Movado Group, Inc. Announces Record Second Quarter Results Increases Annual Outlook
Movado Group, Inc. (NYSE: MOV) reported record second quarter results with net sales of $173.9 million, a 96.4% increase from fiscal 2021 and 10.2% from fiscal 2020. Operating income rose to $24.6 million, compared to a loss of $8.9 million last year. Earnings per share reached $0.82. The company ended the quarter with cash of $199.7 million and no debt, while declaring a quarterly dividend of $0.20 per share. Looking ahead, Movado increased its fiscal 2022 outlook for net sales to $680-$695 million, anticipating a 25% effective tax rate.
- Net sales increased 96.4% to $173.9 million compared to $88.5 million in Q2 FY2021.
- Operating income improved to $24.6 million from a loss of $8.9 million in Q2 FY2021.
- Earnings per share reached $0.82 compared to a net loss of $0.28 per share last year.
- Cash at quarter-end was $199.7 million with no debt, enhancing financial stability.
- Board declared a quarterly dividend of $0.20 per share.
- Increased fiscal 2022 net sales guidance to $680-$695 million.
- International net sales decreased by 3.2% compared to pre-pandemic levels in fiscal 2020.
- Despite strong growth, concerns remain regarding uncertainty from COVID-19 variants.
~
~ Operating Income Increases to
~ Earnings Per Share of
~ Ends Second Quarter with Cash of
~ Board Declares Quarterly Dividend ~
“During the second quarter we generated a
“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)
-
Delivered topline growth with an increase of
96.4% over second quarter fiscal 2021. Total net sales increased10.2% as compared to pre-pandemic second quarter fiscal 2020 with a28.5% increase inU.S. net sales partially offset by a3.2% decrease in International net sales; -
Drove gross margin expansion of 540 basis points from prior year period to
56.6% and 250 basis points from second quarter fiscal 2020; -
Generated second quarter adjusted operating income of
as compared to an adjusted operating loss of$25.5 million last year and adjusted operating income of$0.6 million in the second quarter of fiscal 2020;$10.3 million -
Delivered adjusted diluted earnings per share of
as compared to ($0.85 ) and$0.07 in the second quarter of fiscal 2021 and 2020, respectively; and$0.36 -
Maintained strong balance sheet at quarter end, including cash of
, a$199.7 million 5.7% increase in inventory and a reduction in debt from prior year quarter end.$48.3 million
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Second quarter fiscal 2022 results of operations included the following items:
-
a
pre-tax charge, or$0.7 million after tax, representing$0.6 million per diluted share, associated with the amortization of acquired intangible assets related to the acquisition of$0.03 Olivia Burton ; and -
a
pre-tax and after-tax charge, representing$0.1 million per diluted share, associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT.$0.00
Second quarter fiscal 2021 results of operations included the following items:
-
a
pre-tax charge, or$0.7 million after tax, representing$0.5 million per diluted share, of operating expenses associated with the amortization of acquired intangible assets related to the acquisition of$0.02 Olivia Burton ; -
a
pre-tax charge, or$0.3 million after tax, representing$0.2 million per diluted share, of operating expenses associated with the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT;$0.01 -
a
pre-tax charge, or$7.4 million after tax, representing$5.0 million per diluted share, of operating expenses related to corporate initiatives primarily in response to the COVID-19 pandemic; and$0.22 -
a
pre-tax gain, or$1.3 million after tax, representing$0.8 million per diluted share, of other non-operating income associated with the sale of a non-operating asset in$0.04 Switzerland .
Second Quarter Fiscal 2022 (See attached table for GAAP and Non-GAAP measures)
-
Net sales increased
96.4% to compared to$173.9 million in the second quarter of fiscal 2021. The increase in net sales reflected growth in online retail (both in the Company’s owned and wholesale customers’ websites), in Movado Company Stores and in wholesale customers’ brick and mortar stores due to the partial recovery from the COVID-19 pandemic. Net sales on a constant dollar basis increased$88.5 million 90.5% .U.S. net sales increased145.9% as compared to the second quarter of last year and increased28.5% as compared to pre-pandemic second quarter fiscal 2020. International net sales increased64.4% as compared to the second quarter of last year and decreased3.2% as compared to pre-pandemic second quarter of fiscal 2020. -
Gross profit was
, or$98.5 million 56.6% of sales, compared to , or$45.4 million 51.2% of sales, in the second quarter last year. The increase in gross margin percentage was primarily the result of favorable changes in channel and product mix and favorable foreign currency exchange rates partially offset by an increase in certain fixed costs to support the increase in net sales. -
Operating expenses were
compared to$73.8 million in the prior year period. Adjusted operating expenses were$54.3 million for the second quarter fiscal 2022 and$73.0 million in the second quarter of fiscal 2021. In both periods, the adjusted operating expenses exclude charges mentioned above in the Non-GAAP Items section. The increase in adjusted operating expenses was primarily due to higher marketing expenses and performance-based compensation and an increase in certain operating expenses to support the increase in net sales. The Company continues to minimize all non-essential operating expenses. As a percent of sales, adjusted operating expenses decreased to$45.9 million 42.0% of sales from51.9% in the prior year period primarily due to improved sales leverage. -
Operating income was
compared to an operating loss of$24.6 million in the second quarter of fiscal 2021. Adjusted operating income for the second quarter of fiscal 2022 was$8.9 million compared to an adjusted operating loss of$25.5 million for the prior year quarter. In both periods, the adjusted operating income/loss excludes the charges listed above in the Non-GAAP Items section.$0.6 million -
The Company recorded a tax provision of
compared to a tax benefit of$5.3 million in the second quarter of fiscal 2021. The Company recorded an adjusted tax provision in the second quarter of fiscal 2022 of$1.6 million compared to an adjusted tax provision of$5.5 million for the second quarter of fiscal 2021.$0.6 million -
Net income was
, or$19.4 million per diluted share, compared to a net loss of$0.82 , or ($6.6 million ) per diluted share, in the second quarter of fiscal 2021. Adjusted net income for the fiscal 2022 period was$0.28 , or$20.1 million per diluted share, which excludes the second quarter fiscal 2022 net charges listed above in the Non-GAAP Items section after the associated tax effects. This compares to an adjusted net loss in the second quarter of fiscal 2021 of$0.85 , or ($1.7 million ) per diluted share, which excludes the second quarter fiscal 2021 net charges listed above in the Non-GAAP Items section after the associated tax effects.$0.07
First Half Fiscal 2022 (See attached table for GAAP and Non-GAAP measures)
-
Net sales for the first six months of fiscal 2022 were
compared to$308.7 million in the first six months of fiscal 2021, an increase of$158.2 million 95.1% . The increase in net sales reflected growth in online retail (both in the Company’s owned and wholesale customers’ websites), in Movado Company Stores and in wholesale customers’ brick and mortar stores due to the partial recovery from the COVID-19 pandemic. Net sales on a constant dollar basis increased89.0% .U.S. net sales increased139.1% as compared to the first half of last year and increased20.1% as compared to pre-pandemic first half of fiscal 2020. International net sales increased65.7% as compared to the first half of last year and decreased11.8% as compared to pre-pandemic first half of fiscal 2020. -
Gross profit was
, or$172.7 million 55.9% of sales, compared to , or$77.2 million 48.8% of sales in the same period last year. Adjusted gross profit was the same as gross profit for the first half of fiscal 2022. Adjusted gross profit for the first six months of fiscal 2021, which excludes in corporate initiative charges related to the impact to the business of the COVID-19 pandemic, was$3.5 million , or$80.8 million 51.0% of net sales. The increase in adjusted gross margin percentage was primarily the result of favorable changes in channel and product mix, leveraging certain fixed costs as a result of higher sales and favorable foreign currency exchange rates. -
Operating expenses were
as compared to$134.8 million in the first six months of last fiscal year. For the first six months of fiscal 2022, adjusted operating expenses were$268.3 million , which excludes$133.1 million of expenses associated with the amortization of acquired intangible assets related to$1.4 million Olivia Burton and in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition. For the first six months of fiscal 2021, adjusted operating expenses were$0.2 million , which excludes$99.0 million in adjustments related to the impairment of goodwill and certain intangible assets,$155.9 million in corporate initiative charges related to the impact to the business from the COVID-19 pandemic,$11.1 million of expenses associated with the amortization of acquired intangible assets related to$1.4 million Olivia Burton and in adjustments associated with the amortization of acquired intangible assets and deferred compensation related to the MVMT acquisition. The increase in adjusted operating expenses was primarily due to higher marketing expenses and performance-based compensation and an increase in certain operating expenses to support the increase in net sales. The Company continues to minimize all operating expenses. As a percent of sales, adjusted operating expenses decreased to$1.0 million 43.1% of sales from62.6% in the prior year period primarily due to improved sales leverage. -
Operating income was
compared to operating loss of$37.9 million in the first six months of fiscal 2021. Adjusted operating income for the first six months of fiscal 2022 was$191.1 million which excludes the fiscal 2022 charges listed in the immediately preceding bullets compared to the first six months of fiscal 2021’s operating loss of$39.6 million , which excludes the fiscal 2021 charges listed in the immediately preceding bullets.$18.2 million -
The Company recorded a tax provision in the first six months of fiscal 2022 of
as compared to a benefit of$8.6 million in the first six months of last year. The first six months of fiscal 2022 included a benefit of$33.9 million primarily associated with the amortization of acquired intangible assets related to$0.3 million Olivia Burton and MVMT. The first six months of fiscal 2021 included a benefit of associated with the amortization of acquired intangible assets related to$0.3 million Olivia Burton , a benefit related to the amortization of acquired intangible assets and deferred compensation related to MVMT, a$0.4 million benefit related to the tax deductible portion of the impairment of goodwill and certain intangible assets, and a$24.9 million benefit related to corporate initiatives taken in response to the COVID-19 pandemic, partially offset by a$4.6 million provision for tax associated with the sale of a non-operating asset in$0.5 million Switzerland . -
Net income was
, or$28.8 million per diluted share, compared to a net loss of$1.21 , or ($156.6 million ) per diluted share, in the first six months of last year. In the first half of fiscal 2022, adjusted net income was$6.75 , or$30.2 million per diluted share, which excludes the fiscal 2022 charges listed above after the associated tax effects, as described in the immediately preceding bullets. For the first half of fiscal 2021, adjusted net loss was$1.27 , or ($14.7 million ) per diluted share, which excludes the fiscal 2021 charges listed above after the associated tax effects, as described in the immediately preceding bullets.$0.63
Fiscal 2022 Outlook
The Company is increasing its outlook and currently expects fiscal 2022 net sales in a range of approximately
Quarterly Dividend and Share Repurchase Program
The Company also announced today that on
During the second quarter of fiscal 2022, the Company repurchased approximately 322,800 shares under its share repurchase program. As of
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today,
In this release, the Company presents certain financial measures that are not calculated according to generally accepted accounting principles in
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
(Tables to follow)
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
(In thousands, except per share data) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
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 |
$ 19,410 |
$ (6,615) |
$ 28,819 |
$ (156,608) |
||||||
Diluted Income Per Share Information | ||||||||||
Net income/(loss) attributable to |
$ 0.82 |
$ (0.28) |
$ 1.21 |
$ (6.75) |
||||||
Weighted diluted average shares outstanding | 23,739 |
23,240 |
23,736 |
23,191 |
GAAP AND NON-GAAP MEASURES | |||||||||
(In thousands, except for percentage data) | |||||||||
(Unaudited) | |||||||||
As Reported | |||||||||
Three Months Ended | |||||||||
% Change |
|||||||||
2021 |
2020 |
||||||||
Total net sales, as reported | $ 173,874 |
$ 88,538 |
|
||||||
Total net sales, constant dollar basis | $ 168,640 |
$ 88,538 |
|
||||||
As Reported | |||||||||
Six Months Ended | |||||||||
% Change |
|||||||||
2021 |
2020 |
||||||||
Total net sales, as reported | $ 308,672 |
$ 158,204 |
|
||||||
Total net sales, constant dollar basis | $ 299,080 |
$ 158,204 |
|
GAAP AND NON-GAAP MEASURES | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Gross Profit | Operating Income/(Loss) |
Pre-tax Income/(Loss) |
Provision/(Benefit) for Income Taxes |
Net Income/(Loss) Attributable to |
Diluted EPS | |||||||||||
Three Months Ended |
||||||||||||||||
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 |
||||||||||||||||
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) |
|||||||||
Gross Profit | Operating Income/(Loss) |
Pre-tax Income/(Loss) |
Provision/(Benefit) for Income Taxes |
Net Income/(Loss) Attributable to |
Diluted EPS | |||||||||||
Six Months Ended |
||||||||||||||||
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 |
||||||||||||||||
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 |
|||||||||
- |
- |
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 |
||||||||
(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 |
||||||||
(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. |
CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
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 |
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 |
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