Movado Group, Inc. Reports Strong Fourth Quarter and Fiscal 2005 Results
PARAMUS, N.J., March 23, 2005 /PRNewswire-FirstCall via COMTEX/ -- Movado Group, Inc. (NYSE: MOV), today announced results for the fourth quarter and fiscal year ended January 31, 2005.
Fourth Quarter Fiscal 2005 * Net sales for the quarter were $120.0 million, a 29.4% increase over last year. The acquisition of Ebel accounted for net sales of $17.3 million. * Comparable store sales at the Company's Movado boutiques increased 2.9% on top of a 15.1% gain in the year-ago period. * Gross margin was 59.7% compared to 59.6% last year. * Operating profit was $8.6 million and includes a $2.0 million non-cash impairment charge related to the Movado boutique in Soho in New York City, which the Company continues to operate. The Company determined that this charge was necessary as this location's performance never fully recovered from the economic impact of September 11, 2001. * The Company recorded a lower than anticipated tax rate of 5.4% in the fourth quarter due to non-recurring favorable tax benefits including a retroactive favorable tax ruling and the tax benefit associated with the previously mentioned impairment charge. * Net income increased 16.4% to $7.2 million compared to $6.2 million last year. * Earnings per diluted share increased to $0.28, or a 16.7% increase from $0.24 reported in the year-ago period. Fourth quarter earnings included a gain of $0.05 related to the aforementioned tax benefits and a loss of $0.05 related to the previously cited impairment charge. Ebel was slightly accretive to earnings during the quarter. Fiscal 2005 Results * Net sales increased 26.9% to $419.0 million versus net sales of $330.2 million last year. The acquisition of Ebel accounted for net sales of $45.4 million. * Comparable store sales increased 11.2% at the Company's Movado boutiques on top of a 20.1% gain recorded last year. * Gross margin was 59.7% compared to 60.7% last year. * Operating profit increased to $35.1 million and includes the previously mentioned $2.0 million impairment charge recorded in the fourth quarter of fiscal 2005. * The Company recorded a lower than anticipated tax rate of 20.5% reflecting non-recurring favorable tax benefits including a retroactive favorable tax ruling and the benefit associated with the previously cited impairment charge recognized in the fourth quarter of fiscal 2005. * Net income increased 15.1% to $26.3 million compared to $22.9 million last year. * Earnings per diluted share increased 12.0% to $1.03 from $0.92 last year. Earnings results included a $0.03 gain associated with a favorable legal settlement recorded in the second quarter of fiscal 2005. Full year earnings also included a gain of $0.05 related to the aforementioned tax benefits and a loss of $0.05 related to the previously cited impairment charge, both recognized in the fourth quarter. Ebel was dilutive to full year earnings by $0.11 per share.
Efraim Grinberg, President and Chief Executive Officer, stated, "Fiscal 2005 was an exciting year for Movado Group with significant accomplishments delivered across our organization. From a financial standpoint, we reported an excellent year with double digit growth in sales and profits, along with strong cash flow generation. Operationally, we integrated Ebel's worldwide business into Movado Group and began revitalizing its image as a premier global luxury brand, while keeping a steady focus on the disciplined execution of our base business. Strategically, we strengthened our brands' awareness and positioning in each segment of the market that we compete. Specifically, we continue to increase Movado's market share, strengthen Concord's international presence, grow our Coach and Tommy Hilfiger licensed businesses, and successfully reposition ESQ in the entry level Swiss watch category. We also enhanced our portfolio with the addition of the Hugo Boss watch license."
Rick Cote, Executive Vice President and Chief Operating Officer, stated, "Building on our strong momentum, in fiscal 2006 we will continue to strengthen our brands with innovative new products and strong marketing support across our portfolio. On the international front, we have identified key target growth markets for each of our brands as we look to expand our portfolio globally. This year, we will prudently invest across our brands and businesses, both domestically and internationally, to take advantage of these opportunities."
Movado Group currently anticipates fiscal 2006 earnings per share to range between $1.15 and $1.21 including an approximate $0.07 per diluted share expense related to the Company's equity compensation, which consists of both stock options and restricted stock. The Company plans to adopt SFAS 123R ("Accounting for Share-Based Payment") in the third quarter of fiscal 2006.
The Company's management will host a conference call today, March 23, 2005 at 10:00 a.m. Eastern Time to discuss its fourth quarter and year-end financial results. 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 Twelve Months Ended January 31, January 31, 2005 2004 2005 2004 Net sales $119,968 $92,732 $418,966 $330,214 Cost of sales 48,324 37,444 168,818 129,908 Gross profit 71,644 55,288 250,148 200,306 Selling, general and administrative expenses 63,007 46,047 215,072 165,525 Operating profit 8,637 9,241 35,076 34,781 Income from litigation settlement, net -- -- 1,444 -- Interest expense 1,050 672 3,430 3,044 Income before income taxes 7,587 8,569 33,090 31,737 Income tax 407 2,399 6,783 8,886 Net income $7,180 $6,170 $26,307 $22,851 Net income per diluted share $0.28 $0.24 $1.03 $0.92 Shares used in per share computation 25,828 25,364 25,583 24,877 MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (Unaudited) January 31, January 31, 2005 2004 ASSETS Cash and cash equivalents $63,782 $82,083 Trade receivables, net 102,622 88,800 Inventories 187,890 121,678 Other 32,239 28,378 Total current assets 386,533 320,939 Property, plant and equipment, net 50,283 42,112 Other assets 38,884 28,362 $475,700 $391,413 LIABILITIES AND SHAREHOLDERS' EQUITY Loans payable to banks $0 $0 Current portion of long-term debt 0 10,000 Accounts payable 38,488 23,631 Accrued liabilities 39,618 25,781 Deferred and current taxes payable 3,916 18,111 Total current liabilities 82,022 77,523 Long-term debt 45,000 25,000 Deferred and non-current income taxes 14,911 2,282 Other liabilities 17,209 11,895 Shareholders' equity 316,558 274,713 $475,700 $391,413
SOURCE Movado Group, Inc.
Rick Cote, Executive Vice President and Chief Operating Officer, or Investors: Suzanne Michalek, Director of Corporate Communications, both of Movado Group, Inc., +1-201-267-8000; or Rachel Albert of Financial Dynamics, +1-212-850-5600