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
CONTACT: Investor Relations
Suzanne Rosenberg
Vice President, Corporate Communications
201-267-8000
Financial Dynamics
Melissa Myron/Rachel Albert
212-850-5600
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FOR IMMEDIATE RELEASE
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MOVADO GROUP, INC. REPORTS THIRD QUARTER RESULTS
PARAMUS, NJ - DECEMBER 7, 2006 -- MOVADO GROUP, INC. (NYSE: MOV),
today announced third quarter and nine-month results for the period ended
October 31, 2006.
THIRD QUARTER FISCAL 2007
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o Net sales increased $24.5 million, or 17.3%, to $166.3 million from $141.7
million last year. Net sales for the quarter included $12.1 million of
excess discontinued product.
o Comparable store sales increased 0.5% at the Company's Movado boutiques
versus a 10.6% gain achieved last year.
o Gross profit was $97.9 million, or 58.9% of sales, compared to $86.2
million, or 60.8% of sales last year. Excluding excess discontinued
product sales, adjusted gross profit was $97.9 million, or 63.5% of sales.
o Operating profit was $19.8 million versus $19.0 million last year and
includes two unusual items:
o A change in estimate of the Company's reserve for accounts receivable,
which resulted in a $6.0 million non-cash charge, or $0.14 per fully
diluted share.
o A $2.2 million gain from an out-of-period adjustment related to
foreign currency, or $0.06 per fully diluted share.
o Adjusted operating profit, which excludes those unusual items, was $23.6
million, a 24.0% increase from adjusted operating profit in the year-ago
period. (SEE ATTACHED TABLE FOR RECONCILIATION OF GAAP TO NON-GAAP
MEASURES.)
o Net interest expense was $0.2 million versus $1.2 million last year:
o Interest expense for the quarter was $1.0 million compared to $1.3
million in the year-ago period.
o Interest income for the quarter was $0.8 million compared to $0.1
million last year.
o An income tax benefit of $2.0 million was recorded in the third quarter
compared to income tax expense of $4.7 million, or a 25.0% tax rate,
recorded last year. The further utilization of a Swiss net operating loss
carryforward (NOL) acquired with the Ebel brand in fiscal 2005 contributed
$0.25 to third quarter diluted earnings per share. The Company continues
to benefit from the utilization of its NOL and now anticipates a fiscal
2007 tax rate of approximately 5.0%.
o On a reported basis, net income and earnings per share were $21.9 million
and $0.82, respectively, versus net income of $14.1 million and earnings
per diluted share of $0.54 in the year-ago period.
o Adjusting for unusual items recorded in fiscal 2007 and fiscal 2006, third
quarter net income increased 31.9% to $17.2 million from $13.1 million
last year, and earnings per diluted share increased 28.0% to $0.64 in the
third quarter from $0.50 in the year-ago period. (SEE ATTACHED TABLE FOR
RECONCILIATION OF GAAP TO NON-GAAP MEASURES.)
NINE-MONTH RESULTS
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o Net sales increased 13.3% to $390.6 million from $344.8 million last year
and included $12.1 million of excess discontinued product sales recorded
in the third quarter.
o Comparable store sales increased 5.0% at the Company's Movado boutiques
matching a 5.0% gain achieved last year.
o Gross profit was $236.0 million, or 60.4% of sales, compared to $209.0
million, or 60.6% of sales in the year-ago period. Excluding excess
discontinued product sales, adjusted gross profit was $236.0 million, or
62.4% of sales.
o Operating profit was $37.3 million versus $33.4 million last year and
includes the previously mentioned unusual items recorded in the third
quarter of this year.
o Adjusted operating profit, which excludes those unusual items, was $41.1
million, a 22.9% increase over adjusted operating profit in the comparable
period last year. (SEE ATTACHED TABLE FOR RECONCILIATION OF GAAP TO
NON-GAAP MEASURES.)
o Net interest expense was $0.6 million versus $2.9 million last year:
o Interest expense for the nine-month period was $2.8 million compared
to $3.1 million in the year-ago period.
o Interest income for the nine-month period was $2.3 million compared to
$0.2 million last year.
o Income tax expense of $1.0 million reflects a 2.8% tax rate in the
year-to-date period compared to income tax expense of $7.9 million, or a
25.0% tax rate recorded last year, and reflects the further utilization of
the Swiss NOL acquired with the Ebel brand in fiscal 2005.
o On a reported basis, net income and earnings per share were $36.1 million
and $1.35, respectively, versus net income of $23.7 million and earnings
per diluted share of $0.91 in the year-ago period.
o Adjusting for unusual items recorded in fiscal 2007 and fiscal 2006, net
income for the nine-month period increased 33.3% to $30.1 million from
$22.6 million last year, and earnings per diluted share increased 29.9% to
$1.13 in the nine-month period from $0.87 in the year-ago period. (SEE
ATTACHED TABLE FOR RECONCILIATION OF GAAP TO NON-GAAP MEASURES.)
Efraim Grinberg, President and Chief Executive Officer, commented,
"We are very pleased with our performance in the third quarter reflecting the
strength of our brands and the consistent execution of our strategies. We
continue to see solid momentum across our portfolio, from luxury timepieces to
fashion watches, driven by product innovation, dynamic marketing programs and
advertising campaigns, and strong marketplace execution."
Rick Cote, Executive Vice President and Chief Operating Officer,
stated, "Our strong financial results and balance sheet speak to the
fundamental strength of our business model. Throughout the quarter and
year-to-date period, our global team demonstrated strong operating disciplines
which translated into expanded gross margins and operating profit growth.
During the quarter, we also took advantage of an opportunity to convert
discontinued product into cash, thereby improving our inventory mix and
driving cash flow. Going forward, we will continue to focus on growing our
operating margin through a combination of gross margin improvement and the
leveraging of our existing infrastructure."
On a GAAP basis, Movado Group projects fiscal 2007 diluted earnings
per share to range between $1.77 and $1.82 versus GAAP diluted earnings per
share of $1.02 recorded in fiscal 2006. Fiscal 2007 GAAP earnings projections
are based on an approximate 5% tax rate.
On an adjusted basis, which excludes the unusual items reconciled in
the attached table and which is based on a normalized 25% effective tax rate,
the Company's fiscal 2007 diluted earnings per share range of $1.77 to $1.82,
translates to a range of $1.45 to $1.50. This represents a 16% to 20% increase
from fiscal 2006 adjusted EPS of $1.25, which also excluded unusual items and
was based on an effective tax rate of 25%. Included in the Company's fiscal
2007 guidance is an estimated $0.08 per diluted share expense related to
equity compensation.
The Company's management will host a conference call today, December
7th at 10:00 a.m. Eastern Time. 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, HUGO BOSS and Juicy Couture watches
worldwide, and operates Movado boutiques and company stores in the United
States. The Company plans to launch LACOSTE watches in the spring of 2007.
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 NET SALES EXCLUDING EXCESS DISCONTINUED PRODUCT
SALES (AND GROSS PROFIT EXCLUDING SUCH SALES) BECAUSE THE COMPANY BELIEVES
THAT IT IS USEFUL TO INVESTORS TO ELIMINATE THE EFFECT OF THESE UNUSUAL SALES
IN ORDER TO IMPROVE THE COMPARABILITY OF THE COMPANY'S RESULTS FOR THE PERIODS
PRESENTED.
THE COMPANY PRESENTS ADJUSTED OPERATING PROFIT, WHICH IS OPERATING PROFIT
EXCLUDING A NON-CASH CHARGE TO ACCOUNTS RECEIVABLE RESERVE DUE TO A CHANGE IN
ESTIMATE AND A ONE-TIME BENEFIT RECORDED FOR AN OUT-OF-PERIOD ADJUSTMENT
RELATED TO FOREIGN CURRENCY. THE COMPANY EXCLUDES THE CHARGE TO ACCOUNTS
RECEIVABLE RESERVE BECAUSE IT IS A NON-CASH, NON-RECURRING CHARGE. THE COMPANY
EXCLUDES THE OUT-OF-PERIOD ADJUSTMENT RELATED TO FOREIGN CURRENCY BECAUSE IT
DOES NOT RELATE TO THE PERIODS BEING PRESENTED. MANAGEMENT BELIEVES THAT
PRESENTING ADJUSTED OPERATING PROFIT IS USEFUL TO INVESTORS BECAUSE THE
EXCLUSION OF NON-RECURRING, NON-CASH CHARGES AND OUT-OF-PERIOD ADJUSTMENTS
ENHANCES THE COMPARABILITY OF FISCAL 2007 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 AND
UNUSUAL ITEMS FROM NET INCOME, SUCH AS A NON-CASH CHARGE TO ACCOUNTS
RECEIVABLE RESERVE DUE TO A CHANGE IN ESTIMATE, A ONE-TIME BENEFIT RECORDED
FOR AN OUT-OF-PERIOD ADJUSTMENT RELATED TO FOREIGN CURRENCY, A NON-RECURRING
GAIN ON THE SALE OF A BUILDING, A LOSS ON DISCONTINUED CURRENCY HEDGE
DERIVATIVES AND THE UTILIZATION OF AN ACQUIRED EBEL TAX NET OPERATING LOSS
CARRYFORWARD. 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 FISCAL 2007 OPERATING RESULTS AND ITS
FISCAL 2006 OPERATING RESULTS.
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 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 OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
----------------------------- -----------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
----------------------------- -----------------------------
2006 2005 2006 2005
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Net sales $ 166,272 $ 141,736 $ 390,604 $ 344,818
Cost of sales 68,370 55,563 154,600 135,821
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Gross profit 97,902 86,173 236,004 208,997
Selling, general and administrative expenses 78,123 67,163 198,717 175,563
--------- --------- --------- ---------
Operating profit 19,779 19,010 37,287 33,434
Other income, net 374 1,008 374 1,008
Interest expense (987) (1,292) (2,849) (3,090)
Interest income 753 84 2,260 189
Minority interest 2 -- 66 --
--------- --------- --------- ---------
Income before income taxes 19,921 18,810 37,138 31,541
Income tax (1,964) 4,702 1,049 7,885
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Net income $ 21,885 $ 14,108 $ 36,089 $ 23,656
========= ========= ========= =========
Net income per diluted share $ 0.82 $ 0.54 $ 1.35 $ 0.91
Shares used in per share computation 26,799 26,211 26,659 26,123
MOVADO GROUP, INC.
RECONCILIATION TABLES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
----------------------------- -----------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
----------------------------- -----------------------------
2006 2005 2006 2005
-------- -------- -------- --------
Operating Profit (GAAP) $ 19,779 $ 19,010 $ 37,287 $ 33,434
A/R Reserve Adjustment (1) 6,000 -- 6,000 --
Out-of-Period FX Adjustment (2) (2,211) -- (2,211) --
-------- -------- -------- --------
Adjusted Operating Profit (Non-GAAP) $ 23,568 $ 19,010 $ 41,076 $ 33,434
======== ======== ======== ========
----------------------------- -----------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
----------------------------- -----------------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net Income (GAAP) $ 21,885 $ 14,108 $ 36,089 $ 23,656
A/R Reserve Adjustment (1) 3,706 -- 3,706 --
Out-of-Period FX Adjustment (2) (1,729) -- (1,729) --
Gain on Sale of Building (3) -- (2,057) -- (2,057)
Currency Loss (4) -- 1,002 -- 1,002
NOL Utilization (5) (6,647) -- (7,938) --
-------- -------- -------- --------
Adjusted Net Income (Non-GAAP) $ 17,215 $ 13,053 $ 30,128 $ 22,601
======== ======== ======== ========
Number of shares outstanding 26,799 26,211 26,659 26,123
Adjusted Net Income per share (Non-GAAP) $ 0.64 $ 0.50 $ 1.13 $ 0.87
(1) Non-cash charge to accounts receivable reserve due to a change in
estimate.
(2) One-time benefit recorded for an out-of-period adjustment related to
foreign currency.
(3) Gain of sale on building acquired with Ebel.
(4) Loss on discontinued foreign currency hedge derivatives.
(5) Utilization of acquired Ebel tax net operating loss carryforwards.
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
OCTOBER 31, JANUARY 31, OCTOBER 31,
2006 2006 2005
----------- ----------- -----------
ASSETS
Cash and cash equivalents $ 79,908 $123,625 $ 56,064
Trade receivables, net 159,010 106,619 144,975
Inventories 207,709 198,582 208,943
Other 33,740 26,319 27,603
-------- -------- --------
Total current assets 480,367 455,145 437,585
-------- -------- --------
Property, plant and equipment, net 53,339 52,168 51,706
Other assets 47,058 39,373 37,846
-------- -------- --------
$580,764 $546,686 $527,137
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LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $ 0 $ 0 $ 44,000
Current portion of long-term debt 5,000 5,000 --
Accounts payable 35,948 33,120 32,497
Accrued liabilities 52,465 42,268 57,620
Deferred and current taxes payable 7,634 8,227 7,055
-------- -------- --------
Total current liabilities 101,047 88,615 141,172
-------- -------- --------
Long-term debt 82,435 104,955 45,000
Deferred and non-current income taxes 11,050 11,947 9,741
Other liabilities 21,714 19,491 17,629
Minority interest 244 -- --
Shareholders' equity 364,274 321,678 313,595
-------- -------- --------
$580,764 $546,686 $527,137
======== ======== ========