Movado Group, Inc. Announces Second Quarter and Six-Month Results
Second Quarter Fiscal 2010
-- Net sales in the second quarter of fiscal 2010 were $89.7 million
compared to $129.7 million .
-- Gross profit was $52.7 million , or 58.7% of sales, compared to $83.2
million , or 64.1% of sales last year.
-- Operating expenses decreased $22.5 million , or 31.2%, to $49.5 million
versus $72.0 million last year.
-- Operating profit was $3.1 million compared to $11.1 million in the
year-ago period.
-- Net income in the quarter was $0.5 million . Excluding the after-tax
effect of the aforementioned charge, adjusted net income was $1.4
million compared to adjusted net income of $9.8 million in the prior
year period, which excludes a charge related to the Company's
expense reduction plan.
First Half Fiscal 2010
-- Net sales in the first six months of fiscal 2010 were $157.3 million
compared to $231.0 million .
-- Gross profit was $89.7 million , or 57.0% of sales, compared to $147.5
million , or 63.8% of sales last year.
-- Operating expenses decreased $37.1 million , or 27.5%, to $97.7 million
versus $134.8 million last year.
-- Operating loss was $8.0 million compared to operating income of $12.8
million in the year-ago period.
-- Net loss was $8.4 million compared to net income of $9.4 million in the
year-ago period. Excluding the effect of the charge recorded in the
second quarter of fiscal 2010, adjusted net loss was $7.6 million , or
$0.31 per diluted share, compared to adjusted net income of $11.0
million , or $0.42 per diluted share, which excludes a charge related to
the Company's expense reduction plan.
Fiscal 2010 Guidance
The Company's management will host a conference call today,
In this release, the Company presents certain adjusted financial measures that are not calculated according to generally accepted accounting principles in
The Company is presenting operating income excluding severance related expense and presenting net income excluding severance related expenses and refinancing related expenses because the Company believes that it is useful to investors to eliminate the effect of these unusual items 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: actual or perceived weakness in the U.S. and global economy and fluctuations in consumer spending and disposable income, the Company's ability to successfully implement the new Movado brand strategy, the ability of the new Movado brand strategy to improve the Company's net sales, profitability and other results of operations, 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
MOVADO GROUP, INC.
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $89,701 $129,689 $157,276 $231,042
Cost of sales 37,037 46,527 67,589 83,539
------ ------ ------ ------
Gross profit 52,664 83,162 89,687 147,503
Selling, general and
administrative expenses 49,547 72,022 97,689 134,750
------ ------ ------ -------
Operating income / (loss) 3,117 11,140 (8,002) 12,753
Interest expense (2,301) (794) (2,846) (1,500)
Interest income 149 523 200 1,480
--- --- --- -----
Income / (loss) before
income taxes and
noncontrolling interests 965 10,869 (10,648) 12,733
Provision for / (benefit
from) income taxes 481 2,669 (2,222) 3,236
(Loss) / income attributed
to noncontrolling interest (44) 64 6 112
--- -- - ---
Net income / (loss) $528 $8,136 $(8,432) $9,385
==== ====== ======= ======
Net income / (loss) per
diluted share $0.02 $0.32 $(0.34) $0.36
Number of shares outstanding 24,744 25,384 24,485 26,033
MOVADO GROUP, INC.
Reconciliation tables
(in thousands, except per share data)
(Unaudited)
Three Months Six Months
Ended Ended
July 31, July 31,
2009 2008 2009 2008
---- ---- ---- ----
Operating income / (loss)
(GAAP) $3,117 $11,140 ($8,002) $12,753
Severance related expenses (1) - 2,192 - 2,192
- ----- - -----
Adjusted operating income /
(loss) (non-GAAP) $3,117 $13,332 ($8,002) $14,945
====== ======= ======= =======
Three Months Six Months
Ended Ended
July 31, July, 31
2009 2008 2009 2008
---- ---- ---- ----
Net income / (loss) (GAAP) $528 $8,136 ($8,432) $9,385
Refinancing expenses and
fees (2) 839 - 839 -
Severance related expenses (1) - 1,644 - 1,644
- ----- - -----
Adjusted net income /
(loss) (non-GAAP) $1,367 $9,780 ($7,593) $11,029
====== ====== ======= =======
Adjusted net income /
(loss) per share (non-GAAP) $0.06 $0.39 $(0.31) $0.42
Number of shares outstanding 24,744 25,384 24,485 26,033
(1) Charges related to the implementation of the Company's expense
reduction plans.
(2) Expenses and fees associated with the refinancing and repayment of
the Company's former credit and note agreements which included a
non-cash pre-tax charge of $0.2 million related to the accelerated
recognition of deferred financing costs and a pre-tax charge of $1.1
million for fees due to the former lenders. Both charges were
recorded in Interest Expense on the Consolidated Statements of
Income.
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
July 31, January 31, July 31,
2009 2009 2008
---- ---- ----
ASSETS
------
Cash and cash equivalents $47,474 $86,621 $84,503
Trade receivables, net 76,689 76,710 96,372
Inventories 248,187 228,884 238,736
Other current assets 41,560 47,863 48,352
------ ------ ------
Total current assets 413,910 440,078 467,963
------- ------- -------
Property, plant and equipment, net 60,920 66,749 71,472
Deferred income taxes 27,020 23,449 20,223
Other non-current assets 24,502 33,714 38,404
------ ------ ------
Total assets $526,352 $563,990 $598,062
======== ======== ========
LIABILITIES AND EQUITY
----------------------
Loan payable to banks $- $40,000 $-
Current portion of long-term debt - 25,000 10,000
Accounts payable 13,607 20,794 21,331
Accrued liabilities 38,445 47,686 43,543
Deferred and current income taxes
payable 3,463 430 568
----- --- ---
Total current liabilities 55,515 133,910 75,442
------ ------- ------
Long-term debt 40,000 - 49,776
Deferred and non-current income
taxes payable 810 6,856 6,577
Other non-current liabilities 20,190 22,459 24,306
Noncontrolling interest 1,700 1,506 1,960
Shareholders' equity 408,137 399,259 440,001
------- ------- -------
Total liabilities and equity $526,352 $563,990 $598,062
======== ======== ========
SOURCE
Leigh Parrish or Stephanie Rich, both of Financial Dynamics for Movado Group, Inc., +1-212-850-5600