Movado Group, Inc. Announces First Quarter EPS Increases to $0.11
PARAMUS, N.J., June 1, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Movado Group, Inc. (NYSE: MOV), today announced first quarter results for the period ended April 30, 2006.
First Quarter Fiscal 2007 -- Net sales increased 11.4% to $97.7 million compared to $87.8 million last year. -- Comparable store sales at the Company's Movado boutiques increased 4.5% versus a 3.2% increase in the year-ago period. -- Gross margin improved to 61.0% compared to 60.2% last year. -- Operating profit increased 60.5% to $3.4 million compared to $2.1 million in the year-ago period. -- Net interest expense was $0.1 million versus $0.8 million last year: - Interest expense for the quarter was the same as the year-ago period, $0.9 million, with average borrowings in the quarter of $106.5 million at an average borrowing rate of 3.4%. - Interest income for the quarter was $0.9 million due to short term investments of cash-on-hand resulting from the repatriation of foreign earnings under the American Jobs Creation Act. This compares to interest income of $0.1 million in the year-ago period. -- Income tax expense of $0.6 million reflects a 17.5% tax rate in the first quarter compared to income tax expense of $0.3 million, or a 25.0% tax rate, recorded last year. The favorable tax rate benefited first quarter diluted earnings per share by $0.01 and reflects the further utilization of a Swiss net operating loss carryforward (NOL) acquired with the Ebel brand in fiscal 2005. The Company anticipates maintaining the 17.5% tax rate for the balance of fiscal 2007. -- Net income and earnings per diluted share more than doubled to $2.9 million and $0.11, respectively, versus net income of $1.0 million and earnings per diluted share of $0.04 in the year-ago period.
Efraim Grinberg, President and Chief Executive Officer, stated, "We are very pleased with the strength of our first quarter performance, which continued to be driven by the appeal of our diverse portfolio of brands and the focused execution of our operating strategies. Fiscal 2007 was jump- started by an excellent response from our retail partners to the powerful array of new products debuted at the Basel Watch Fair. In our luxury category, Ebel sparked excitement with the introduction of Brasilia, an important new collection that is already showing encouraging initial sell- through."
Rick Cote, Executive Vice President and Chief Operating Officer, stated, "In addition to the robust sales performance in the first quarter, our global team demonstrated strong operating disciplines which translated into expanded gross margins and operating profit growth. We continue to invest behind our Movado Boutiques, the worldwide growth of Ebel and the development of our licensed brands. As we begin to reap the benefits of these investments, we expect to grow our operating margin through a combination of gross margin improvement and the leveraging of our existing infrastructure."
Movado Group increased its guidance for fiscal 2007 and now anticipates diluted earnings per share to range between $1.53 and $1.58. This new guidance continues to include an approximate $0.08 per diluted share expense associated with the adoption of FASB 123R and the shift in the composition of the Company's equity-based compensation plan from options toward restricted stock. These projections compare with the Company's previously issued guidance for diluted earnings per share to range between $1.35 and $1.39. Approximately $0.14 of the increase in guidance is based on projected benefits resulting from the further utilization of the Company's NOL, with the balance of the increase attributed to improved operating performance. The Company now estimates fiscal 2007 year-over-year net sales growth to be at the higher end of its previously issued range of 9% to 11%.
The Company's management will host a conference call today, June 1, 2006 at 10:00 a.m. Eastern Time to discuss its first quarter financial results. A live broadcast of the call will be available on the Company's website: http://www.movadogroup.com. This call will be archived online within one hour of the completion of the conference call.
Movado Group, Inc. designs, manufactures, and distributes Movado, Ebel, Concord, ESQ, Coach, Tommy Hilfiger and HUGO BOSS watches worldwide, and operates Movado boutiques and company stores in the United States. The Company plans to launch Juicy Couture watches in the fall of 2006 and LACOSTE watches in the spring of 2007.
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 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: the Company's ability to successfully introduce and sell new products, the Company's ability to successfully integrate the operations of newly acquired and/or licensed brands without disruption to its other business activities, changes in consumer demand for the Company's products, risks relating to the retail industry, import restrictions, competition, seasonality and the other factors discussed in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. These statements reflect the Company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time.
MOVADO GROUP, INC. Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Three Months Ended April 30, 2006 2005 Net sales $97,744 $87,756 Cost of sales 38,154 34,918 Gross profit 59,590 52,838 Selling, general and administrative expenses 56,156 50,699 Operating profit 3,434 2,139 Interest expense 943 878 Interest income (891) (69) Minority interest (79) - Income before income taxes 3,461 1,330 Income tax 606 333 Net income $2,855 $997 Net income per diluted share $0.11 $0.04 Shares used in per share computation 26,395 26,020 MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) April 30, January 31, April 30, 2006 2006 2005 ASSETS Cash and cash equivalents $82,560 $123,625 $49,641 Trade receivables, net 116,523 109,852 102,115 Inventories 213,763 198,582 202,498 Other 34,199 26,596 35,055 Total current assets 447,045 458,655 389,309 Property, plant and equipment, net 51,003 52,168 53,389 Other assets 39,774 39,069 37,548 $537,822 $549,892 $480,246 LIABILITIES AND SHAREHOLDERS' EQUITY Loans payable to banks $0 $0 $18,000 Current portion of long-term debt 5,000 5,000 0 Accounts payable 33,432 35,529 35,289 Accrued liabilities 35,748 43,065 35,830 Deferred and current taxes payable 1,158 8,227 5,131 Total current liabilities 75,338 91,821 94,250 Long-term debt 97,323 104,955 45,000 Deferred and non-current income taxes 13,181 11,947 12,046 Other liabilities 20,244 19,491 16,425 Minority interest 231 - - Shareholders' equity 331,505 321,678 312,525 $537,822 $549,892 $480,246
SOURCE Movado Group, Inc.
Investor Relations - Suzanne Michalek, Vice President, Corporate Communications,
or Rachel Albert of Financial Dynamics, +1-212-850-5600,
both for Movado Group, Inc.