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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Movado Group Inc | NYSE:MOV | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.16 | 0.63% | 25.76 | 26.005 | 25.72 | 25.82 | 3,316 | 15:24:14 |
~ Second Quarter Net Sales of $88.5 million ~
~ Second Quarter Loss Per Share of ($0.28), or ($0.07) Excluding Restructuring Plan and Other Items ~
~ Ends Second Quarter with Cash of $170 million ~
~ Announces Licensing Partnership with Calvin Klein ~
Movado Group, Inc. (NYSE: MOV) today announced second quarter and six-month results for the period ended July 31, 2020.
Efraim Grinberg, Chairman and Chief Executive Officer, stated, “We remain focused on ensuring the safety and health of our employees, customers and the communities where we operate. In a quarter that was significantly impacted globally by the COVID-19 pandemic, I am proud of our team’s ability to build on our multi-year investments in our digital center of excellence and adapt to support our ongoing mission to put consumers first, allowing them to connect with our great brands, designs and platforms wherever and whenever they choose to shop. These efforts allowed us to capture strong online demand where our Movado brand generated a 130% increase in our own and third party ecommerce sales. In North America, we reopened our outlet stores in June and were encouraged by the improved sequential performance in July, despite reduced stores hours. We are also seeing encouraging demand in our domestic department store channel. In China, we had a 16% increase in sales for the quarter with trends continuing to accelerate and we had positive top line growth in France and Germany, despite our customers being closed for nearly half of the quarter.”
Mr. Grinberg continued, “The aggressive actions we took at the height of the pandemic have positioned us well to continue to navigate the current environment. We have implemented initiatives that are expected to generate $90 million in cost savings in this fiscal year and have strengthened our financial health as evidenced by our cash balance of $170 million after repaying $37 million on our revolver at quarter end. As we look to the remainder of the year, we continue to expect improving sales trends in the second half relative to the first half with improved profitability and we will continue to be disciplined and agile in managing the business given the continued uncertainty. The actions we have taken, combined with our strong liquidity, enable us to leverage our powerful portfolio of brands which will be further strengthened by the exciting new licensing partnership announced today to design and develop Calvin Klein timepieces and jewelry. As a result, we have confidence that we will emerge from this extraordinary period a stronger company that is even better positioned to deliver long-term shareholder value.”
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Second quarter fiscal 2021 results of operations included the following items:
Second quarter Fiscal 2020 results of operations included the following items:
Second Quarter Fiscal 2021 (See attached table for GAAP and Non-GAAP measures)
First Half Fiscal 2021 (See attached table for GAAP and Non-GAAP measures)
Fiscal 2021 Outlook
Given the dynamic nature of the COVID-19 crisis and lack of visibility, the potential financial impact to the business cannot be reasonably estimated. The Company is not providing fiscal 2021 guidance.
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today, August 27, 2020 at 9:00 a.m. Eastern Time. The conference call may be accessed by dialing (877) 407-0784. Additionally, a live webcast of the call can be accessed at www.movadogroup.com. The webcast will be archived on the Company’s website approximately one hour after the conclusion of the call. Additionally, a telephonic re-play of the call will be available at 12:00 p.m. ET on August 27, 2020 until 11:59 p.m. ET on September 10, 2020 and can be accessed by dialing (844) 512-2921 and entering replay pin number 13708469.
Movado Group, Inc. designs, sources, and distributes MOVADO®, MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, COACH®, TOMMY HILFIGER®, HUGO BOSS®, LACOSTE®, SCUDERIA FERRARI®, REBECCA MINKOFF® and URI MINKOFF® watches worldwide, and operates Movado company stores in the United States and Canada.
In this release, the Company presents certain financial measures that are not calculated according to generally accepted accounting principles in the United States (“GAAP”). Specifically, the Company is presenting adjusted gross profit, adjusted gross margin, adjusted operating expenses and adjusted operating income, which are gross profit, gross margin, operating expenses and operating income, respectively, under GAAP, adjusted to eliminate the amortization of acquisition accounting adjustments related to the Olivia Burton and MVMT acquisitions, corporate initiatives and the impairment of goodwill and certain intangible assets. The Company is also presenting adjusted tax provision, which is the tax provision under GAAP, adjusted to eliminate the impact of charges for the Olivia Burton and MVMT acquisitions, corporate initiatives, the impairment of goodwill and certain intangible assets and the gain on sale of a non-operating asset. The Company believes these adjusted measures are useful because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. The Company is also presenting adjusted net income, adjusted earnings per share and adjusted effective tax rate, which are net income, earnings per share and effective tax rate, respectively, under GAAP, adjusted to eliminate the after-tax impact of amortization of acquisition accounting adjustments related to the Olivia Burton and MVMT acquisitions, corporate initiatives, the impairment of goodwill and certain intangibles and the gain on sale of a non-operating asset. The Company believes that adjusted net income, adjusted earnings per share and adjusted effective tax rate are useful measures of performance because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. Additionally, the Company is presenting constant currency information to provide a framework to assess how its business performed excluding the effects of foreign currency exchange rate fluctuations in the current period. Comparisons of financial results on a constant dollar basis are calculated by translating each foreign currency at the same US dollar exchange rate as in effect for the prior-year period for both periods being compared. The Company believes this information is useful to investors to facilitate comparisons of operating results. These non-GAAP financial measures are designed to complement the GAAP financial information presented in this release. The non-GAAP financial measures presented should not be considered in isolation from or as a substitute for the comparable GAAP financial measures, and the methods of their calculation may differ substantially from similarly titled measures used by other companies.
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 the United States and the other significant markets (including Europe) where the Company’s products are sold, uncertainty regarding such economic and business conditions, trends in consumer debt levels and bad debt write-offs, general uncertainty related to possible terrorist attacks, natural disasters, pandemics, including the effect of the COVID-19 pandemic and other diseases on travel and traffic in our retail stores and the stores of our wholesale customers, supply disruptions and delivery delays from our Chinese and other suppliers as a result of the COVID-19 pandemic, adverse impact on the Company’s wholesale customers and customer traffic in the Company’s stores as a result of increased uncertainty and economic disruption caused by the COVID-19 pandemic, the stability of the European Union (including the impact of the United Kingdom’s process to exit from the European Union), the stability of the United Kingdom after its exit from the European Union, and defaults on or downgrades of sovereign debt and the impact of any of those events on consumer spending, changes in consumer preferences and popularity of particular designs, new product development and introduction, decrease in mall traffic and increase in e-commerce, the ability of the Company to successfully implement its business strategies, competitive products and pricing, the impact of “smart” watches and other wearable tech products on the traditional watch market, seasonality, availability of alternative sources of supply in the case of the loss of any significant supplier or any supplier’s inability to fulfill the Company’s orders, the loss of or curtailed sales to significant customers, the Company’s dependence on key employees and officers, the ability to successfully integrate the operations of acquired businesses without disruption to other business activities, the possible impairment of acquired intangible assets including goodwill if the carrying value of any reporting unit were to exceed its fair value, volatility in reported earnings resulting from changes in the estimated fair value of contingent acquisition consideration, the continuation of the company’s major warehouse and distribution centers, the continuation of licensing arrangements with third parties, losses possible from pending or future litigation, the ability to secure and protect trademarks, patents and other intellectual property rights, the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis, the ability of the Company to successfully manage its expenses on a continuing basis, information systems failure or breaches of network security, the continued availability to the Company of financing and credit on favorable terms, business disruptions, and general risks associated with doing business outside the United States including, without limitation, import duties, tariffs (including retaliatory tariffs), quotas, political and economic stability, changes to existing laws or regulations, and success of hedging strategies with respect to currency exchange rate fluctuations, 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. The Company assumes no duty to update its forward looking statements and this release shall not be construed to indicate the assumption by the Company of any duty to update its outlook in the future.
(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,
2020
2019
2020
2019
Net sales
$
88,538
$
157,816
$
158,204
$
304,365
Cost of sales
43,182
72,477
80,955
140,153
Gross profit
45,356
85,339
77,249
164,212
Operating expenses
54,272
76,563
112,409
150,462
Impairment of goodwill and intangible assets
-
-
155,919
-
Total operating expenses
54,272
76,563
268,328
150,462
Operating (loss)/income
(8,916
)
8,776
(191,079
)
13,750
Non-operating (expense)/income: Gain on sale of a non-operating asset
1,317
-
1,317
-
Change in contingent consideration
-
13,627
-
13,627
Interest expense
(590
)
(225
)
(861
)
(449
)
Interest income
8
24
23
45
(Loss)/Income before income taxes
(8,181
)
22,202
(190,600
)
26,973
(Benefit)/Provision for income taxes
(1,559
)
4,741
(33,889
)
5,588
Net (loss)/income
(6,622
)
17,461
(156,711
)
21,385
Less: Net loss attributable to noncontrolling interests
(7
)
(44
)
(103
)
(45
)
Net (loss)/income attributable to Movado Group, Inc.$
(6,615
)
$
17,505
$
(156,608
)
$
21,430
Diluted Income Per Share Information Net (loss)/income attributable to Movado Group, Inc.
$
(0.28
)
$
0.75
$
(6.75
)
$
0.92
Weighted diluted average shares outstanding
23,240
23,292
23,191
23,370
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In thousands, except for percentage data) (Unaudited)
As Reported
Three Months Ended
July 31,
% Change
2020
2019
Total net sales, as reported
$
88,538
$
157,816
-43.9
%
Total net sales, constant dollar basis$
88,461
$
157,816
-43.9
%
As Reported
Six Months Ended
July 31,
% Change
2020
2019
Total net sales, as reported$
158,204
$
304,365
-48.0
%
Total net sales, constant dollar basis$
158,813
$
304,365
-47.8
%
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In thousands, except per share data) (Unaudited)Net Sales
Gross Profit
Operating (Loss)/Income
Pre-tax (Loss)/Income
(Benefit)/Provision for Income Taxes
Net (Loss)/Income Attributable to Movado Group, Inc.
Diluted EPS
Three Months Ended July 31, 2020 As Reported (GAAP)$
88,538
$
45,356
$
(8,916
)
$
(8,181
)
$
(1,559
)
$
(6,615
)
$
(0.28
)
Olivia Burton Costs (1)
-
-
671
671
139
532
$
0.02
MVMT Costs (2)
-
-
284
284
108
176
$
0.01
Gain On Sale of a Non-Operating Asset (3)
-
-
-
(1,317
)
(474
)
(843
)
$
(0.04
)
Corporate Initiatives (4)
-
-
7,368
7,368
2,353
5,015
$
0.22
Adjusted Results (Non-GAAP)
$
88,538
$
45,356
$
(593
)
$
(1,175
)
$
567
$
(1,735
)
$
(0.07
)
Three Months Ended July 31, 2019 As Reported (GAAP)$
157,816
$
85,339
$
8,776
$
22,202
$
4,741
$
17,505
$
0.75
Olivia Burton Costs (1)
-
-
690
690
131
559
0.02
MVMT Costs (2)
-
-
1,125
1,125
270
855
0.04
Change In Contingent Consideration (5)
-
-
-
(13,627
)
(3,270
)
(10,357
)
(0.44
)
Cost Savings Initiatives (6)
-
-
(320
)
(320
)
(77
)
(243
)
(0.01
)
Adjusted Results (Non-GAAP)$
157,816
$
85,339
$
10,271
$
10,070
$
1,795
$
8,319
$
0.36
Net Sales Gross Profit Operating(Loss)/Income Pre-tax(Loss)/Income (Benefit)/Provisionfor Income Taxes Net(Loss)/IncomeAttributable toMovado Group,Inc. Diluted EPS Six Months Ended July 31, 2020 As Reported (GAAP)
$
158,204
$
77,249
$
(191,079
)
$
(190,600
)
$
(33,889
)
$
(156,608
)
$
(6.75
)
Olivia Burton Costs (1)
-
-
1,356
1,356
258
1,098
$
0.05
MVMT Costs (2)
-
-
981
981
373
608
$
0.03
Goodwill and Intangible Asset Impairment (7)
-
-
155,919
155,919
24,867
131,052
$
5.65
Gain On Sale of a Non-Operating Asset (3)
-
-
-
(1,317
)
(474
)
(843
)
$
(0.04
)
Corporate Initiatives (4)
-
3,508
14,608
14,608
4,592
10,016
$
0.43
Adjusted Results (Non-GAAP)
$
158,204
$
80,757
$
(18,215
)
$
(19,053
)
$
(4,273
)
$
(14,677
)
$
(0.63
)
Six Months Ended July 31, 2019 As Reported (GAAP)$
304,365
$
164,212
$
13,750
$
26,973
$
5,588
$
21,430
$
0.92
Olivia Burton Costs (1)
-
-
1,402
1,402
266
1,136
0.05
MVMT Costs (2)
-
140
2,598
2,598
624
1,974
0.08
Change In Contingent Consideration (5)
-
-
-
(13,627
)
(3,270
)
(10,357
)
(0.44
)
Cost Savings Initiatives (6)
-
-
(320
)
(320
)
(77
)
(243
)
(0.01
)
Adjusted Results (Non-GAAP)$
304,365
$
164,352
$
17,430
$
17,026
$
3,131
$
13,940
$
0.60
(1)
Related to the amortization of acquired intangible assets for Olivia Burton.(2)
Related to the amortization of acquired intangible assets, accounting adjustments and deferred compensation of MVMT, where applicable.(3)
Related to a gain on sale of a non-operating asset in Switzerland.(4)
Related to provision established associated with corporate initiatives, including restructuring plan.(5)
Remeasurement of contingent consideration liability.(6)
Change in estimate in Fiscal 2020 for severance and occupancy expenses.(7)
Related to the impairment of goodwill for MVMT, Olivia Burton and City Time and impairment of certain of MVMT's intangible assets. MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)July 31,
January 31,
July 31,
2020
2020
2019
ASSETS Cash and cash equivalents$
170,195
$
185,872
$
134,890
Trade receivables, net
60,128
78,388
93,699
Inventories
173,374
171,406
200,953
Other current assets
29,856
28,888
32,113
Total current assets
433,553
464,554
461,655
Property, plant and equipment, net
25,888
29,238
28,248
Operating lease right-of-use assets
82,169
89,523
91,119
Deferred and non-current income taxes
59,747
25,403
24,621
Goodwill
-
136,366
131,936
Other intangibles, net
18,071
42,359
43,995
Other non-current assets
60,261
59,865
59,057
Total assets$
679,689
$
847,308
$
840,631
LIABILITIES AND EQUITY Accounts payable$
29,929
$
35,488
$
50,281
Accrued liabilities
45,509
44,210
43,874
Accrued payroll and benefits
12,431
6,302
7,333
Current operating lease liabilities
14,766
15,083
14,609
Income taxes payable
6,774
8,217
10,800
Total current liabilities
109,409
109,300
126,897
Loans payable to bank, non current
48,341
51,910
50,300
Deferred and non-current income taxes payable
20,743
25,419
26,593
Non-current operating lease liabilities
75,376
81,877
82,972
Other non-current liabilities
48,124
48,393
50,025
Redeemable noncontrolling interest
3,037
3,165
3,540
Shareholders' equity
373,671
526,537
500,304
Noncontrolling interest
988
707
-
Total equity
374,659
527,244
500,304
Total liabilities, redeemable noncontrolling interest and equity$
679,689
$
847,308
$
840,631
MOVADO GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)Six Months Ended
July 31,
2020
2019
Cash flows from operating activities: Net (loss)/income
$
(156,608
)
$
21,430
Impairment of goodwill and intangible assets
155,919
-
Non-cash corporate initiatives
6,608
-
Change in contingent consideration
-
(13,627
)
Depreciation and amortization
7,200
7,937
Other non-cash adjustments
(33,833
)
2,289
Changes in working capital
9,630
(50,401
)
Changes in non-current assets and liabilities
(292
)
(222
)
Net cash used in operating activities
(11,376
)
(32,594
)
Cash flows from investing activities: Capital expenditures
(1,891
)
(6,948
)
Proceeds from sale of a non-operating asset
1,317
-
Tradenames and other intangibles
(51
)
(99
)
Net cash used in investing activities
(625
)
(7,047
)
Cash flows from financing activities: Repayments of bank borrowings
(36,772
)
-
Proceeds from bank borrowings
30,879
-
Dividends paid
-
(9,196
)
Stock repurchase
-
(4,199
)
Stock awards and options exercised and other changes
(474
)
(1,234
)
Debt issuance costs
(300
)
-
Net cash used in financing activities
(6,667
)
(14,629
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
3,022
(751
)
Net change in cash, cash equivalents, and restricted cash
(15,646
)
(55,021
)
Cash, cash equivalents, and restricted cash at beginning of period
186,438
190,459
Cash, cash equivalents, and restricted cash at end of period
$
170,792
$
135,438
Reconciliation of cash, cash equivalents, and restricted cash: Cash and cash equivalents
$
170,195
$
134,890
Restricted cash included in other non-current assets
597
548
Cash, cash equivalents, and restricted cash
$
170,792
$
135,438
View source version on businesswire.com: https://www.businesswire.com/news/home/20200827005233/en/
ICR, Inc. Rachel Schacter/Allison Malkin 203-682-8200
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