EXHIBIT 99.1
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[GRAPHIC OMITTED] Movado
[LOGO - MOVADO GROUP INC.] Ebel
Concord
ESQ SWISS
Coach Watches
Tommy Hilfiger Watches
Hugo Boss Watches
Juicy Couture Watches
APPROVED BY: Rick Cote
Executive Vice President and
Chief Operating Officer
201-267-8000
CONTACT: Investor Relations
Suzanne Michalek
Director of Corporate Communications
201-267-8000
Financial Dynamics
Rachel Albert
212-850-5600
FOR IMMEDIATE RELEASE
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MOVADO GROUP, INC. ANNOUNCES 37% INCREASE IN REPORTED OPERATING
PROFIT IN FISCAL 2006; ADJUSTED OPERATING PROFIT UP 28%
~ FY06 REPORTED NET INCOME INCREASES SLIGHTLY ~
~ FY06 ADJUSTED NET INCOME INCREASES 28% ~
PARAMUS, NJ - APRIL 6, 2006 -- MOVADO GROUP, INC. (NYSE: MOV), today
announced results for the fourth quarter and fiscal year ended January 31,
2006.
FOURTH QUARTER FISCAL 2006
o Net sales were $126.1 million compared to $120.0 million last year.
o Comparable store sales at the Company's Movado boutiques increased 14.4%
versus a 2.9% increase in the year-ago period.
o Gross margin improved 160 basis points to 61.3% compared to 59.7% last
year.
o Operating profit was $14.6 million compared to $8.6 million in the fourth
quarter of fiscal 2005 and included a one-time benefit of $0.8 million
from a reversal of a previously recorded liability. Year-ago operating
profit included a $2.0 million non-cash impairment charge related to the
Movado boutique in Soho, New York City. Adjusted operating profit
increased 29.7% to $13.8 million in fiscal 2006 from $10.7 million in
fiscal 2005. (See attached table for reconciliation of GAAP to non-GAAP
measures.)
o Income tax expense was $10.4 million and included a $7.5 million charge
related to $148.5 million of foreign earnings repatriated under the
American Jobs Creation Act. Income tax expense of $0.4 million recorded
in the fourth quarter of fiscal 2005 included $1.9 million of
non-recurring favorable tax benefits, including a retroactive favorable
tax ruling and the tax benefit associated with the previously mentioned
impairment charge.
o On a reported basis, net income and earnings per diluted share were $3.0
million and $0.11, respectively, versus net income of $7.2 million and
earnings per diluted share of $0.28 in the year-ago period.
o Adjusted net income increased 35.0% to $9.9 million in fiscal 2006 from
$7.3 million in fiscal 2005, and adjusted earnings per diluted share
increased 35.7% to $0.38 in fiscal 2006 from $0.28 in fiscal 2005.
FISCAL 2006 RESULTS
o Net sales increased 12.4% to $470.9 million versus $419.0 million last
year.
o Comparable store sales increased 8.5% at the Company's Movado boutiques
versus an 11.2% increase last year.
o Gross margin improved 110 basis points to 60.8% compared to 59.7% last
year.
o Operating profit increased to $48.0 million from $35.1 million in fiscal
2005 and included a one-time benefit of $0.5 million from a reversal of a
previously recorded liability. Year-ago results include the previously
mentioned impairment charge recorded in the fourth quarter of fiscal
2005. Adjusted operating profit increased 28.1% to $47.5 million in
fiscal 2006 from $37.1 million in fiscal 2005.
o Other income of $1.0 million includes two unusual items recorded in the
third quarter of fiscal 2006: a gain of $2.6 million generated from the
sale of a building acquired with Ebel, which more than offset a loss of
$1.6 million associated with the accounting for foreign currency hedge
derivatives. Other income of $1.4 million recorded in fiscal 2005
includes a one-time gain associated with a legal settlement the Company
reached with Swiss Army Brands.
o Income tax expense for fiscal 2006 was $18.3 million and includes the
previously mentioned charge associated with $148.5 million of foreign
earnings repatriated under the American Jobs Creation Act. Income tax
expense of $6.8 million recorded in fiscal 2005 includes the
aforementioned non-recurring tax benefits recorded in the fourth quarter
of last year.
o On a reported basis, net income and earnings per diluted share were $26.6
million and $1.02, respectively, versus net income of $26.3 million and
earnings per diluted share of $1.03 reported in fiscal 2005.
o Fiscal 2006 adjusted net income increased 27.7% to $32.7 million in 2006
from $25.6 million in fiscal 2005, and adjusted earnings per diluted
share increased 25.0% to $1.25 in fiscal 2006 from $1.00 in fiscal 2005.
Efraim Grinberg, President and Chief Executive Officer, stated,
"Fiscal 2006 was an excellent year for Movado Group. Over the past several
years we have delivered a consistent track record of growth by remaining true
to our strategies. As demonstrated brand builders, we continue to support our
portfolio - Movado, Ebel, Concord, ESQ, Coach and Tommy Hilfiger - with
strongly differentiated and innovative products, bold advertising and
marketing campaigns, and a commitment to our retail partners. We have built a
strong presence at retail with our growing Movado boutique business, which
continues to post strong results and adds immeasurable brand equity. We have
also selectively aligned ourselves with world-class brands and we are excited
to launch HUGO BOSS and Juicy Couture watches this year and LACOSTE watches in
2007. These factors, coupled with a relentless focus on the fundamentals of
our business, have enabled our company to deliver strong sales, margins,
profits and cash flow."
Rick Cote, Executive Vice President and Chief Operating Officer,
stated, "We achieved solid results in fiscal 2006, while maintaining a
strategy of strong and consistent investment in our business. In fiscal 2007,
we are well positioned for continued growth as we expand our existing
businesses, prepare for and launch our new businesses, and focus on further
improving our financial metrics."
Mr. Grinberg concluded, "Fiscal 2007 marks the 125th anniversary of
the Movado brand. Throughout the year we will celebrate Movado's history and
incorporate its rich heritage in our products, our marketing and through
special events. New initiatives are in place across all of our brands and the
exciting products we recently introduced at the Basel Watch Fair were met with
great reception."
Movado Group anticipates fiscal 2007 earnings per share to range
between $1.35 and $1.39, including 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 management compensation plan from
options toward restricted stock. Fiscal 2007 net sales are projected to grow
between 9% and 11% from fiscal 2006.
The Company's management will host a conference call today, April 6,
2006 at 10:00 a.m. Eastern Time to discuss its fourth quarter and year-end
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.
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 PRESENTS ADJUSTED OPERATING PROFIT, WHICH IS OPERATING
PROFIT EXCLUDING THE BENEFIT OF A REVERSAL OF A PREVIOUSLY RECORDED LIABILITY
INCURRED IN THE FOURTH QUARTER OF FISCAL 2006 AND THE IMPAIRMENT CHARGE
INCURRED IN THE FOURTH QUARTER OF FISCAL 2005 ASSOCIATED WITH THE COMPANY'S
MOVADO BOUTIQUE IN SOHO. MANAGEMENT EXCLUDES THE RECORDED LIABILITY ADJUSTMENT
FROM ADJUSTED OPERATING PROFIT BECAUSE IT IS AN OUT-OF-PERIOD ADJUSTMENT WHICH
THE COMPANY BELIEVES DOES NOT RELATE TO CURRENT YEAR RESULTS. THE COMPANY
EXCLUDES THE IMPAIRMENT CHARGE BECAUSE IT WAS NOT A RECURRING CHARGE AND WAS
NON-CASH. MANAGEMENT BELIEVES THAT PRESENTING ADJUSTED OPERATING PROFIT IS
USEFUL TO INVESTORS BECAUSE THE EXCLUSION OF THE NON-RECURRING, NON-CASH
IMPAIRMENT CHARGE AND THE RECORDED LIABILITY ADJUSTMENT ENHANCES THE
COMPARABILITY OF FISCAL 2005 OPERATING RESULTS WITH FISCAL 2006 OPERATING
RESULTS AND GIVES A BETTER INDICATION OF THE GROWTH IN THE COMPANY'S OPERATING
PERFORMANCE THAT OCCURRED BETWEEN THE PERIODS COMPARED.
ADJUSTED NET INCOME IS CALCULATED BY EXCLUDING CERTAIN
NON-OPERATIONAL ITEMS FROM NET INCOME, SUCH AS REPATRIATION TAXES, THE
FAVORABLE EFFECT OF A TAX RULING, THE FAVORABLE EFFECT OF A LITIGATION
SETTLEMENT AND CURRENCY LOSSES. IN ADDITION, THE COMPANY EXCLUDES THE
IMPAIRMENT CHARGE AND THE BENEFIT FROM A REVERSAL OF A PREVIOUSLY RECORDED
LIABILITY DISCUSSED ABOVE AND THE GAIN ON SALE OF A BUILDING FROM ITS ADJUSTED
NET INCOME BECAUSE THEY ARE UNUSUAL ITEMS. MANAGEMENT BELIEVES THAT PRESENTING
ADJUSTED NET INCOME (AND ADJUSTED NET INCOME PER SHARE) IS USEFUL TO INVESTORS
BECAUSE THE EXCLUSION OF NON-OPERATIONAL AND UNUSUAL ITEMS PROVIDES INVESTORS
WITH ADDITIONAL INFORMATION REGARDING THE COMPANY'S OPERATING RESULTS AND
PERFORMANCE BECAUSE CHANGES IN THE COMPANY'S OPERATIONS MAY BE MASKED BY THOSE
UNUSUAL ITEMS. PRESENTATION OF ADJUSTED NET INCOME PROVIDES INVESTORS WITH
ANOTHER MEASURE WITH WHICH TO COMPARE THE COMPANY'S 2006 OPERATING RESULTS
VERSUS ITS 2005 OPERATING RESULTS.
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," "PROJECTS," "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 TWELVE MONTHS ENDED
JANUARY 31, JANUARY 31,
---------------------- ----------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net sales $126,123 $119,968 $470,941 $418,966
Cost of sales 48,800 48,324 184,621 168,818
-------- -------- -------- --------
Gross profit 77,323 71,644 286,320 250,148
Selling, general and administrative expenses 62,720 63,007 238,283 215,072
-------- -------- -------- --------
Operating profit 14,603 8,637 48,037 35,076
Other income/(expense) -- -- 1,008 1,444
Interest expense 1,208 1,050 4,109 3,430
-------- -------- -------- --------
Income before income taxes 13,395 7,587 44,936 33,090
Income tax 10,434 407 18,319 6,783
-------- -------- -------- --------
Net income $ 2,961 $ 7,180 $ 26,617 $ 26,307
======== ======== ======== ========
Net income per diluted share $ 0.11 $ 0.28 $ 1.02 $ 1.03
Shares used in per share computation 26,263 25,828 26,180 25,583
MOVADO GROUP, INC.
RECONCILIATION TABLES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED TWELVE MONTHS ENDED
JANUARY 31, JANUARY 31,
--------------------- ----------------------
2006 2005 2006 2005
------- ------- -------- --------
Operating Profit (GAAP) $14,603 $8,637 $ 48,037 $ 35,076
Previously Recorded Liability Adjustment (1) (771) -- (507) --
Impairment Charge (2) -- 2,025 -- 2,025
------- ------- -------- --------
Adjusted Operating Profit (Non-GAAP) $13,832 $10,662 $ 47,530 $ 37,101
======= ======= ======== ========
THREE MONTHS ENDED TWELVE MONTHS ENDED
JANUARY 31, JANUARY 31,
--------------------- ---------------------
2006 2005 2006 2005
------- ------- -------- --------
Net Income (GAAP) $ 2,961 $ 7,180 $ 26,617 $ 26,307
Previously Recorded Liability Adjustment (1) (603) -- (396) --
Impairment Charge (2) -- 1,251 -- 1,251
Repatriation Taxes (3) 7,506 -- 7,506 --
Gain on Sale of Building (4) -- -- (2,057) --
Effect of Tax Ruling (5) -- (1,126) -- (1,126)
Currency Loss (6) -- -- 1,002 --
Litigation Settlement (7) -- -- -- (842)
------- ------- -------- --------
Adjusted Net Income $ 9,864 $ 7,305 $ 32,672 $ 25,590
======= ======= ======== ========
Number of shares outstanding 26,263 25,828 26,180 25,583
Adjusted Net Income per share (Non-GAAP) $ 0.38 $ 0.28 $ 1.25 $ 1.00
(1) One-time benefit recorded for reversal of a previously recorded liability.
(2) Non-cash impairment charge related to the Movado boutique in Soho,
New York City.
(3) Tax expense associated with the repatriated foreign earnings under the
American Jobs Creation Act of 2004.
(4) Gain of sale on building acquired with Ebel.
(5) Retroactive favorable tax ruling.
(6) Loss on discontinued foreign currency hedge derivatives.
(7) One-time gain associated with a legal settlement reached with Swiss Army
Brands.
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(UNAUDITED)
JANUARY 31, JANUARY 31,
2006 2005
----------- -----------
ASSETS
Cash and cash equivalents $ 123,625 $ 63,782
Trade receivables, net 109,852 104,685
Inventories 198,582 185,609
Other 28,989 32,630
----------- -----------
Total current assets 461,048 386,706
----------- -----------
Property, plant and equipment, net 52,168 52,510
Other assets 36,676 37,858
----------- -----------
$ 549,892 $ 477,074
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LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $ 0 $ 0
Current portion of long-term debt 5,000 0
Accounts payable 35,529 38,488
Accrued liabilities 43,065 39,743
Deferred and current taxes payable 8,227 5,250
----------- -----------
Total current liabilities 91,821 83,481
----------- -----------
Long-term debt 104,955 45,000
Deferred and non-current income taxes 11,947 14,827
Other liabilities 19,491 17,209
Shareholders' equity 321,678 316,557
----------- -----------
$ 549,892 $ 477,074
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