MOVADO GROUP, INC.
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(Exact name of registrant as specified in its charter)
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New York
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(State or other jurisdiction of incorporation)
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1-16497
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13-2595932
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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650 From Road, Suite 375
Paramus, NJ
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07652-3556
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(Address of principal executive offices)
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(Zip Code)
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(201) 267-8000
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(Registrant’s Telephone Number, Including Area Code)
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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Exhibit No.
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Description
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MOVADO GROUP, INC.
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By:
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/s/ Timothy F. Michno | |
Name: Timothy F. Michno | |||
Title: General Counsel | |||
CONTACT:
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ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200
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·
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Adjusted net sales increased 9.0% to $140.1 million compared to the prior year period. Adjusted net sales exclude the impact of the $7.8 million charge in the fourth quarter of fiscal 2014 for anticipated sales returns related to the ESQ reallocation strategy described above, as well as the $4.9 million charge related to the Coach repositioning initiative in the fourth quarter of fiscal 2013. Adjusted net sales on a constant dollar basis increased 8.4% compared to the prior year period.
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Adjusted gross margin was 53.0% compared to adjusted gross margin of 52.6% last year, excluding the charge to gross profit for anticipated sales returns and the write down of excess inventory related to the ESQ reallocation strategy, in addition to the duty refund in the fourth quarter of fiscal 2014 and the Coach repositioning initiative in the fourth quarter of fiscal 2013.
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·
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Adjusted operating expenses increased $2.3 million or 4.0% to $59.9 million in the fourth quarter of fiscal 2014 from $57.6 million in the fourth quarter last year. Adjusted operating expenses excludes the $2.0 million pre-tax charge related to a contribution to the Movado Group Foundation and a $0.8 million write down of excess displays and point of sale materials related to the ESQ reallocation strategy.
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Adjusted operating income in the fourth quarter increased 43.5% to $14.4 million compared to $10.0 million in the prior year period.
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The adjusted effective tax rate for the fourth quarter was 15.1% which compares to (7.7%) in the fourth quarter of fiscal 2013.
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Adjusted net income was $12.0 million, or $0.46 per diluted share, compared to $10.5 million, or $0.41 per diluted share, for the same period in the prior year.
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Adjusted EBITDA increased to $17.9 million compared to adjusted EBITDA of $12.6 million in the fourth quarter of fiscal 2013.
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Net sales in the fourth quarter were $132.3 million compared to $123.6 million in the fourth quarter of fiscal 2013 led by growth in the licensed brand category.
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Gross profit was $69.3 million, or 52.4% of sales, compared to $62.7 million, or 50.7% of sales, in the fourth quarter last year.
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Operating expenses increased $5.1 million, or 8.8%, to $62.6 million in the fourth quarter of fiscal 2014 from $57.6 million in the fourth quarter last year.
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Operating income totaled $6.6 million compared to operating income of $5.1 million in the same period last year.
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The Company reported a tax benefit of $0.8 million in the fourth quarter of fiscal 2014, compared to the $3.1 million tax benefit recorded in the prior year period.
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Net income was $7.2 million, or $0.28 per diluted share, in the fourth quarter of fiscal 2014 compared to $7.9 million, or $0.31 per diluted share, in the fourth quarter of fiscal 2013.
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EBITDA was $10.2 million compared to EBITDA of $7.7 million in the fourth quarter of fiscal 2013. (See attached table for GAAP and Non-GAAP measures.)
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Adjusted net sales increased by 13.3% to $578.1 million compared to fiscal 2013. Adjusted net sales exclude the impact of the $7.8 million charge for anticipated sales returns related to the ESQ reallocation strategy in the fourth quarter of fiscal 2014 mentioned above, as well as the $4.9 million charge related to the Coach repositioning initiative in the fourth quarter of fiscal 2013. Adjusted net sales on a constant dollar basis increased 12.7%.
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Adjusted gross margin was 53.7% of sales compared to adjusted gross margin of 55.4% of sales last year, which excludes the charge to gross profit for anticipated sales returns and the write down of excess inventory related to the ESQ reallocation strategy, in addition to the duty refund in the fourth quarter of fiscal 2014 and the Coach repositioning initiative in the fourth quarter of fiscal 2013.
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Adjusted operating expenses increased $9.2 million or 4.1% to $234.8 million in fiscal 2014 from $225.5 million last year. Adjusted operating expenses in fiscal 2014 excludes the $2.0 million pre-tax charge related to a contribution to the Movado Group Foundation and a $0.8 million write down of excess displays and point of sale materials related to the ESQ reallocation strategy. Adjusted operating expenses in fiscal 2013 excludes a $3.0 million pre-tax contribution to the Movado Group Foundation.
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Adjusted operating income for fiscal 2014 increased 31.9% to $75.5 million as compared to $57.2 million for fiscal 2013.
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The adjusted effective tax rate for fiscal 2014 was 27.8% which compares to 24.6% in fiscal 2013.
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Adjusted net income was $53.6 million, or $2.07 per diluted share, for fiscal 2014 compared to $42.1 million, or $1.64 per diluted share, for the prior year.
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Adjusted EBITDA totaled $87.7 million in fiscal 2014 compared to $67.9 million in fiscal 2013.
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Net sales in fiscal 2014 were $570.3 million compared to $505.5 million in fiscal 2013 driven by growth in both the accessible luxury and licensed brand categories.
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Gross profit was $305.3 million, or 53.5% of sales, compared to $277.9 million, or 55.0% of sales last year.
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Operating expenses increased $9.0 million, or 3.9%, to $237.5 million from $228.5 million last year.
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Operating income increased to $67.7 million compared to operating income of $49.3 million in the prior year.
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The Company recorded a tax provision of $17.4 million in fiscal 2014 compared to a tax benefit of $8.8 million in the prior year.
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Net income was $50.9 million, or $1.97 per diluted share, in fiscal 2014. This compares to net income of $57.1 million, or $2.22 per diluted share, in fiscal 2013.
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EBITDA was $80.0 million in fiscal 2014 compared to $60.0 million in the prior year. (See attached table for GAAP and Non-GAAP measures.)
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Three Months Ended
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Twelve Months Ended
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January 31,
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January 31,
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2014
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2013
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2014
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2013
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Net sales
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$ | 132,259 | $ | 123,594 | $ | 570,255 | $ | 505,478 | ||||||||
Cost of sales
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63,005 | 60,914 | 264,994 | 227,596 | ||||||||||||
Gross profit
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69,254 | 62,680 | 305,261 | 277,882 | ||||||||||||
Operating expenses
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62,641 | 57,561 | 237,519 | 228,536 | ||||||||||||
Operating income
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6,613 | 5,119 | 67,742 | 49,346 | ||||||||||||
Other income
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- | - | 1,526 | - | ||||||||||||
Interest expense
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(142 | ) | (147 | ) | (436 | ) | (434 | ) | ||||||||
Interest income
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33 | 60 | 86 | 144 | ||||||||||||
Income before income taxes
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6,504 | 5,032 | 68,918 | 49,056 | ||||||||||||
Provision for / (benefit from) income taxes
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(793 | ) | (3,068 | ) | 17,373 | (8,812 | ) | |||||||||
Net income
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7,297 | 8,100 | 51,545 | 57,868 | ||||||||||||
Less: Net income attributed to noncontrolling interests
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104 | 181 | 668 | 785 | ||||||||||||
Net income attributed to Movado Group, Inc.
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$ | 7,193 | $ | 7,919 | $ | 50,877 | $ | 57,083 | ||||||||
Per Share Information:
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Net income attributed to Movado Group, Inc.
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$ | 0.28 | $ | 0.31 | $ | 1.97 | $ | 2.22 | ||||||||
Weighted diluted average shares outstanding
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25,822 | 25,824 | 25,849 | 25,664 |
As Reported
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% Change
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% Change
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Three Months Ended
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% Change
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Constant
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Adjusted
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January 31,
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As Reported
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Dollar
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Constant Dollar (1)
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2014
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2013
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Total net sales
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$ | 132,259 | $ | 123,594 | 7.0% | 6.4% | 8.4% | ||||||||||
As Reported
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% Change
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% Change
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Twelve Months Ended
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% Change
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Constant
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Adjusted
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January 31,
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As Reported
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Dollar
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Constant Dollar (1)
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2014 | 2013 | ||||||||||||||||
Total net sales
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$ | 570,255 | $ | 505,478 | 12.8% | 12.2% | 12.7% |
(1)
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In the current year, net sales were adjusted for a charge related to the ESQ reallocation strategy and in the prior period, net sales were adjusted for a charge related tothe repositioning of the Coach watch brand.
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Three Months Ended
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Twelve Months Ended
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January 31, | January 31, | |||||||||||||||
2014
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2013
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2014
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2013
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Operating income (GAAP)
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$ | 6,613 | $ | 5,119 | $ | 67,742 | $ | 49,346 | ||||||||
ESQ strategy (1)
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8,263 | - | 8,263 | - | ||||||||||||
Duty refund (2)
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(2,500 | ) | - | (2,500 | ) | - | ||||||||||
Charitable contribution (3)
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2,000 | - | 2,000 | 3,000 | ||||||||||||
Coach sales allowance (4)
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- | 4,900 | - | 4,900 | ||||||||||||
Adjusted operating income (non-GAAP)
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14,376 | 10,019 | 75,505 | 57,246 | ||||||||||||
Depreciation and amortization
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3,540 | 2,572 | 12,233 | 10,608 | ||||||||||||
Adjusted EBITDA (non-GAAP)
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$ | 17,916 | $ | 12,591 | $ | 87,738 | $ | 67,854 | ||||||||
Three Months Ended |
Twelve Months Ended
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January 31, | January 31, | |||||||||||||||
2014
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2013
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2014
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2013
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Net income attributed to Movado Group, Inc. (GAAP)
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$ | 7,193 | $ | 7,919 | $ | 50,877 | $ | 57,083 | ||||||||
ESQ strategy (1)
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5,123 | - | 5,123 | - | ||||||||||||
Duty refund (2)
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(1,550 | ) | - | (1,550 | ) | - | ||||||||||
Charitable contribution (3)
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1,240 | - | 1,240 | 1,860 | ||||||||||||
Building sale (5)
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- | - | (1,099 | ) | - | |||||||||||
Tax settlements and release of tax reserves (6)
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- | - | (1,000 | ) | - | |||||||||||
Coach sales allowance (4)
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- | 3,443 | - | 3,443 | ||||||||||||
Tax adjustment (7)
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- | (461 | ) | - | (461 | ) | ||||||||||
Valuation allowance (8)
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- | (381 | ) | - | (19,790 | ) | ||||||||||
Adjusted net income attributed to Movado Group, Inc. (non-GAAP)
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$ | 12,006 | $ | 10,520 | $ | 53,591 | $ | 42,135 | ||||||||
Adjusted effective tax rate (non-GAAP)
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15.1 | % | -7.7 | % | 27.8 | % | 24.6 | % | ||||||||
Adjusted net income attributed to Movado Group, Inc. per share (non-GAAP)
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$ | 0.46 | $ | 0.41 | $ | 2.07 | $ | 1.64 | ||||||||
Weighted diluted average shares outstanding
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25,822 | 25,824 | 25,849 | 25,664 |
(1)
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Reflects a charge related to the Company's decision to reduce the presence of ESQ Movado in certain retail doors while expanding the Movado brand offering.
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(2)
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Reflects a duty refund on drawback claims filed to recover duty payments made by the Company in calendar years 2008 through 2011.
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(3)
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Reflects a contribution to the Movado Group Foundation.
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(4)
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Reflects a charge related to the repositioning of the Coach watch brand.
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(5)
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Reflects a gain on a sale of a building in Switzerland.
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(6)
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Reflects favorable tax settlement and the release of uncertain tax positions.
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(7)
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Represents a settlement related to foreign taxes.
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(8)
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Reflects the reversal of the valuation allowance on certain of the Company's U.S. net deferred tax assets.
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January 31,
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January 31,
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2014
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2013
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ASSETS
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Cash and cash equivalents
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$ | 157,659 | $ | 167,889 | ||||
Short-term investments
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33,099 | - | ||||||
Trade receivables
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68,683 | 61,398 | ||||||
Inventories
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181,305 | 167,256 | ||||||
Other current assets
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44,564 | 37,556 | ||||||
Total current assets
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485,310 | 434,099 | ||||||
Property, plant and equipment, net
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47,796 | 44,501 | ||||||
Deferred income taxes
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14,891 | 22,749 | ||||||
Other non-current assets
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30,613 | 25,013 | ||||||
Total assets
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$ | 578,610 | $ | 526,362 | ||||
LIABILITIES AND EQUITY
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Accounts payable
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$ | 33,598 | $ | 22,075 | ||||
Accrued liabilities
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29,118 | 34,794 | ||||||
Accrued payroll and benefits
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14,455 | 16,342 | ||||||
Deferred and current income taxes payable
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6,422 | 275 | ||||||
Total current liabilities
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83,593 | 73,486 | ||||||
Deferred and non-current income taxes payable
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3,518 | 5,637 | ||||||
Other non-current liabilities
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25,509 | 21,547 | ||||||
Noncontrolling interests
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2,686 | 2,002 | ||||||
Shareholders' equity
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463,304 | 423,690 | ||||||
Total liabilities and equity
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$ | 578,610 | $ | 526,362 | ||||
Twelve Months Ended | ||||||||
January 31, | ||||||||
2014
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2013
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Cash flows from operating activities:
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Net income
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$ | 51,545 | $ | 57,868 | ||||
Depreciation and amortization
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12,233 | 10,608 | ||||||
Other non-cash adjustments
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10,421 | (9,145 | ) | |||||
Changes in working capital
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(16,862 | ) | (20,670 | ) | ||||
Changes in non-current assets and liabilities
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(2,821 | ) | 120 | |||||
Net cash provided by operating activities
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54,516 | 38,781 | ||||||
Cash flows from investing activities:
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Capital expenditures
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(16,707 | ) | (15,978 | ) | ||||
Proceeds from sale of an asset held for sale
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2,196 | - | ||||||
Short-term investments
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(33,099 | ) | - | |||||
Trademarks
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(285 | ) | (285 | ) | ||||
Net cash (used in) investing activities
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(47,895 | ) | (16,263 | ) | ||||
Cash flows from financing activities:
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Dividends paid
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(6,637 | ) | (36,684 | ) | ||||
Stock repurchase
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(10,488 | ) | - | |||||
Purchase of incremental ownership in Joint Venture
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- | (4,689 | ) | |||||
Other financing
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610 | 2,998 | ||||||
Net cash (used in) financing activities
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(16,515 | ) | (38,375 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
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(336 | ) | 1,545 | |||||
Net change in cash and cash equivalents
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(10,230 | ) | (14,312 | ) | ||||
Cash and cash equivalents at beginning of year
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167,889 | 182,201 | ||||||
Cash and cash equivalents at end of year
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$ | 157,659 | $ | 167,889 | ||||