EXHIBIT 99.1

 

 

CONTACT:

ICR, Inc. Rachel Schacter/Allison Malkin 203-682-8200

 

FINAL

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MOVADO GROUP, INC. ANNOUNCES FIRST QUARTER
RESULTS

~ First Quarter Revenue of $99.3 Million ~

~ Reiterates Fiscal 2018 Outlook ~

~ Board Declares Quarterly Dividend ~

Paramus, NJ – May 25, 2017 -- Movado Group, Inc. (NYSE: MOV) today announced first quarter results for the period ended April 30, 2017.

Efraim Grinberg, Chairman and Chief Executive Officer, stated, “For the first quarter, we reported sales and operating earnings consistent with our expectations reflecting a very challenging store traffic environment in the United States which has retailers focused on reducing their inventory. We recognized this trend early in our planning cycle and mitigated this impact through decisive actions to significantly reduce our planned operating expenses for the year. As we look to the balance of the year, we continue to anticipate a challenging U.S. retail marketplace and expect modest growth in our international markets. We are excited about our upcoming launches including our expansion of the Movado Heritage collection, the introduction of Movado Connect, our smart watch powered by Google’s Android Wear, and the launch of our Rebecca Minkoff watch collection. Our strategy is to focus on designing unique and compelling products across our brands while investing in our digital marketing and eCommerce initiatives to enable us to navigate the evolving retail landscape.”

In the first quarter of fiscal 2018, the Company recorded a $6.3 million pre-tax charge, with a related tax benefit of $1.9 million, or $0.19 per diluted share, related to its previously announced cost savings initiatives. The first quarter of fiscal 2018 benefited only partially from the cost savings initiatives which began to take effect during the latter part of the period. The first quarter therefore included approximately $2.0 million, or $0.06 per diluted share, of expenses that would not have been incurred had the initiatives begun on February 1, 2017. In the first quarter of fiscal 2017, the Company recorded a $1.8 million

 

 

 

pre-tax charge, with a related tax benefit of $0.7 million, or $0.05 per diluted share, for the immediate vesting of stock awards and certain other compensation related to the announcement of the retirement of Rick Coté, the Company’s former Vice Chairman and Chief Operating Officer, in fiscal 2017 (“COO’s retirement”).

 

The Company is reiterating its outlook for fiscal 2018. In fiscal 2018, the Company anticipates that net sales will be in a range of $515.0 million to $530.0 million and operating income will be approximately $50.0 million to $55.0 million. The Company anticipates net income in fiscal 2018 to be approximately $33.0 million to $36.3 million, or $1.40 to $1.55 per diluted share, reflecting a 32% anticipated effective tax rate. The Company's outlook also assumes no further significant fluctuations from prevailing foreign currency exchange rates.

This outlook excludes the $7.0 million to $10.0 million pre-tax charge related to cost savings initiatives in fiscal 2018, of which $6.3 million was recorded in the first quarter. The Company continues to expect to realize approximately $12.0 million of savings in fiscal 2018 and estimates approximately $15.0 million in on-going annual pre-tax savings from these initiatives, with the majority being in general and administrative expenses.

The Company announced on May 25, 2017, that the Board of Directors approved the payment on June 20, 2017 of a cash dividend in the amount of $0.13 for each share of the Company’s outstanding common stock and class A common stock held by shareholders of record as of the close of business on June 6, 2017.

During the first quarter of fiscal 2018, the Company repurchased 44,000 shares under its share repurchase program. As of April 30, 2017, $4.9 million was utilized of the current $50.0 million share repurchase authorization.

The Company’s management will host a conference call and audio webcast to discuss its results today, May 25^th at 9:00 a.m. Eastern Time.  The conference call may be accessed by dialing (888) 437-9445.  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 replay of the call will be available at 12:00 p.m. ET on May 25, 2017 until 11:59 p.m. ET on June 1, 2017 and can be accessed by dialing (844) 512-2921 and entering replay pin number 7745601.

 

 

Movado Group, Inc. designs, sources, and distributes Movado, EBEL, Concord, Coach, HUGO BOSS, Lacoste, Juicy Couture, Tommy Hilfiger and Scuderia Ferrari brand watches worldwide and Rebecca Minkoff brand watches beginning in summer of 2017.

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, the stability of the European Union (including the impact of the June 23, 2016 referendum advising that the United Kingdom exit from the European Union) and 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, 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 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, disease, general risks associated with doing business outside the United States including, without limitation, import duties, 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)

 

 

 

		Three Months Ended
		April 30,
		2017				2016
Net sales		$	99,265			$	114,063
Cost of sales			50,128				52,746
Gross profit			49,137				61,317
Operating expenses			52,785				55,939
Operating (loss) / income			(3,648	)			5,378
Interest expense			(356	)			(375	)
Interest income			122				57
(Loss) / Income before income taxes			(3,882	)			5,060
Provision for income taxes			277				1,723
Net (loss) / income			(4,159	)			3,337
Less: Net income attributed to noncontrolling interests			-				29
Net (loss) / income attributed to Movado Group, Inc.		$	(4,159	)		$	3,308
Per Share Information:
Net (loss) / income attributed to Movado Group, Inc.		$	(0.18	)		$	0.14
Weighted diluted average shares outstanding			23,075	*			23,349

 

*Calculated using basic weighted average shares as common stock equivalents would be anti-dilutive.

 

 

	As Reported			% Change
	Three Months Ended		% Change	Constant
	April 30,		As Reported	Dollar
	2017	2016
Total Net sales	$99,265	$114,063	-13.0%	-11.0%

 

 

		Net Sales				Gross Profit				Operating (Loss) / Income				Pre-tax (Loss) / Income				Provisions for Income Taxes				Net (Loss) / Income Attributed to Movado Group, Inc.				EPS
Three Months Ended April 30, 2017
As Reported (GAAP)		$	99,265			$	49,137			$	(3,648	)		$	(3,882	)		$	277			$	(4,159	)		$	(0.18	)
Cost Savings Initiatives (1)			-				1,402				6,334				6,334				1,917				4,417				0.19
Adjusted Results (Non-GAAP)		$	99,265			$	50,539			$	2,686			$	2,452			$	2,194			$	258			$	0.01
Three Months Ended April 30, 2016
As Reported (GAAP)		$	114,063			$	61,317			$	5,378			$	5,060			$	1,723			$	3,308			$	0.14
Retirement Charge (2)			-				-				1,806				1,806				686				1,119				0.05
Adjusted Results (Non-GAAP)		$	114,063			$	61,317			$	7,184			$	6,866			$	2,409			$	4,427			$	0.19

 

(1) Related to a charge for severance and payroll related, other expenses and occupancy expenses.

(2) Related to a charge for the retirement of the former Vice Chairman and Chief Operating Officer.

 

 

 

 

		April 30,				January 31,				April 30,
		2017				2017				2016
ASSETS
Cash and cash equivalents		$	233,594			$	256,279			$	203,909
Trade receivables, net			66,457				66,847				75,771
Inventories			160,376				153,167				178,388
Other current assets			32,555				28,487				36,472
Total current assets			492,982				504,780				494,540
Property, plant and equipment, net			31,962				34,173				37,247
Deferred and non-current income taxes			24,864				24,837				20,697
Other non-current assets			45,233				44,012				41,578
Total assets		$	595,041			$	607,802			$	594,062
LIABILITIES AND EQUITY
Loans payable to bank, current		$	5,000			$	5,000			$	-
Accounts payable			22,981				27,192				27,677
Accrued liabilities			37,530				35,061				37,191
Income taxes payable			1,349				4,149				893
Total current liabilities			66,860				71,402				65,761
Loans payable to bank			25,000				25,000				35,000
Deferred and non-current income taxes payable			3,312				3,322				3,008
Other non-current liabilities			35,349				34,085				30,875
Noncontrolling interests			-				-				632
Shareholders' equity			464,520				473,993				458,786
Total liabilities and equity		$	595,041			$	607,802			$	594,062

 

 

 

 

 

		Three Months Ended
		April 30,
		2017				2016
Cash flows from operating activities:
Net (loss) / income		$	(4,159	)		$	3,337
Depreciation and amortization			2,885				2,901
Other non-cash adjustments			826				2,948
Cost savings initiatives			6,334				-
Changes in working capital			(22,229	)			(29,167	)
Changes in non-current assets and liabilities			(211	)			(1,103	)
Net cash (used in) operating activities			(16,554	)			(21,084	)
Cash flows from investing activities:
Capital expenditures			(397	)			(538	)
Restricted cash deposits			-				(1,070	)
Short-term investment			-				(156	)
Trademarks and other intangibles			(40	)			(226	)
Net cash (used in) investing activities			(437	)			(1,990	)
Cash flows from financing activities:
Repayments of bank borrowings			-				(5,000	)
Dividends paid			(2,982	)			(2,983	)
Stock repurchase			(1,028	)			(943	)
Other financing			(692	)			(1,204	)
Net cash (used in) financing activities			(4,702	)			(10,130	)
Effect of exchange rate changes on cash and cash equivalents			(992	)			8,925
Net change in cash and cash equivalents			(22,685	)			(24,279	)
Cash and cash equivalents at beginning of period			256,279				228,188
Cash and cash equivalents at end of period		$	233,594			$	203,909

 

 

 

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