$
|
0.63
|
$
|
0.76
|
$
|
(6.11
|
)
|
$
|
1.68
|
|||||||
Weighted diluted average shares outstanding
|
23,375
|
23,250
|
23,223
|
23,322
|
As Reported
|
||||||||||||
Three Months Ended
|
||||||||||||
October 31,
|
% Change
|
|||||||||||
2020
|
2019
|
|||||||||||
Total net sales, as reported
|
$
|
169,863
|
$
|
205,618
|
-17.4
|
%
|
||||||
Total net sales, constant dollar basis
|
$
|
165,639
|
$
|
205,618
|
-19.4
|
%
|
||||||
As Reported
|
||||||||||||
Nine Months Ended
|
||||||||||||
October 31,
|
% Change
|
|||||||||||
2020
|
2019
|
|||||||||||
Total net sales, as reported
|
$
|
328,067
|
$
|
509,983
|
-35.7
|
%
|
||||||
Total net sales, constant dollar basis
|
$
|
324,452
|
$
|
509,983
|
-36.4
|
%
|
Net Sales
|
Gross Profit
|
Operating Income/(Loss)
|
Pre-tax Income/(Loss)
|
Provision/(Benefit) for Income Taxes
|
Net Income/(Loss) Attributable to Movado Group, Inc.
|
Diluted EPS
|
||||||||||||||||||||||
Three Months Ended October 31, 2020
|
||||||||||||||||||||||||||||
As Reported (GAAP)
|
$
|
169,863
|
$
|
92,453
|
$
|
23,067
|
$
|
22,467
|
$
|
7,524
|
$
|
14,825
|
$
|
0.63
|
||||||||||||||
Olivia Burton Costs (1)
|
-
|
-
|
677
|
677
|
128
|
549
|
$
|
0.02
|
||||||||||||||||||||
MVMT Costs (2)
|
-
|
-
|
555
|
555
|
211
|
344
|
$
|
0.02
|
||||||||||||||||||||
Corporate Initiatives (3)
|
-
|
43
|
781
|
781
|
143
|
638
|
$
|
0.03
|
||||||||||||||||||||
Adjusted Results (Non-GAAP)
|
$
|
169,863
|
$
|
92,496
|
$
|
25,080
|
$
|
24,480
|
$
|
8,006
|
$
|
16,356
|
$
|
0.70
|
||||||||||||||
Three Months Ended October 31, 2019
|
||||||||||||||||||||||||||||
As Reported (GAAP)
|
$
|
205,618
|
$
|
110,069
|
$
|
22,638
|
$
|
22,416
|
$
|
4,955
|
$
|
17,765
|
$
|
0.76
|
||||||||||||||
Olivia Burton Costs (1)
|
-
|
-
|
676
|
676
|
128
|
548
|
0.03
|
|||||||||||||||||||||
MVMT Costs (2)
|
-
|
-
|
936
|
936
|
225
|
711
|
0.03
|
|||||||||||||||||||||
Adjusted Results (Non-GAAP)
|
$
|
205,618
|
$
|
110,069
|
$
|
24,250
|
$
|
24,028
|
$
|
5,308
|
$
|
19,024
|
$
|
0.82
|
||||||||||||||
Net Sales
|
Gross Profit
|
Operating (Loss)/Income
|
Pre-tax (Loss)/Income
|
(Benefit)/Provision for Income Taxes
|
Net (Loss)/Income Attributable to Movado Group, Inc.
|
Diluted EPS
|
||||||||||||||||||||||
Nine Months Ended October 31, 2020
|
||||||||||||||||||||||||||||
As Reported (GAAP)
|
$
|
328,067
|
$
|
169,702
|
$
|
(168,012
|
)
|
$
|
(168,133
|
)
|
$
|
(26,365
|
)
|
$
|
(141,783
|
)
|
$
|
(6.11
|
)
|
|||||||||
Olivia Burton Costs (1)
|
-
|
-
|
2,033
|
2,033
|
386
|
1,647
|
$
|
0.07
|
||||||||||||||||||||
MVMT Costs (2)
|
-
|
-
|
1,536
|
1,536
|
584
|
952
|
$
|
0.04
|
||||||||||||||||||||
Corporate Initiatives (3)
|
-
|
3,551
|
15,389
|
15,389
|
4,735
|
10,654
|
$
|
0.46
|
||||||||||||||||||||
Goodwill and Intangible Asset Impairment (4)
|
-
|
-
|
155,919
|
155,919
|
24,867
|
131,052
|
$
|
5.64
|
||||||||||||||||||||
Gain On Sale of a Non-Operating Asset (5)
|
-
|
-
|
-
|
(1,317
|
)
|
(474
|
)
|
(843
|
)
|
$
|
(0.03
|
)
|
||||||||||||||||
Adjusted Results (Non-GAAP)
|
$
|
328,067
|
$
|
173,253
|
$
|
6,865
|
$
|
5,427
|
$
|
3,733
|
$
|
1,679
|
$
|
0.07
|
||||||||||||||
Nine Months Ended October 31, 2019
|
||||||||||||||||||||||||||||
As Reported (GAAP)
|
$
|
509,983
|
$
|
274,281
|
$
|
36,388
|
$
|
49,389
|
$
|
10,543
|
$
|
39,195
|
$
|
1.68
|
||||||||||||||
Olivia Burton Costs (1)
|
-
|
-
|
2,078
|
2,078
|
395
|
1,683
|
0.07
|
|||||||||||||||||||||
MVMT Costs (2)
|
-
|
140
|
3,534
|
3,534
|
848
|
2,686
|
0.11
|
|||||||||||||||||||||
Change In Contingent Consideration (6)
|
-
|
-
|
-
|
(13,627
|
)
|
(3,270
|
)
|
(10,357
|
)
|
(0.44
|
)
|
|||||||||||||||||
Cost Savings Initiatives (7)
|
-
|
-
|
(320
|
)
|
(320
|
)
|
(77
|
)
|
(243
|
)
|
(0.01
|
)
|
||||||||||||||||
Adjusted Results (Non-GAAP)
|
$
|
509,983
|
$
|
274,421
|
$
|
41,680
|
$
|
41,054
|
$
|
8,439
|
$
|
32,964
|
$
|
1.41
|
(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 provision established associated with corporate initiatives, including restructuring plan.
|
(4)
|
Related to the impairment of goodwill for MVMT, Olivia Burton and City Time and impairment of certain of MVMT's intangible assets.
|
(5)
|
Related to a gain on sale of a non-operating asset in Switzerland.
|
(6)
|
Remeasurement of contingent consideration liability.
|
(7)
|
Change in estimate in Fiscal 2020 for severance and occupancy expenses.
|
|
October 31,
|
January 31,
|
October 31,
|
|||||||||
|
2020
|
2020
|
2019
|
|||||||||
ASSETS
|
||||||||||||
|
||||||||||||
|
||||||||||||
Cash and cash equivalents
|
$
|
163,218
|
$
|
185,872
|
$
|
116,025
|
||||||
Trade receivables, net
|
103,506
|
78,388
|
136,272
|
|||||||||
Inventories
|
176,841
|
171,406
|
201,164
|
|||||||||
Other current assets
|
28,028
|
28,888
|
30,737
|
|||||||||
Total current assets
|
471,593
|
464,554
|
484,198
|
|||||||||
|
||||||||||||
Property, plant and equipment, net
|
24,002
|
29,238
|
29,275
|
|||||||||
Operating lease right-of-use assets
|
77,932
|
89,523
|
88,126
|
|||||||||
Deferred and non-current income taxes
|
54,748
|
25,403
|
28,191
|
|||||||||
Goodwill
|
-
|
136,366
|
135,280
|
|||||||||
Other intangibles, net
|
17,123
|
42,359
|
43,532
|
|||||||||
Other non-current assets
|
56,380
|
59,865
|
58,453
|
|||||||||
Total assets
|
$
|
701,778
|
$
|
847,308
|
$
|
867,055
|
||||||
|
||||||||||||
LIABILITIES AND EQUITY
|
||||||||||||
|
||||||||||||
|
||||||||||||
Accounts payable
|
$
|
35,562
|
$
|
35,488
|
$
|
33,757
|
||||||
Accrued liabilities
|
59,612
|
44,210
|
62,499
|
|||||||||
Accrued payroll and benefits
|
12,693
|
6,302
|
9,353
|
|||||||||
Current operating lease liabilities
|
14,210
|
15,083
|
14,579
|
|||||||||
Income taxes payable
|
11,275
|
8,217
|
17,243
|
|||||||||
Total current liabilities
|
133,352
|
109,300
|
137,431
|
|||||||||
|
||||||||||||
Loans payable to bank, non current
|
37,266
|
51,910
|
50,685
|
|||||||||
Deferred and non-current income taxes payable
|
20,893
|
25,419
|
26,370
|
|||||||||
Non-current operating lease liabilities
|
71,658
|
81,877
|
80,682
|
|||||||||
Other non-current liabilities
|
45,179
|
48,393
|
47,943
|
|||||||||
|
||||||||||||
Redeemable noncontrolling interest
|
2,772
|
3,165
|
3,263
|
|||||||||
|
||||||||||||
Shareholders' equity
|
389,345
|
526,537
|
520,681
|
|||||||||
|
||||||||||||
Noncontrolling interest
|
1,313
|
707
|
-
|
|||||||||
Total equity
|
390,658
|
527,244
|
520,681
|
|||||||||
|
||||||||||||
Total liabilities, redeemable noncontrolling interest and equity
|
$
|
701,778
|
$
|
847,308
|
$
|
867,055
|
Nine Months Ended |
||||||||
October 31, | ||||||||
2020
|
2019
|
|||||||
Cash flows from operating activities:
|
||||||||
Net (loss)/income
|
$
|
(141,783
|
)
|
$
|
39,195
|
|||
Impairment of goodwill and intangible assets
|
155,919
|
-
|
||||||
Non-cash corporate initiatives
|
6,685
|
-
|
||||||
Change in contingent consideration
|
-
|
(13,627
|
)
|
|||||
Depreciation and amortization
|
10,546
|
11,888
|
||||||
Other non-cash adjustments
|
(26,402
|
)
|
696
|
|||||
Changes in working capital
|
(12,120
|
)
|
(81,015
|
)
|
||||
Changes in non-current assets and liabilities
|
449
|
(1,707
|
)
|
|||||
Net cash used in operating activities
|
(6,706
|
)
|
(44,570
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(2,428
|
)
|
(10,023
|
)
|
||||
Proceeds from sale of a non-operating asset
|
1,317
|
-
|
||||||
Proceeds from sale of an asset held for sale
|
-
|
242
|
||||||
Tradenames and other intangibles
|
(118
|
)
|
(194
|
)
|
||||
Net cash used in investing activities
|
(1,229
|
)
|
(9,975
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayments of bank borrowings
|
(47,699
|
)
|
-
|
|||||
Proceeds from bank borrowings
|
30,879
|
-
|
||||||
Dividends paid
|
-
|
(13,796
|
)
|
|||||
Stock repurchase
|
-
|
(4,199
|
)
|
|||||
Stock awards and options exercised and other changes
|
(497
|
)
|
(1,249
|
)
|
||||
Debt issuance costs
|
(300
|
)
|
-
|
|||||
Net cash used in financing activities
|
(17,617
|
)
|
(19,244
|
)
|
||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
2,926
|
(93
|
)
|
|||||
Net change in cash, cash equivalents, and restricted cash
|
(22,626
|
)
|
(73,882
|
)
|
||||
Cash, cash equivalents, and restricted cash at beginning of period
|
186,438
|
190,459
|
||||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
163,812
|
$
|
116,577
|
||||
Reconciliation of cash, cash equivalents, and restricted cash:
|
||||||||
Cash and cash equivalents
|
$
|
163,218
|
$
|
116,025
|
||||
Restricted cash included in other non-current assets
|
594
|
552
|
||||||
Cash, cash equivalents, and restricted cash
|
$
|
163,812
|
$
|
116,577
|