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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 | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 25.60 | 0 | 09:00:00 |
~ Third Quarter Net Sales of $169.9 million ~
~ Operating Income of $23.1 million and Adjusted Operating Income of $25.1 million ~
~ Third Quarter Earnings Per Share of $0.63, or Adjusted Earnings Per Share of $0.70 ~
~ Ends Third Quarter with Cash of $163.2 million on Lower Debt ~
Movado Group, Inc. (NYSE: MOV) today announced third quarter and nine month results for the period ended October 31, 2020.
Efraim Grinberg, Chairman and Chief Executive Officer, stated, “Our third quarter results were ahead of our expectations and included strength across key operating metrics, including a sequential improvement in sales, expansion in gross margin; and operating expenses below the prior year, which combined led to adjusted operating income above last year. We are encouraged by the strengthening in demand for our products and brands despite the global environment. The quarter saw strong sales in Europe, a key market for our brands, and across our ecommerce sites, with Movado brand ecommerce sales increasing 159% on our own and our partners’ digital platforms. Looking to the fourth quarter, while there remains uncertainty around the duration and trajectory of the COVID resurgence, we are confident that our powerful portfolio of brands combined with a continued focus on innovation and support of our marketing campaigns, position us well for the all-important holiday season.”
Mr. Grinberg continued, “Our strong balance sheet is a testament to the disciplined execution in operating our business by our teams around the world. We tightly managed operating expenses and inventories, and ended the third quarter with $163.2 million in cash and lower debt. Importantly, we believe that the operational and financial actions that we’ve taken will enable us to emerge even stronger and well positioned to deliver long-term, sustainable growth.”
Fiscal Third Quarter Highlights (See attached table for GAAP and Non-GAAP measures)
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Third quarter fiscal 2021 included the following charges:
Third quarter fiscal 2020 included the following charges:
Third Quarter Fiscal 2021 (See attached table for GAAP and Non-GAAP measures)
Nine Month Results 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 Company is not providing fiscal 2021 outlook.
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today, November 24th 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 November 24, 2020 until 11:59 p.m. ET on December 8, 2020 and can be accessed by dialing (844) 512-2921 and entering replay pin number 13713033.
Movado Group, Inc. designs, sources, and globally distributes MOVADO®, MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, COACH®, TOMMY HILFIGER®, HUGO BOSS®, LACOSTE®, SCUDERIA FERRARI®, REBECCA MINKOFF® and URI MINKOFF® watches, and for certain of these brands jewelry and other accessories, 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 the Company’s retail stores and the stores of its wholesale customers, supply disruptions and delivery delays from the Company’s 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, uncertainty relating to the availability of vaccines and treatments for COVID-19, the impact of the United Kingdom’s process to exit from the European Union, 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 Nine Months Ended October 31, October 31,2020
2019
2020
2019
Net sales$ 169,863
$ 205,618
$ 328,067
$ 509,983
Cost of sales77,410
95,549
158,365
235,702
Gross profit92,453
110,069
169,702
274,281
Operating expenses69,386
87,431
181,795
237,893
Impairment of goodwill and intangible assets-
-
155,919
-
Total operating expenses69,386
87,431
337,714
237,893
Operating income/(loss)23,067
22,638
(168,012)
36,388
Non-operating (expense)/income: Gain on sale of a non-operating asset-
-
1,317
-
Change in contingent consideration-
-
-
13,627
Interest expense(608)
(240)
(1,469)
(689)
Interest income8
18
31
63
Income/(Loss) before income taxes22,467
22,416
(168,133)
49,389
Provision/(Benefit) for income taxes7,524
4,955
(26,365)
10,543
Net income/(loss)14,943
17,461
(141,768)
38,846
Less: Net income/(loss) attributable to noncontrolling interests118
(304)
15
(349)
Net income/(loss) attributable to Movado Group, Inc.$ 14,825
$ 17,765
$ (141,783)
$ 39,195
Diluted Income Per Share Information Net income/(loss) attributable to Movado Group, Inc.$ 0.63
$ 0.76
$ (6.11)
$ 1.68
Weighted diluted average shares outstanding23,375
23,250
23,223
23,322
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In thousands, except for percentage data) (Unaudited) As Reported Three Months Ended October 31, % Change2020
2019
Total net sales, as reported$ 169,863
$ 205,618
-17.4%
Total net sales, constant dollar basis$ 165,639
$ 205,618
-19.4%
As Reported Nine Months Ended October 31, % Change2020
2019
Total net sales, as reported$ 328,067
$ 509,983
-35.7%
Total net sales, constant dollar basis$ 324,452
$ 509,983
-36.4%
MOVADO GROUP, INC. GAAP AND NON-GAAP MEASURES (In thousands, except per share data) (Unaudited) Net Sales Gross Profit OperatingIncome/(Loss) Pre-taxIncome/(Loss) Provision/(Benefit)for Income Taxes NetIncome/(Loss)Attributable toMovado Group, Inc. Diluted EPS Three Months Ended October 31, 2020 As Reported (GAAP)$
169,863
$
92,453
$
23,067
$
22,467
$
7,524
$
14,825
$
0.63
Olivia Burton Costs (1)
-
-
677
677
128
549
$
0.02
MVMT Costs (2)
-
-
555
555
211
344
$
0.02
Corporate Initiatives (3)
-
43
781
781
143
638
$
0.03
Adjusted Results (Non-GAAP)$
169,863
$
92,496
$
25,080
$
24,480
$
8,006
$
16,356
$
0.70
Three Months Ended October 31, 2019 As Reported (GAAP)$
205,618
$
110,069
$
22,638
$
22,416
$
4,955
$
17,765
$
0.76
Olivia Burton Costs (1)
-
-
676
676
128
548
0.03
MVMT Costs (2)
-
-
936
936
225
711
0.03
Adjusted Results (Non-GAAP)$
205,618
$
110,069
$
24,250
$
24,028
$
5,308
$
19,024
$
0.82
Net Sales Gross Profit Operating(Loss)/Income Pre-tax(Loss)/Income (Benefit)/Provisionfor Income Taxes Net(Loss)/IncomeAttributable toMovado Group, Inc. Diluted EPS Nine Months Ended October 31, 2020 As Reported (GAAP)$
328,067
$
169,702
$
(168,012)
$
(168,133)
$
(26,365)
$
(141,783)
$
(6.11)
Olivia Burton Costs (1)
-
-
2,033
2,033
386
1,647
$
0.07
MVMT Costs (2)
-
-
1,536
1,536
584
952
$
0.04
Corporate Initiatives (3)
-
3,551
15,389
15,389
4,735
10,654
$
0.46
Goodwill and Intangible Asset Impairment (4)
-
-
155,919
155,919
24,867
131,052
$
5.64
Gain On Sale of a Non-Operating Asset (5)
-
-
-
(1,317)
(474)
(843)
$
(0.03)
Adjusted Results (Non-GAAP)$
328,067
$
173,253
$
6,865
$
5,427
$
3,733
$
1,679
$
0.07
Nine Months Ended October 31, 2019 As Reported (GAAP)$
509,983
$
274,281
$
36,388
$
49,389
$
10,543
$
39,195
$
1.68
Olivia Burton Costs (1)
-
-
2,078
2,078
395
1,683
0.07
MVMT Costs (2)
-
140
3,534
3,534
848
2,686
0.11
Change In Contingent Consideration (6)
-
-
-
(13,627)
(3,270)
(10,357)
(0.44)
Cost Savings Initiatives (7)
-
-
(320)
(320)
(77)
(243)
(0.01)
Adjusted Results (Non-GAAP)$
509,983
$
274,421
$
41,680
$
41,054
$
8,439
$
32,964
$
1.41
(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 provision established associated with corporate initiatives, including restructuring plan.(4)
Related to the impairment of goodwill for MVMT, Olivia Burton and City Time and impairment of certain of MVMT's intangible assets.(5)
Related to a gain on sale of a non-operating asset in Switzerland.(6)
Remeasurement of contingent consideration liability.(7)
Change in estimate in Fiscal 2020 for severance and occupancy expenses. MOVADO GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) October 31, January 31, October 31,2020
2020
2019
ASSETS Cash and cash equivalents$ 163,218
$ 185,872
$ 116,025
Trade receivables, net103,506
78,388
136,272
Inventories176,841
171,406
201,164
Other current assets28,028
28,888
30,737
Total current assets471,593
464,554
484,198
Property, plant and equipment, net24,002
29,238
29,275
Operating lease right-of-use assets77,932
89,523
88,126
Deferred and non-current income taxes54,748
25,403
28,191
Goodwill-
136,366
135,280
Other intangibles, net17,123
42,359
43,532
Other non-current assets56,380
59,865
58,453
Total assets$ 701,778
$ 847,308
$ 867,055
LIABILITIES AND EQUITY Accounts payable$ 35,562
$ 35,488
$ 33,757
Accrued liabilities59,612
44,210
62,499
Accrued payroll and benefits12,693
6,302
9,353
Current operating lease liabilities14,210
15,083
14,579
Income taxes payable11,275
8,217
17,243
Total current liabilities133,352
109,300
137,431
Loans payable to bank, non current37,266
51,910
50,685
Deferred and non-current income taxes payable20,893
25,419
26,370
Non-current operating lease liabilities71,658
81,877
80,682
Other non-current liabilities45,179
48,393
47,943
Redeemable noncontrolling interest2,772
3,165
3,263
Shareholders' equity389,345
526,537
520,681
Noncontrolling interest1,313
707
-
Total equity390,658
527,244
520,681
Total liabilities, redeemable noncontrolling interest and equity$ 701,778
$ 847,308
$ 867,055
MOVADO GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)Nine Months Ended
October 31,
2020
2019
Cash flows from operating activities: Net (loss)/income$ (141,783)
$ 39,195
Impairment of goodwill and intangible assets155,919
-
Non-cash corporate initiatives6,685
-
Change in contingent consideration-
(13,627)
Depreciation and amortization10,546
11,888
Other non-cash adjustments(26,402)
696
Changes in working capital(12,120)
(81,015)
Changes in non-current assets and liabilities449
(1,707)
Net cash used in operating activities(6,706)
(44,570)
Cash flows from investing activities: Capital expenditures(2,428)
(10,023)
Proceeds from sale of a non-operating asset1,317
-
Proceeds from sale of an asset held for sale-
242
Tradenames and other intangibles(118)
(194)
Net cash used in investing activities(1,229)
(9,975)
Cash flows from financing activities: Repayments of bank borrowings(47,699)
-
Proceeds from bank borrowings30,879
-
Dividends paid-
(13,796)
Stock repurchase-
(4,199)
Stock awards and options exercised and other changes(497)
(1,249)
Debt issuance costs(300)
-
Net cash used in financing activities(17,617)
(19,244)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash2,926
(93)
Net change in cash, cash equivalents, and restricted cash(22,626)
(73,882)
Cash, cash equivalents, and restricted cash at beginning of period186,438
190,459
Cash, cash equivalents, and restricted cash at end of period$ 163,812
$ 116,577
Reconciliation of cash, cash equivalents, and restricted cash: Cash and cash equivalents$ 163,218
$ 116,025
Restricted cash included in other non-current assets594
552
Cash, cash equivalents, and restricted cash$ 163,812
$ 116,577
View source version on businesswire.com: https://www.businesswire.com/news/home/20201124005381/en/
ICR, Inc. Rachel Schacter/Allison Malkin 203-682-8200
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