Movado Group, Inc. Announces First Quarter Results
PARAMUS, N.J., May 31 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced first quarter results for the period ended April 30, 2007.
First Quarter Fiscal 2008
- Net sales increased 3.7% to $101.4 million compared to $97.7 million last year. Net sales for the quarter included $2.7 million of excess discontinued product.
- Comparable store sales at the Company's Movado boutiques decreased 1.5% versus a 4.5% increase in the year-ago period.
- Gross profit was $61.7 million, or 60.8% of sales, compared to $59.6 million, or 61.0% of sales last year. Excluding excess discontinued product sales, adjusted gross profit was $62.0 million, or 62.9% of sales, an improvement of 190 basis points over the year-ago period.
- Operating profit was $2.8 million compared to $3.4 million in the year- ago period.
- Net interest income was $0.4 million versus net interest expense of $0.1 million last year.
- Income tax expense of $0.6 million reflects a 20.6% tax rate in the first quarter compared to income tax expense of $0.6 million, or a 17.9% tax rate, recorded last year. The Company adopted FASB Interpretation No. (FIN) 48, "Accounting for Uncertainty in Income Taxes" effective as of February 1, 2007, which resulted in an increase to income tax expense in the first quarter of $0.2 million.
- Net income and earnings per diluted share were $2.4 million and $0.09, respectively, versus net income of $2.9 million and earnings per diluted share of $0.11 in the year-ago period. Average diluted shares outstanding increased 3.0% from the prior year period.
Efraim Grinberg, President and Chief Executive Officer, stated, "We are very pleased with the strength of our first quarter performance. As anticipated, sales growth slowed in the quarter reflecting a shift in the U.S. retail calendar, which resulted in timing differences in purchases by certain of our customers. We continue to support all of our brands with strong new product introductions and compelling advertising campaigns. Across our portfolio, we received an excellent response from our retail partners to the powerful array of new products debuted at the Basel Watch Fair in April."
Rick Cote, Executive Vice President and Chief Operating Officer, stated, "Strong operating disciplines across our organization led to continued improvement in gross margin, a key driver toward achieving our goal of expanding operating margin into the mid-teens. Additionally, in the quarter we converted additional discontinued product into cash, thereby improving our inventory mix."
Movado Group projects fiscal 2008 diluted earnings per share of approximately $1.72 based on an estimated 25% tax rate. This compares to fiscal 2007 adjusted diluted earnings per share of $1.54. Fiscal 2007 adjusted diluted earnings per share exclude the impact of the tax benefit resulting from the further utilization of the NOL acquired with Ebel in fiscal 2005 and previously disclosed one-time items related to accounts receivable, foreign currency and sale of a non-operating asset. On a GAAP basis, fiscal 2007 earnings per share were $1.87 with a 5.4% tax rate. Fiscal 2008 net sales remain projected to range between $550 million and $560 million.
The Company's management will host a conference call today, May 31, 2007 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: 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, HUGO BOSS, Juicy Couture and LACOSTE watches worldwide, and operates Movado boutiques and company stores in the United States.
In this release, the Company presents certain adjusted financial measures that are not calculated according to generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures are designed to complement the GAAP financial information presented in this release because management believes they present information regarding the Company that management believes is useful to investors. The non-GAAP financial measures presented should not be considered in isolation from or as a substitute for the comparable GAAP financial measure.
For a reconciliation of 2007 adjusted diluted earnings per share to 2007 earnings per share on a GAAP basis, please see the Company's press release, dated March 29, 2007.
The Company is presenting net sales excluding excess discontinued product sales (and gross profit excluding such sales) because the Company believes that it is useful to investors to eliminate the effect of these unusual sales in order to improve the comparability of the Company's results for the periods presented.
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 fashion and retail industry, import restrictions, competition, seasonality, commodity price and exchange rate fluctuations, changes in local or global economic conditions, 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, 2007 2006 Net sales $101,363 $97,744 Cost of sales 39,711 38,154 Gross profit 61,652 59,590 Selling, general and administrative expenses 58,880 56,156 Operating profit 2,772 3,434 Interest expense (879) (943) Interest income 1,247 891 Income before income taxes and minority interest 3,140 3,382 Income tax 647 606 Minority interest 93 (79) Net income $2,400 $2,855 Net income per diluted share $0.09 $0.11 Shares used in per share computation 27,175 26,395 MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) April 30, January 31, April 30, 2007 2007 2006 ASSETS Cash $101,769 $133,011 $82,560 Trade receivables, net 105,753 111,417 116,523 Inventories 212,106 193,342 213,763 Other current assets 39,510 35,109 34,199 Total current assets 459,138 472,879 447,045 Property, plant and equipment, net 58,297 56,823 51,003 Other non-current assets 63,597 47,916 39,774 Total assets $581,032 $577,618 $537,822 LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt $5,000 $5,000 $5,000 Accounts payable 26,304 32,901 26,949 Accrued liabilities 39,946 45,610 42,231 Deferred and current taxes payable 2,039 5,946 1,158 Total current liabilities 73,289 89,457 75,338 Long-term debt 71,454 75,196 97,323 Deferred and non-current income taxes 33,086 11,054 13,181 Other liabilities 24,130 23,087 20,244 Minority interest 536 443 231 Shareholders' equity 378,537 378,381 331,505 Total liabilities and equity $581,032 $577,618 $537,822 Impact of adoption of FIN 48: As a result of the adoption of FIN 48, we recorded a reduction to our February 1, 2007 retained earnings in the amount of $7.7 million representing the cumulative effect of the adoption.
SOURCE Movado Group, Inc.
CONTACT: Investors, Suzanne Rosenberg, Vice President, Corporate Communications of Movado Group, Inc.,
Leigh Parrish or Melissa Merrill, both of Financial Dynamics,