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 |
13-2595932 |
(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 |
07652-3556 |
(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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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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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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☐
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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 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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99.1
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Press Release issued August 25, 2016 announcing second quarter results for the period ended July 31, 2016. |
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MOVADO GROUP, INC.
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By: |
/s/ Mitchell C. Sussis |
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Name:
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Mitchell C. Sussis
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Title:
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Senior Vice President and General Counsel
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CONTACT: | ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200
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—
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Net sales were $128.1 million compared to $145.6 million in the second quarter of fiscal 2016, a decrease of 12.0%. Net sales on a constant dollar basis decreased 11.2% compared to net sales in the second quarter of fiscal 2016.
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—
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Gross profit was $70.3 million, or 54.9% of sales, compared to $79.0 million, or 54.3% of sales, in the second quarter last year. The increase in gross margin percentage was primarily the result of the favorable impact of channel and product mix, and certain sourcing improvements, as well as changes in foreign currency exchange rates, partially offset by the reduced leverage of certain fixed costs as a result of lower net sales.
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—
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Operating expenses decreased $0.6 million, or 1.0%, to $60.2 million. This decrease was primarily the result of a decrease in marketing expenses, performance-based compensation and selling-related expenses, partially offset by the unfavorable impact of foreign currency exchange rates and an increase in allowances on accounts receivable.
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—
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Operating income was $10.1 million compared to operating income of $18.2 million in the second quarter of fiscal 2016.
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—
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The Company recorded a tax provision of $3.4 million which equates to an effective tax rate of 35.1% compared to a tax provision of $6.1 million or an effective tax rate of 33.8% in the second quarter of fiscal 2016.
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—
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Net income was $6.3 million, or $0.27 per diluted share, compared to $12.1 million, or $0.50 per diluted share, in the second quarter of fiscal 2016.
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—
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Net sales were $242.1 million compared to $266.0 million in the first six months of fiscal 2016, a decrease of 9.0%. Net sales on a constant dollar basis decreased 8.4% compared to net sales in the first six months of fiscal 2016.
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—
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Gross profit was $131.6 million, or 54.3% of sales, compared to $141.5 million, or 53.2% of sales in the same period last year. Adjusted gross profit for the first six months of fiscal 2016, which excludes $0.7 million in charges related to operating efficiency initiatives and other items in the first quarter of fiscal 2016, was $142.2 million, or 53.4% of sales. The increase from the adjusted gross margin percentage in the first half of last year was primarily the result of the favorable impact of changes in foreign currency exchange rates as well as channel and product mix, and certain sourcing improvements, partially offset by the reduced leverage of certain fixed costs as a result of lower net sales.
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—
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Operating expenses were $116.1 million as compared to $116.4 million in the first half of last year. For the first six months of fiscal 2017, adjusted operating expenses were $114.3 million, which excludes $1.8 million of expenses related to the COO’s retirement in fiscal 2017, as compared to adjusted operating expenses of $114.4 million in the first half of last year, which excludes $2.0 million of expenses related to operating efficiency initiatives and other items recorded in the first quarter of fiscal 2016. The $0.1 million decrease in adjusted operating expenses was primarily the result of a decrease in marketing expenses, performance-based compensation and selling-related expenses, mostly offset by the unfavorable effect of fluctuations in foreign currency rates and an increase in allowances on accounts receivable.
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—
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Operating income was $15.5 million compared to operating income of $25.1 million in the first six months of fiscal 2016. Adjusted operating income for the first half of fiscal 2017, which excludes $1.8 million of expenses related to the COO’s retirement in fiscal 2017, was $17.3 million. Adjusted operating income for the first half of fiscal 2016, which excludes $2.7 million of expenses related to operating efficiency initiatives and other items recorded in the first quarter, was $27.8 million.
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—
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The Company recorded a tax provision in the first six months of fiscal 2017 of $5.2 million as compared to a tax provision of $9.2 million in the first six months of last year. Based upon adjusted pre-tax income, the adjusted tax provision for income tax was $5.9 million compared to an adjusted tax provision for income tax of $9.4 million in the first half of fiscal 2016.
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—
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Net income was $9.6 million, or $0.41 per diluted share, compared to $15.7 million, or $0.65 per diluted share, in the first six months of fiscal 2016. For the first half of fiscal 2017, adjusted net income was $10.7 million, or $0.46 per diluted share, which excludes $1.1 million in expenses, net of tax, related to the COO’s retirement in fiscal 2017. Adjusted net income for the first six months of fiscal 2016 was $18.2 million, or $0.75 per diluted share, which excludes $2.5 million in expenses, net of tax, related to operating efficiency initiatives and other items in the first quarter of fiscal 2016.
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MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
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||||||||||||||||
Three Months Ended
July 31,
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Six Months Ended
July 31,
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|||||||||||||||
2016
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2015
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2016
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2015
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|||||||||||||
Net sales
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$
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128,086
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$
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145,569
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$
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242,149
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$
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266,030
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||||||||
Cost of sales
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57,823
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66,531
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110,569
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124,543
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||||||||||||
Gross profit
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70,263
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79,038
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131,580
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141,487
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||||||||||||
Operating expenses
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60,172
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60,804
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116,111
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116,378
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||||||||||||
Operating income
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10,091
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18,234
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15,469
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25,109
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||||||||||||
Interest expense
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(331
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)
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(256
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)
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(706
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)
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(408
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)
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||||||||
Interest income
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36
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35
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93
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88
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||||||||||||
Income before income taxes
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9,796
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18,013
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14,856
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24,789
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||||||||||||
Provision for income taxes
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3,441
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6,080
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5,164
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9,216
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||||||||||||
Net income
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6,355
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11,933
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9,692
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15,573
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||||||||||||
Less: Net income / (loss) attributed to noncontrolling interests
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49
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(120
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)
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78
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(101
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)
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||||||||||
Net income attributed to Movado Group, Inc.
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$
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6,306
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$
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12,053
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$
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9,614
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$
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15,674
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||||||||
Per Share Information:
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||||||||||||||||
Net income attributed to Movado Group, Inc.
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$
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0.27
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$
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0.50
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$
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0.41
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$
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0.65
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||||||||
Weighted diluted average shares outstanding
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23,192
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23,904
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23,237
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24,230
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MOVADO GROUP, INC.
GAAP AND NON-GAAP MEASURES |
As Reported
Three Months Ended
July 31,
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% Change
As Reported
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% Change
Constant
Dollar
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||||||||||||||
2016
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2015
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|||||||||||||||
Total Net sales
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$
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128,086
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$
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145,569
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-12.0
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%
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-11.2
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%
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As Reported
Six Months Ended
July 31,
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% Change
As Reported
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% Change
Constant
Dollar
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||||||||||||||
2016
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2015
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|||||||||||||||
Total Net sales
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$
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242,149
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$
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266,030
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-9.0
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%
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-8.4
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%
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MOVADO GROUP, INC.
GAAP AND NON-GAAP MEASURES |
||||||||||||||||||||||||||||
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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Provisions for Income Taxes
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Net Income Attributed to
Movado
Group, Inc.
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EPS
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||||||||||||||||||||||
Three Months Ended July 31, 2016
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||||||||||||||||||||||||||||
As Reported (GAAP)
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$
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128,086
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$
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70,263
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$
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10,091
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$
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9,796
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$
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3,441
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$
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6,306
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$
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0.27
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||||||||||||||
Three Months Ended July 31, 2015
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||||||||||||||||||||||||||||
As Reported (GAAP)
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$
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145,569
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$
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79,038
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$
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18,234
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$
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18,013
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$
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6,080
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$
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12,053
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$
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0.50
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||||||||||||||
Six Months Ended July 31, 2016
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||||||||||||||||||||||||||||
As Reported (GAAP)
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$
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242,149
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$
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131,580
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$
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15,469
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$
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14,856
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$
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5,164
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$
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9,614
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$
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0.41
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||||||||||||||
Retirement Charge (1)
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-
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-
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1,806
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1,806
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687
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1,119
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0.05
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|||||||||||||||||||||
Adjusted Results (Non-GAAP)
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$
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242,149
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$
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131,580
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$
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17,275
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$
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16,662
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$
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5,851
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$
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10,733
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$
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0.46
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||||||||||||||
Six Months Ended July 31, 2015
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||||||||||||||||||||||||||||
As Reported (GAAP)
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$
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266,030
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$
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141,487
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$
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25,109
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$
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24,789
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$
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9,216
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$
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15,674
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$
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0.65
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||||||||||||||
Operating Efficiency Initiatives and Other Items (2)
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-
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693
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2,670
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2,670
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134
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2,536
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0.10
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|||||||||||||||||||||
Adjusted Results (Non-GAAP)
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$
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266,030
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$
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142,180
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$
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27,779
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$
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27,459
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$
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9,350
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$
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18,210
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$
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0.75
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(1)
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Related to a charge for the retirement of the Vice Chairman and Chief Operating Officer.
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(2)
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Related to a charge for severance, occupancy expenses and the write-off of certain fixed assets.
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MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS(Unaudited)
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July 31,
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January 31,
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July 31,
|
||||||||||
2016
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2016
|
2015
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||||||||||
ASSETS
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||||||||||||
Cash and cash equivalents
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$
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205,795
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$
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228,188
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$
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188,012
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||||||
Trade receivables, net
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72,737
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71,030
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80,818
|
|||||||||
Inventories
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186,090
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162,465
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188,515
|
|||||||||
Other current assets
|
34,807
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27,352
|
31,935
|
|||||||||
Total current assets
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499,429
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489,035
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489,280
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|||||||||
Property, plant and equipment, net
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35,726
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38,553
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42,723
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|||||||||
Deferred and non-current income taxes
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20,656
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20,323
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19,652
|
|||||||||
Other non-current assets
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42,925
|
37,259
|
38,356
|
|||||||||
Total assets
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$
|
598,736
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$
|
585,170
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$
|
590,011
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||||||
LIABILITIES AND EQUITY
|
||||||||||||
Loans payable to bank, current
|
$
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3,000
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$
|
5,000
|
$
|
-
|
||||||
Accounts payable
|
26,013
|
27,308
|
31,687
|
|||||||||
Accrued liabilities
|
37,676
|
39,617
|
38,182
|
|||||||||
Income taxes payable
|
2,120
|
6,257
|
955
|
|||||||||
Total current liabilities
|
68,809
|
78,182
|
70,824
|
|||||||||
Loans payable to bank
|
35,000
|
35,000
|
40,000
|
|||||||||
Deferred and non-current income taxes payable
|
3,089
|
2,640
|
3,750
|
|||||||||
Other non-current liabilities
|
32,206
|
28,201
|
30,353
|
|||||||||
Noncontrolling interests
|
649
|
595
|
2,089
|
|||||||||
Shareholders' equity
|
458,983
|
440,552
|
442,995
|
|||||||||
Total liabilities and equity
|
$
|
598,736
|
$
|
585,170
|
$
|
590,011
|
MOVADO GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited) |
||||||||
Six Months Ended
July 31, |
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
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$
|
9,692
|
$
|
15,573
|
||||
Depreciation and amortization
|
5,688
|
6,131
|
||||||
Other non-cash adjustments
|
7,120
|
3,364
|
||||||
Operating efficiency initiatives and other items
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-
|
2,670
|
||||||
Changes in working capital
|
(35,413
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)
|
(25,748
|
)
|
||||
Changes in non-current assets and liabilities
|
(1,260
|
)
|
584
|
|||||
Net cash (used in) / provided by operating activities
|
(14,173
|
)
|
2,574
|
|||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(1,796
|
)
|
(3,668
|
)
|
||||
Restricted cash deposits
|
(1,156
|
)
|
-
|
|||||
Short-term investment
|
(154
|
)
|
-
|
|||||
Trademarks and other intangibles
|
(263
|
)
|
(138
|
)
|
||||
Net cash (used in) investing activities
|
(3,369
|
)
|
(3,806
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from bank borrowings
|
3,000
|
50,000
|
||||||
Repayments of bank borrowings
|
(5,000
|
)
|
(10,000
|
)
|
||||
Dividends paid
|
(5,970
|
)
|
(5,239
|
)
|
||||
Stock repurchase
|
(2,858
|
)
|
(39,129
|
)
|
||||
Other financing
|
(1,408
|
)
|
(447
|
)
|
||||
Net cash (used in) financing activities
|
(12,236
|
)
|
(4,815
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
7,385
|
(5,793
|
)
|
|||||
Net change in cash and cash equivalents
|
(22,393
|
)
|
(11,840
|
)
|
||||
Cash and cash equivalents at beginning of period
|
228,188
|
199,852
|
||||||
Cash and cash equivalents at end of period
|
$
|
205,795
|
$
|
188,012
|
MOVADO GROUP, INC.
GAAP AND NON-GAAP MEASURES(In millions, except per share data)
(Unaudited)
|
Net Sales
|
Operating Income
|
Pre-tax Income
|
Provisions for
Income Taxes |
Net Income
Attributed to Movado Group, Inc.
|
EPS
|
|||||||||||||||||||
Fiscal Year Ended January 31, 2017 | ||||||||||||||||||||||||
Outlook (GAAP)
|
$
|
550.0 - $560.0
|
$
|
48.2 - $53.2
|
$
|
46.8 - $52.0
|
$
|
14.9 - $16.6
|
$
|
31.9 - $35.4
|
$
|
1.35 - $1.50
|
||||||||||||
Retirement Charge (1)
|
-
|
1.8
|
1.8
|
0.7
|
1.1
|
0.05
|
||||||||||||||||||
Outlook (Non-GAAP)
|
$
|
550.0 - $560.0
|
$
|
50.0 - $55.0
|
$
|
48.6 - $53.8
|
$
|
15.6 - $17.3
|
$
|
33.0 - $36.5
|
$
|
1.40 - $1.55
|
(1)
|
Related to a charge for the retirement of the Vice Chairman and Chief Operating Officer.
|
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