Movado Group, Inc. Announces Second Quarter Results
~ Second Quarter Revenue of
~ Maintains Full Year Guidance ~
~ Board Declares Quarterly Dividend ~
“We believe we are well positioned for the second half of the year,”
continued Mr. Grinberg. “We have a number of exciting new product
introductions planned for the holiday season as we continue to drive
innovation across our brand portfolio. We are expecting to deliver our
first connected
There were no unusual items recorded during the second quarter of fiscal
2016. During the first quarter of fiscal 2016, the Company recorded a
Second Quarter Fiscal 2016 (See attached table for GAAP and Non-GAAP measures)
-
Net sales increased 1.4% to
$145.6 million compared to$143.6 million in the second quarter of fiscal 2015. Net sales on a constant dollar basis increased 6.1% compared to net sales in the second quarter of fiscal 2015. -
Gross profit was
$79.0 million , or 54.3% of sales, compared to$77.6 million , or 54.0% of sales, in the second quarter last year. The increase in gross margin percentage was due to channel and product mix, selective price increases and certain sourcing improvements, partially offset by the unfavorable impact of changes in foreign currency exchange rates. -
Operating expenses increased
$0.4 million , or 0.6%, to$60.8 million . This increase was primarily the result of an increase in compensation and benefit expenses as well as higher marketing expenses, partially offset by the favorable impact of foreign currency exchange rates. -
Operating income increased to
$18.2 million , or 12.5% of net sales, compared to operating income of$17.2 million , or 12.0% of net sales, in the second quarter of fiscal 2015. -
The Company recorded a tax provision of
$6.1 million , which equates to an effective tax rate of 33.8%, compared to an effective tax rate of 28.7% in the second quarter of fiscal 2015. The increase in the effective tax rate was primarily due to not recognizing tax benefits on losses incurred by certain foreign operations. -
Net income was
$12.1 million , or$0.50 per diluted share, compared to$12.2 million , or$0.47 per diluted share, in the second quarter of fiscal 2015.
First Half Fiscal 2016 (See attached table for GAAP and Non-GAAP measures)
-
Net sales increased 0.6% to
$266.0 million compared to$264.5 million in the first six months of fiscal 2015. Net sales on a constant dollar basis increased 5.6% compared to net sales in the first six months of fiscal 2015. -
Gross profit was
$141.5 million , or 53.2% of sales, compared to$142.8 million , or 54.0% of sales in the same period last year. Adjusted gross profit for the first six months of fiscal 2016, which excludes$0.7 million in charges related to operating efficiency initiatives and other items in the first quarter of fiscal 2016, was$142.2 million , or 53.4% of sales. The decline in adjusted gross margin percentage was primarily the result of the unfavorable impact of changes in foreign currency exchange rates partially offset by channel and product mix, selective price increases and certain sourcing improvements. -
Operating expenses were
$116.4 million as compared to$114.7 million in the first half of last year. For the first six months of fiscal 2016, adjusted operating expenses were$114.4 million , excluding$2.0 million of expenses related to operating efficiency initiatives and other items recorded in the first quarter. Operating expenses remained relatively flat due to the favorable impact of foreign currency exchange rates partially offset by an increase in compensation and benefit expenses as well as other higher miscellaneous operating costs. -
Operating income was
$25.1 million , or 9.4% of net sales, compared to operating income of$28.1 million , or 10.6% of net sales in the first six months of fiscal 2015. Adjusted operating income for the first half of fiscal 2016, excluding$2.7 million of expenses related to operating efficiency initiatives and other items recorded in the first quarter, was$27.8 million or 10.4% of net sales. -
The Company recorded a tax provision in the first six months of fiscal
2016 of
$9.2 million , which equates to an effective tax rate of 37.2% compared to an effective tax rate of 29.9% for the first six months of fiscal 2015. The adjusted effective tax rate for first half of fiscal 2016 was 34.1%. -
Net income was
$15.7 million , or$0.65 per diluted share, compared to$19.5 million , or$0.76 per diluted share, in the first six months of fiscal 2015. Adjusted net income for the first six months of fiscal 2016 was$18.2 million , or$0.75 per diluted share, excluding$2.5 million in expenses, net of tax, related to operating efficiency initiatives and other items in the first quarter of fiscal 2016.
Rick Coté, Vice Chairman and Chief Operating Officer, stated, “We delivered a solid second quarter driven by the successful execution of our growth and efficiency strategies by our team. The quarter saw the initial benefit of our selective price increases, operating efficiencies and sourcing improvements across our supply chain, which combined drove our gross margin expansion. We continue to invest in our infrastructure and growth initiatives and believe our strategies will position us to achieve our goal of delivering sustainable profitable growth. While we are maintaining our guidance at this time, we do believe there is uncertainty in the global economic environment as we enter the second half of the year.”
Fiscal 2016 Guidance
The Company is maintaining its guidance for fiscal 2016. In fiscal 2016,
the Company expects net sales to be in the range of
The Company also anticipates recording the remainder of the previously
announced
Quarterly Dividend and Share Repurchase Program
The Company also announced that on
During the second quarter of fiscal 2016, the Company repurchased
approximately 613,000 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)
MOVADO GROUP, INC. | |||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
July 31, | July 31, | ||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Net sales | $ | 145,569 | $ | 143,591 | $ | 266,030 | $ | 264,512 | |||||||||||||
Cost of sales | 66,531 | 65,985 | 124,543 | 121,755 | |||||||||||||||||
Gross profit | 79,038 | 77,606 | 141,487 | 142,757 | |||||||||||||||||
Operating expenses | 60,804 | 60,438 | 116,378 | 114,668 | |||||||||||||||||
Operating income | 18,234 | 17,168 | 25,109 | 28,089 | |||||||||||||||||
Interest expense | (256 | ) | (100 | ) | (408 | ) | (194 | ) | |||||||||||||
Interest income | 35 | 11 | 88 | 46 | |||||||||||||||||
Income before income taxes | 18,013 | 17,079 | 24,789 | 27,941 | |||||||||||||||||
Provision for income taxes | 6,080 | 4,909 | 9,216 | 8,342 | |||||||||||||||||
Net income | 11,933 | 12,170 | 15,573 | 19,599 | |||||||||||||||||
Less: Net (loss) / income attributed to noncontrolling interests | (120 | ) | 19 | (101 | ) | 83 | |||||||||||||||
Net income attributed to Movado Group, Inc. | $ | 12,053 | $ | 12,151 | $ | 15,674 | $ | 19,516 | |||||||||||||
Per Share Information: | |||||||||||||||||||||
Net income attributed to Movado Group, Inc. | $ | 0.50 | $ | 0.47 | $ | 0.65 | $ | 0.76 | |||||||||||||
Weighted diluted average shares outstanding | 23,904 | 25,674 | 24,230 | 25,685 |
MOVADO GROUP, INC. | |||||||||||||
GAAP AND NON-GAAP MEASURES | |||||||||||||
(In thousands, except for percentage data) | |||||||||||||
(Unaudited) | |||||||||||||
As Reported | % Change | ||||||||||||
Three Months Ended | % Change | Constant | |||||||||||
July 31, | As Reported | Dollar | |||||||||||
2015 | 2014 | ||||||||||||
Total Net sales | 145,569 | 143,591 | 1.4 | % | 6.1 | % | |||||||
As Reported | % Change | ||||||||||||
Six Months Ended | % Change | Constant | |||||||||||
July 31, | As Reported | Dollar | |||||||||||
2015 | 2014 | ||||||||||||
Total Net sales | 266,030 | 264,512 | 0.6 | % | 5.6 | % |
MOVADO GROUP, INC. | |||||||||||||||||||||||
GAAP AND NON-GAAP MEASURES | |||||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Net Sales | Gross Profit | Operating Income | Pre-tax Income | Net Income | EPS | ||||||||||||||||||
Three Months Ended July 31, 2015 | |||||||||||||||||||||||
As Reported (GAAP) | $ | 145,569 | $ | 79,038 | $ | 18,234 | $ | 18,013 | $ | 12,053 | $ | 0.50 | |||||||||||
Three Months Ended July 31, 2014 | |||||||||||||||||||||||
As Reported (GAAP) | $ | 143,591 | $ | 77,606 | $ | 17,168 | $ | 17,079 | $ | 12,151 | $ | 0.47 | |||||||||||
Six Months Ended July 31, 2015 | |||||||||||||||||||||||
As Reported (GAAP) | $ | 266,030 | $ | 141,487 | $ | 25,109 | $ | 24,789 | $ | 15,674 | $ | 0.65 | |||||||||||
Operating Efficiency Initiatives and Other Items (1) | 693 | 2,670 | 2,670 | 2,536 | 0.10 | ||||||||||||||||||
Adjusted Results (Non-GAAP) | $ | 266,030 | $ | 142,180 | $ | 27,779 | $ | 27,459 | $ | 18,210 | $ | 0.75 | |||||||||||
Six Months Ended July 31, 2014 | |||||||||||||||||||||||
As Reported (GAAP) | $ | 264,512 | $ | 142,757 | $ | 28,089 | $ | 27,941 | $ | 19,516 | $ | 0.76 | |||||||||||
(1) Related to a charge for severance, occupancy expenses and the write-off of certain fixed assets. |
MOVADO GROUP, INC. | ||||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||||
(In thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
July 31, | January 31, | July 31, | ||||||||||||
2015 | 2015 | 2014 | ||||||||||||
ASSETS | ||||||||||||||
Cash and cash equivalents | $ | 188,012 | $ | 199,852 | $ | 169,649 | ||||||||
Trade receivables | 80,818 | 74,106 | 91,214 | |||||||||||
Inventories | 188,515 | 170,788 | 195,331 | |||||||||||
Other current assets | 37,962 | 40,532 | 41,018 | |||||||||||
Total current assets | 495,307 | 485,278 | 497,212 | |||||||||||
Property, plant and equipment, net | 42,723 | 46,673 | 46,141 | |||||||||||
Deferred income taxes | 13,625 | 13,550 | 14,604 | |||||||||||
Other non-current assets | 38,356 | 37,522 | 33,486 | |||||||||||
Total assets | $ | 590,011 | $ | 583,023 | $ | 591,443 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Accounts payable | $ | 31,687 | $ | 27,767 | $ | 37,604 | ||||||||
Accrued liabilities | 38,182 | 30,933 | 40,334 | |||||||||||
Deferred and current income taxes payable | 1,703 | 7,372 | 4,819 | |||||||||||
Total current liabilities | 71,572 | 66,072 | 82,757 | |||||||||||
Loans payable to bank | 40,000 | - | - | |||||||||||
Deferred and non-current income taxes payable | 3,002 | 3,470 | 3,360 | |||||||||||
Other non-current liabilities | 30,353 | 29,196 | 28,063 | |||||||||||
Noncontrolling interests | 2,089 | 2,076 | 2,751 | |||||||||||
Shareholders' equity | 442,995 | 482,209 | 474,512 | |||||||||||
Total liabilities and equity | $ | 590,011 | $ | 583,023 | $ | 591,443 |
MOVADO GROUP, INC. | |||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
(In thousands) | |||||||||||||
(Unaudited) | |||||||||||||
Six Months Ended | |||||||||||||
July 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Cash flows from operating activities: | |||||||||||||
Net income | $ | 15,573 | $ | 19,599 | |||||||||
Depreciation and amortization | 6,131 | 6,097 | |||||||||||
Other non-cash adjustments | 3,364 | 3,363 | |||||||||||
Operating efficiency initiatives and other items | 2,670 | - | |||||||||||
Changes in working capital | (25,748 | ) | (34,317 | ) | |||||||||
Changes in non-current assets and liabilities | 584 | (421 | ) | ||||||||||
Net cash provided by / (used in) operating activities | 2,574 | (5,679 | ) | ||||||||||
Cash flows from investing activities: | |||||||||||||
Capital expenditures | (3,668 | ) | (4,294 | ) | |||||||||
Proceeds from short-term investments | - | 33,736 | |||||||||||
Other investing | (138 | ) | 275 | ||||||||||
Net cash (used in) / provided by investing activities | (3,806 | ) | 29,717 | ||||||||||
Cash flows from financing activities: | |||||||||||||
Proceeds from bank borrowings | 50,000 | - | |||||||||||
Repayments of bank borrowings | (10,000 | ) | - | ||||||||||
Dividends paid | (5,239 | ) | (5,059 | ) | |||||||||
Stock repurchase | (39,129 | ) | (7,684 | ) | |||||||||
Other financing | (447 | ) | 1,312 | ||||||||||
Net cash (used in) financing activities | (4,815 | ) | (11,431 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (5,793 | ) | (617 | ) | |||||||||
Net change in cash and cash equivalents | (11,840 | ) | 11,990 | ||||||||||
Cash and cash equivalents at beginning of year | 199,852 | 157,659 | |||||||||||
Cash and cash equivalents at end of period | $ | 188,012 | $ | 169,649 |
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Source:
ICR, Inc.
Rachel Schacter/Allison Malkin, 203-682-8200