Movado Group, Inc. Announces Second Quarter Results
- Net sales of $160.4 million
- Operating income of $9.6 million
- Adjusted EPS of $0.38
- Quarterly dividend of $0.35 per share
- Lower net sales and earnings expectations for FY2024
~ Net Sales of
~ Operating Income of
~ EPS of
~ Updates Fiscal Year 2024 Outlook ~
~ Board Declares Quarterly Dividend of
Efraim Grinberg, Chairman and Chief Executive Officer, stated, “We managed our business well, delivering second quarter net sales and earnings within our range of expectations despite operating in a challenging retail environment for our category, particularly in
Fiscal 2024 Second Quarter Highlights (See attached table for GAAP and Non-GAAP measures)
-
Delivered net sales of
versus$160.4 million in the second quarter of fiscal 2023;$182.8 million -
Generated gross margin of
55.7% as compared to58.5% in the prior year period; -
Generated operating income of
as compared to$9.6 million in the prior year period; Adjusted operating income of$30.7 million as compared to$10.3 million ;$31.4 million -
Achieved diluted earnings per share of
as compared to$0.36 in the prior year period; Adjusted diluted earnings per share of$1.05 as compared to$0.38 ; and$1.07 -
Ended the quarter with cash of
and no debt.$218.9 million
Mr. Grinberg continued, “We expect the difficult environment for consumer discretionary products to persist into the back half of the year, which is reflected in our updated outlook that incorporates lower shipments across our wholesale partners in
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Second quarter fiscal 2024 results of operations included the following items:
-
a
pre-tax charge, or$0.6 million after tax, representing$0.5 million per diluted share, associated with the amortization of acquired intangible assets related to the acquisitions of Olivia Burton and MVMT.$0.02
Second quarter fiscal 2023 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 acquisitions of Olivia Burton and MVMT.$0.02
In this press release, reference to “adjusted” results exclude the impact of the above charges from the second quarter of fiscal years 2024 and 2023, as well as the items described in the Non-GAAP Items section of the Company’s earnings release for the first quarter of fiscal year 2024. Please refer to the attached table of GAAP and Non-GAAP measures for a detailed reconciliation of the Company’s reported results to its adjusted, non-GAAP results.
Second Quarter Fiscal 2024 Results (See attached table for GAAP and Non-GAAP measures)
-
Net sales decreased
12.3% (13.8% on a constant dollar basis) to compared to$160.4 million in the second quarter of fiscal 2023. The decrease in net sales reflected declines in wholesale customers’ brick and mortar stores, online retail and Movado Company Stores due to the challenging environment for consumer discretionary products.$182.8 million U.S. net sales decreased12.4% as compared to the second quarter of last year. International net sales decreased12.1% (14.9% on a constant dollar basis) as compared to the second quarter of last year. -
Gross profit was
, or$89.3 million 55.7% of net sales, compared to , or$106.9 million 58.5% of net sales, in the second quarter of fiscal 2023. The decrease in gross margin percentage was primarily the result of decreased leverage of higher fixed costs on lower sales, the unfavorable changes in channel and product mix and the unfavorable impact of foreign currency exchange rates. -
Operating expenses were
compared to$79.6 million in the second quarter of fiscal 2023. Adjusted operating expenses were$76.3 million for the second quarter of fiscal 2024 and$79.0 million in the second quarter of fiscal 2023. This increase was primarily due to higher payroll-related costs, partially offset by lower marketing expenses and performance-based compensation. As a percent of sales, adjusted operating expenses increased to$75.6 million 49.3% of net sales from41.3% in the prior year period primarily due to lower sales. -
Operating income was
compared to$9.6 million in the second quarter of fiscal 2023. Adjusted operating income for the second quarter of fiscal 2024 was$30.7 million compared to an adjusted operating income of$10.3 million in the second quarter of fiscal 2023.$31.4 million -
The Company recorded a tax provision of
compared to a tax provision of$2.9 million in the second quarter of fiscal 2023. The Company recorded an adjusted tax provision in the second quarter of fiscal 2024 of$6.4 million compared to an adjusted tax provision of$3.0 million in the second quarter of fiscal 2023.$6.6 million -
Net income was
, or$8.0 million per diluted share, compared to net income of$0.36 , or$24.0 million per diluted share, in the second quarter of fiscal 2023. Adjusted net income for the fiscal 2024 period was$1.05 , or$8.5 million per diluted share. This compares to adjusted net income in the second quarter of fiscal 2023 of$0.38 , or$24.6 million per diluted share.$1.07
First Half Fiscal 2024 Results (See attached table for GAAP and Non-GAAP measures)
-
Net sales for the first six months of fiscal 2024 decreased
11.8% to ($305.3 million 12.1% on a constant dollar basis) compared to in the first six months of fiscal 2023. The decrease in net sales reflected declines in wholesale customers’ brick and mortar stores, online retail and Movado Company Stores due to the challenging retail environment.$346.2 million U.S. net sales decreased13.9% as compared to the first six months of last year. International net sales decreased10.2% (10.6% on a constant dollar basis) as compared to the first six months of last year. -
Gross profit was
, or$171.3 million 56.1% of net sales, compared to , or$203.6 million 58.8% of net sales in the first six months of fiscal 2023. The decrease in gross margin percentage was primarily the result of the unfavorable changes in channel and product mix, the unfavorable impact of foreign currency exchange rates and decreased leverage of higher fixed costs on lower sales, partially offset by reduced shipping costs. -
Operating expenses were
as compared to$150.7 million in the first six months of fiscal 2023. Adjusted operating expenses were$147.7 million compared to$149.4 million in the first six months of fiscal 2023. This increase was primarily due to higher payroll-related costs, partially offset by lower marketing expenses and performance-based compensation. As a percent of sales, adjusted operating expenses increased to$146.2 million 48.9% of net sales from42.2% in the prior year period primarily due to lower sales. -
Operating income was
compared to operating income of$20.5 million in the first six months of fiscal 2023. Adjusted operating income was$56.0 million compared to$21.9 million in the prior year period.$57.4 million -
The Company recorded a tax provision in the first six months of fiscal 2024 of
as compared to a provision of$5.4 million in the first six months of fiscal 2023. The Company recorded an adjusted tax provision of$12.4 million compared to an adjusted tax provision of$5.7 million for the first half of fiscal 2023.$12.7 million -
Net income was
, or$17.2 million per diluted share, compared to net income of$0.76 , or$42.5 million per diluted share, in the first six months of last year. In the first half of fiscal 2024, adjusted net income was$1.83 , or$18.2 million per diluted share, compared to adjusted net income of$0.80 , or$43.7 million per diluted share, in the prior year period.$1.89
Fiscal 2024 Outlook
The Company is revising its previously provided outlook to reflect the continued expected impact of the challenging consumer discretionary environment on the business.
For Fiscal Year 2024, the Company currently expects:
-
Net sales in a range of approximately
to$690.0 million , as compared to its previous expectation for net sales in the range of$700.0 million to$725.0 million ;$750.0 million -
Gross profit of approximately
55% of net sales, as compared to its previous expectation for gross profit of approximately56% of net sales; -
Operating income in a range of
to$62.5 million , as compared to its previous expectation for operating income in a range of$65.0 million to$80.0 million ;$85.0 million -
An effective tax rate of approximately
23% , assuming no changes to the current tax regulations, as compared to its previous expectation of22% ; and -
Earnings of
to$2.15 per diluted share, as compared to its previous expectation of$2.25 to$2.70 per diluted share.$2.90
The Company noted that its fiscal 2024 outlook continues to exclude approximately
Quarterly Dividend and Share Repurchase Program
The Company also announced today that on August 24, 2023, the Board of Directors approved the payment on September 21, 2023 of a cash dividend in the amount of
During the first six months of fiscal 2024, the Company repurchased approximately 16,000 shares under its share repurchase program. As of July 31, 2023 , the Company had
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today, August 24, 2023, 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 from 12:00 p.m. ET on August 24, 2023 until 11:59 p.m. ET on September 7, 2023 and can be accessed by dialing (844) 512-2921 and entering replay pin number 13740661.
Movado Group, Inc. designs, sources, and distributes MOVADO®, MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, CALVIN KLEIN®, COACH®, HUGO BOSS®, LACOSTE®, and TOMMY HILFIGER® watches, and, to a lesser extent, jewelry and other accessories, and operates Movado Company Stores in
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)
MOVADO GROUP, INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
July 31, |
July 31, |
|||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Net sales | $ |
160,390 |
|
$ |
182,804 |
|
$ |
305,295 |
|
$ |
346,228 |
|
||||
Cost of sales |
|
71,104 |
|
|
75,877 |
|
|
134,006 |
|
|
142,616 |
|
||||
Gross profit |
|
89,286 |
|
|
106,927 |
|
|
171,289 |
|
|
203,612 |
|
||||
Total operating expenses |
|
79,638 |
|
|
76,270 |
|
|
150,742 |
|
|
147,661 |
|
||||
Operating income |
|
9,648 |
|
|
30,657 |
|
|
20,547 |
|
|
55,951 |
|
||||
Non-operating income/(expense): | ||||||||||||||||
Other income, net |
|
1,537 |
|
|
199 |
|
|
2,562 |
|
|
282 |
|
||||
Interest expense |
|
(113 |
) |
|
(101 |
) |
|
(226 |
) |
|
(213 |
) |
||||
Income before income taxes |
|
11,072 |
|
|
30,755 |
|
|
22,883 |
|
|
56,020 |
|
||||
Provision for income taxes |
|
2,885 |
|
|
6,418 |
|
|
5,419 |
|
|
12,429 |
|
||||
Net income |
|
8,187 |
|
|
24,337 |
|
|
17,464 |
|
|
43,591 |
|
||||
Less: Net income attributable to noncontrolling interests |
|
138 |
|
|
334 |
|
|
287 |
|
|
1,075 |
|
||||
Net income attributable to Movado Group, Inc. | $ |
8,049 |
|
$ |
24,003 |
|
$ |
17,177 |
|
$ |
42,516 |
|
||||
Diluted Income Per Share Information | ||||||||||||||||
Net income per share attributable to Movado Group, Inc. | $ |
0.36 |
|
$ |
1.05 |
|
$ |
0.76 |
|
$ |
1.83 |
|
||||
Weighted diluted average shares outstanding |
|
22,616 |
|
|
22,966 |
|
|
22,642 |
|
|
23,176 |
|
MOVADO GROUP, INC. | |||||||||
GAAP AND NON-GAAP MEASURES | |||||||||
(In thousands, except for percentage data) | |||||||||
(Unaudited) | |||||||||
Three Months Ended |
|||||||||
July 31, |
% Change |
||||||||
2023 |
2022 |
||||||||
Total net sales, as reported | $ |
160,390 |
$ |
182,804 |
-12.3 |
% |
|||
Total net sales, constant dollar basis | $ |
157,589 |
$ |
182,804 |
-13.8 |
% |
|||
Six Months Ended |
|||||||||
July 31, |
% Change |
||||||||
2023 |
2022 |
||||||||
Total net sales, as reported | $ |
305,295 |
$ |
346,228 |
-11.8 |
% |
|||
Total net sales, constant dollar basis | $ |
304,440 |
$ |
346,228 |
-12.1 |
% |
MOVADO GROUP, INC. | ||||||||||||||||||||||||||
GAAP AND NON-GAAP MEASURES | ||||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Net Sales | Gross Profit | Total Operating Expenses |
Operating Income |
Pre-tax Income |
Provision for Income Taxes |
Net Income Attributable to Movado Group, Inc. |
Diluted EPS | |||||||||||||||||||
Three Months Ended July 31, 2023 | ||||||||||||||||||||||||||
As Reported (GAAP) | $ |
160,390 |
$ |
89,286 |
$ |
79,638 |
|
$ |
9,648 |
$ |
11,072 |
$ |
2,885 |
$ |
8,049 |
$ |
0.36 |
|||||||||
Olivia Burton and MVMT Costs (1) |
|
- |
|
- |
|
(612 |
) |
|
612 |
|
612 |
|
147 |
|
465 |
|
0.02 |
|||||||||
Adjusted Results (Non-GAAP) | $ |
160,390 |
$ |
89,286 |
$ |
79,026 |
|
$ |
10,260 |
$ |
11,684 |
$ |
3,032 |
$ |
8,514 |
$ |
0.38 |
|||||||||
Three Months Ended July 31, 2022 | ||||||||||||||||||||||||||
As Reported (GAAP) | $ |
182,804 |
$ |
106,927 |
$ |
76,270 |
|
$ |
30,657 |
$ |
30,755 |
$ |
6,418 |
$ |
24,003 |
$ |
1.05 |
|||||||||
Olivia Burton and MVMT Costs (1) |
|
- |
|
- |
|
(712 |
) |
|
712 |
|
712 |
|
138 |
|
574 |
|
0.02 |
|||||||||
Adjusted Results (Non-GAAP) | $ |
182,804 |
$ |
106,927 |
$ |
75,558 |
|
$ |
31,369 |
$ |
31,467 |
$ |
6,556 |
$ |
24,577 |
$ |
1.07 |
|||||||||
Net Sales | Gross Profit | Total Operating Expenses |
Operating Income |
Pre-tax Income |
Provision for Income Taxes |
Net Income Attributable to Movado Group, Inc. |
Diluted EPS | |||||||||||||||||||
Six Months Ended July 31, 2023 | ||||||||||||||||||||||||||
As Reported (GAAP) | $ |
305,295 |
$ |
171,289 |
$ |
150,742 |
|
$ |
20,547 |
$ |
22,883 |
$ |
5,419 |
$ |
17,177 |
$ |
0.76 |
|||||||||
Olivia Burton and MVMT Costs (1) |
|
- |
|
- |
|
(1,319 |
) |
|
1,319 |
|
1,319 |
|
317 |
|
1,002 |
|
0.04 |
|||||||||
Adjusted Results (Non-GAAP) | $ |
305,295 |
$ |
171,289 |
$ |
149,423 |
|
$ |
21,866 |
$ |
24,202 |
$ |
5,736 |
$ |
18,179 |
$ |
0.80 |
|||||||||
Six Months Ended July 31, 2022 | ||||||||||||||||||||||||||
As Reported (GAAP) | $ |
346,228 |
$ |
203,612 |
$ |
147,661 |
|
$ |
55,951 |
$ |
56,020 |
$ |
12,429 |
$ |
42,516 |
$ |
1.83 |
|||||||||
Olivia Burton and MVMT Costs (1) |
|
- |
|
- |
|
(1,481 |
) |
|
1,481 |
|
1,481 |
|
289 |
|
1,192 |
|
0.06 |
|||||||||
Adjusted Results (Non-GAAP) | $ |
346,228 |
$ |
203,612 |
$ |
146,180 |
|
$ |
57,432 |
$ |
57,501 |
$ |
12,718 |
$ |
43,708 |
$ |
1.89 |
|||||||||
(1) Related to the amortization of acquired intangible assets for Olivia Burton and MVMT and MVMT's deferred compensation, where applicable. |
MOVADO GROUP, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
July 31, |
January 31, |
July 31, |
|||||||
2023 |
2023 |
2022 |
|||||||
ASSETS | |||||||||
Cash and cash equivalents | $ |
218,909 |
$ |
251,584 |
$ |
203,109 |
|||
Trade receivables, net |
|
95,821 |
|
94,282 |
|
100,697 |
|||
Inventories |
|
181,448 |
|
186,203 |
|
215,038 |
|||
Other current assets |
|
25,206 |
|
24,212 |
|
21,588 |
|||
Income taxes receivable |
|
12,988 |
|
10,908 |
|
9,691 |
|||
Total current assets |
|
534,372 |
|
567,189 |
|
550,123 |
|||
Property, plant and equipment, net |
|
19,740 |
|
18,699 |
|
17,956 |
|||
Operating lease right-of-use assets |
|
71,358 |
|
80,897 |
|
76,818 |
|||
Deferred and non-current income taxes |
|
45,004 |
|
44,490 |
|
44,480 |
|||
Other intangibles, net |
|
8,432 |
|
9,642 |
|
10,946 |
|||
Other non-current assets |
|
70,791 |
|
66,788 |
|
65,813 |
|||
Total assets | $ |
749,697 |
$ |
787,705 |
$ |
766,136 |
|||
LIABILITIES AND EQUITY | |||||||||
Accounts payable | $ |
28,435 |
$ |
32,085 |
$ |
51,981 |
|||
Accrued liabilities |
|
47,135 |
|
46,720 |
|
58,475 |
|||
Accrued payroll and benefits |
|
10,976 |
|
17,343 |
|
11,383 |
|||
Current operating lease liabilities |
|
17,069 |
|
17,681 |
|
16,904 |
|||
Income taxes payable |
|
18,078 |
|
28,591 |
|
20,875 |
|||
Total current liabilities |
|
121,693 |
|
142,420 |
|
159,618 |
|||
Deferred and non-current income taxes payable |
|
8,321 |
|
15,163 |
|
15,788 |
|||
Non-current operating lease liabilities |
|
63,565 |
|
70,910 |
|
67,241 |
|||
Other non-current liabilities |
|
52,220 |
|
48,668 |
|
47,633 |
|||
Redeemable noncontrolling interest |
|
- |
|
- |
|
2,305 |
|||
Shareholders' equity |
|
500,784 |
|
507,606 |
|
470,836 |
|||
Noncontrolling interest |
|
3,114 |
|
2,938 |
|
2,715 |
|||
Total equity |
|
503,898 |
|
510,544 |
|
473,551 |
|||
Total liabilities, redeemable noncontrolling interest and equity | $ |
749,697 |
$ |
787,705 |
$ |
766,136 |
MOVADO GROUP, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Six Months Ended |
|||||||
July 31, |
|||||||
2023 |
2022 |
||||||
Cash flows from operating activities: | |||||||
Net income | $ |
17,464 |
|
$ |
43,591 |
|
|
Depreciation and amortization |
|
5,039 |
|
|
5,635 |
|
|
Other non-cash adjustments |
|
5,427 |
|
|
3,346 |
|
|
Changes in working capital |
|
(19,999 |
) |
|
(74,366 |
) |
|
Changes in non-current assets and liabilities |
|
1,295 |
|
|
(3,598 |
) |
|
Net cash provided by/(used in) operating activities |
|
9,226 |
|
|
(25,392 |
) |
|
Cash flows from investing activities: | |||||||
Capital expenditures |
|
(4,620 |
) |
|
(2,987 |
) |
|
Long-term investments |
|
(1,407 |
) |
|
(2,283 |
) |
|
Trademarks and other intangibles |
|
(54 |
) |
|
(57 |
) |
|
Net cash used in investing activities |
|
(6,081 |
) |
|
(5,327 |
) |
|
Cash flows from financing activities: | |||||||
Dividends paid |
|
(37,650 |
) |
|
(15,797 |
) |
|
Stock repurchase |
|
(433 |
) |
|
(21,539 |
) |
|
Stock awards and options exercised and other changes |
|
(92 |
) |
|
(405 |
) |
|
Other |
|
- |
|
|
(85 |
) |
|
Net cash used in financing activities |
|
(38,175 |
) |
|
(37,826 |
) |
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
3,131 |
|
|
(5,489 |
) |
|
Net change in cash, cash equivalents, and restricted cash |
|
(31,899 |
) |
|
(74,034 |
) |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
252,179 |
|
|
277,716 |
|
|
Cash, cash equivalents, and restricted cash at end of period | $ |
220,280 |
|
$ |
203,682 |
|
|
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||
Cash and cash equivalents | $ |
218,909 |
|
$ |
203,109 |
|
|
Restricted cash included in other non-current assets |
|
1,371 |
|
|
573 |
|
|
Cash, cash equivalents, and restricted cash | $ |
220,280 |
|
$ |
203,682 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230824403753/en/
ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200
Source: Movado Group, Inc.