MOV - Earnings call transcript Q4 2018

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Operator

Good day everyone. And welcome to the Movado Group Fiscal Fourth Quarter 2018 Earnings Call.

As a reminder, today's call is being recorded and may not be reproduced in whole or in part without permission from the Company. At this time, I would like to turn the conference over to Rachel Schacter of ICR. Please go ahead.

Rachel Schacter

you. Thank everyone. morning, Good the and Efraim Officer. Sallie on Chief Chairman Executive Officer DeMarsilis, call me Grinberg, is and With Chief Financial

Act we Securities which language, forward-looking from meaning would XXXX. the I results The in to statements of statements our you’re measure get constitute such remind this the with. to release. Litigation as historical all Company's Before of financial number will conference used or of call may is facts, in If you deemed includes the call, risk in all of like the familiar measure the be with Company's not provided and future release. I SEC, which on the directly measure this due statements materially which uncertainties, to Harbor press Reform within contained Private financial a am of are comparable sure Actual Safe to GAAP differ started, filings suggested today's maybe in this presentation described financial which most supplemental financial those non-GAAP are non-GAAP press of any information

Now, I to Executive Grinberg, over of the would turn Chief and to Movado Group. call Officer Chairman Efraim like

Efraim Grinberg

with transforming glad into financial driven Burton call. very our reflective welcome and market and strong progress exciting performance Group's quarter progress was of significant bottom And and Sallie of began where our for year the return important to answer we fourth omni-channel we a finished acquisition an the the of make to share, Movado that to important Group, some year. purchase growth questions. top both Good We to the consumer morning. made. year ourselves of completed highlights your on with that was review an a organization. gained brand first fourth the the I Olivia line, in that, quarter Movado share conference will the you Fiscal then be for we’d with quarter will XXXX After and

million For the operating fourth quarter, profit almost our sales $XXX.X to million. grew doubled XX.X% and adjusted to by $XX.X

our $XXX profit year, revenues to increased the For by Adjusted X.X% $XX.X million. million. by operating grew XX% to

Our adjusted were year. quarter the $X the per and for share for $X.XX earnings

our Cuts provided of the Tax tax Act, we The have charge the $X.XX. million earnings. Following years. we and tax overseas Due repatriate result and U.S. to portion the on is our overseas further earnings the tax ability positive have the law eight enactment over Jobs of consequences, under to and the quarterly for without dividend payable equals now to increase impact made cash new decision $XX.X the to

expected We ongoing tax be also that is will in moved tax some her time act with comments. an reform. discussing given the to rate Sallie tax XXXX forward lower spend

of of you initiatives year. for to share Now, on brands some fiscal XXXX and the our some this with results I'd like from highlights the of our

setting. our well product the we the around brand, and our Davos, our As year intimate being the from with At resources. our a to a more expand many our summit this Switzerland to Group the just venue of consumer licensing new a for digital to to our growth facing results, previously reinvested we marketplace, drive help and quickly world. Movado coming introductions wholesale World by attend partners was from wholesale customers of it first previewed with I've that as Group's this Movado strategies attended as no in more Basel to have Trade decision Savings To announced our our from decision distributors, was quarter Fair. returned are longer end, personal third customers made product showcase and communicate growth personal center excellence Davos, in establishment customers for the our and and digital a in including in of held evolving initiatives in

We also level our panel high engagement landscape media with featured customers. a from digital social excellent on a evolving of and the speaker an

Turning to our sales of largest brand, Movado.

certain While United single challenging, sales of brand wholesale States our as our store our for holiday were retail, department for specialty digits performed store double-digit remain channels and Movado increases the in the quarter, the down recording well the mid at across channels sell-through season.

introduced units. to some of Museum for dial season our by the design, the initiatives performance, Bauhaus holiday to performers bracelet our We Google bold driven and our first continue digital also anniversary Movado strong connect, XXth smartwatch. of the powered watches Museum Highlights strong see our of and collection were iconic our men's honor product

XX% and quarter Movado.com we our respectively. saw the and the For by year, XX%, sales grow

still modest strong we performance. relatively by are of a this overall sales, encouraged portion While our

we the mall few excellence of looking forward announced to -- based digital communication. increasing a establishment center emphasis remained adapt digitally retailers announced and we ago, Social as that are arena U.S. as and we Vice hires Company, for in the to leading consumers. with years establishment on store a of Digital President are These a This challenging the as reflect Media. few e-commerce of Chief planning a the continued of key more well the weeks environment. Our in digital this chain appointment the a Officer two engagement spring, ago, focused to we A digitally our

our world. for our increased Movado as around benefit the platform from portfolio our well remains business partners business as focus wholesale expect us, our our omni-channel as digital a on brand We to and entire priority

the to Movado for to year an we’ll important we into necessary our business strong that brand our and China investments of the to Movado. in For continue China make growth grow region developing in competencies in saw develop team

plan. our spring product to Turning

in our Last retail new spring this a new numbers from outdoor with it partners previewed with print, strong excited where tagline, Movado Davos into don't advertising Classic this let digital and were pleased and very we’re define launching response Museum Movado we evolve our fall, are our we introduced We when in we the you, campaign with to collection. venues.

licensed this strong watch our were momentum with fashion thus looking challenging brand performance we pleased this continuing Although, to year. division are for brand our and U.S. the the internationally, forward of category, license remain category and the

We continue largest in fashion represent the growth our to a watch for and market, accelerated markets international growth significant market in opportunities challenging France, despite that company. the Germany and two UK, saw see

also return our in Brazil, growth We to Latin largest in market America.

a During for Mexico that the we significant fourth quarter, we subsidiary opportunity established represents in believe a us.

brand, the Tommy driven important East, Hugo in watches relevant this strong become to for saw that Lacoste Hugo implemented Hilfiger demand license consumers Our the Hugo have the for customers spring Lacoste with increased presence Scuderia we’re We a the seen U.S. racing watches casual increasing feel Formula a significant With women well during continue accessible this an generation to Grand overall. introduce new new grow holiday strong significant on Tommy brand strong with watch After for younger Boss’s, media on and for customer. We this seeing also modern to collection watches for Group also have our Europe help opportunity, In response Movado both the watches. in-store growth our great in the a point Hugo we we're will with previewed Tommy that our and Charles in more for brand to price collection. Boss. out, a Hilfiger’s spring, focus a In overall our Europe. for our kids perform and visibility interest our in have we of performer opportunity an We especially watches, Hugo more reach social we from In for sponsorship we for consumer. and for has the with new a and the Boss excellent been sell-through Middle is One the very brand. retailers businesses introducing growth and focus Boss Davos. as an new Tommy a very response internationally for this American we believe brand. to new to where we brand, region will most and response spring. in where Hilfiger design year, for men watches partnered dial coach, looking Deco Hilfiger's has Boss and we’re of This our deal continued excitement a of a in growing and create are is blue This Hilfiger increased renewed of our watches more to launching collection, to retail brand younger expand strategy both both that excited received opportunity collection our we represents very Tommy in and a by Gigi designed Peri sportswear, media. watch targeting signature Ferrari, ambassador, men, and at Gigi our fan. strong a inspired Aster our was there season with forward increase Boss, partners to Hadid, a engagement women's our its the its sold our Coach in China brand, and social company. the drive brand saw A Collectively, under C at Pre collection Hugo the opportunity is Hugo in in for in watches. In

We year Ferrari beautiful customer a will launching new renew this collection Aspire. on are the we and our emphasis lifestyle called

at excited Nordstrom. see to global and introduce remains could basis. We for not acquisition extremely with and distribution our be and on innovation Rebecca collection a opportunity our growth we new how Minkoff Our great Olivia design mesh performed has limited Burton continued happier studded a are by

a end segments truly that to a women global XXXX to We different open receives relate the United launched to the iconic same very it United build and ago. potential particularly a limited it seeing in in OliviaBurton.com develop can increasing at the about first seen the summer segment, have basis. founded boutique the at time platforms a penetration both age jewelry great Burton months Olivia launched potential selective was the This We're which Garden States a Kingdom and We brand very and is level very believe where of of Olivia in is digital of for Covent stores, brand the various XX was in that a engagement across there on distribution was lifestyle while we'll Burton a categories. in London. continuing the high brick-and-mortar where in significant way. across

of positive plan strategic margins are strong quickly X.X% reducing we Movado our we quarter at of transforming our while performance our extremely pleased in in significant during in as to products. to of saw with had XXXX This evolving we brand also for in year. of on fiscal momentum in our strong the quarter. progress Most while reflected retail importantly, confirms with we first environment. for retail return grow We Company has X.X% year, and we which our continued our investments fourth growth important Overall, into company and the the the a the full pleased in were desirability our operating division. markets, the The are in made the continuing quarter, to expenses, have stores which expecting executing business, retail comps making performance guidance. international our America, we North Looking

we category year. the the now in built to in volatile, Sallie. While remain to call coming profits drive I retail the growth to solid revenue turn watch a both foundation environment over and and the would like have

Sallie DeMarsilis

and Efraim good you, Thank everyone. morning

I our outlook review XXXX. fiscal our financial results and then For discuss will for today's first call,

table fourth the point and these our special to Before items, non-GAAP XXXX. a and description for of and would the for for items release full quarter year as included fiscal year results I of begin, out well full our in I the refer Please XXXX press results GAAP to as measures. fiscal like

taxes; million recorded eight the unremitted Cuts $XX Tax Our of assets; to fourth to on charge XXXX share. over included enactment and and million Act. million GAAP totaling million to tax and year. for or be in for provision withholding tax fiscal one-time XX% on impact is quarter, This related of per Jobs tax tax $X.XX This charges U.S. includes; related $XX.X diluted in the the $XX.X foreign the for $X.X in installment state million earnings; the repaid deferred will the deferred rate our $X.X income the reduction the

Group the of of charges, acquisition $X.X XXXX to Movado July on quarter. $X.XX aware, year. the Included XXXX. to the to million equates in $X.X related fiscal connected are Burton the year-to-date was recorded consolidated million per the the $XXX,XXX for you XX, Olivia or diluted tax, in results fourth After pretax share which was for As primarily acquisition acquired charges

share results for Fiscal a $XX.X of vesting other with compensation approximately to this which for items which and per $XXX,XXX which to charge in fourth $XXX,XXX long-term quarter results XXXX exclude results million XXXX a our connection held first retirement. GAAP in related the the in The savings the $X.X or the $X.X or GAAP remarks or GAAP million $XX.X equates initiatives, to impairment diluted million, share Our share quarter diluted after $X.XX within $X.XX stock equates connection the with included also balance of investment $X.X my charge, of per include year of fiscal Fiscal year award of million in recorded million certain announcement special pretax privately tax cost pretax pretax of will include after-tax former in to just XXXX discussed. COO's after-tax company. $X.XX third per charge, an charge the quarter. equates diluted our

International in operating end, expense. gross than year's million exchange increased compared resulting growth leverage the following; currency increase marketing The sales favorable $XXX.X increase leading of XX% was the of other each fourth sales share on of a business constant an expected, Sales sales category, XX.X% $X.X fourth to in in per XXXX X.X% the period Middle this share increased $XX.X wholesale of offset offset sales unfavorable changes income a XX $XX fourth expenses; with million In segment and of year. the million million payroll than based quarter. quarter fiscal brands X.X% constant expansion channel and of million, primarily The sales of $X.X prior $XX.X dollars. the of $XX.X better last increased fourth primarily X% net decreased of or or million contributor in jurisdictional expense expenses In million the in and brand increase were $X.XX XXXX, was exchange U.S. to were last lower $X.X U.S. in currency outlet the is license We Burton. was decrease or Net in in same related $X.X fourth million, to positive year. performance internationally was in rates. the million. expectations. end impact Income By XX.X% mix expense from income $XX XXX XX.X% results ago The across XXXX. an owned diluted tax cost. XX% of from fixed million million diluted income million earnings. $XXX.X the increasing of and $X geography, in Company’s increase XX.X% increased period. were of performing of operating rate, $XX.X quarter. the dollars, our $X.X the more increased XX.X% These line basis quarter compared sales sales strongest Asia. dollars, operating sales for and year. quarter to in up $XX.X year, increase million of million Olivia expense; product to Wholesale last fourth last per the was the point versus This the the same a quarter retail. Operating In segment foreign million for rate million $XXX.X due Gross to profit compared than or $X.XX XX.X% we the from fiscal to compared million saw sales increase include The driven compared retail of quarter and gross X.X%. year. of XX.X%. an by XX.X% with income effective increase fiscal sales $X.X the year in to change East million $XX.X increased $XX.X For a brands, in increased in was To the Europe, period, or impact tax increase fourth year-over-year. foreign dollar, sales favorable The the operated XX.X% last compensation expected constant Strong $X.X expense, was total Company's addition constant wholesale X.X% to wholesale partially of in the margin primarily sales and were was At the in locations. and or million of in in to fourth result by million in profit tax income

$XX.X effective or million per rate in the last our of sales income expense of income or results XX.X% decreased income increased XX.X% constant and to XX.X% were earnings year compared were In Gross Looking Net million $XX.X was from million Income Operating the sales share fiscal per increased in $XX.X slightly tax at share dollars, million Sales year tax brand $XXX.X compared for current XX%, to dollar compared sales XXXX. sales million, a effective in our XX, year. and XX.X% category million net the both increased was of fiscal in $XXX.X sales the million international And international X.X% was to basis, compared U.S. January per profit compared category. retail expense to ended full on an prior last to increase increased sales of share sales income sales XX.X% year. was compared to year. XX.X% or last and X.X%. our down last an tax increased fiscal as for $X $XX.X rate of XXXX. XX.X%. in brand $XX.X XXXX, license was million year. or year. to of owned for constant XXXX Diluted $X.XX $XX.X XX.X% million sales $XXX fiscal tax

stock as outside of acquisition the $XXX.X fiscal year. U.S. quarter January we sheet. In balance of second we $XXX.X at used to cash for the for million $X.X acquisition, At combined Cash repurchased compared compared revolver, million outstanding Olivia Year-to-date, same primarily approximately were by of Olivia with dilution of included due our year. of million of we expenditures and XXXX, $X Burton. share year our last Accounts the decreased compared the sales the I program, receivable outlook $X.X million were By as and our million. end stock million the held million amortization awards. for $X.X $XX had will XXXX. XXXX, last inventory period discuss end of $XX.X the XXXX, to turning the the Now same was to repurchase our fiscal for the year, last offset intangible million to This of now was repaid remaining XX.X% ago. February while on to expense Capital were or sales. Burton to the million year acquired a primarily the from the Olivia period million as depreciation up in of Burton. $XX.X the And we assets million million of to outstanding. up $XX.X down amortization related quarter from increase $XX under $X.X year-end

recent Our outlook levels. assumes rates consistent with currency

materially risk such in foreign fluctuations factors Our currency various many changes customer rates and results global spending, referenced and affected as exchange in XX-K by in our maybe economic other filling. causes

the XXXX, to ahead. have $XXX of As anticipate we approximately which foundation range fiscal on and solid we sales for the of foregoing a for $XXX million million. year drive Efraim revenue to growth in In in mentioned, profit be our we will light a plan

to to be XX% XXXX, flat from improve estimate for the gross fiscal gross fiscal be our percent outlook slightly full year. margin margin approximately expect to We our

operating We record of of track control have our a disciplined expenses.

digital million. rate, with Based approximately approximately range lower is the international tax of our XX% excellence, to to on income coupled resources Summit investments establishment is our in of and are And $XX that, expected Movado projected to rate. a in the in $XX.X the $XX U.S. making million jurisdictional earnings, And our tax million net growth. the of be as be operating range a We company as to Group well of reinvesting with to anticipates income million. teams $XX.X support corporate center the into effective

the items XXXX approximately assumes the $XX of We excludes brand. are in expenditures in have diluted share assets to million. and provided I’d we Olivia no up a to The like for range to per approximately outlook to the XXXX $X.XX. be $X.XX be earnings now unusual acquired fiscal Burton intangible Capital amortization to expect estimated questions. for XXXX for open fiscal call related non-cash of fiscal

Operator

Chen Instructions]. Thank Oliver first you Cowen Company. [Operator and go to We’ll with

Oliver Chen

overtime? My pace XX%? question What plus very it’s it impressive. the will in that your about for also will total and quite to of of digital where been it’s elevated rate very what’s to XX% key priorities some And excellence. innovative thinking Efraim, future? of that as about And was marketing vision thoughts for percentage and the on then hypothesis are growth, ahead continue a that at the the your the for in what’s your related year of right reach model of the Movado.com, your you’re of engaged center conclusions seems terms

Efraim Grinberg

if So reach that I know rate. questions, growth we’ll multiple don’t

are continue We accelerated it still growth expecting site, would that and be in to expectations Movado.com for expect I don’t growth our growth, But nice double-digit think level this would grow. that. year I to Web our

site we’re partners, digital our subsidiaries, a and wholesale to our our Web I or really, a they able -- digital as global to customers our wholesale our basis that customers think capability is of a initiatives be our lot online; excellence our format. importantly, partners on with building the center licensing of on whether moved into support be the and

to felt infrastructure our needed a we to build really we And on able be company that to basis. so support global

meaningful customers our and online business well. as today wholesale is part of done our good with a So

well. have stores, who to Web stores, site the So be omni-channel people whether platform, specialty department dedicated they’d as adapted

we’re the as well. that with arena pleased really direction heading we're in So

Oliver Chen

for Thank the the for What year ahead? the the gross that And the in of What's should should performance about slightly underlying guidance margins. improved. know on margin brand Sallie we is that? you. going impact how gross year how ahead flat Movado And to we model

Sallie DeMarsilis

I unusual you listed anything if I fourth then really that to was that out a quarter, related we're factor out noticed in currency calling And call did next our in margin keeping flat that. fourth throughout I currency that the year. gross the am quarter. But not mentioned

So one major pieces. the that underlying was of

So quarter other by any -- more I cadence. or can't give margin tied you any into

Efraim Grinberg

to add that again, And that Olivia that as will gross accretive I as we grow begin is to Burton Movado and well believe would margin. stabilize our

Oliver Chen

gotten happened And related as retail going Efraim and question thoughts retail to inventory, performance year, on the been what what will And to and Sallie, ahead there. are the you. on the there love in your wholesale how happen your your ahead. that partners Movado look terms sector a of channel. you latest dynamic and of year managed performance has and the Thank the forward? what the your and is, is It's retail thoughts better partners the have economy brand versus Would

Efraim Grinberg

Well, from international I the perspective, year retailers. bouncing versus more was U.S. seeing think you're late -- the in a challenged back last year retail

thing results. one the skewing overall that's think I that's So

certain significant of a based retailers levels, specialty omni-channel platform in department And quickly had well I U.S. not management particularly as in certain as as you resetting channels. chain, comments think stores my as inventory I to inventory retailers and an mall focus moved and and as channels, on have stores. mentioned still

channels to the in this that you’ll in you results year, you'll see U.S. will But see begin that I good So in that. arena specialty very we've store seen think our improvements department stores see and again,

and growth America. Europe fashion to our in strong Latin particularly in continue very watch last brands, year at in see retail We

the I of omni-channel retail Web think now last So stabilization really and the forward. environment people new and site addressing year for retail saw new realities you the new moving of paradigm year a and

Operator

with to Capital next Markets. KeyBanc go Yruma We'll Edward

Unidentified Analyst

question So building a I Oliver’s on bit. guess

wholesale how that deeper is guess times shift update orders. I Thanks. the orders, would more stabilizing in are is calendar on great. I cadence affecting the So about they we’re there it just be ordering wondering the guess channel somewhat, any the or year now

Efraim Grinberg

season, over frequently, closer years all models a the replenishment have those I Well, things on the much global ordering much last to number of retailers more pretty basis. moved think ordering of

possible inventory So business. for to I as little the maintaining to think able produce as a themselves be

is recent that's So dynamic, that over a one time. but more not really evolving been

Unidentified Analyst

said a I that know outperformed accelerated in you saw And of really for couple you has Germany and the Europe quarter, UK, France so this U.S. and years growth now.

do see in horizon trend a control any higher it puts on gross the and the the more And or margin? takes just are and U.S. guess that you inventory growth fashion bring catalyst of I given U.S. shift So and is is rates more European I what or will channel. the margin the that guess

Efraim Grinberg

earlier, and in believe of expect return have the had years, the retail. growth U.S As down grow the to U.S. been little plans and across to grown a our that our cyclical be in I said able in brand. is to previous year, to the we think place in part products reaction turn this I it we’ve And bit to great we And again. the I the had U.S. over it’s very quickly

to think we continue retailers that quarter saw in we will think European the that in for that to I again grow expect well. back as trend still overall. fourth I you bounce begin but would And expect

Sallie DeMarsilis

not versus question more of on we your gross U.S. which brand. was, And our in Matt, own And we as it’s necessarily the margin the margin license it’s through, talked don’t. international, royalty gross and goes about brands obviously

would a Movado like gross So Olivia margin. have Burton stronger things and

So it’s of compose all of composition total. what are mix will in they brand to what the

Operator

next with [Jeffery we’ll Sidoti. And to Camma] go

Frank Camma

break little for Olivia the did talk all, you of revenue but bit, Could Burton Frank It’s a you first quarter? the out Camma.

Efraim Grinberg

announced we the when plans first And the not. as our year meet any beginning we don’t we’ve acquired have brands, our at like We revenues. of breakout of did specific It brand the brand.

target us excited it’s by really So for been the pretty and on acquisition. much we’re

Frank Camma

back though since you on has the for because lot Stepping changed a second announced -- the restructuring. a

investments. making where Burton just Olivia you’ve of because were you’ve implying you how savings? on Can some the digital your view just initiatives. further the you guidance as as initially Olivia you you’re and achieved? is growth Can recap far the has And a us sales maybe? there update Or now For savings, now changed, us Burton you’ve an give what total obviously got you’ve that got give the on got and much

Sallie DeMarsilis

jump So am going Efraim had add sure of you will I And and at some. in a initiatives I’ll right. lot once. are We

this have savings pull we We our savings. out all of been started realize right announced, those We our implemented. initiatives, dollars those the cost out last amount infrastructure. So did time of year when fully did of which

about in be that So XXXX. later for talked not this 'XX. savings that to and throughout Then this would year, we was year, fiscal going Basel

mentioned those things be was like of those reinvested intimate, excellence like the reinvesting was savings that it center digital we are summit savings we Although, the in. adding to and did that more in small going

all if you to year So new have last our The our we well the this of support in. year slowing outlook will as of investments infrastructure mixed as has that our down growth.

Frank Camma

QX And a correct? really event, Basel is

Sallie DeMarsilis

was happened event fiscal but the was year for in QX, the throughout 'XX. expense that Historically and the

Our summit on different first what quarter the that obviously scale other hand would and was. and be event it’s

Frank Camma

then question sheet. balance on is the And last I guess

down or as et that going given brands, timing what's that this level, better What's anything that would on and sales on. there Was it inventory You management. increase what's far decreased is as new have going the an mentioned with inventory given that just in cetera? brought there driving

Efraim Grinberg

just drop the that single our most year. there fabulous actually bigger is teams really On even throughout managing drop currency basis, had. levels inventory we in a digit constant job It's did than a their

managing or not that. really level, events one-off was anything did like job in So in any they there that the a just really, good

Frank Camma

in you're globally? no we is gross I'm anything on costs what's It for need given look so mean at to be here. input we there granted just But of not. need aware guidance giving margins, assuming is I to major your us going that

Efraim Grinberg

we're Not including or that. of -- anything not like could. aware they our but they we’re really. possibly Obviously, type would don't We business, not affect any tariffs that believe

Operator

We no time. this questions have other at

Efraim Grinberg

Okay.

we to more And since wish nice quarter thank forward everybody on So call we and speaking like a first just today. the conference being to everybody look for call for everybody I'd no have this holiday questions, weekend. to our

thank very much. Okay, you

Operator

your We call. for And participation. thank you that conclude today's

You may now disconnect.

Movado (MOV) 29 Mar 182018 Q4 Earnings call transcript