Movado Group, Inc. Announces Second Quarter Results
PARAMUS, N.J., Sept 08, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- Movado Group, Inc. (NYSE: MOV), today announced second quarter results for the period ended July 31, 2005.
Second Quarter Fiscal 2006
-- Net sales increased 17.9% to $115.3 million from $97.8 million last
year.
-- Comparable store sales increased 2.3% at the Company's Movado
boutiques on top of an 11.8% comparable store sales gain in the
year-ago period.
-- Gross margin was 60.7% this year compared to 59.3% last year.
-- Operating profit increased to $12.3 million versus $8.7 million in the
year-ago period.
-- Net income increased to $8.6 million, or $0.33 per diluted share,
compared to net income of $7.1 million, or $0.28 per diluted share, in
the prior year period. Net income in the year-ago period included a
one-time gain of $0.03 per fully diluted share associated with a legal
settlement the Company reached with Swiss Army Brands.
First Half Fiscal 2006
-- Net sales increased 18.1% to $203.1 million from $172.0 million
last year.
-- Comparable store sales increased 2.7% at the Company's Movado
boutiques on top of an 18.4% comparable store sales gain in the
year-ago period.
-- Gross margin was 60.5% compared to 58.9%.
-- Operating profit was $14.4 million versus $10.5 million in the
year-ago period.
-- Net income was $9.5 million, or $0.37 per diluted share, compared to
net income of $7.8 million, or $0.31 per diluted share, in the prior
year period. Net income for the first half of last year included a
one-time gain of $0.03 per fully diluted share associated with a legal
settlement gain recorded in the second quarter of fiscal 2005.
Efraim Grinberg, President and Chief Executive Officer, commented, "The results we have achieved stem from remaining true to our vision; building brands with a commitment to long term success. Movado, Ebel, Concord, ESQ, Coach, and Tommy Hilfiger Watches -- are marked by exceptional quality and each possesses a distinct brand image in the marketplace. We consistently support our brands with compelling marketing and advertising support, while challenging our organization to keep our brands fresh through an ongoing process of reinvention and product innovation."
"Continued investment behind our brands and businesses demonstrates our commitment toward building long-term shareholder value. We are on-track with our strategy of rebuilding Ebel into a global luxury brand and we are very encouraged with our progress. Our Movado Boutiques now operate in 27 locations nationwide and we continue to develop and strengthen this business as we move toward converting our investment into a profitable operation. Finally, our team is preparing for the exciting launch of a new Hugo Boss watch collection in March of 2006."
Rick Cote, Executive Vice President and Chief Operating Officer, stated, "We are very pleased with the results we delivered during the first half of the year, which reflects the success of our brand and business investments, new product offerings and enhanced productivity. Fiscal 2006 is a year where we have made a strategic decision to invest significantly behind our brands and businesses as we position our company for accelerated growth. Consistent with our strategy, we continue to expect earnings growth to outpace sales growth."
Movado Group now anticipates fiscal 2006 net sales to grow approximately 14% from last year and fully diluted earnings per share for the full year to be at the upper-end of the Company's previously stated range of $1.18 to $1.24. Included in this guidance is an expected $0.05 per diluted share expense related to equity compensation of restricted stock. This guidance excludes any potential impact associated with the American Jobs Creation Act, which the Company continues to evaluate. To the extent that Movado Group repatriates any international earnings, the Company would incur a one time income tax charge.
The Company's management will host a conference call today, September 8th at 10:00 a.m. Eastern Time. 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.
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," "projects," "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 Ebel 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 Six Months Ended
July 31, July 31,
2005 2004 2005 2004
Net sales $115,326 $97,788 $203,082 $171,975
Cost of sales 45,340 39,810 80,258 70,612
Gross profit 69,986 57,978 122,824 101,363
Selling, general and
administrative expenses 57,701 49,230 108,400 90,908
Operating profit 12,285 8,748 14,424 10,455
Income from litigation
settlement, net - 1,444 - 1,444
Interest expense 884 783 1,693 1,508
Income before income taxes 11,401 9,409 12,731 10,391
Income tax 2,850 2,352 3,183 2,598
Net income $8,551 7,057 $9,548 $7,793
Net income per diluted share $0.33 $0.28 $0.37 $0.31
Shares used in per share
computation 26,126 25,484 26,074 25,416
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
July 31, January 31, July 31,
2005 2005 2004
ASSETS
Cash and cash equivalents $50,323 $63,782 $27,438
Trade receivables, net 105,533 102,622 95,841
Inventories 206,483 187,890 181,784
Other 37,127 34,409 31,899
Total current assets 399,466 388,703 336,962
Property, plant and equipment, net 50,282 50,283 48,193
Other assets 36,348 37,964 37,672
$486,096 $476,950 $422,827
LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $37,500 $0 $25,000
Current portion of long-term debt 0 0 5,000
Accounts payable 35,283 38,488 30,965
Accrued liabilities 40,482 39,618 30,223
Deferred and current taxes payable 4,756 5,250 5,853
Total current liabilities 118,021 83,356 97,041
Long-term debt 45,000 45,000 25,000
Deferred and non-current
income taxes 9,031 14,827 11,936
Other liabilities 17,363 17,209 12,214
Shareholders' equity 296,681 316,558 276,636
$486,096 $476,950 $422,827
SOURCE Movado Group, Inc.
Investor Relations - Suzanne Michalek, Director of Corporate Communications of Movado Group, Inc., +1-201-267-8000; or Melissa Myron, or Rachel Albert, both of Financial Dynamics for Movado Group, Inc., +1-212-850-5600