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, New Jersey
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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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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02.
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Results of Operations and Financial Condition.
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Item 7.01.
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Regulation FD Disclosure.
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Item 9.01.
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Financial Statements and Exhibits.
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Exhibit No.
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Description
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99.2 | Press Release issued November 25, 2014 announcing increase in share buyback program. |
MOVADO GROUP, INC.
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By:
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/s/ Timothy F. Michno
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Name: Timothy F. Michno
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Title: General Counsel
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CONTACT:
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ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200
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—
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Net sales decreased 0.6% to $188.6 million compared to $189.7 million in the third quarter of fiscal 2014 driven by a decline in the luxury brand category and certain licensed brands.
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Gross profit was $99.8 million, or 53.0% of sales, compared to $101.3 million, or 53.4% of sales, in the third quarter last year. The decrease in gross margin percentage was primarily the result of a shift in channel and product mix and the unfavorable impact of fluctuations in foreign currency exchange rates, partially offset by a reduction of certain fixed costs.
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Operating expenses decreased $0.7 million, or 1.0%, to $66.5 million compared to $67.2 million in the third quarter last year. The decrease in operating expenses was primarily the result of a decrease in the accrual for performance-based compensation offset by higher compensation and benefit expense in support of our brand building and growth initiatives, marketing expense and other operating expenses.
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Operating income decreased to $33.3 million compared to operating income of $34.1 million in the same period last year.
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The Company recorded a tax provision of $10.9 million in the third quarter of fiscal 2015 as compared to a tax provision of $10.6 million in the prior year. The effective tax rate in the third quarter of fiscal 2015 was 32.7% compared to an effective tax rate of 31.1% in the third quarter of fiscal 2014.
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Net income was $22.2 million, or $0.87 per diluted share, compared to net income of $23.0 million, or $0.89 per diluted share, in the third quarter of fiscal 2014.
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Net sales increased 3.4% to $453.1 million compared to $438.0 million in the same period of fiscal 2014 led by growth in our licensed brand and retail categories.
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Gross profit was $242.6 million, or 53.5% of sales, compared to $236.0 million, or 53.9% of sales in the same period last year. The decrease in gross margin percentage was primarily the result of the unfavorable impact of changes in foreign currency exchange rates and a shift in channel and product mix, partially offset by leverage gained on certain fixed costs due to increased sales volume.
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Operating expenses increased $6.3 million, or 3.6%, to $181.2 million versus $174.9 million in the same period last year. The $6.3 million increase in operating expenses was primarily the result of increased compensation and benefit costs in support of our brand building and growth initiatives, the unfavorable effects of foreign currency exchange rates, selling expenses, expenses associated with the Baselworld Watch and Jewelry Show and higher marketing expenses, partially offset by a decrease in the accrual for performance-based compensation.
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Operating income increased to $61.4 million compared to operating income of $61.1 million in the same period last year.
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The Company recorded a tax provision of $19.2 million for the nine month period of fiscal 2015 as compared to a tax provision of $18.2 million for the nine month period of fiscal 2014. The effective tax rate in the fiscal 2015 period was 31.4% compared to an effective tax rate of 29.1% in the fiscal 2014 period. As mentioned above, the Company recorded a $1.0 million tax benefit, or $0.04 per diluted share, related to certain items, and a $1.5 million pre-tax gain, or $0.04 per diluted share, related to the sale of a Company-owned building in Switzerland, which resulted in an adjusted effective tax rate of 30.8% for the first nine months of fiscal 2014. (See attached table for GAAP and Non-GAAP measures.)
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Net income was $41.7 million, or $1.63 per diluted share, compared to net income for the nine month period of fiscal 2014 of $43.7 million, or $1.69 per diluted share. Adjusted net income for the first nine months of fiscal 2014 was $41.6 million, or $1.61 per diluted share, excluding the $1.0 million
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tax benefit, or $0.04 per diluted share, taken in the second quarter of fiscal 2014 and the $1.5 million pre-tax gain, or $0.04 per diluted share, related to the sale of a building in Switzerland in the first quarter of fiscal 2014. (See attached table for GAAP and Non-GAAP measures.)
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Three Months Ended
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Nine Months Ended
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October 31,
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October 31,
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2014
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2013
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2014
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2013
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Net sales
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$ | 188,557 | $ | 189,685 | $ | 453,069 | $ | 437,996 | ||||||||
Cost of sales
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88,715 | 88,415 | 210,470 | 201,989 | ||||||||||||
Gross profit
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99,842 | 101,270 | 242,599 | 236,007 | ||||||||||||
Operating expenses
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66,509 | 67,186 | 181,177 | 174,878 | ||||||||||||
Operating income
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33,333 | 34,084 | 61,422 | 61,129 | ||||||||||||
Other income
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- | - | - | 1,526 | ||||||||||||
Interest expense
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(78 | ) | (114 | ) | (272 | ) | (294 | ) | ||||||||
Interest income
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51 | 14 | 97 | 53 | ||||||||||||
Income before income taxes
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33,306 | 33,984 | 61,247 | 62,414 | ||||||||||||
Provision for income taxes
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10,889 | 10,570 | 19,231 | 18,166 | ||||||||||||
Net income
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22,417 | 23,414 | 42,016 | 44,248 | ||||||||||||
Less: Net income attributed to noncontrolling interests
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208 | 395 | 291 | 564 | ||||||||||||
Net income attributed to Movado Group, Inc.
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$ | 22,209 | $ | 23,019 | $ | 41,725 | $ | 43,684 | ||||||||
Per Share Information:
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Net income attributed to Movado Group, Inc.
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$ | 0.87 | $ | 0.89 | $ | 1.63 | $ | 1.69 | ||||||||
Weighted diluted average shares outstanding
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25,616 | 25,842 | 25,661 | 25,855 |
As Reported
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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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October 31,
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As Reported
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Dollar
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2014
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2013
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Total Net sales
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$188,557 | $189,685 | -0.6% | 0.1% |
As Reported
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% Change
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Nine Months Ended
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% Change
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Constant
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October 31,
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As Reported
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Dollar
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2014 | 2013 | |||||||||||
Total Net sales
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$453,069 | $437,996 | 3.4% | 3.0% |
Net Sales
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Gross Profit
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Operating Income
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Pre-tax Income
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Net Income
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Earnings Per Share
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Three Months Ended October 31, 2014
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As Reported (GAAP)
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$ | 188,557 | $ | 99,842 | $ | 33,333 | $ | 33,306 | $ | 22,209 | $ | 0.87 | ||||||||||||
Three Months Ended October 31, 2013
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As Reported (GAAP)
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$ | 189,685 | $ | 101,270 | $ | 34,084 | $ | 33,984 | $ | 23,019 | $ | 0.89 | ||||||||||||
Nine Months Ended October 31, 2014
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As Reported (GAAP)
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$ | 453,069 | $ | 242,599 | $ | 61,422 | $ | 61,247 | $ | 41,725 | $ | 1.63 | ||||||||||||
Nine Months Ended October 31, 2013
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As Reported (GAAP)
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$ | 437,996 | $ | 236,007 | $ | 61,129 | $ | 62,414 | $ | 43,684 | $ | 1.69 | ||||||||||||
Tax Adjustment (1)
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(1,000 | ) | (0.04 | ) | ||||||||||||||||||||
Building Sale (2)
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(1,526 | ) | (1,099 | ) | (0.04 | ) | ||||||||||||||||||
Adjusted Results (Non-GAAP) (3)
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$ | 437,996 | $ | 236,007 | $ | 61,129 | $ | 60,888 | $ | 41,585 | $ | 1.61 |
(1)
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Reflects the release of liabilities for uncertain tax positions as a result of favorable U.S. and foreign audit settlements.
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(2)
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Reflects a gain on a sale of a building in Switzerland.
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(3)
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The adjusted tax rate for the nine months ended October 31, 2013, was 30.8%.
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October 31,
2014 |
January 31,
2014 |
October 31,
2013 |
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ASSETS | ||||||||||||
Cash and cash equivalents
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$ | 157,937 | $ | 157,659 | $ | 163,146 | ||||||
Short-term investments
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- | 33,099 | - | |||||||||
Trade receivables
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128,638 | 68,683 | 120,043 | |||||||||
Inventories
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182,663 | 181,305 | 178,714 | |||||||||
Other current assets
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37,927 | 44,564 | 35,429 | |||||||||
Total current assets
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507,165 | 485,310 | 497,332 | |||||||||
Property, plant and equipment, net
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45,340 | 47,796 | 46,512 | |||||||||
Deferred income taxes
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13,899 | 14,891 | 21,881 | |||||||||
Other non-current assets
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35,365 | 30,613 | 29,266 | |||||||||
Total assets
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$ | 601,769 | $ | 578,610 | $ | 594,991 | ||||||
LIABILITIES AND EQUITY
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Accounts payable
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$ | 29,746 | $ | 33,598 | $ | 36,620 | ||||||
Accrued liabilities
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49,933 | 43,573 | 51,172 | |||||||||
Deferred and current income taxes payable
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12,713 | 6,422 | 15,272 | |||||||||
Total current liabilities
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92,392 | 83,593 | 103,064 | |||||||||
Deferred and non-current income taxes payable
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3,578 | 3,518 | 3,930 | |||||||||
Other non-current liabilities
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28,989 | 25,509 | 25,329 | |||||||||
Noncontrolling interests
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2,472 | 2,686 | 2,593 | |||||||||
Shareholders' equity | 474,338 | 463,304 | 460,075 | |||||||||
Total liabilities and eqiuty | $ | 601,769 | $ | 578,610 | $ | 594,991 |
Nine Months Ended | ||||||||
October 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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$ | 42,016 | $ | 44,248 | ||||
Depreciation and amortization
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9,195 | 8,693 | ||||||
Other non-cash adjustments
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4,309 | 1,898 | ||||||
Changes in working capital
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(54,051 | ) | (36,608 | ) | ||||
Changes in non-current assets and liabilities
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(120 | ) | (1,615 | ) | ||||
Net cash provided by operating activities
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1,349 | 16,616 | ||||||
Cash flows from investing activities:
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Capital expenditures
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(7,485 | ) | (11,895 | ) | ||||
Proceeds from short-term investments
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33,736 | - | ||||||
Proceeds from sale of an asset held for sale
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- | 2,196 | ||||||
Long-term investments | (1,200 | ) | - | |||||
Other investing
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232 | (225 | ) | |||||
Net cash provided by / (used in) investing activities
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25,283 | (9,924 | ) | |||||
Cash flows from financing activities:
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Dividends paid
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(7,591 | ) | (4,604 | ) | ||||
Stock repurchase
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(13,150 | ) | (7,450 | ) | ||||
Other financing
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1,242 | 334 | ||||||
Net cash (used in) financing activities
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(19,499 | ) | (11,720 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
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(6,855 | ) | 285 | |||||
Net change in cash and cash equivalents
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278 | (4,743 | ) | |||||
Cash and cash equivalents at beginning of year
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157,659 | 167,889 | ||||||
Cash and cash equivalents at end of period
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$ | 157,937 | $ | 163,146 |
CONTACT:
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ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200
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