Movado Group, Inc. Reports Q3 Net Sales Increase 12%; Operating Profit Grows 19%
PARAMUS, N.J., Dec. 1 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced third quarter results for the period ended October 31, 2005.
Third Quarter Fiscal 2006 * Net sales increased 11.6% to $141.7 million from $127.0 million last year. * Comparable store sales increased 10.6% at the Company's Movado boutiques versus a 12.8% gain achieved last year. * Gross margin remained strong at 60.8%. * Operating profit increased 18.9% to $19.0 million versus $16.0 million last year. * Other income for the quarter of $1.0 million included two unusual items: a gain of $2.6 million generated from the sale of a building acquired with Ebel, which more than offset a loss of $1.6 million associated with the accounting for foreign currency hedge derivatives. * Net income was $14.1 million, or $0.54 per diluted share. The net effect of the aforementioned unusual items benefited net income and diluted earnings per share by $0.8 million and $0.03, respectively. Net income was $11.3 million, or $0.44 per diluted share, in the year-ago period. Nine-Month Results * Net sales increased 15.3% to $344.8 million from $299.0 million last year. * Comparable store sales increased 5.0% at the Company's Movado boutiques versus a 16.7% gain achieved last year. * Gross margin was 60.6% compared to 59.7% in the year-ago period. * Operating profit increased 26.5% to $33.4 million versus $26.4 million last year. * Other income for the nine-month period of $1.0 million included the aforementioned unusual items recorded in the third quarter of fiscal 2006. Other income of $1.4 million recorded in the prior year period reflected the one-time gain associated with a legal settlement the Company reached with Swiss Army Brands. * Net income was $23.7 million, or $0.91 per diluted share, compared to $19.1 million, or $0.75 per diluted share, in the prior year period. Unusual items recorded in the nine-month period of fiscal 2006 and fiscal 2005 benefited diluted earnings per share by $0.03.
Efraim Grinberg, President and Chief Executive Officer, commented, "In a period that presented several challenges including hurricanes and higher energy prices, we are very pleased with our overall results delivered in the third quarter. The power of our portfolio of brands enabled our company to deliver a solid 12% increase in sales and record an even stronger 19% increase in operating profit. Our Movado boutique business also gained momentum in the third quarter, reinforcing our initiatives at retail and reflecting the strength of the Movado brand."
Rick Cote, Executive Vice President and Chief Operating Officer, stated, "Throughout fiscal 2006 we have focused on key areas where we have identified significant growth opportunities that require an increased level of investment, including the accelerated growth of ESQ, and the rebuilding of Ebel. Even as we continue to invest behind our brands and businesses, our balance sheet remains strong and provides us with excellent flexibility to continue executing our strategies."
Mr. Grinberg concluded, "As we head into the important holiday selling season, our brands are distinctly positioned at retail, in print, and on television. With terrific products, innovative advertising campaigns and comprehensive marketing programs, we are delivering a great amount of excitement into the marketplace, which should drive consumer purchases during the important gift-giving season."
On a GAAP basis including unusual items, Movado Group projects fully diluted earnings per share for fiscal 2006 to be in the $1.21 to $1.27 range versus $1.03 earned in fiscal 2005. Included in this guidance is an estimated $0.05 per diluted share expense related to the equity compensation of restricted stock. Excluding the aforementioned unusual items recorded in the third quarter of this year, as well as any potential impact associated with the American Jobs Creation Act (AJCA), the Company continues to project fiscal 2006 diluted earnings per share to be at the upper end of the $1.18 to $1.24 range. To the extent that Movado Group repatriates any international earnings associated with AJCA, the Company would incur a one-time income tax charge. Net sales in fiscal 2006 are now expected to grow approximately 12% from last year.
Movado Group believes that presenting financial projections without unusual items provides a clearer picture of the Company's ongoing business.
The Company's management will host a conference call today, December 1st at 10:00 a.m. Eastern Time. A live broadcast of the call will be available on the Company's website: http://www.movadogroupinc.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 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 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 Nine Months Ended October 31, October 31, 2005 2004 2005 2004 Net sales $141,736 $127,023 $344,818 $298,998 Cost of sales 55,563 49,882 135,821 120,494 Gross profit 86,173 77,141 208,997 178,504 Selling, general and administrative expenses 67,163 61,157 175,563 152,065 Operating profit 19,010 15,984 33,434 26,439 Other income/(expense) 1,008 - 1,008 1,444 Interest expense 1,208 872 2,901 2,380 Income before income taxes 18,810 15,112 31,541 25,503 Income tax 4,702 3,778 7,885 6,376 Net income $ 14,108 $ 11,334 $ 23,656 $ 19,127 Net income per diluted share $ 0.54 $ 0.44 $ 0.91 $ 0.75 Shares used in per share computation 26,211 25,621 26,123 25,497 MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (Unaudited) October 31, January 31, October 31, 2005 2005 2004 ASSETS Cash and cash equivalents $ 56,064 $ 63,782 $ 35,870 Trade receivables, net 144,484 102,622 137,861 Inventories 211,442 187,890 192,811 Other 31,622 34,515 42,540 Total current assets 443,612 388,809 409,082 Property, plant and equipment, net 49,109 50,283 50,105 Other assets 35,449 37,858 39,972 $528,170 $476,950 $499,159 LIABILITIES AND SHAREHOLDERS' EQUITY Loans payable to banks $ 44,000 $ 0 $ 16,300 Current portion of long-term debt 0 0 5,000 Accounts payable 42,016 38,488 41,928 Accrued liabilities 49,135 39,618 47,237 Deferred and current taxes payable 7,055 5,250 20,911 Total current liabilities 142,206 83,356 131,376 Long-term debt 45,000 45,000 45,000 Deferred and non-current income taxes 9,741 14,827 3,291 Other liabilities 17,629 17,209 13,281 Shareholders' equity 313,594 316,558 306,211 $528,170 $476,950 $499,159
SOURCE Movado Group, Inc.
CONTACT: Investor Relations - Suzanne Michalek, Director of Corporate Communications of Movado Group, +1-201-267-8000;
or Melissa Myron or Rachel Albert, both of Financial Dynamics, +1-212-850-5600, for Movado Group