Movado Group, Inc. Announces Second Quarter Results
~
~ Operating Income of
~ EPS of
~ Updates Fiscal Year 2024 Outlook ~
~ Board Declares Quarterly Dividend of
Fiscal 2024 Second Quarter Highlights (See attached table for GAAP and Non-GAAP measures)
-
Delivered net sales of
$160.4 million versus$182.8 million in the second quarter of fiscal 2023; - Generated gross margin of 55.7% as compared to 58.5% in the prior year period;
-
Generated operating income of
$9.6 million as compared to$30.7 million in the prior year period; Adjusted operating income of$10.3 million as compared to$31.4 million ; -
Achieved diluted earnings per share of
$0.36 as compared to$1.05 in the prior year period; Adjusted diluted earnings per share of$0.38 as compared to$1.07 ; and -
Ended the quarter with cash of
$218.9 million and no debt.
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Second quarter fiscal 2024 results of operations included the following items:
-
a
$0.6 million pre-tax charge, or$0.5 million after tax, representing$0.02 per diluted share, associated with the amortization of acquired intangible assets related to the acquisitions ofOlivia Burton and MVMT.
Second quarter fiscal 2023 results of operations included the following items:
-
a
$0.7 million pre-tax charge, or$0.6 million after tax, representing$0.02 per diluted share, associated with the amortization of acquired intangible assets related to the acquisitions ofOlivia Burton and MVMT.
In this press release, reference to “adjusted” results exclude the impact of the above charges from the second quarter of fiscal years 2024 and 2023, as well as the items described in the Non-GAAP Items section of the Company’s earnings release for the first quarter of fiscal year 2024. Please refer to the attached table of GAAP and Non-GAAP measures for a detailed reconciliation of the Company’s reported results to its adjusted, non-GAAP results.
Second Quarter Fiscal 2024 Results (See attached table for GAAP and Non-GAAP measures)
-
Net sales decreased 12.3% (13.8% on a constant dollar basis) to
$160.4 million compared to$182.8 million in the second quarter of fiscal 2023. The decrease in net sales reflected declines in wholesale customers’ brick and mortar stores, online retail and Movado Company Stores due to the challenging environment for consumer discretionary products.U.S. net sales decreased 12.4% as compared to the second quarter of last year. International net sales decreased 12.1% (14.9% on a constant dollar basis) as compared to the second quarter of last year. -
Gross profit was
$89.3 million , or 55.7% of net sales, compared to$106.9 million , or 58.5% of net sales, in the second quarter of fiscal 2023. The decrease in gross margin percentage was primarily the result of decreased leverage of higher fixed costs on lower sales, the unfavorable changes in channel and product mix and the unfavorable impact of foreign currency exchange rates. -
Operating expenses were
$79.6 million compared to$76.3 million in the second quarter of fiscal 2023. Adjusted operating expenses were$79.0 million for the second quarter of fiscal 2024 and$75.6 million in the second quarter of fiscal 2023. This increase was primarily due to higher payroll-related costs, partially offset by lower marketing expenses and performance-based compensation. As a percent of sales, adjusted operating expenses increased to 49.3% of net sales from 41.3% in the prior year period primarily due to lower sales. -
Operating income was
$9.6 million compared to$30.7 million in the second quarter of fiscal 2023. Adjusted operating income for the second quarter of fiscal 2024 was$10.3 million compared to an adjusted operating income of$31.4 million in the second quarter of fiscal 2023. -
The Company recorded a tax provision of
$2.9 million compared to a tax provision of$6.4 million in the second quarter of fiscal 2023. The Company recorded an adjusted tax provision in the second quarter of fiscal 2024 of$3.0 million compared to an adjusted tax provision of$6.6 million in the second quarter of fiscal 2023. -
Net income was
$8.0 million , or$0.36 per diluted share, compared to net income of$24.0 million , or$1.05 per diluted share, in the second quarter of fiscal 2023. Adjusted net income for the fiscal 2024 period was$8.5 million , or$0.38 per diluted share. This compares to adjusted net income in the second quarter of fiscal 2023 of$24.6 million , or$1.07 per diluted share.
First Half Fiscal 2024 Results (See attached table for GAAP and Non-GAAP measures)
-
Net sales for the first six months of fiscal 2024 decreased 11.8% to
$305.3 million (12.1% on a constant dollar basis) compared to$346.2 million in the first six months of fiscal 2023. The decrease in net sales reflected declines in wholesale customers’ brick and mortar stores, online retail and Movado Company Stores due to the challenging retail environment.U.S. net sales decreased 13.9% as compared to the first six months of last year. International net sales decreased 10.2% (10.6% on a constant dollar basis) as compared to the first six months of last year. -
Gross profit was
$171.3 million , or 56.1% of net sales, compared to$203.6 million , or 58.8% of net sales in the first six months of fiscal 2023. The decrease in gross margin percentage was primarily the result of the unfavorable changes in channel and product mix, the unfavorable impact of foreign currency exchange rates and decreased leverage of higher fixed costs on lower sales, partially offset by reduced shipping costs. -
Operating expenses were
$150.7 million as compared to$147.7 million in the first six months of fiscal 2023. Adjusted operating expenses were$149.4 million compared to$146.2 million in the first six months of fiscal 2023. This increase was primarily due to higher payroll-related costs, partially offset by lower marketing expenses and performance-based compensation. As a percent of sales, adjusted operating expenses increased to 48.9% of net sales from 42.2% in the prior year period primarily due to lower sales. -
Operating income was
$20.5 million compared to operating income of$56.0 million in the first six months of fiscal 2023. Adjusted operating income was$21.9 million compared to$57.4 million in the prior year period. -
The Company recorded a tax provision in the first six months of fiscal 2024 of
$5.4 million as compared to a provision of$12.4 million in the first six months of fiscal 2023. The Company recorded an adjusted tax provision of$5.7 million compared to an adjusted tax provision of$12.7 million for the first half of fiscal 2023. -
Net income was
$17.2 million , or$0.76 per diluted share, compared to net income of$42.5 million , or$1.83 per diluted share, in the first six months of last year. In the first half of fiscal 2024, adjusted net income was$18.2 million , or$0.80 per diluted share, compared to adjusted net income of$43.7 million , or$1.89 per diluted share, in the prior year period.
Fiscal 2024 Outlook
The Company is revising its previously provided outlook to reflect the continued expected impact of the challenging consumer discretionary environment on the business.
For Fiscal Year 2024, the Company currently expects:
-
Net sales in a range of approximately
$690.0 million to$700.0 million , as compared to its previous expectation for net sales in the range of$725.0 million to$750.0 million ; - Gross profit of approximately 55% of net sales, as compared to its previous expectation for gross profit of approximately 56% of net sales;
-
Operating income in a range of
$62.5 million to$65.0 million , as compared to its previous expectation for operating income in a range of$80.0 million to$85.0 million ; - An effective tax rate of approximately 23%, assuming no changes to the current tax regulations, as compared to its previous expectation of 22%; and
-
Earnings of
$2.15 to$2.25 per diluted share, as compared to its previous expectation of$2.70 to$2.90 per diluted share.
The Company noted that its fiscal 2024 outlook continues to exclude approximately
Quarterly Dividend and Share Repurchase Program
The Company also announced today that on
During the first six months of fiscal 2024, the Company repurchased approximately 16,000 shares under its share repurchase program. As of
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today,
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)
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
|
|||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Net sales |
$ |
160,390 |
|
$ |
182,804 |
|
$ |
305,295 |
|
$ |
346,228 |
|
||||
Cost of sales |
|
71,104 |
|
|
75,877 |
|
|
134,006 |
|
|
142,616 |
|
||||
Gross profit |
|
89,286 |
|
|
106,927 |
|
|
171,289 |
|
|
203,612 |
|
||||
Total operating expenses |
|
79,638 |
|
|
76,270 |
|
|
150,742 |
|
|
147,661 |
|
||||
Operating income |
|
9,648 |
|
|
30,657 |
|
|
20,547 |
|
|
55,951 |
|
||||
Non-operating income/(expense): | ||||||||||||||||
Other income, net |
|
1,537 |
|
|
199 |
|
|
2,562 |
|
|
282 |
|
||||
Interest expense |
|
(113 |
) |
|
(101 |
) |
|
(226 |
) |
|
(213 |
) |
||||
Income before income taxes |
|
11,072 |
|
|
30,755 |
|
|
22,883 |
|
|
56,020 |
|
||||
Provision for income taxes |
|
2,885 |
|
|
6,418 |
|
|
5,419 |
|
|
12,429 |
|
||||
Net income |
|
8,187 |
|
|
24,337 |
|
|
17,464 |
|
|
43,591 |
|
||||
Less: Net income attributable to noncontrolling interests |
|
138 |
|
|
334 |
|
|
287 |
|
|
1,075 |
|
||||
Net income attributable to |
$ |
8,049 |
|
$ |
24,003 |
|
$ |
17,177 |
|
$ |
42,516 |
|
||||
Diluted Income Per Share Information | ||||||||||||||||
Net income per share attributable to |
$ |
0.36 |
|
$ |
1.05 |
|
$ |
0.76 |
|
$ |
1.83 |
|
||||
Weighted diluted average shares outstanding |
|
22,616 |
|
|
22,966 |
|
|
22,642 |
|
|
23,176 |
|
GAAP AND NON-GAAP MEASURES | |||||||||
(In thousands, except for percentage data) | |||||||||
(Unaudited) | |||||||||
Three Months Ended |
|||||||||
|
% Change |
||||||||
2023 |
2022 |
||||||||
Total net sales, as reported |
$ |
160,390 |
$ |
182,804 |
-12.3 |
% |
|||
Total net sales, constant dollar basis |
$ |
157,589 |
$ |
182,804 |
-13.8 |
% |
|||
Six Months Ended |
|||||||||
|
% Change |
||||||||
2023 |
2022 |
||||||||
Total net sales, as reported |
$ |
305,295 |
$ |
346,228 |
-11.8 |
% |
|||
Total net sales, constant dollar basis |
$ |
304,440 |
$ |
346,228 |
-12.1 |
% |
GAAP AND NON-GAAP MEASURES | ||||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Gross Profit | Total Operating Expenses |
Operating Income |
Pre-tax Income |
Provision for Income Taxes |
Net Income Attributable to |
Diluted EPS | ||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
160,390 |
$ |
89,286 |
$ |
79,638 |
|
$ |
9,648 |
$ |
11,072 |
$ |
2,885 |
$ |
8,049 |
$ |
0.36 |
|||||||||
|
- |
|
- |
|
(612 |
) |
|
612 |
|
612 |
|
147 |
|
465 |
|
0.02 |
||||||||||
Adjusted Results (Non-GAAP) |
$ |
160,390 |
$ |
89,286 |
$ |
79,026 |
|
$ |
10,260 |
$ |
11,684 |
$ |
3,032 |
$ |
8,514 |
$ |
0.38 |
|||||||||
Three Months Ended |
||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
182,804 |
$ |
106,927 |
$ |
76,270 |
|
$ |
30,657 |
$ |
30,755 |
$ |
6,418 |
$ |
24,003 |
$ |
1.05 |
|||||||||
|
- |
|
- |
|
(712 |
) |
|
712 |
|
712 |
|
138 |
|
574 |
|
0.02 |
||||||||||
Adjusted Results (Non-GAAP) |
$ |
182,804 |
$ |
106,927 |
$ |
75,558 |
|
$ |
31,369 |
$ |
31,467 |
$ |
6,556 |
$ |
24,577 |
$ |
1.07 |
|||||||||
Gross Profit | Total Operating Expenses |
Operating Income |
Pre-tax Income |
Provision for Income Taxes |
Net Income Attributable to |
Diluted EPS | ||||||||||||||||||||
Six Months Ended |
||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
305,295 |
$ |
171,289 |
$ |
150,742 |
|
$ |
20,547 |
$ |
22,883 |
$ |
5,419 |
$ |
17,177 |
$ |
0.76 |
|||||||||
|
- |
|
- |
|
(1,319 |
) |
|
1,319 |
|
1,319 |
|
317 |
|
1,002 |
|
0.04 |
||||||||||
Adjusted Results (Non-GAAP) |
$ |
305,295 |
$ |
171,289 |
$ |
149,423 |
|
$ |
21,866 |
$ |
24,202 |
$ |
5,736 |
$ |
18,179 |
$ |
0.80 |
|||||||||
Six Months Ended |
||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
346,228 |
$ |
203,612 |
$ |
147,661 |
|
$ |
55,951 |
$ |
56,020 |
$ |
12,429 |
$ |
42,516 |
$ |
1.83 |
|||||||||
|
- |
|
- |
|
(1,481 |
) |
|
1,481 |
|
1,481 |
|
289 |
|
1,192 |
|
0.06 |
||||||||||
Adjusted Results (Non-GAAP) |
$ |
346,228 |
$ |
203,612 |
$ |
146,180 |
|
$ |
57,432 |
$ |
57,501 |
$ |
12,718 |
$ |
43,708 |
$ |
1.89 |
|||||||||
(1) Related to the amortization of acquired intangible assets for |
CONSOLIDATED BALANCE SHEETS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
|
|
|
|||||||
2023 |
2023 |
2022 |
|||||||
ASSETS | |||||||||
Cash and cash equivalents |
$ |
218,909 |
$ |
251,584 |
$ |
203,109 |
|||
Trade receivables, net |
|
95,821 |
|
94,282 |
|
100,697 |
|||
Inventories |
|
181,448 |
|
186,203 |
|
215,038 |
|||
Other current assets |
|
25,206 |
|
24,212 |
|
21,588 |
|||
Income taxes receivable |
|
12,988 |
|
10,908 |
|
9,691 |
|||
Total current assets |
|
534,372 |
|
567,189 |
|
550,123 |
|||
Property, plant and equipment, net |
|
19,740 |
|
18,699 |
|
17,956 |
|||
Operating lease right-of-use assets |
|
71,358 |
|
80,897 |
|
76,818 |
|||
Deferred and non-current income taxes |
|
45,004 |
|
44,490 |
|
44,480 |
|||
Other intangibles, net |
|
8,432 |
|
9,642 |
|
10,946 |
|||
Other non-current assets |
|
70,791 |
|
66,788 |
|
65,813 |
|||
Total assets |
$ |
749,697 |
$ |
787,705 |
$ |
766,136 |
|||
LIABILITIES AND EQUITY | |||||||||
Accounts payable |
$ |
28,435 |
$ |
32,085 |
$ |
51,981 |
|||
Accrued liabilities |
|
47,135 |
|
46,720 |
|
58,475 |
|||
Accrued payroll and benefits |
|
10,976 |
|
17,343 |
|
11,383 |
|||
Current operating lease liabilities |
|
17,069 |
|
17,681 |
|
16,904 |
|||
Income taxes payable |
|
18,078 |
|
28,591 |
|
20,875 |
|||
Total current liabilities |
|
121,693 |
|
142,420 |
|
159,618 |
|||
Deferred and non-current income taxes payable |
|
8,321 |
|
15,163 |
|
15,788 |
|||
Non-current operating lease liabilities |
|
63,565 |
|
70,910 |
|
67,241 |
|||
Other non-current liabilities |
|
52,220 |
|
48,668 |
|
47,633 |
|||
Redeemable noncontrolling interest |
|
- |
|
- |
|
2,305 |
|||
Shareholders' equity |
|
500,784 |
|
507,606 |
|
470,836 |
|||
Noncontrolling interest |
|
3,114 |
|
2,938 |
|
2,715 |
|||
Total equity |
|
503,898 |
|
510,544 |
|
473,551 |
|||
Total liabilities, redeemable noncontrolling interest and equity |
$ |
749,697 |
$ |
787,705 |
$ |
766,136 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Six Months Ended |
|||||||
|
|||||||
2023 |
2022 |
||||||
Cash flows from operating activities: | |||||||
Net income |
$ |
17,464 |
|
$ |
43,591 |
|
|
Depreciation and amortization |
|
5,039 |
|
|
5,635 |
|
|
Other non-cash adjustments |
|
5,427 |
|
|
3,346 |
|
|
Changes in working capital |
|
(19,999 |
) |
|
(74,366 |
) |
|
Changes in non-current assets and liabilities |
|
1,295 |
|
|
(3,598 |
) |
|
Net cash provided by/(used in) operating activities |
|
9,226 |
|
|
(25,392 |
) |
|
Cash flows from investing activities: | |||||||
Capital expenditures |
|
(4,620 |
) |
|
(2,987 |
) |
|
Long-term investments |
|
(1,407 |
) |
|
(2,283 |
) |
|
Trademarks and other intangibles |
|
(54 |
) |
|
(57 |
) |
|
Net cash used in investing activities |
|
(6,081 |
) |
|
(5,327 |
) |
|
Cash flows from financing activities: | |||||||
Dividends paid |
|
(37,650 |
) |
|
(15,797 |
) |
|
Stock repurchase |
|
(433 |
) |
|
(21,539 |
) |
|
Stock awards and options exercised and other changes |
|
(92 |
) |
|
(405 |
) |
|
Other |
|
- |
|
|
(85 |
) |
|
Net cash used in financing activities |
|
(38,175 |
) |
|
(37,826 |
) |
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
3,131 |
|
|
(5,489 |
) |
|
Net change in cash, cash equivalents, and restricted cash |
|
(31,899 |
) |
|
(74,034 |
) |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
252,179 |
|
|
277,716 |
|
|
Cash, cash equivalents, and restricted cash at end of period |
$ |
220,280 |
|
$ |
203,682 |
|
|
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||
Cash and cash equivalents |
$ |
218,909 |
|
$ |
203,109 |
|
|
Restricted cash included in other non-current assets |
|
1,371 |
|
|
573 |
|
|
Cash, cash equivalents, and restricted cash |
$ |
220,280 |
|
$ |
203,682 |
|
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