Movado Group, Inc. Announces Third Quarter Results
~
~ Operating Income of
~ EPS of
~ Company Updates Fiscal 2024 Outlook ~
~ Board Declares Quarterly Dividend ~
Fiscal 2024 Third Quarter Highlights (See table below for GAAP and Non-GAAP measures)
-
Reported net sales of
$187.7 million versus$211.4 million in the third quarter of fiscal 2023; - Generated gross margin of 54.5% compared to 57.3% in the prior year period;
-
Generated operating income of
$20.7 million as compared to$38.3 million in the prior year period; Adjusted operating income of$21.1 million as compared to$38.9 million ; -
Delivered diluted earnings per share of
$0.77 as compared to$1.28 in the prior year period; Adjusted diluted earnings per share of$0.78 as compared to$1.31 ; and -
Ended the quarter with cash of
$201.0 million and no debt.
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Third quarter fiscal 2024 results of operations included the following items:
-
a
$0.4 million pre-tax charge, or$0.3 million after tax, representing$0.01 per diluted share, associated with the amortization of acquired intangible assets related to the acquisitions ofOlivia Burton and MVMT.
Third quarter fiscal 2023 results of operations included the following items:
-
a
$0.7 million pre-tax charge, or$0.5 million after tax, representing$0.03 per diluted share, associated with the amortization of acquired intangible assets related to the acquisitions ofOlivia Burton and MVMT.
In this press release, references to “adjusted” results exclude the impact of the above charges and the charges described in the Non-GAAP Items section of the Company’s earnings releases for the first and second quarters of fiscal year 2024 in deriving the adjusted results for the nine months ended
Third Quarter Fiscal 2024 (See attached table for GAAP and Non-GAAP measures)
-
Net sales decreased 11.2% to
$187.7 million , or decreased 13.5% on a constant dollar basis, compared to$211.4 million in the third quarter of fiscal 2023. The decrease in net sales reflected declines in wholesale customers’ brick and mortar stores, online retail and Movado Company Stores.U.S. net sales decreased 12.3% as compared to the third quarter of last year. International net sales decreased 10.4% (14.4% on a constant dollar basis) as compared to the third quarter of last year. -
Gross profit was
$102.3 million , or 54.5% of sales, compared to$121.0 million , or 57.3% of sales, in the third quarter of fiscal 2023. The decrease in gross margin percentage was primarily the result of unfavorable changes in channel and product mix and the decreased leverage of certain fixed costs on lower sales, partially offset by decreased shipping costs and the favorable impact of foreign currency exchange rates. -
Operating expenses were
$81.6 million compared to$82.8 million in the third quarter of fiscal 2023. Adjusted operating expenses were$81.3 million for the third quarter of fiscal 2024 and$82.1 million in the third quarter of fiscal 2023. This decrease was primarily due to lower performance-based compensation, partially offset by higher payroll related expenses and marketing expenses. As a percent of sales, adjusted operating expenses increased to 43.3% of sales from 38.8% in the prior year period due to lower sales. -
Operating income was
$20.7 million compared to$38.3 million in the third quarter of fiscal 2023. Adjusted operating income for the third quarter of fiscal 2024 was$21.1 million compared to adjusted operating income of$38.9 million in the third quarter of fiscal 2023. -
The Company recorded a tax provision of
$4.5 million compared to a tax provision of$8.4 million in the third quarter of fiscal 2023. The Company recorded an adjusted tax provision in the third quarter of fiscal 2024 of$4.6 million compared to an adjusted tax provision of$8.6 million in the third quarter of fiscal 2023. -
Net income was
$17.4 million , or$0.77 per diluted share, compared to net income of$29.3 million , or$1.28 per diluted share, in the third quarter of fiscal 2023. Adjusted net income for the fiscal 2024 period was$17.7 million , or$0.78 per diluted share. This compares to adjusted net income in the third quarter of fiscal 2023 of$29.8 million , or$1.31 per diluted share.
Nine Month Results Fiscal 2024 (See attached table for GAAP and Non-GAAP measures)
-
Net sales decreased 11.6% to
$493.0 million , or decreased 12.6% on a constant dollar basis, compared to$557.6 million in the first nine months of fiscal 2023. The decrease in net sales reflected declines in wholesale customers’ brick and mortar stores, online retail and Movado Company Stores.U.S. net sales decreased 13.4% as compared to the first nine months of last year. International net sales decreased 10.3% (12.1% on a constant dollar basis) as compared to the first nine months of last year. -
Gross profit was
$273.6 million , or 55.5% of sales, compared to$324.6 million , or 58.2% of sales in the same period last year. The decrease in gross margin percentage was primarily the result of unfavorable changes in channel and product mix, the decreased leverage of higher fixed costs on lower sales and the unfavorable impact of foreign currency exchange rates, partially offset by reduced shipping costs. -
Operating expenses were
$232.4 million as compared to$230.4 million in the same period last year. Adjusted operating expenses were$230.7 million compared to$228.3 million in the prior year period. This increase was primarily due to higher payroll-related costs, partially offset by lower performance-based compensation and marketing expenses. As a percent of sales, adjusted operating expenses increased to 46.8% of sales from 40.9% in the prior year period primarily due to lower sales. -
Operating income was
$41.2 million compared to operating income of$94.2 million in the same period last year. Adjusted operating income was$42.9 million compared to$96.4 million in the prior year period. -
The Company recorded a tax provision in the first nine months of fiscal 2024 of
$9.9 million as compared to a provision of$20.9 million in the first nine months of fiscal 2023. The Company recorded an adjusted tax provision of$10.3 million compared to an adjusted tax provision of$21.3 million for the first nine months of fiscal 2023. -
Net income was
$34.6 million , or$1.53 per diluted share, compared to net income of$71.8 million , or$3.12 per diluted share, in the first nine months of last year. In the first nine months of fiscal 2024, adjusted net income was$35.9 million , or$1.58 per diluted share, compared to adjusted net income of$73.5 million , or$3.19 per diluted share, in the first nine months of fiscal 2023.
Fiscal 2024 Outlook
The Company is revising its previously provided outlook to reflect third quarter results and the expected continuing impact of a challenging environment.
For Fiscal Year 2024, the Company currently expects:
-
Net sales in a range of approximately
$665.0 million to$675.0 million , as compared to its previous expectation for net sales in the range of$690.0 million to$700.0 million ; - Gross profit of approximately 55% of net sales, unchanged from its previous expectation;
-
Operating income in a range of
$51.0 million to$55.0 million , as compared to its previous expectation for operating income in a range of$62.5 million to$65.0 million ; - An effective tax rate of approximately 23%, unchanged from its previous expectation; and
-
Earnings of
$1.85 to$2.00 per diluted share, as compared to its previous expectation of$2.15 to$2.25 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 third quarter of fiscal 2024, the Company repurchased approximately 69,700 shares under its
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 | Nine Months Ended | ||||||||||||||||
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|||
Net sales |
$ |
187,686 |
|
$ |
211,397 |
|
$ |
492,981 |
|
$ |
557,625 |
|
|||||
Cost of sales |
|
85,358 |
|
|
90,370 |
|
|
219,364 |
|
|
232,986 |
|
|||||
Gross profit |
|
102,328 |
|
|
121,027 |
|
|
273,617 |
|
|
324,639 |
|
|||||
Total operating expenses |
|
81,636 |
|
|
82,756 |
|
|
232,378 |
|
|
230,417 |
|
|||||
Operating income |
|
20,692 |
|
|
38,271 |
|
|
41,239 |
|
|
94,222 |
|
|||||
Non-operating income/(expense): | |||||||||||||||||
Other income, net |
|
1,632 |
|
|
422 |
|
|
4,194 |
|
|
704 |
|
|||||
Interest expense |
|
(135 |
) |
|
(143 |
) |
|
(361 |
) |
|
(356 |
) |
|||||
Income before income taxes |
|
22,189 |
|
|
38,550 |
|
|
45,072 |
|
|
94,570 |
|
|||||
Provision for income taxes |
|
4,519 |
|
|
8,439 |
|
|
9,938 |
|
|
20,868 |
|
|||||
Net income |
|
17,670 |
|
|
30,111 |
|
|
35,134 |
|
|
73,702 |
|
|||||
Less: Net income attributable to noncontrolling interests |
|
281 |
|
|
825 |
|
|
568 |
|
|
1,900 |
|
|||||
Net income attributable to |
$ |
17,389 |
|
$ |
29,286 |
|
$ |
34,566 |
|
$ |
71,802 |
|
|||||
Diluted Income Per Share Information | |||||||||||||||||
Net income per share attributable to |
$ |
0.77 |
|
$ |
1.28 |
|
$ |
1.53 |
|
$ |
3.12 |
|
|||||
Weighted diluted average shares outstanding |
|
22,677 |
|
|
22,794 |
|
|
22,641 |
|
|
23,044 |
|
|||||
GAAP AND NON-GAAP MEASURES | |||||||||
(In thousands, except for percentage data) | |||||||||
(Unaudited) | |||||||||
Three Months Ended | |||||||||
% Change | |||||||||
2023 |
2022 |
||||||||
Total net sales, as reported |
$ |
187,686 |
$ |
211,397 |
-11.2 |
% |
|||
Total net sales, constant dollar basis |
$ |
182,797 |
$ |
211,397 |
-13.5 |
% |
|||
Nine Months Ended | |||||||||
% Change | |||||||||
2023 |
2022 |
||||||||
Total net sales, as reported |
$ |
492,981 |
$ |
557,625 |
-11.6 |
% |
|||
Total net sales, constant dollar basis |
$ |
487,237 |
$ |
557,625 |
-12.6 |
% |
|||
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) |
$ |
187,686 |
$ |
102,328 |
$ |
81,636 |
|
$ |
20,692 |
$ |
22,189 |
$ |
4,519 |
$ |
17,389 |
$ |
0.77 |
|||||||||
|
- |
|
- |
|
(376 |
) |
|
376 |
|
376 |
|
90 |
|
286 |
|
0.01 |
||||||||||
Adjusted Results (Non-GAAP) |
$ |
187,686 |
$ |
102,328 |
$ |
81,260 |
|
$ |
21,068 |
$ |
22,565 |
$ |
4,609 |
$ |
17,675 |
$ |
0.78 |
|||||||||
Three Months Ended |
||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
211,397 |
$ |
121,027 |
$ |
82,756 |
|
$ |
38,271 |
$ |
38,550 |
$ |
8,439 |
$ |
29,286 |
$ |
1.28 |
|||||||||
|
- |
|
- |
|
(671 |
) |
|
671 |
|
671 |
|
132 |
|
539 |
|
0.03 |
||||||||||
Adjusted Results (Non-GAAP) |
$ |
211,397 |
$ |
121,027 |
$ |
82,085 |
|
$ |
38,942 |
$ |
39,221 |
$ |
8,571 |
$ |
29,825 |
$ |
1.31 |
|||||||||
Gross Profit | Total Operating Expenses |
Operating Income |
Pre-tax Income |
Provision for Income Taxes |
Net Income Attributable to |
Diluted EPS | ||||||||||||||||||||
Nine Months Ended |
||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
492,981 |
$ |
273,617 |
$ |
232,378 |
|
$ |
41,239 |
$ |
45,072 |
$ |
9,938 |
$ |
34,566 |
$ |
1.53 |
|||||||||
|
- |
|
- |
|
(1,695 |
) |
|
1,695 |
|
1,695 |
|
407 |
|
1,288 |
|
0.05 |
||||||||||
Adjusted Results (Non-GAAP) |
$ |
492,981 |
$ |
273,617 |
$ |
230,683 |
|
$ |
42,934 |
$ |
46,767 |
$ |
10,345 |
$ |
35,854 |
$ |
1.58 |
|||||||||
Nine Months Ended |
||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
557,625 |
$ |
324,639 |
$ |
230,417 |
|
$ |
94,222 |
$ |
94,570 |
$ |
20,868 |
$ |
71,802 |
$ |
3.12 |
|||||||||
|
- |
|
- |
|
(2,152 |
) |
|
2,152 |
|
2,152 |
|
421 |
|
1,731 |
|
0.07 |
||||||||||
Adjusted Results (Non-GAAP) |
$ |
557,625 |
$ |
324,639 |
$ |
228,265 |
|
$ |
96,374 |
$ |
96,722 |
$ |
21,289 |
$ |
73,533 |
$ |
3.19 |
|||||||||
(1) Related to the amortization of acquired intangible assets for |
||||||||||||||||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
2023 |
|
2023 |
|
2022 |
||||||||
ASSETS | ||||||||||||
Cash and cash equivalents |
$ |
200,965 |
$ |
251,584 |
$ |
186,665 |
||||||
Trade receivables, net |
|
135,523 |
|
94,282 |
|
135,566 |
||||||
Inventories |
|
171,966 |
|
186,203 |
|
215,006 |
||||||
Other current assets |
|
18,856 |
|
24,212 |
|
18,664 |
||||||
Income taxes receivable |
|
11,135 |
|
10,908 |
|
7,978 |
||||||
Total current assets |
|
538,445 |
|
567,189 |
|
563,879 |
||||||
Property, plant and equipment, net |
|
19,458 |
|
18,699 |
|
18,207 |
||||||
Operating lease right-of-use assets |
|
84,212 |
|
80,897 |
|
74,918 |
||||||
Deferred and non-current income taxes |
|
44,814 |
|
44,490 |
|
44,288 |
||||||
Other intangibles, net |
|
7,688 |
|
9,642 |
|
9,818 |
||||||
Other non-current assets |
|
68,780 |
|
66,788 |
|
64,570 |
||||||
Total assets |
$ |
763,397 |
$ |
787,705 |
$ |
775,680 |
||||||
LIABILITIES AND EQUITY | ||||||||||||
Accounts payable |
$ |
22,998 |
$ |
32,085 |
$ |
40,884 |
||||||
Accrued liabilities |
|
57,165 |
|
46,720 |
|
66,894 |
||||||
Accrued payroll and benefits |
|
10,317 |
|
17,343 |
|
15,581 |
||||||
Current operating lease liabilities |
|
15,885 |
|
17,681 |
|
16,779 |
||||||
Income taxes payable |
|
20,024 |
|
28,591 |
|
25,457 |
||||||
Total current liabilities |
|
126,389 |
|
142,420 |
|
165,595 |
||||||
Deferred and non-current income taxes payable |
|
7,966 |
|
15,163 |
|
15,639 |
||||||
Non-current operating lease liabilities |
|
76,929 |
|
70,910 |
|
65,164 |
||||||
Other non-current liabilities |
|
49,195 |
|
48,668 |
|
45,735 |
||||||
Redeemable noncontrolling interest |
|
- |
|
- |
|
2,433 |
||||||
Shareholders' equity |
|
500,439 |
|
507,606 |
|
478,021 |
||||||
Noncontrolling interest |
|
2,479 |
|
2,938 |
|
3,093 |
||||||
Total equity |
|
502,918 |
|
510,544 |
|
481,114 |
||||||
Total liabilities, redeemable noncontrolling interest and equity |
$ |
763,397 |
$ |
787,705 |
$ |
775,680 |
||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
Nine Months Ended |
|||||||||||
|
|||||||||||
2023 |
2022 |
||||||||||
Cash flows from operating activities: | |||||||||||
Net income |
$ |
35,134 |
|
$ |
73,702 |
|
|||||
Depreciation and amortization |
|
7,278 |
|
|
8,218 |
|
|||||
Other non-cash adjustments |
|
8,258 |
|
|
7,413 |
|
|||||
Changes in working capital |
|
(43,865 |
) |
|
(108,857 |
) |
|||||
Changes in non-current assets and liabilities |
|
563 |
|
|
(4,125 |
) |
|||||
Net cash provided by/(used in) operating activities |
|
7,368 |
|
|
(23,649 |
) |
|||||
Cash flows from investing activities: | |||||||||||
Capital expenditures |
|
(6,627 |
) |
|
(4,703 |
) |
|||||
Long-term investments |
|
(2,040 |
) |
|
(2,716 |
) |
|||||
Trademarks and other intangibles |
|
(113 |
) |
|
(175 |
) |
|||||
Net cash used in investing activities |
|
(8,780 |
) |
|
(7,594 |
) |
|||||
Cash flows from financing activities: | |||||||||||
Dividends paid |
|
(45,399 |
) |
|
(23,600 |
) |
|||||
Stock repurchases |
|
(2,349 |
) |
|
(28,150 |
) |
|||||
Distribution of noncontrolling interest earnings |
|
(780 |
) |
|
- |
|
|||||
Stock awards and options exercised and other changes |
|
(73 |
) |
|
(80 |
) |
|||||
Other |
|
- |
|
|
(85 |
) |
|||||
Net cash used in financing activities |
|
(48,601 |
) |
|
(51,915 |
) |
|||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(377 |
) |
|
(7,349 |
) |
|||||
Net change in cash, cash equivalents, and restricted cash |
|
(50,390 |
) |
|
(90,507 |
) |
|||||
Cash, cash equivalents, and restricted cash at beginning of period |
|
252,179 |
|
|
277,716 |
|
|||||
Cash, cash equivalents, and restricted cash at end of period |
$ |
201,789 |
|
$ |
187,209 |
|
|||||
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||||||
Cash and cash equivalents |
$ |
200,965 |
|
$ |
186,665 |
|
|||||
Restricted cash included in other non-current assets |
|
824 |
|
|
544 |
|
|||||
Cash, cash equivalents, and restricted cash |
$ |
201,789 |
|
$ |
187,209 |
|
|||||
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