MOV - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day everyone. And welcome to the Movado Group Inc. Fiscal First Quarter 2019 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. Ma'am. ahead go Please

Rachel Schacter

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

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

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

Efraim Grinberg

I strategic you, our our review Thank will discuss call. welcome then Group's first Rachel, results. of all some quarter like quarter and I and would first provide morning everyone. Sallie of conference financial and to good Movado you to initiatives the will highlights

to call up the open then questions. will We

Sales on expect in will included currency. double-digit adjusted for impact the and a neutral. accounting strong year, be a pleased growing based the Sallie the we will This extremely will recognition. shift quarter driven to of in earnings surpassed new growth $X.X constant for from it greater each the by XX.X% XX.X% of plan year; sales continue are the shift additional million however, to report review standards to in quarter a this revenue and $XXX timing for our The million start We to per the share. revenue year balance revenue detail.

adjusted was $X.X million quarter year. $X.X last for operating Our million profit the versus

share $X.XX $X.XX earnings versus grew to year. per last adjusted Our

to strong debt. balance sheet while We repaying a of cash of bank maintain $XXX continue position also the very all with our million

Our teams sales do $X.X strong managing We million inventory last see the period did tremendous a same job of inventory by levels. despite from year our the growth.

last Now, priorities regions. strong few and spend a key like I energized Coming teams for momentum around to our the have world on off finish a year, minutes to to brands would on fiscal our our XXXX. strategic for that build been

driven in leading We are In our continuing leading our continues well business consumer to driven the into become our company. Movado to domestic omni-channel regions, wholesale market on digital store perform share very growth. the fuel portfolio by in of sales single-digit licensed the double-digit by France, Kingdom and the Europe Olivia helped our We which season addition international high Germany led the the strong transformation $XXXX to range and price department showed brand date. and make the specialty and for progress with to of a growth $XXX to our Burton, and United to large channels, in growth performance our

double-digit growth sales in We stores Latin continued with saw U.S. comps international modest increases also positive in in markets. seeing the total brand we momentum and are well of our very We are market. Burton XX.X% Movado perspective, continued the as with our and gross margin. pleased Middle-East Asia-Pacific with Movado company as from From our a we Olivia the brands. in and had our Movado business, growth and In performance growth e-commerce strong brand experienced America, our excellent

men's bold help is performed Movado's classic also retail bracelet drive as continuing to Museum Movado performance. On collection. as the Connect and well well in side, the core Esperanza product

will For Museum received wholesale deliver men's Father's Day, our our Sport, positive new we customers. which reaction the from very

driving in Burton with continues to paid the fiscal our marketing performance initiatives. focus excellent we efforts Olivia Company the social both summer digital and We to since results on year. of during last continue acquired deliver

We in continue The design excite a and expansion both on marketplaces. to e-commerce global watch and distribution continues focus with and business. innovate women powerful team Burton building to jewelry limited Olivia

collection, also forward are to to for Burton retail still Florals first consumers we're opportunities reaction Some Garden of in our in store opening Florals. the very brand There early Olivia our new in fall London. growth in Olivia our Burton we and tremendous Covent are a getting and bestsellers Burton in from Olivia Marble our good looking Bejeweled are

Sport Grand watches strong him in performance for by Companion Allusion Our opportunity and Boss in for Europe, our perform the campaigns Middle-East, in the brand style watches featuring very Hilfiger, Hugo with be In strong division men. Hugo beginning our quarter, both and results driven especially an license Hilfiger, Lacoste and in the and collections generated of our continues to with driven increasing well In women Prix Blue Asia. we Tommy first iconic continue very Tommy IP to our for and families. Boss Hugo by growth strong typically America Boss, her. and performance We're Latin Classics seeing

continue retail brand trend to improving of in by the collection. performance Coach driven see an our We

season. introductions are We strong for product ourselves fall Coach very well the positioning in some for

driven strengthening We collection especially watches. Europe momentum our XXXX our and Ultra Lacoste are seeing iconic Lacoste Moon in Slim in by

about refined year. new Rebecca the a lot for have and learned points we product are introducing We introductions a of Minkoff, In continue introduction since to fall and our initial grow are more appealing business at the Ferrari our price the balance season. product kids assortment excited for in

our We quarter first results. pleased are with very

for dollar we balance increasing first today, and the we the continue expect our is this from recognized smallest quarter to quarter year. not While we are benefits that our our outlook of do the weaker

to made have Company the call in transforming and omni-channel Sallie. we to into strategic over year, progress leader like great last I would an category. the the watch Over turn fine-tuned in have direction our the now

Sallie DeMarsilis

and Thank Efraim, everyone. good you, morning

begin will quarter first sheet I and with and outlook. call, today's review then of balance a our financial discuss results our For

I and I fiscal like begin, quarter results XXXX. to for special fiscal XXXX first included out point our items the would in Before

press the equates was July After-tax, also first amortization results describes or fiscal to share. includes the Our in of Group of GAAP the and release these XXXX and $X.XX Olivia acquired of $XXX,XXX Movado items on intangible measures. included of acquisition non-cash related to the diluted for a quarter XXXX $XXX,XXX per charge non-GAAP Burton asset. table acquired X,

included The which equates the for pre-tax these quarter after-tax exclude diluted charge of $X.X remarks will or our million just connection fiscal per XXXX $X.X Our in million cost of special first items my initiatives. balance share results savings with to GAAP $X.XX discussed.

broad-based each turning standard The Now and of shifts brands, owned timing our growth recognition which resulted adopted our in as X, and we recognition Company retail. across returns XXXX, the of related to with quarters. categories, licensed the markdowns our pleased between sale are accounting February in very results, brands of revenue new to

offset period. impacted sales would in change the $X.X net and the for million after-tax above As were Efraim the later million $XX.X have first this to a and per quarter, in markdowns mentioned Sales our to operating diluted XX.X% quarter and this dollars $XXX,XXX year. decrease $XXX.X returns income by This to share. $X.XX equated or were by increased for our been due expectations favorable We historically corresponding million. first anticipate recorded

to by the $XX.X XX.X%. growth of Wholesale X.X% of was expenses, million sales wholesale dollars To expansion XX.X% prior million Strong own of increased months the sales. unfavorable for compared was leverage offset a Income or last U.S. fiscal, growth to marketing tax control up million other million end, expenses period was quarter retail $X.X business operating in $XX.X from million business. net sales increased foreign income contributor X% Middle than brand to decrease did to as of in the the of from XX or for operating as the positive be impact of At the increase or sales growth. X%. the to compared without constant and in in outlet more by we profit million in XX.X% expense year. and last or an sales opposite to change XX.X% resulting The ago same the Asia. sales profit point million we of first years exchange same year the XX.X% XXXX first tax $XXX.X in end million in The and driven even segment U.S. and Brazil, rates million our the increased The sales expenses to better In contributed while effective income constant The primarily to operating favorable of year support of sales wholesale million five double foreign tax $XX.X year. XX.X rate compared cost increase Gross percent expense leveraging year. for Operating to directions. currency year. were we XX% demonstrating of gross $XX.X in first Sales a operating XX% East quarter a were quarter. basis last to sales geography not locations. rate international due the $X.X to as increasing million In year's $XX.X wholesale for operating from the items of result a period. was sales increased was the increase margins increased year. segment constant higher $XX.X newest of expenses increase strongest discrete increase last International to compared digit disciplined $X.X Our sales both to than year dollars, million leading XX.X% first first income in compared last sales sales sales this cost in expenses constant it of XX.X%, million continues $X.X were of sales to quarter. compared or the $XX.X of primarily recorded in increased is this fixed the of X.X% in although by we quarter. Olivia first the $X.X of the driven to million million invest in increased the an sales Burton, expected also was dollar XXX quarter growth following; the fiscal in gross our first million timing growing $XX.X in sales high currency in as yet the in The in of by continued dollars exchange prior XX.X% of last increase and the Company's dollars. in operated this with the operating Europe, sales expense, $X.X in the impacted $X,XXX period, XX.X% increased experienced

lower The rate of our items share for first few $X.XX of for the diluted provision higher diluted in fiscal based the due fiscal than or of per is deferred income including or to year's timing diluted was the was full of share Net million per on the versus in per quarter of $X.XX favorable the of year quarter than evaluation $X.XX tax X.X the per stock of tax last million XXX,XXX fiscal due aggregate first diluted ago period. which approximately XXXX fiscal the $X.X the or year the assets. increased $XXX,XXX $X.XX compensation, certain release quarter the The to or tax net unfavorable of expectations discrete primarily XXXX year first allowance income expected full in the for share. impact share effective timing by

and of balance by was driven turning decrease $XX the amortization award. Now $XXX.X million Capital the as quarter X.X the of of of X.X as for under on year. primarily of the compared sales to period XX.X% million quarter to offset year-over-year increase quarter last our million. related to repurchased in last X.X Olivia for primarily of first same as X.X was to the sales, million of the acquisition to intangible XXXX. the in Olivia depreciation XX.X million the sheet. year. and the end compared share last the same repayment expenditures of stock $XXX the fiscal million and second million at Burton quarter, outstanding The million Cash programs the to period quarter of we the inventory year increase revolver repurchase the our or acquisition the to dilution Burton was up was of compared of from first amortization million acquired included despite In stock due the XX.X our decreased XXX,XXX Olivia by and potential were Accounts Burton. expense assets receivable This

outlook year. I'd fiscal like the updated current for Now, discuss to our

Our levels. outlook assumes currency rates consistent with recent

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

fiscal $XXX are raising million Sales be For approximately in expected our of XXXX, million. are range the we outlook. to $XXX to

our slightly from gross to be XXXX. margin percent expect We improved fiscal

on that international lower gross of $XX with that, of And range behind jurisdictional XX% million the estimates earnings, in of to year. effective to $XX.X disciplined our but corporate outlook income operating $XX.X XX.X% XX% operating our record a million income our Company Our U.S. will the projected is now We've our to also of the tax Net investing with full to a control a is coupled approximately to $XX we margin expected growth. for expenses, be million. be anticipates range range in support Based to in are rate. approximately a a of fiscal teams be rate now tax approximately million. track

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

Operator

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

Oliver Chen

The here? of with comments Are are there? I'm and sell-through then are versus an What around terms channel. your international just the the interesting. department selling also levels team what looking on states, to the wholesale you international, building opportunities in about What happy are you inventory thoughts U.S. curious rates? do your you're thoughts what And there store see of the

Efraim Grinberg

those take I'll So, Oliver.

On about their our really increased improving of the well the and we're' very you and as international we're both believe the side, some the that growing we're and trends retailers, strong that can those overall in behind momentum I half marketing seeing second improving businesses the first the in the and brands, business. think, see appropriately. store markets is watch with the trends in quarter. sales one, those first in those year. our investment of U.S. the U.S. category We by and people department expense in behind overall, are seeing are And on those markets businesses cautiously positions the stocking as optimistic And improving trends, growth

Oliver Chen

digital been the Okay encouraging investments and center it's of in regarding excellence. the

what priorities are you your progress with As initiatives, time had what the the more on made thoughts there you've and these see and ahead? you

Efraim Grinberg

the so the us, early we're placing that throughout fiscal in area Company. a it's of greater digital this process we launched of for and just beginning year on that the on and emphasis at very Sure, really staffing

this real that I to predominantly really of and would an think I of in seeing towards next half the begin expect area, be impact will the year. year latter really this and year a So, beginning investment year

Oliver Chen

would our thoughts was in ROIC accretive on or make growth? versus your And M&A organic M&A you as opportunities? of other What about framework driven for terms general a deals from, as think question what as you for looking regarding M&A are sense

Efraim Grinberg

organically for we stage. and a Burton well as drive model in us, great opportunities have early out that's very been we're but to think proving our still I acquisition that both ourselves it's as Olivia

flexibility amount very sheet give to really us a well. as So, continue certain does the marketplace of strong a that we in have balance

Operator

We'll to next Edward with Markets. Yruma Capital Instructions] KeyBanc go [Operator

Edward Yruma

Couple quick from ones me. of

being follow-up at portfolio. on I think since of First, as kind I lots product the of heritage the the Minkoff out Is product And new innovation core? bit guess to little sales underperformed core that in improvement lines color then growth -- bit? little Movado core of a of sales a a or the maybe or driven

Efraim Grinberg

very -- is which actually opportunity brand, So, exclusive as is and still Movado business over a and e-commerce us. in very bold, business a right also it the excited that makes and answer really seeing we’re first noted and I'll period collection, in last our it very it makes continued actually the And distribution. our so strong an has the still really it’s now. actually heritage that revitalization that. I we're small opportunity -- we're about strong part is improving exciting trends about and business seeing the a We performance of we're part a think in millennially same limited for based core also for Minkoff very Company overall interesting limited Rebecca brand a incubating year,

Operator

no time. And further looks like it questions there this at are

So, I any over remarks. additional would to like back to turn it management for

Efraim Grinberg

thank quarter for of Again, again for quarter. our for to you the conference second call. joining at And forward summer we our you you. seeing Thank the first end look us

Operator

conclude And for again today's thank you that does their everyone conference. participation. We

Movado (MOV) 30 May 182019 Q1 Earnings call transcript