Movado Group, Inc. Announces Third Quarter Results
~ Net Sales of
~ Operating Income of
~ EPS of
~ Updates Fiscal Year 2025 Outlook ~
~ Board Approves New Share Repurchase Program and Declares Quarterly Dividend of
Efraim Grinberg, Chairman and Chief Executive Officer, stated, “We continued to advance our strategy in the third quarter, unveiling a captivating Movado brand-building marketing campaign in September, launching iconic product families across our brand portfolio, and delivering solid growth in our digital channel, all while maintaining a strong balance sheet. Our financial results were held back due to tighter inventory management by our retail partners in the
“As we look ahead, our highest priority is to meaningfully improve profitability. We are finalizing plans for fiscal 2026 that focus on efficient brand-building initiatives, key growth opportunities such as jewelry and emerging markets, and a more streamlined expense base,” Mr. Grinberg continued. “We continue to enjoy a strong financial position, concluding the quarter with
Third Quarter Fiscal 2025 Highlights (See attached table for GAAP and Non-GAAP measures)
-
Net sales of
versus$182.7 million in the third quarter of fiscal 2024;$187.7 million -
Gross margin of
53.8% compared to54.5% in the prior year period; -
Operating income of
, including$6.6 million of expense related to a cost-savings initiative, compared to$2.7 million in the prior year period;$20.7 million -
Adjusted operating income of
;$9.3 million -
Diluted earnings per share of
compared to$0.22 in the prior year period;$0.77 -
Adjusted diluted earnings per share of
; and$0.37 -
Ended the quarter with cash of
and no debt.$181.5 million
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Third quarter fiscal 2025 results of operations included the following items:
-
a
pre-tax charge, or$2.7 million after tax, representing$2.2 million per diluted share, associated with the establishment of a provision associated with a corporate cost-savings initiative; and$0.10 -
a
after-tax charge, representing$1.1 million per diluted share, associated with the tax impact of repatriation of foreign earnings, primarily related to foreign currency gains.$0.05
In this press release, references to “adjusted” results exclude the impact of the above charges. Please refer to the attached GAAP and Non-GAAP measures table for a detailed reconciliation of the Company’s reported results to its adjusted, non-GAAP results.
Third Quarter Fiscal 2025 Results (See attached table for GAAP and Non-GAAP measures)
-
Net sales decreased
2.6% (a3.5% decline on a constant-dollar basis) to compared to$182.7 million in the third quarter of fiscal 2024. The decrease in net sales reflected unfavorable sales mix and decreased volumes from the Company’s wholesale customers, mainly in$187.7 million the United States , partially offset by an increase in online retail inthe United States and the positive impact of fluctuations in foreign exchange rates.U.S. net sales decreased7.1% as compared to the third quarter of last year. International sales increased0.4% as compared to the third quarter of last year. -
Gross profit was
, or$98.4 million 53.8% of net sales, compared to , or$102.3 million 54.5% of net sales, in the third quarter of fiscal 2024. The decrease in gross margin percentage was primarily the result of the unfavorable impact of sales mix, the decreased leveraging of higher fixed costs as a result of lower sales, and a negative impact of fluctuations in foreign exchange rates. -
Operating expenses were
compared to$91.8 million in the third quarter of fiscal 2024. Adjusted operating expenses for the third quarter of fiscal 2025, which excludes costs of$81.6 million related to the cost-savings initiative, were$2.7 million . The increase in operating expenses relative to the third quarter of fiscal 2024 was primarily due to higher marketing expenses and an increase in payroll-related expenses.$89.1 million -
Operating income was
compared to$6.6 million in the third quarter of fiscal 2024. Adjusted operating income, which excludes costs of$20.7 million related to the cost-savings initiative, was$2.7 million for the third quarter of fiscal 2025.$9.3 million -
The Company recorded a tax provision of
, or an effective tax rate of$2.5 million 31.5% , as compared to a tax provision of , or an effective tax rate of$4.5 million 20.4% , in the third quarter of fiscal 2024. The adjusted tax provision was in the third quarter of fiscal 2025, which excludes the impact of the cost-savings initiative as well as the tax impact of the repatriation of foreign earnings, primarily related to foreign currency gains. The adjusted tax rate in the third quarter of fiscal 2025 was$2.0 million 18.4% . -
Net income was
, or$5.1 million per diluted share, compared to net income of$0.22 , or$17.4 million per diluted share, in the third quarter of fiscal 2024. Adjusted net income for the fiscal 2025 period was$0.77 , or$8.3 million per diluted share, which excludes the third quarter items listed above in the Non-GAAP Items section after the associated tax effects.$0.37
Nine Months Fiscal 2025 Results (See attached table for GAAP and Non-GAAP measures)
-
Net sales for the first nine months of fiscal 2025 decreased
2.9% to (a$478.7 million 3.2% decrease on a constant dollar basis) compared to in the first nine months of fiscal 2024. The decrease in net sales reflected unfavorable sales mix and decreased volumes from the Company’s wholesale customers, mainly in$493.0 million the United States , partially offset by an increase in online retail inthe United States and the positive impact of fluctuations in foreign exchange rates.U.S. net sales decreased4.5% as compared to the first nine months of last year. International net sales decreased1.7% as compared to the first nine months of last year. -
Gross profit was
, or$260.3 million 54.4% of net sales, compared to , or$273.6 million 55.5% of net sales in the first nine months of fiscal 2024. The decrease in gross margin percentage was primarily the result of the unfavorable impact of sales mix, the decreased leveraging of higher fixed costs as a result of lower sales, and a negative impact of fluctuations in foreign exchange rates. -
Operating expenses were
, as compared to$247.4 million in the first nine months of fiscal 2024. Adjusted operating expenses for the first nine months of fiscal 2025, which excludes the costs of$232.4 million related to the cost-savings initiative, were$2.7 million . This increase in operating expenses was primarily due to higher marketing expenses and an increase in payroll-related expenses.$244.6 million -
Operating income was
compared to operating income of$12.9 million in the first nine months of fiscal 2024. Adjusted operating income, which excludes costs of$41.2 million related to the cost-savings initiative, was$2.7 million for the first nine months of fiscal 2025.$15.6 million -
The Company recorded a tax provision of
, or an effective tax rate of$5.7 million 31.7% , as compared to a provision of , or an effective tax rate of$9.9 million 22.0% , in the first nine months of fiscal 2024. The adjusted tax provision was in the first nine months of fiscal 2025, which excludes the impact of the cost-savings initiative as well as the tax impact of the repatriation of foreign earnings, primarily related to foreign currency gains. The adjusted tax rate for the first nine months of fiscal 2025 was$5.2 million 25.0% . -
Net income was
, or$11.7 million per diluted share, compared to net income of$0.52 , or$34.6 million per diluted share, in the first nine months of last year. Adjusted net income for the fiscal 2025 period was$1.53 , or$14.9 million per diluted share, which excludes the items listed above in the Non-GAAP Items section after the associated tax effects.$0.66
Fiscal 2025 Outlook
The Company is revising its previously provided outlook to reflect third-quarter results and the expected continuation of a challenging environment, including the impact of retailers continuing to tightly manage inventories in both the
For Fiscal Year 2025, the Company currently expects:
-
Net sales of approximately
, the low end of its previous expectation of a range of approximately$665.0 million to$665.0 million ;$675.0 million -
Gross profit of approximately
54% of net sales; -
Operating income near
, representing the low end of its previous expectation of$23.0 million to$23.0 million ; this revised outlook contemplates approximately$26.0 million of incremental investments in brand-building initiatives as compared to last year;$18 million -
An effective tax rate of approximately
25% ; and -
Earnings of
per diluted share, the low end of its previous expectation of$0.90 to$0.90 per diluted share.$1.00
The Company noted that its fiscal 2025 outlook excludes
As the Company prepares its plan for fiscal 2026, it is focused on delivering a meaningful improvement in profitability versus its expected outlook for fiscal 2025. This expectation includes the
Quarterly Dividend and Share Repurchase Program
The Company also announced today that on December 5, 2024, the Board of Directors approved the payment on December 30, 2024, of a cash dividend in the amount of
During the first nine months of fiscal 2025, the Company repurchased approximately 120,000 shares under its November 23, 2021, share repurchase program. As of October 31, 2024, the Company had
On December 5, 2024, the Company’s Board of Directors approved a new share buyback program under which the Company may purchase up to
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today, December 5, 2024, 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 replay of the call will be available from 1:00 p.m. ET on December 5, 2024, until 11:59 p.m. ET on December 19, 2024, and can be accessed by dialing (844) 512-2921 and entering replay pin number 13750219.
Movado Group, Inc. designs, sources, and globally distributes and sells MOVADO®, MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, CALVIN KLEIN®, COACH®, TOMMY HILFIGER®, HUGO BOSS®, and LACOSTE® 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 | Nine Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||||
Net sales | $ |
182,727 |
|
$ |
187,686 |
|
$ |
478,709 |
|
$ |
492,981 |
|
||||
Cost of sales |
|
84,331 |
|
|
85,358 |
|
|
218,435 |
|
|
219,364 |
|
||||
Gross profit |
|
98,396 |
|
|
102,328 |
|
|
260,274 |
|
|
273,617 |
|
||||
Total operating expenses |
|
91,846 |
|
|
81,636 |
|
|
247,383 |
|
|
232,378 |
|
||||
Operating income |
|
6,550 |
|
|
20,692 |
|
|
12,891 |
|
|
41,239 |
|
||||
Non-operating income/(expense): | ||||||||||||||||
Other income, net |
|
1,522 |
|
|
1,632 |
|
|
5,571 |
|
|
4,194 |
|
||||
Interest expense |
|
(144 |
) |
|
(135 |
) |
|
(372 |
) |
|
(361 |
) |
||||
Income before income taxes |
|
7,928 |
|
|
22,189 |
|
|
18,090 |
|
|
45,072 |
|
||||
Provision for income taxes |
|
2,495 |
|
|
4,519 |
|
|
5,733 |
|
|
9,938 |
|
||||
Net income |
|
5,433 |
|
|
17,670 |
|
|
12,357 |
|
|
35,134 |
|
||||
Less: Net income attributable to noncontrolling interests |
|
383 |
|
|
281 |
|
|
695 |
|
|
568 |
|
||||
Net income attributable to Movado Group, Inc. | $ |
5,050 |
|
$ |
17,389 |
|
$ |
11,662 |
|
$ |
34,566 |
|
||||
Diluted Income Per Share Information | ||||||||||||||||
Net income per share attributable to Movado Group, Inc. | $ |
0.22 |
|
$ |
0.77 |
|
$ |
0.52 |
|
$ |
1.53 |
|
||||
Weighted diluted average shares outstanding |
|
22,559 |
|
|
22,677 |
|
|
22,627 |
|
|
22,641 |
|
MOVADO GROUP, INC. | ||||||||
GAAP AND NON-GAAP MEASURES | ||||||||
(In thousands, except for percentage data) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
October 31, | % Change |
|||||||
|
||||||||
2024 |
|
2023 |
|
|||||
|
||||||||
Total net sales, as reported | $ |
182,727 |
$ |
187,686 |
- |
|||
|
||||||||
Total net sales, constant dollar basis | $ |
181,044 |
$ |
187,686 |
- |
|||
|
||||||||
|
||||||||
|
||||||||
Nine Months Ended |
|
|||||||
October 31, | % Change |
|||||||
|
||||||||
2024 |
|
2023 |
|
|||||
|
||||||||
Total net sales, as reported | $ |
478,709 |
$ |
492,981 |
- |
|||
|
||||||||
Total net sales, constant dollar basis | $ |
477,006 |
$ |
492,981 |
- |
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/(benefit) for Income Taxes | Net Income Attributable to Movado Group, Inc. | Diluted EPS | |||||||||||||||||||||
Three Months Ended October 31, 2024 | ||||||||||||||||||||||||||||
As Reported (GAAP) | $ |
182,727 |
$ |
98,396 |
$ |
91,846 |
|
$ |
6,550 |
$ |
7,928 |
$ |
2,495 |
|
$ |
5,050 |
$ |
0.22 |
||||||||||
Cost-Savings Initiative (1) |
|
- |
|
- |
|
(2,735 |
) |
|
2,735 |
|
2,735 |
|
561 |
|
|
2,174 |
|
0.10 |
||||||||||
Repatriation of Foreign Earnings (2) |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
(1,091 |
) |
|
1,091 |
|
0.05 |
||||||||||
Adjusted Results (Non-GAAP) | $ |
182,727 |
$ |
98,396 |
$ |
89,111 |
|
$ |
9,285 |
$ |
10,663 |
$ |
1,965 |
|
$ |
8,315 |
$ |
0.37 |
||||||||||
Three Months Ended October 31, 2023 | ||||||||||||||||||||||||||||
As Reported (GAAP) | $ |
187,686 |
$ |
102,328 |
$ |
81,636 |
|
$ |
20,692 |
$ |
22,189 |
$ |
4,519 |
|
$ |
17,389 |
$ |
0.77 |
||||||||||
Net Sales | Gross Profit | Total Operating Expenses | Operating Income | Pre-tax Income | Provision/(benefit) for Income Taxes | Net Income Attributable to Movado Group, Inc. | Diluted EPS | |||||||||||||||||||||
Nine Months Ended October 31, 2024 | ||||||||||||||||||||||||||||
As Reported (GAAP) | $ |
478,709 |
$ |
260,274 |
$ |
247,383 |
|
$ |
12,891 |
$ |
18,090 |
$ |
5,733 |
|
$ |
11,662 |
$ |
0.52 |
||||||||||
Cost-Savings Initiative (1) |
|
- |
|
- |
|
(2,735 |
) |
|
2,735 |
|
2,735 |
|
561 |
|
|
2,174 |
|
0.09 |
||||||||||
Repatriation of Foreign Earnings (2) |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
(1,091 |
) |
|
1,091 |
|
0.05 |
||||||||||
Adjusted Results (Non-GAAP) | $ |
478,709 |
$ |
260,274 |
$ |
244,648 |
|
$ |
15,626 |
$ |
20,825 |
$ |
5,203 |
|
$ |
14,927 |
$ |
0.66 |
||||||||||
Nine Months Ended October 31, 2023 | ||||||||||||||||||||||||||||
As Reported (GAAP) | $ |
492,981 |
$ |
273,617 |
$ |
232,378 |
|
$ |
41,239 |
$ |
45,072 |
$ |
9,938 |
|
$ |
34,566 |
$ |
1.53 |
||||||||||
(1) |
|
Related to the establishment of a provision associated with a corporate cost-savings initiative. |
||||||||||||||||||||||||||
(2) |
|
Tax impact of repatriation of foreign earnings, primarily related to foreign currency gains. |
MOVADO GROUP, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
October 31, | January 31, | October 31, | |||||||
2024 |
|
2024 |
|
2023 |
|||||
ASSETS | |||||||||
Cash and cash equivalents | $ |
181,548 |
$ |
262,059 |
$ |
200,965 |
|||
Trade receivables, net |
|
139,163 |
|
104,472 |
|
135,523 |
|||
Inventories |
|
168,929 |
|
148,031 |
|
171,966 |
|||
Other current assets |
|
22,625 |
|
17,962 |
|
18,856 |
|||
Income taxes receivable |
|
7,922 |
|
11,354 |
|
11,135 |
|||
Total current assets |
|
520,187 |
|
543,878 |
|
538,445 |
|||
Property, plant and equipment, net |
|
20,480 |
|
19,436 |
|
19,458 |
|||
Operating lease right-of-use assets |
|
88,892 |
|
82,661 |
|
84,212 |
|||
Deferred and non-current income taxes |
|
43,767 |
|
43,016 |
|
44,814 |
|||
Other intangibles, net |
|
6,192 |
|
7,493 |
|
7,688 |
|||
Other non-current assets |
|
86,358 |
|
72,598 |
|
68,780 |
|||
Total assets | $ |
765,876 |
$ |
769,082 |
$ |
763,397 |
|||
LIABILITIES AND EQUITY | |||||||||
Accounts payable | $ |
29,429 |
$ |
32,775 |
$ |
22,998 |
|||
Accrued liabilities |
|
51,245 |
|
38,695 |
|
57,165 |
|||
Accrued payroll and benefits |
|
12,541 |
|
7,591 |
|
10,317 |
|||
Current operating lease liabilities |
|
18,851 |
|
15,696 |
|
15,885 |
|||
Income taxes payable |
|
9,760 |
|
18,318 |
|
20,024 |
|||
Total current liabilities |
|
121,826 |
|
113,075 |
|
126,389 |
|||
Deferred and non-current income taxes payable |
|
1,188 |
|
8,234 |
|
7,966 |
|||
Non-current operating lease liabilities |
|
79,410 |
|
76,396 |
|
76,929 |
|||
Other non-current liabilities |
|
57,028 |
|
52,420 |
|
49,195 |
|||
Shareholders' equity |
|
503,583 |
|
516,798 |
|
500,439 |
|||
Noncontrolling interest |
|
2,841 |
|
2,159 |
|
2,479 |
|||
Total equity |
|
506,424 |
|
518,957 |
|
502,918 |
|||
Total liabilities and equity | $ |
765,876 |
$ |
769,082 |
$ |
763,397 |
MOVADO GROUP, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Nine Months Ended |
||||||||
October 31, |
||||||||
|
|
|
||||||
2024 |
|
2023 |
||||||
Cash flows from operating activities: | ||||||||
Net income | $ |
12,357 |
|
$ |
35,134 |
|
||
Depreciation and amortization |
|
6,960 |
|
|
7,278 |
|
||
Other non-cash adjustments |
|
7,860 |
|
|
8,258 |
|
||
Changes in working capital |
|
(64,620 |
) |
|
(43,865 |
) |
||
Changes in non-current assets and liabilities |
|
(3,184 |
) |
|
563 |
|
||
Net cash (used in)/provided by operating activities |
|
(40,627 |
) |
|
7,368 |
|
||
Cash flows from investing activities: | ||||||||
Capital expenditures |
|
(6,368 |
) |
|
(6,627 |
) |
||
Long-term investments |
|
(5,467 |
) |
|
(2,040 |
) |
||
Trademarks and other intangibles |
|
(86 |
) |
|
(113 |
) |
||
Net cash used in investing activities |
|
(11,921 |
) |
|
(8,780 |
) |
||
Cash flows from financing activities: | ||||||||
Dividends paid |
|
(23,319 |
) |
|
(45,399 |
) |
||
Stock repurchases |
|
(2,628 |
) |
|
(2,349 |
) |
||
Distribution of noncontrolling interest earnings |
|
- |
|
|
(780 |
) |
||
Stock awards and options exercised and other changes |
|
(1,101 |
) |
|
(73 |
) |
||
Net cash used in financing activities |
|
(27,048 |
) |
|
(48,601 |
) |
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(917 |
) |
|
(377 |
) |
||
Net change in cash, cash equivalents, and restricted cash |
|
(80,513 |
) |
|
(50,390 |
) |
||
Cash, cash equivalents, and restricted cash at beginning of period |
|
262,814 |
|
|
252,179 |
|
||
Cash, cash equivalents, and restricted cash at end of period | $ |
182,301 |
|
$ |
201,789 |
|
||
Reconciliation of cash, cash equivalents, and restricted cash: | ||||||||
Cash and cash equivalents | $ |
181,548 |
|
$ |
200,965 |
|
||
Restricted cash included in other non-current assets |
|
753 |
|
|
824 |
|
||
Cash, cash equivalents, and restricted cash | $ |
182,301 |
|
$ |
201,789 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241205765153/en/
ICR, Inc.
Allison Malkin
203-682-8225
Source: Movado Group, Inc.