Movado Group, Inc. Reports Strong Third Quarter Results
- Company Delivers Double Digit Sales & Profit Growth in Q3 and YTD Period -
PARAMUS, N.J., Dec. 8 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced third quarter results for the period ended October 31, 2004. These results include the Ebel business, which was acquired on March 1, 2004. All share data has been adjusted to reflect a two-for-one stock split distributed to shareholders on June 25, 2004.
Third Quarter Fiscal 2005
* Net sales increased 26.1% to $127.0 million from $100.8 million last
year. The acquisition of Ebel accounted for net sales of
$15.7 million.
* Comparable store sales increased 12.8% at the Company's Movado
boutiques.
* Gross margin remained strong at 60.7% this year compared to 60.9%
last year.
* Operating profit was $16.0 million versus $14.8 million in the year-ago
period
* Net income increased 12.5% to $11.3 million, or $0.44 per diluted
share, compared to net income of $10.1 million, or $0.40 per diluted
share, in the prior year period. Third quarter net income includes the
slightly dilutive impact of Ebel of $0.1 million, or less than $0.01
per diluted share.
Nine-Month Results
* Net sales increased 25.9% to $299.0 million from $237.5 million last
year. The acquisition of Ebel accounted for net sales of
$28.6 million.
* Comparable store sales increased 16.7% at the Company's Movado
boutiques.
* Gross margin was 59.7% compared to 61.1%.
* Operating profit was $26.4 million versus $25.5 million in the year-ago
period.
* Net income rose 14.7% to $19.1 million, or $0.75 per diluted share,
compared to net income of $16.7 million, or $0.67 per diluted share, in
the prior year period. Net income for the nine-month period includes
the dilutive impact of Ebel, which was partially offset by a legal
settlement gain recorded in the second quarter of fiscal 2005. The
combined effect of these two items reduced net income in the nine-month
period by approximately, $2.4 million, or $0.09 per diluted share.
Efraim Grinberg, President and Chief Executive Officer, commented, "Our company delivered a strong performance in the third quarter with year-over-year sales increases recorded in each of our brands and businesses. The results were driven by the steadfast execution of our strategy to develop and support our distinctive portfolio of brands through strong product development, compelling advertising campaigns, and consistent marketing support. We are also very pleased with the performance of our Movado boutiques, demonstrating consumers continued appreciation and desire for luxury jewelry and accessories with signature Movado styling."
Rick Cote, Executive Vice President and Chief Operating Officer, stated, "In our seasonally strongest quarter, we are very pleased that Ebel delivered an attractive sales level driven by the recently launched global advertising campaign featuring Claudia Schiffer and certain new product introductions such as the Sportwave. We expect this momentum to continue as we enhance and accelerate new product introductions beginning next year. Given the restructuring actions taken to-date, we are pleased that Ebel neared the breakeven mark to the bottom line in the third quarter. The appropriate cost structure is in place and we anticipate this business will be modestly accretive to the bottom line next year, with the potential for significant operating leverage in the future."
Mr. Grinberg concluded, "We believe our company is well positioned for the important holiday season. Our market presence is strong with significant merchandising and marketing initiatives in place to support our diverse brand portfolio and drive sales. At the same time, we remain focused on our business fundamentals and operating disciplines to further enhance our bottom line results."
The Company projects diluted earnings per share for the fiscal year ending January 31, 2005 to range between $0.98 and $1.02, compared to management's previously issued financial projections for full year earnings per share to range between $0.96 and $1.00. These projections include the anticipated dilutive impact of Ebel and a legal settlement gain recorded in the second quarter of fiscal 2005.
The Company's management will host a conference call today, December 8th 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 and Tommy Hilfiger 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 Nine Months Ended
October 31, October 31,
2004 2003 2004 2003
Net sales $127,023 $100,767 $298,998 $237,482
Cost of sales 49,882 39,428 120,494 92,464
Gross profit 77,141 61,339 178,504 145,018
Selling, general and
administrative expenses 61,157 46,584 152,065 119,478
Operating profit 15,984 14,755 26,439 25,540
Interest expense 872 764 2,380 2,372
Income before litigation
settlement 15,112 13,991 24,059 23,168
Litigation settlement - - 1,444 -
Income before taxes 15,112 13,991 25,503 23,168
Income tax 3,778 3,917 6,376 6,487
Net income $11,334 $10,074 $19,127 16,681
Net income per diluted share $0.44 $0.40 $0.75 $0.67
Shares used in per share
computation 25,621 25,257 25,497 25,007
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
October January October
31, 31, 31,
2004 2004 2003
ASSETS
Cash and cash equivalents $35,870 $82,083 $60,957
Trade receivables, net 137,861 88,800 120,706
Inventories 192,811 121,678 123,074
Other 40,359 26,693 20,341
Total current assets 406,901 319,254 325,078
Property, plant and equipment, net 50,105 42,112 40,744
Other assets 41,641 29,601 29,052
$498,647 $390,967 $394,874
LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $16,300 $0 $22,000
Current portion of long-term debt 5,000 10,000 5,000
Accounts payable 41,928 23,631 22,115
Accrued liabilities 47,180 25,781 31,084
Deferred and current taxes payable 20,911 18,111 17,868
Total current liabilities 131,319 77,523 98,067
Long-term debt 45,000 25,000 30,000
Deferred and non-current income taxes 3,291 2,282 2,406
Other liabilities 12,826 11,449 10,518
Shareholders' equity 306,211 274,713 253,883
$498,647 $390,967 $394,874
SOURCE Movado Group, Inc. -0- 12/08/2004 /CONTACT: Rick Cote, Executive Vice President and Chief Operating Officer, or Investor Relations, Suzanne Michalek, Director of Corporate Communications, both of Movado Group, Inc., +1-201-267-8000; or Melissa Myron of Financial Dynamics, +1-212-850-5600, for Movado Group, Inc./ /Web site: http://www.movadogroupinc.com / (MOV)