Movado Group, Inc. Announces Second Quarter Results
Movado Group, Inc. (NYSE: MOV) reported strong financial results for the second quarter and first half of fiscal 2023, with net sales increasing by 5.1% to $182.8 million, and operating income rising to $30.7 million. The earnings per share increased to $1.05 compared to $0.82 in the prior year. Despite a 5.4% decline in U.S. net sales, international sales surged 15.3%. The company anticipates net sales of $780-$790 million for the year, slightly down from prior guidance amid foreign exchange concerns.
- Net sales rose 5.1% to $182.8 million.
- Operating income increased to $30.7 million from $24.6 million.
- Earnings per share up 27.8% to $1.05.
- International sales grew by 15.3%, highlighting strong global demand.
- U.S. net sales decreased 5.4% compared to last year.
- Net sales guidance adjusted downward to $780-$790 million, from $780-$800 million.
~ Net Sales Increase
~ Net Sales Increase
~ Operating Income Increases to
~ EPS of
~ Board Declares Quarterly Dividend ~
Fiscal 2023 Second Quarter Highlights (See table below for GAAP and Non-GAAP measures)
-
Delivered topline growth of
5.1% or10.5% on a constant dollar basis over second quarter fiscal 2022; - Expanded gross margin by 190 basis points;
-
Improved operating expenses as a percent of sales by 80 bps to
41.7% ; -
Generated operating income of
, or$30.7 million 16.8% of sales; -
Delivered an increase in diluted earnings per share of
27.8% as compared to the prior year period; and -
Maintained strong balance sheet at quarter end, including cash of
and no debt.$203.1 million
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Second quarter fiscal 2023 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 acquisition of$0.02 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 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
In this press release, reference to “adjusted” results exclude the impact of the above charges and the charges described in the Non-GAAP Items section of the Company’s earnings release for the first quarter of fiscal year 2023 in deriving the adjusted results for the six months ending
Second Quarter Fiscal 2023 (See attached table for GAAP and Non-GAAP measures)
-
Net sales increased
5.1% (10.5% on a constant dollar basis) to compared to$182.8 million in the second quarter of fiscal 2022. The increase in net sales reflected growth in wholesale customers’ brick and mortar stores and in Movado Company Stores. International net sales increased$173.9 million 15.3% as compared to the second quarter of last year.U.S. net sales decreased5.4% as compared to the second quarter of last year. -
Gross profit was
, or$106.9 million 58.5% of sales, compared to , or$98.5 million 56.6% of sales, in the second quarter of fiscal 2022. The increase in gross margin percentage was primarily the result of favorable changes in channel and product mix, partially offset by the unfavorable impact of foreign currency exchange rates. -
Operating expenses were
compared to$76.3 million in the second quarter of fiscal 2022. Adjusted operating expenses were$73.8 million for the second quarter of fiscal 2023 and$75.6 million in the second quarter of fiscal 2022. This increase was primarily due to higher marketing expenses, payroll related costs and certain other operating expenses to support the increase in net sales. As a percent of sales, adjusted operating expenses decreased to$73.0 million 41.3% of sales from42.0% in the prior year period primarily due to improved sales leverage. -
Operating income was
compared to$30.7 million in the second quarter of fiscal 2022. Adjusted operating income for the second quarter of fiscal 2023 was$24.6 million compared to an adjusted operating income of$31.4 million in the second quarter of fiscal 2022.$25.5 million -
The Company recorded a tax provision of
compared to a tax provision of$6.4 million in the second quarter of fiscal 2022. The Company recorded an adjusted tax provision in the second quarter of fiscal 2023 of$5.3 million compared to an adjusted tax provision of$6.6 million in the second quarter of fiscal 2022.$5.5 million -
Net income was
, or$24.0 million per diluted share, compared to net income of$1.05 , or$19.4 million per diluted share, in the second quarter of fiscal 2022. Adjusted net income for the fiscal 2023 period was$0.82 , or$24.6 million per diluted share. This compares to adjusted net income in the second quarter of fiscal 2022 of$1.07 , or$20.1 million per diluted share.$0.85
First Half Fiscal 2023 (See attached table for GAAP and Non-GAAP measures)
-
Net sales for the first six months of fiscal 2023 increased
12.2% to ($346.2 million 16.5% on a constant dollar basis) compared to in the first six months of fiscal 2022. The increase in net sales reflected growth in wholesale customers’ brick and mortar stores and in Movado Company Stores. International net sales increased$308.7 million 24.1% as compared to the same period last year.U.S. net sales decreased0.2% as compared to the prior year period. -
Gross profit was
, or$203.6 million 58.8% of sales, compared to , or$172.7 million 55.9% of sales in the first six months of fiscal 2022. The increase in gross margin percentage was primarily the result of favorable changes in channel and product mix partially offset by increased shipping costs and the unfavorable impact of foreign currency exchange rates. -
Operating expenses were
as compared to$147.7 million in the first six months of fiscal 2022. Adjusted operating expenses were$134.8 million compared to$146.2 million in the first six months of fiscal 2022. This increase was primarily due to higher marketing expenses, payroll related costs and certain other operating expenses to support the increase in net sales. As a percent of sales, adjusted operating expenses decreased to$133.1 million 42.2% of sales from43.1% in the prior year period primarily due to improved sales leverage. -
Operating income was
compared to operating income of$56.0 million in the first six months of fiscal 2022. Adjusted operating income was$37.9 million compared to$57.4 million in the prior year period.$39.6 million -
The Company recorded a tax provision in the first six months of fiscal 2023 of
as compared to a provision of$12.4 million in the first six months of fiscal 2022. The Company recorded an adjusted tax provision of$8.6 million compared to an adjusted tax provision of$12.7 million for the first half of fiscal 2022.$9.0 million -
Net income was
, or$42.5 million per diluted share, compared to net income of$1.83 , or$28.8 million per diluted share, in the first six months of last year. In the first half of fiscal 2023, adjusted net income was$1.21 , or$43.7 million per diluted share compared to adjusted net income of$1.89 , or$30.2 million per diluted share.$1.27
Fiscal 2023 Outlook
Given the prevailing foreign exchange headwinds, the Company currently expects net sales to be
Specifically:
-
Fiscal 2023 net sales are currently expected to be in the range of approximately
to$780 million . This represents growth of$790 million 6.5% to8.0% from fiscal 2022 net sales. -
Gross profit is expected to continue to be approximately
58.0% of net sales. -
Operating income is expected to be at the high end of its previous outlook range of
to$125 million .$130 million -
In addition, the Company anticipates an effective tax rate of approximately
25% , assuming no changes to the current tax regulations. -
The outlook excludes approximately
of amortization of acquired intangible assets and deferred compensation for fiscal 2023 related to the Olivia Burton and MVMT brands.$3.0 million - This outlook does not contemplate significant further impact of increasing inflation, geopolitical unrest or extended negative impact to supply chain and shipping costs, and assumes no further significant fluctuations from prevailing foreign currency exchange rates.
Quarterly Dividend and Share Repurchase Program
The Company also announced today that on
During the second quarter of fiscal 2023, the Company repurchased approximately 208,200 shares under its
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 | ||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||
Net sales | $ |
182,804 |
$ |
173,874 |
$ |
346,228 |
$ |
308,672 |
|||
Cost of sales |
|
75,877 |
|
75,421 |
|
142,616 |
|
136,017 |
|||
Gross profit |
|
106,927 |
|
98,453 |
|
203,612 |
|
172,655 |
|||
Total operating expenses |
|
76,270 |
|
73,820 |
|
147,661 |
|
134,766 |
|||
Operating income |
|
30,657 |
|
24,633 |
|
55,951 |
|
37,889 |
|||
Non-operating income/(expense): | |||||||||||
Other income |
|
199 |
|
257 |
|
282 |
|
357 |
|||
Interest expense |
|
(101) |
|
(174) |
|
(213) |
|
(449) |
|||
Income before income taxes |
|
30,755 |
|
24,716 |
|
56,020 |
|
37,797 |
|||
Provision for income taxes |
|
6,418 |
|
5,315 |
|
12,429 |
|
8,645 |
|||
Net income |
|
24,337 |
|
19,401 |
|
43,591 |
|
29,152 |
|||
Less: Net income/(loss) attributable to noncontrolling interests |
|
334 |
|
(9) |
|
1,075 |
|
333 |
|||
Net income attributable to |
$ |
24,003 |
$ |
19,410 |
$ |
42,516 |
$ |
28,819 |
|||
Diluted Income Per Share Information | |||||||||||
Net income attributable to |
$ |
1.05 |
$ |
0.82 |
$ |
1.83 |
$ |
1.21 |
|||
Weighted diluted average shares outstanding |
|
22,966 |
|
23,739 |
|
23,176 |
|
23,736 |
GAAP AND NON-GAAP MEASURES | |||||||
(In thousands, except for percentage data) | |||||||
(Unaudited) | |||||||
As Reported | |||||||
Three Months Ended | |||||||
% Change | |||||||
2022 |
2021 |
||||||
Total net sales, as reported | $ |
182,804 |
$ |
173,874 |
|
||
Total net sales, constant dollar basis | $ |
192,082 |
$ |
173,874 |
|
||
As Reported | |||||||
Six Months Ended | |||||||
% Change | |||||||
2022 |
2021 |
||||||
Total net sales, as reported | $ |
346,228 |
$ |
308,672 |
|
||
Total net sales, constant dollar basis | $ |
359,663 |
$ |
308,672 |
|
GAAP AND NON-GAAP MEASURES | ||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
Gross Profit | Total Operating Expenses | Operating Income | Pre-tax Income | Provision for Income Taxes | Net Income Attributable to |
Diluted EPS | ||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||||
As Reported (GAAP) | $ |
182,804 |
$ |
106,927 |
$ |
76,270 |
$ |
30,657 |
$ |
30,755 |
$ |
6,418 |
$ |
24,003 |
$ |
1.05 |
||||||||
Olivia Burton Costs (1) |
|
- |
|
- |
|
(637) |
|
637 |
|
637 |
|
120 |
|
517 |
|
0.02 |
||||||||
MVMT Costs (2) |
|
- |
|
- |
|
(75) |
|
75 |
|
75 |
|
18 |
|
57 |
|
0.00 |
||||||||
Adjusted Results (Non-GAAP) | $ |
182,804 |
$ |
106,927 |
$ |
75,558 |
$ |
31,369 |
$ |
31,467 |
$ |
6,556 |
$ |
24,577 |
$ |
1.07 |
||||||||
Three Months Ended |
||||||||||||||||||||||||
As Reported (GAAP) | $ |
173,874 |
$ |
98,453 |
$ |
73,820 |
$ |
24,633 |
$ |
24,716 |
$ |
5,315 |
$ |
19,410 |
$ |
0.82 |
||||||||
Olivia Burton Costs (1) |
|
- |
|
- |
|
(726) |
|
726 |
|
726 |
|
138 |
|
588 |
|
0.03 |
||||||||
MVMT Costs (2) |
|
- |
|
- |
|
(101) |
|
101 |
|
101 |
|
25 |
|
76 |
|
0.00 |
||||||||
Adjusted Results (Non-GAAP) | $ |
173,874 |
$ |
98,453 |
$ |
72,993 |
$ |
25,460 |
$ |
25,543 |
$ |
5,478 |
$ |
20,074 |
$ |
0.85 |
||||||||
Gross Profit | Total Operating Expenses | Operating Income | Pre-tax Income | Provision for Income Taxes | Net Income Attributable to |
Diluted EPS | ||||||||||||||||||
Six Months Ended |
||||||||||||||||||||||||
As Reported (GAAP) | $ |
346,228 |
$ |
203,612 |
$ |
147,661 |
$ |
55,951 |
$ |
56,020 |
$ |
12,429 |
$ |
42,516 |
$ |
1.83 |
||||||||
Olivia Burton Costs (1) |
|
- |
|
- |
|
(1,324) |
|
1,324 |
|
1,324 |
|
251 |
|
1,073 |
|
0.05 |
||||||||
MVMT Costs (2) |
|
- |
|
- |
|
(157) |
|
157 |
|
157 |
|
38 |
|
119 |
|
0.01 |
||||||||
Adjusted Results (Non-GAAP) | $ |
346,228 |
$ |
203,612 |
$ |
146,180 |
$ |
57,432 |
$ |
57,501 |
$ |
12,718 |
$ |
43,708 |
$ |
1.89 |
||||||||
Six Months Ended |
||||||||||||||||||||||||
As Reported (GAAP) | $ |
308,672 |
$ |
172,655 |
$ |
134,766 |
$ |
37,889 |
$ |
37,797 |
$ |
8,645 |
$ |
28,819 |
$ |
1.21 |
||||||||
Olivia Burton Costs (1) |
|
- |
|
- |
|
(1,447) |
|
1,447 |
|
1,447 |
|
275 |
|
1,172 |
|
0.05 |
||||||||
MVMT Costs (2) |
|
- |
|
- |
|
(232) |
|
232 |
|
232 |
|
58 |
|
174 |
|
0.01 |
||||||||
Adjusted Results (Non-GAAP) | $ |
308,672 |
$ |
172,655 |
$ |
133,087 |
$ |
39,568 |
$ |
39,476 |
$ |
8,978 |
$ |
30,165 |
$ |
1.27 |
||||||||
(1) Related to the amortization of acquired intangible assets for |
||||||||||||||||||||||||
(2) Related to the amortization of acquired intangible assets and the MVMT brand's deferred compensation, where applicable. |
CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
2022 |
2022 |
2021 |
||||||
ASSETS | ||||||||
Cash and cash equivalents | $ |
203,109 |
$ |
277,128 |
$ |
199,721 |
||
Trade receivables, net |
|
100,697 |
|
91,558 |
|
89,710 |
||
Inventories |
|
215,038 |
|
160,283 |
|
183,289 |
||
Other current assets |
|
21,588 |
|
16,974 |
|
23,144 |
||
Income taxes receivable |
|
9,691 |
|
7,941 |
|
8,602 |
||
Total current assets |
|
550,123 |
|
553,884 |
|
504,466 |
||
Property, plant and equipment, net |
|
17,956 |
|
19,470 |
|
19,656 |
||
Operating lease right-of-use assets |
|
76,818 |
|
68,599 |
|
71,253 |
||
Deferred and non-current income taxes |
|
44,480 |
|
42,596 |
|
41,579 |
||
Other intangibles, net |
|
10,946 |
|
13,507 |
|
15,550 |
||
Other non-current assets |
|
65,813 |
|
63,104 |
|
58,394 |
||
Total assets | $ |
766,136 |
$ |
761,160 |
$ |
710,898 |
||
LIABILITIES AND EQUITY | ||||||||
Accounts payable | $ |
51,981 |
$ |
46,011 |
$ |
45,670 |
||
Accrued liabilities |
|
58,475 |
|
48,522 |
|
50,329 |
||
Accrued payroll and benefits |
|
11,383 |
|
25,117 |
|
13,864 |
||
Current operating lease liabilities |
|
16,904 |
|
13,693 |
|
14,863 |
||
Income taxes payable |
|
20,875 |
|
18,123 |
|
10,379 |
||
Total current liabilities |
|
159,618 |
|
151,466 |
|
135,105 |
||
Deferred and non-current income taxes payable |
|
15,788 |
|
19,614 |
|
20,185 |
||
Non-current operating lease liabilities |
|
67,241 |
|
62,730 |
|
64,520 |
||
Other non-current liabilities |
|
47,633 |
|
50,264 |
|
51,686 |
||
Redeemable noncontrolling interest |
|
2,305 |
|
2,311 |
|
2,443 |
||
Shareholders' equity |
|
470,836 |
|
472,808 |
|
434,567 |
||
Noncontrolling interest |
|
2,715 |
|
1,967 |
|
2,392 |
||
Total equity |
|
473,551 |
|
474,775 |
|
436,959 |
||
Total liabilities, redeemable noncontrolling interest and equity | $ |
766,136 |
$ |
761,160 |
$ |
710,898 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Six Months Ended | |||||||
2022 |
|
2021 |
|
||||
Cash flows from operating activities: | |||||||
Net income | $ |
43,591 |
|
$ |
29,152 |
|
|
Depreciation and amortization |
|
5,635 |
|
|
6,283 |
|
|
Other non-cash adjustments |
|
3,346 |
|
|
5,363 |
|
|
Changes in working capital |
|
(74,366 |
) |
|
(18,802 |
) |
|
Changes in non-current assets and liabilities |
|
(3,598 |
) |
|
682 |
|
|
Net cash (used in)/provided by operating activities |
|
(25,392 |
) |
|
22,678 |
|
|
Cash flows from investing activities: | |||||||
Capital expenditures |
|
(2,987 |
) |
|
(1,786 |
) |
|
Long-term investments |
|
(2,283 |
) |
|
- |
|
|
Trademarks and other intangibles |
|
(57 |
) |
|
(133 |
) |
|
Net cash used in investing activities |
|
(5,327 |
) |
|
(1,919 |
) |
|
Cash flows from financing activities: | |||||||
Repayment of bank borrowings |
|
- |
|
|
(21,140 |
) |
|
Dividends paid |
|
(15,797 |
) |
|
(11,618 |
) |
|
Stock repurchase |
|
(21,539 |
) |
|
(9,975 |
) |
|
Stock awards and options exercised and other changes |
|
(405 |
) |
|
(1,030 |
) |
|
Other |
|
(85 |
) |
|
- |
|
|
Net cash used in financing activities |
|
(37,826 |
) |
|
(43,763 |
) |
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(5,489 |
) |
|
(1,096 |
) |
|
Net change in cash, cash equivalents, and restricted cash |
|
(74,034 |
) |
|
(24,100 |
) |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
277,716 |
|
|
224,423 |
|
|
Cash, cash equivalents, and restricted cash at end of period | $ |
203,682 |
|
$ |
200,323 |
|
|
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||
Cash and cash equivalents | $ |
203,109 |
|
$ |
199,721 |
|
|
Restricted cash included in other non-current assets |
|
573 |
|
|
602 |
|
|
Cash, cash equivalents, and restricted cash | $ |
203,682 |
|
$ |
200,323 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220825005193/en/
203-682-8200
Source:
FAQ
What were the second quarter 2023 earnings per share for MOV?
How much did Movado's net sales increase in Q2 2023?
What is the fiscal 2023 net sales outlook for Movado Group?
How did international sales perform for Movado in Q2 2023?