PARAMUS, N.J., Dec. 4 /PRNewswire-FirstCall/ -- Movado Group, Inc.
(NYSE: MOV), today announced third quarter and nine-month results
for the period ended October 31, 2008. "During the latter part of
the third quarter, our results were significantly impacted as
retailers experienced substantial retail sales declines and focused
on very tight inventory controls going into the holiday season,"
commented Efraim Grinberg, President and Chief Executive Officer.
"During the quarter our licensed brand category delivered a solid
performance as we continue to gain market share and expand into new
doors. As we enter the holiday season, we are focused on maximizing
business opportunities in the current environment to gain market
share and further strengthen our brands. We will continue to take
decisive actions to manage our business and expenses while
strategically positioning our company for long-term success." Third
Quarter Fiscal 2009 -- Net sales were $135.8 million compared with
$180.2 million last year, reflecting the significant deterioration
of the global economic environment. Year-ago net sales included
$11.3 million of excess discontinued product. -- Gross profit was
$86.2 million, or 63.5% of sales, compared to $109.9 million, or
61.0% of sales last year. Excluding excess discontinued product
sales from the year-ago period, adjusted gross profit was $109.2
million, or 64.7% of sales. -- Operating profit was $14.6 million
and included a $3.4 million charge related to the implementation of
the Company's expense reduction plan announced in August of 2008.
Excluding this charge, adjusted operating profit was $18.0 million
versus $28.5 million last year. (See attached table for
reconciliation of GAAP to non-GAAP measures.) -- An income tax
benefit of $1.4 million was recorded in the third quarter compared
to income tax expense of $1.9 million, or a 6.7% tax rate, recorded
last year. Both periods include the expected utilization of a Swiss
net operating loss carryforward (NOL) acquired with the Ebel brand
in fiscal 2005, which was primarily responsible for contributing
$0.19 to both third quarter diluted earnings per share this year
and in the year-ago period. -- On a reported basis, net income and
earnings per diluted share were $15.7 million and $0.62,
respectively, versus net income of $26.5 million and earnings per
diluted share of $0.97 in the year-ago period. -- Adjusting for
unusual items recorded in fiscal 2009 and fiscal 2008, third
quarter adjusted net income was $13.4 million versus $21.3 million
last year, and adjusted earnings per diluted share was $0.53 in the
third quarter compared to $0.78 in the year-ago period. (See
attached table for reconciliation of GAAP to non-GAAP measures.)
Nine-Month Results -- Net sales were $366.9 million compared with
$421.0 million last year. Net sales for the year-ago nine-month
period included $22.3 million of excess discontinued product. --
Gross profit was $235.1 million, or 64.1% of sales, compared to
$254.9 million, or 60.5% of sales, last year. Excluding excess
discontinued product sales from the year-ago period, adjusted gross
profit was $254.6 million, or 63.9% of sales. -- Operating profit
was $27.4 million and included a $5.6 million charge related to the
Company's aforementioned expense reduction plan. Excluding this
charge, adjusted operating profit was $33.0 million versus $47.6
million last year. (See attached table for reconciliation of GAAP
to non-GAAP measures.) -- Income tax expense of $1.8 million
reflects a 6.7% tax rate in the year-to-date period compared to
income tax expense of $6.7 million, or a 13.9% tax rate recorded
last year. Both periods include the expected utilization of the
Swiss NOL acquired with the Ebel brand in fiscal 2005. -- On a
reported basis, net income and earnings per diluted share were
$25.1 million and $0.97, respectively, versus net income of $41.2
million and earnings per diluted share of $1.51 in the year-ago
period. -- Adjusting for unusual items recorded in fiscal 2009 and
fiscal 2008, adjusted net income for the nine-month period was
$24.7 million compared to $35.8 million and adjusted earnings per
diluted share was $0.96 compared to $1.31 in the year-ago period.
(See attached table for reconciliation of GAAP to non-GAAP
measures.) Mr. Grinberg continued, "Our company has a proven track
record of appropriately positioning our business in the face of
challenging consumer and retail trends and emerging stronger when
the economy recovers. We have a well-diversified global company
with a powerful portfolio of nine brands that offer compelling
price/value propositions from the more affordable fashion watch
category to the high-end of the luxury watch market. With
approximately $85 million in cash as of quarter-end, our balance
sheet remains strong." Rick Cote, Executive Vice President and
Chief Operating Officer, stated, "We are implementing tactical
programs to drive our business both in the near-term and for what
we expect to be a continued slowdown next year. In August, we
announced an expense reduction plan, which we expect will generate
annualized cost savings of approximately $25 million. Given the
further deterioration that has taken place in the global economy,
we expect to initiate another set of actions designed to achieve an
additional $25 million to $30 million in annualized cost savings, a
substantial portion of which we expect to be realized in fiscal
2010. Looking ahead to next year, we expect our top-line to
continue to be challenged. Nevertheless, we are focused on
achieving appropriate levels of profitability and cash flow by
continuing to be aggressive in reducing costs, while maximizing
business opportunities and tightly managing inventory." Based on
the Company's year-to-date results, the further deterioration that
continues to take place in the macroeconomic environment, and
increasingly limited visibility, Movado Group now projects fiscal
2009 net sales to range from $470 million to $480 million and
diluted earnings per share to range between $0.80 and $1.00, on a
GAAP basis. Excluding the projected pre-tax charge of approximately
$9.0 million, or $0.24 per diluted share, associated with the
Company's cost savings plan announced on August 7, 2008, and
assuming a 24% tax rate, fiscal 2009 adjusted diluted earnings per
share are expected to range between $0.85 and $1.05. These
projections do not include any one-time charges as they relate to
the aforementioned new set of savings initiatives. Results for the
full year will depend on the holiday season and retailer
replenishment in January. On a comparable basis, the Company
reported adjusted diluted earnings per share of $1.71 in fiscal
2008. The Company's management will host a conference call today,
December 4th at 10:00 a.m. Eastern Time. A live broadcast of the
call will be available on the Company's website:
http://www.movadogroup.com/. This call will be archived online
within one hour of the completion of the conference call. Movado
Group, Inc. designs, manufactures, and distributes Movado, Ebel,
Concord, ESQ, Coach, Tommy Hilfiger, HUGO BOSS, Juicy Couture and
LACOSTE watches worldwide, and operates Movado boutiques and
company stores in the United States. In this release, the Company
presents certain adjusted financial measures that are not
calculated according to generally accepted accounting principles in
the United States ("GAAP"). These non-GAAP financial measures are
designed to complement the GAAP financial information presented in
this release because management believes they present information
regarding the Company that management believes is useful to
investors. The non-GAAP financial measures presented should not be
considered in isolation from or as a substitute for the comparable
GAAP financial measure. The Company is presenting adjusted
operating profit, which is operating profit excluding a
non-recurring charge related to the implementation of the Company's
expense reduction plan announced in August 2008. The Company is
also presenting adjusted net income, which is net income excluding
the aforementioned non-recurring charge and the effects of the
utilization of NOLs from the Ebel acquisition and to assume more
representative tax rates for all periods presented. Management
believes that presenting adjusted operating profit and adjusted net
income is useful for investors because they improve comparability
of results for the periods presented by eliminating items that
affect those line items that are not expected to recur, although
such items may, in fact, recur in the future. 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 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: actual or perceived weakness in
the U.S. and global economy and fluctuations in consumer spending
and disposable income, uncertainty regarding U.S. and global
economic conditions, the Company's ability to successfully
introduce and sell new products, the Company's ability to
successfully integrate the operations of newly acquired and/or
licensed brands without disruption to its other business
activities, changes in consumer demand for the Company's products,
risks relating to the fashion and retail industry, import
restrictions, competition, seasonality, commodity price and
exchange rate fluctuations, changes in local or global economic
conditions, 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. (Tables to follow) MOVADO GROUP, INC. Consolidated
Statements of Income (in thousands, except per share data)
(Unaudited) Three Months Ended Nine Months Ended October 31,
October 31, ----------- ----------- 2008 2007 2008 2007 ---- ----
---- ---- Net sales $135,846 $180,153 $366,888 $420,983 Cost of
sales 49,644 70,266 131,763 166,098 ------ ------ ------- -------
Gross profit 86,202 109,887 235,125 254,885 Selling, general and
administrative expenses 71,582 81,398 207,752 207,287 ------ ------
------- ------- Operating profit 14,620 28,489 27,373 47,598
Interest expense (691) (920) (2,191) (2,671) Interest income 413
1,064 1,893 3,373 --- ----- ----- ----- Income before income taxes
and minority interests 14,342 28,633 27,075 48,300 Provision for
income tax (1,434) 1,927 1,802 6,691 Minority interests 47 178 159
417 -- --- --- --- Net income $15,729 $26,528 $25,114 $41,192
======= ======= ======= ======= Net income per diluted share $0.62
$0.97 $0.97 $1.51 Number of shares outstanding 25,225 27,236 25,792
27,299 MOVADO GROUP, INC. Reconciliation tables (in thousands,
except per share data) (Unaudited) Three Months Ended Nine Months
Ended October 31, October 31, ----------- ----------- 2008 2007
2008 2007 ---- ---- ---- ---- Operating profit (GAAP) $14,620
$28,489 $27,373 $47,598 Severance related expenses(1) 3,393 - 5,585
- ----- --- ----- --- Adjusted operating profit (non-GAAP) $18,013
$28,489 $32,958 $47,598 ======= ======= ======= ======= Three
Months Ended Nine Months Ended October 31, October 31, -----------
----------- 2008 2007 2008 2007 ---- ---- ---- ---- Net income
(GAAP) $15,729 $26,528 $25,114 $41,192 Severance related
expenses(1) 2,579 - 4,245 - Tax adjustments(2) (4,876) (5,231)
(4,696) (5,384) ------ ------ ------ ------ Adjusted net income
(Non-GAAP) $13,432 $21,297 $24,663 $35,808 ======= ======= =======
======= Number of shares outstanding 25,225 27,236 25,792 27,299
Adjusted net income per share (non-GAAP) $0.53 $0.78 $0.96 $1.31
(1) Charges related to the implementation of the Company's expense
reduction plan. (2) To present financials at a representative 24%
effective tax rate for the current period and a 25% effective tax
rate for the prior period. Actual taxes primarily reflect
utilization of the acquired Ebel net operating loss tax
carryforward. October 31, January 31, October 31, 2008 2008 2007
---- ---- ---- ASSETS ------ Cash and cash equivalents $85,077
$169,551 $111,060 Trade receivables, net 118,464 94,328 150,996
Inventories 236,734 205,129 210,510 Other current assets 42,245
50,317 37,056 ------ ------ ------ Total current assets 482,520
519,325 509,622 ------- ------- ------- Property, plant and
equipment, net 71,359 68,513 63,729 Deferred income taxes 17,753
20,024 31,000 Other non-current assets 34,761 38,354 38,605 ------
------ ------ Total assets $606,393 $646,216 $642,956 ========
======== ======== LIABILITIES AND EQUITY ----------------------
Current portion of long-term debt $10,000 $10,000 $10,000 Accounts
payable 33,146 38,397 26,892 Accrued liabilities 50,010 42,770
54,311 Deferred and current taxes payable 392 8,526 11,355 ---
----- ------ Total current liabilities 93,548 99,693 102,558 ------
------ ------- Long-term debt 59,324 50,895 50,907 Deferred and
non-current income taxes 6,706 6,363 32,980 Other liabilities
21,279 24,205 25,481 Minority interests 1,727 1,865 1,645
Shareholders' equity 423,809 463,195 429,385 ------- -------
------- Total liabilities and equity $606,393 $646,216 $642,956
======== ======== ======== DATASOURCE: Movado Group, Inc. CONTACT:
Investor Relations: Suzanne Rosenberg, Vice President, Corporate
Communications, +1-201-267-8000; Leigh Parrish, or Stephanie Rich,
both of Financial Dynamics, +1-212-850-5600 Web Site:
http://www.movadogroup.com/
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