EXHIBIT 99.1
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[GRAPHIC OMITTED]
[LOGO - MOVADO GROUP INC.]
CONTACT: Investor Relations
Suzanne Rosenberg
Vice President, Corporate Communications
201-267-8000
Financial Dynamics
Leigh Parrish/Melissa Merrill
212-850-5600
FOR IMMEDIATE RELEASE
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MOVADO GROUP, INC. POSTS RECORD NET SALES AND NET INCOME
IN FISCAL 2007
~ FY07 REPORTED OPERATING INCOME INCREASES 9% ~
~ FY07 ADJUSTED OPERATING INCOME INCREASES 18% ~
PARAMUS, NJ - MARCH 29, 2007 - MOVADO GROUP, INC. (NYSE: MOV), today
announced results for the fourth quarter and fiscal year ended January 31,
2007.
FOURTH QUARTER FISCAL 2007
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o Net sales were $142.3 million compared to $126.1 million last year. Net
sales for the quarter included $4.4 million of excess discontinued product.
o Comparable store sales at the Company's Movado boutiques decreased 1.8%
versus a 14.4% increase in the year-ago period.
o Gross profit was $86.9 million, or 61.1% of sales, compared to $77.3
million, or 61.3% of sales last year. Excluding excess discontinued product
sales, adjusted gross profit was $86.9 million, or 63.1% of sales, an
improvement of 180 basis points over the year-ago period.
o Operating profit was $15.0 million compared to $14.6 million in the fourth
quarter of fiscal 2006. Adjusting for an unusual item recorded in fiscal
2006, operating profit in fiscal 2007 increased 8.7% from $13.8 million in
fiscal 2006. (SEE ATTACHED TABLE FOR A RECONCILIATION OF GAAP TO NON-GAAP
MEASURES.)
o Other income of $1.0 million includes the benefit from sales of
non-financial assets. No other income was recorded in the year-ago period.
o Net interest income was $0.1 million versus net interest expense of $1.2
million last year:
o Interest expense for the quarter was $0.9 million compared to $1.5
million in the year-ago period.
o Interest income for the quarter was $1.0 million compared to $0.3
million last year.
o Income tax expense of $1.8 million reflects an effective tax rate of 11.4%
in the fourth quarter compared to income tax expense of $10.4 million, or a
77.9% tax rate, recorded last year. The favorable tax rate benefited fourth
quarter diluted earnings per share by $0.08 and reflects the continued
utilization of a Swiss net operating loss carryforward (NOL) acquired with
the Ebel brand in fiscal 2005. Year-ago income tax expense included a $7.5
million charge related to $148.5 million of foreign earnings repatriated
under the American Jobs Creation Act.
o On a reported basis, net income and earnings per diluted share were $14.0
million and $0.52, respectively, versus net income of $3.0 million and
earnings per diluted share of $0.11 in the year-ago period.
o Adjusting for unusual items recorded in fiscal 2007 and fiscal 2006, fourth
quarter net income increased 15.2% to $11.4 million in fiscal 2007 from
$9.9 million in fiscal 2006, and adjusted earnings per diluted share
increased 10.5% to $0.42 in fiscal 2007 from $0.38 in fiscal 2006. (SEE
ATTACHED TABLE FOR A RECONCILIATION OF GAAP TO NON-GAAP MEASURES.)
FISCAL 2007 RESULTS
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o Net sales increased 13.2% to $532.9 million versus $470.9 million last
year. Net sales for the year included $16.6 million of excess discontinued
product.
o Comparable store sales increased 2.3% at the Company's Movado boutiques
versus an 8.5% increase last year.
o Gross profit was $322.9 million, or 60.6% of sales, compared to $286.3
million, or 60.8% of sales last year. Excluding excess discontinued product
sales, adjusted gross profit was $322.9 million, or 62.5% of sales, an
improvement of 170 basis points over the year-ago period.
o Operating profit increased 8.9% to $52.3 million compared to $48.0 million
in fiscal 2006. Adjusting for unusual items recorded in fiscal 2007 and
fiscal 2006, operating profit in fiscal 2007 increased 18.0% to $56.1
million from $47.5 million in fiscal 2006. (SEE ATTACHED TABLE FOR A
RECONCILIATION OF GAAP TO NON-GAAP MEASURES.)
o Other income was $1.3 million compared to $1.0 million last year and
included the previously mentioned benefit from sales of non-financial
assets. Other income of $1.0 million recorded in fiscal 2006 included 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.
o Net interest expense was $0.5 million versus net interest expense of $4.1
million last year:
o Interest expense for fiscal 2007 was $3.8 million compared to $4.6
million in the year-ago period.
o Interest income for fiscal 2007 was $3.3 million compared to $0.5
million last year.
o Income tax expense of $2.9 million reflects an effective tax rate of 5.4%
compared to income tax expense of $18.3 million, or a 40.8% tax rate,
recorded last year. The favorable tax rate reflects the further utilization
of the Swiss NOL acquired with the Ebel brand in fiscal 2005. Year-ago
income tax expense includes the previously mentioned impact associated with
the repatriation of foreign earnings under the American Jobs Creation Act.
o On a reported basis, net income and earnings per diluted share were $50.1
million and $1.87, respectively, versus net income of $26.6 million and
earnings per diluted share of $1.02 reported in fiscal 2006.
o Fiscal 2007 adjusted net income increased 26.1% to $41.2 million from $32.7
million in fiscal 2006, and adjusted earnings per diluted share increased
23.2% to $1.54 in fiscal 2007 from $1.25 in fiscal 2006. (SEE ATTACHED
TABLE FOR A RECONCILIATION OF GAAP TO NON-GAAP MEASURES.)
Efraim Grinberg, President and Chief Executive Officer, stated, "Movado
Group's continued success in fiscal 2007 demonstrates the distinctive
positioning of our brands, the clarity of our strategy and the power of our
business model. These outstanding results were achieved as we continued to
support our existing brand portfolio and launch new business initiatives. Our
Movado boutiques, while still a relatively small part of our overall business,
experienced a challenging year and we are refocusing our product development
and streamlining our costs in this important brand-building initiative."
Rick Cote, Executive Vice President and Chief Operating Officer,
stated, "Our strong results reflect a demonstrated company-wide commitment to
disciplined operational execution. Appropriate investments made in our brands
and businesses continue to pay off in the form of brand image, margin
expansion, and earnings growth. This is a strategy that we will continue to
employ in fiscal 2008, as we optimize our current brand portfolio, growing both
domestically and abroad."
"Continued improvement of our financial returns - namely expanding
operating margin from the historic 10% level to the mid-teens - remains a top
priority for our company and a key multi-year initiative," Mr. Cote stated. "In
addition to gross margin expansion and increased scale, the implementation of a
new enterprise resource planning system will be a key enabler toward enhancing
our overall cost structure, improving our operating margin performance, and
enhancing our customers' experience. We are bringing our organization to a
whole new level of sophistication by reengineering our business processes and
by harnessing technology to make a significant and sustainable impact on our
global operations."
Mr. Grinberg concluded, "Fiscal 2008 marks the 60th anniversary of the
iconic Movado Museum dial - 60 years of modern design. Throughout the year we
will celebrate Movado brand's history and incorporate its rich heritage in our
products, our marketing, our boutiques and through special events. Supporting
the arts and revolutionizing design, Movado will continue to strengthen its
position as the market leader in the accessible luxury category in North
America. New initiatives are in place across all of our brands and we look
forward to the exciting products we plan to introduce at the Basel Watch Fair,
including the debut of our new LACOSTE watch collection."
On a GAAP basis, Movado Group projects fiscal 2008 diluted earnings per
share of approximately $1.72 based on an approximate 25% tax rate, versus
fiscal 2007 GAAP diluted earnings per share of $1.87 reported on a 5.4% tax
rate. The Company's fiscal 2008 EPS projection represents a 12% increase from
fiscal 2007 adjusted EPS of $1.54, and is based on a projected 2.5% increase in
diluted shares. Fiscal 2008 net sales are projected to range between $550
million and $560 million.
The Company's management will host a conference call today, March 29,
2007 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.
- more -
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 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; A ONE-TIME BENEFIT RECORDED FOR AN OUT-OF-PERIOD ADJUSTMENT RELATED
TO FOREIGN CURRENCY; AND, THE REVERSAL OF A PREVIOUSLY RECORDED LIABILITY. 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. THE COMPANY EXCLUDES THE REVERSAL OF A PREVIOUSLY
RECORDED LIABILITY BECAUSE IT IS AN UNUSUAL ITEM. 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 ASSETS; A LOSS ON DISCONTINUED CURRENCY HEDGE DERIVATIVES; THE
UTILIZATION OF AN ACQUIRED EBEL TAX NET OPERATING LOSS CARRYFORWARD; AND, THE
TAX EXPENSE ASSOCIATED WITH THE REPATRIATED FOREIGN EARNINGS UNDER THE AMERICAN
JOBS CREATION ACT OF 2004. 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 TWELVE MONTHS ENDED
JANUARY 31, JANUARY 31,
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2007 2006 2007 2006
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Net sales $ 142,261 $ 126,123 $ 532,865 $ 470,941
Cost of sales 55,322 48,798 209,922 184,621
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Gross profit 86,939 77,325 322,943 286,320
Selling, general and administrative expenses 71,907 62,721 270,624 238,283
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Operating profit 15,032 14,604 52,319 48,037
Other income, net 973 -- 1,347 1,008
Interest expense (936) (1,486) (3,785) (4,574)
Interest income 1,020 277 3,280 465
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Income before income taxes 16,089 13,395 53,161 44,936
Income tax 1,841 10,434 2,890 18,319
Minority interest 199 -- 133 --
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Net income 14,049 $ 2,961 $ 50,138 $ 26,617
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Net income per diluted share $ 0.52 $ 0.11 $ 1.87 $ 1.02
Shares used in per share computation 27,012 26,263 26,794 26,180
MOVADO GROUP, INC.
RECONCILIATION TABLES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED TWELVE MONTHS ENDED
JANUARY 31, JANUARY 31,
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2007 2006 2007 2006
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Operating Profit (GAAP) $ 15,032 $ 14,604 $ 52,319 $ 48,037
A/R Reserve Adjustment (1) -- -- 6,000 --
Out-of-Period FX Adjustment (2) -- -- (2,211) --
Previously Recorded Liability Adjustment (3) -- (771) -- (507)
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Adjusted Operating Profit (Non-GAAP) $ 15,032 $ 13,833 $ 56,108 $ 47,530
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THREE MONTHS ENDED TWELVE MONTHS ENDED
JANUARY 31, JANUARY 31,
--------------------------- ---------------------------
2007 2006 2007 2006
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Net Income (GAAP) $ 14,049 $ 2,961 $ 50,138 $ 26,617
A/R Reserve Adjustment (1) -- -- 3,706 --
Out-of-Period FX Adjustment (2) -- -- (1,729) --
Previously Recorded Liability Adjustment (3) -- (603) -- (396)
Gain on Sale of Assets (4) (5) (524) -- (524) (2,057)
Currency Loss (6) -- -- -- 1,002
NOL Utilization (7) (2,158) -- (10,385) --
Repatriation Taxes (8) -- 7,506 -- 7,506
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Adjusted Net Income (Non-GAAP) $ 11,367 $ 9,864 $ 41,206 $ 32,672
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Number of shares outstanding 27,012 26,263 26,794 26,180
Adjusted Net Income per share (Non-GAAP) $ 0.42 $ 0.38 $ 1.54 $ 1.25
(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) One-time benefit recorded for reversal of a previously recorded liability.
(4) Fiscal 2007 gain on sale of artwork.
(5) Fiscal 2006 gain on sale of building acquired with Ebel.
(6) Loss on discontinued foreign currency hedge derivatives.
(7) Utilization of acquired Ebel tax net operating loss carryforwards.
(8) Tax expense associated with the repatriated foreign earnings under the
American Jobs Creation Act of 2004.
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
JANUARY 31, JANUARY 31,
2007 2006
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ASSETS
Cash and cash equivalents $133,011 $123,625
Trade receivables, net 111,417 109,852
Inventories 193,342 198,582
Other 35,109 26,319
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Total current assets 472,879 458,378
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Property, plant and equipment, net 56,823 52,168
Other assets 47,916 39,373
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$577,618 $549,919
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt $ 5,000 $ 5,000
Accounts payable 32,901 33,120
Accrued liabilities 45,610 45,501
Deferred and current taxes payable 5,946 8,227
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Total current liabilities 89,457 91,848
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Long-term debt 75,196 104,955
Deferred and non-current income taxes 11,054 11,947
Other liabilities 23,087 19,491
Minority interest 443 --
Shareholders' equity 378,381 321,678
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$577,618 $549,919
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