(MOVADO GROUP INC. LOGO) Movado
Ebel
Concord
ESQ SWISS
Coach Watches
Tommy Hilfiger Watches
Hugo Boss Watches
Juicy Couture Watches
CONTACT: Investor Relations:
Suzanne Michalek
Vice President, Corporate Communications
201-267-8000
Financial Dynamics
Rachel Albert
212-850-5600
FOR IMMEDIATE RELEASE
MOVADO GROUP, INC. ANNOUNCES FIRST QUARTER EPS INCREASES TO $0.11
- Q1 OPERATING PROFIT INCREASES 60.5% FROM LY -
- COMPANY RAISES FY07 EPS PROJECTIONS -
PARAMUS, NJ - JUNE 1, 2006 -- MOVADO GROUP, INC. (NYSE: MOV), today
announced first quarter results for the period ended April 30, 2006.
FIRST QUARTER FISCAL 2007
- - Net sales increased 11.4% to $97.7 million compared to $87.8 million last
year.
- - Comparable store sales at the Company's Movado boutiques increased 4.5%
versus a 3.2% increase in the year-ago period.
- - Gross margin improved to 61.0% compared to 60.2% last year.
- - Operating profit increased 60.5% to $3.4 million compared to $2.1 million
in the year-ago period.
- - Net interest expense was $0.1 million versus $0.8 million last year:
- Interest expense for the quarter was the same as the year-ago period,
$0.9 million, with average borrowings in the quarter of $106.5 million
at an average borrowing rate of 3.4%.
- Interest income for the quarter was $0.9 million due to short term
investments of cash-on-hand resulting from the repatriation of foreign
earnings under the American Jobs Creation Act. This compares to
interest income of $0.1 million in the year-ago period.
- - Income tax expense of $0.6 million reflects a 17.5% tax rate in the first
quarter compared to income tax expense of $0.3 million, or a 25.0% tax
rate, recorded last year. The favorable tax rate benefited first quarter
diluted earnings per share by $0.01 and reflects the further utilization of
a Swiss net operating loss carryforward (NOL) acquired with the Ebel brand
in fiscal 2005. The Company anticipates maintaining the 17.5% tax rate for
the balance of fiscal 2007.
- - Net income and earnings per diluted share more than doubled to $2.9 million
and $0.11, respectively, versus net income of $1.0 million and earnings per
diluted share of $0.04 in the year-ago period.
Efraim Grinberg, President and Chief Executive Officer, stated, "We are
very pleased with the strength of our first quarter performance, which continued
to be driven by the appeal of our diverse portfolio of brands and the focused
execution of our operating strategies. Fiscal 2007 was jump-started by an
excellent response from our retail partners to the powerful array of new
products debuted at the Basel Watch Fair. In our luxury category, Ebel sparked
excitement with the introduction of Brasilia, an important new collection that
is already showing encouraging initial sell-through."
Rick Cote, Executive Vice President and Chief Operating Officer, stated,
"In addition to the robust sales performance in the first quarter, our global
team demonstrated strong operating disciplines which translated into expanded
gross margins and operating profit growth. We continue to invest behind our
Movado Boutiques, the worldwide growth of Ebel and the development of our
licensed brands. As we begin to reap the benefits of these investments, we
expect to grow our operating margin through a combination of gross margin
improvement and the leveraging of our existing infrastructure."
Movado Group increased its guidance for fiscal 2007 and now anticipates
diluted earnings per share to range between $1.53 and $1.58. This new guidance
continues to include an approximate $0.08 per diluted share expense associated
with the adoption of FASB 123R and the shift in the composition of the Company's
equity-based compensation plan from options toward restricted stock. These
projections compare with the Company's previously issued guidance for diluted
earnings per share to range between $1.35 and $1.39. Approximately $0.14 of the
increase in guidance is based on projected benefits resulting from the further
utilization of the Company's NOL, with the balance of the increase attributed to
improved operating performance. The Company now estimates fiscal 2007
year-over-year net sales growth to be at the higher end of its previously issued
range of 9% to 11%.
The Company's management will host a conference call today, June 1, 2006 at
10:00 a.m. Eastern Time to discuss its first quarter financial results. A live
broadcast of the call will be available on the Company's website:
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 and HUGO BOSS watches worldwide, and operates Movado
boutiques and company stores in the United States. The Company plans to launch
Juicy Couture watches in the fall of 2006 and LACOSTE watches in the spring of
2007.
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: 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 RETAIL INDUSTRY, IMPORT
RESTRICTIONS, COMPETITION, SEASONALITY 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 OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
APRIL 30,
------------------
2006 2005
------- --------
Net sales $97,744 $87,756
Cost of sales 38,154 34,918
------- -------
Gross profit 59,590 52,838
Selling, general and administrative expenses 56,156 50,699
------- -------
Operating profit 3,434 2,139
Interest expense 943 878
Interest income (891) (69)
Minority interest (79) --
------- -------
Income before income taxes 3,461 1,330
Income tax 606 333
------- -------
Net income $ 2,855 $ 997
======= =======
Net income per diluted share $ 0.11 $ 0.04
Shares used in per share computation 26,395 26,020
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
APRIL 30, JANUARY 31, APRIL 30,
2006 2006 2005
--------- ----------- ---------
ASSETS
Cash and cash equivalents $ 82,560 $123,625 $ 49,641
Trade receivables, net 116,523 109,852 102,115
Inventories 213,763 198,582 202,498
Other 34,199 26,596 35,055
-------- -------- --------
Total current assets 447,045 458,655 389,309
-------- -------- --------
Property, plant and equipment, net 51,003 52,168 53,389
Other assets 39,774 39,069 37,548
-------- -------- --------
$537,822 $549,892 $480,246
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $ 0 $ 0 $ 18,000
Current portion of long-term debt 5,000 5,000 0
Accounts payable 33,432 35,529 35,289
Accrued liabilities 35,748 43,065 35,830
Deferred and current taxes payable 1,158 8,227 5,131
-------- -------- --------
Total current liabilities 75,338 91,821 94,250
-------- -------- --------
Long-term debt 97,323 104,955 45,000
Deferred and non-current income taxes 13,181 11,947 12,046
Other liabilities 20,244 19,491 16,425
Minority interest 231 -- --
Shareholders' equity 331,505 321,678 312,525
-------- -------- --------
$537,822 $549,892 $480,246
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