MOV - Earnings call transcript Q2 2021

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Operator

Good day, everyone, and welcome to the Movado Group, Inc Second Quarter 2021 Earnings Conference 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

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

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

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

Efraim Grinberg

year. Movado Rachel. as we questions. This begin second Good glad you, highlights will we to focused then detail. be on welcome and review that Sallie are We the to then results morning, in take I the and the conference quarter Thank half call. will the quarter Group's our morning, for would some share strategic financial of initiatives second

significant have expenses the we closures globally. Within teams remain safety and of economic and has communities we greatly caused and have our context, delivered the teams second health amid on quarter. operating the where the challenging customers how that that I operate. margin our internal In have cut proud and in, quarter reacted we an $XXX our sales with around businesses, results environment $XX while which the results last delivered $XX dislocations curtailed and focused paying the led more than of am pandemic, employees, to reduced two ensuring on gross basis. world for retail adjusted than our that million the almost For we global been quarters, operate consumer We by breakeven inventories our million business close year-on-year strong discretionary of We finished of to the dramatic by better over a million million, cash and continue to $XX back debt. expectations,

we to crises. have strongly that number quarter, a emerge that position enable the and to as actions took of will climate company us done during we we the operating During weather are the in previous

currently in do, lowered current of to be We headcount running operating teams until million consumer-facing of by our many to estimated have business able with are the continue do our the company. to ourselves remotely we so $XX to effects we as reduced our subside. and expenses pandemic prepared have XX% our painful very of operating corporate the While and into by size evolve year more a

XXX% Movado.com We initiatives digital achieving our for in invest results, sites both and those to and continue are sites. stores productivity see strong have operating quarter, ran all we for high our sales We've continued up reduced our the are and trends of of accelerate. to despite our partner and wholesale reopened seeing hours. levels own a

quarter, with exceed sales in XX% France we as profitability for return ad markets the business Germany to sales And had of and U.K. and continues Our spend. environment, the At increase results. significantly mvmt.com on In improved difficult like perform store a quarter result accelerate. XXX%. a a channel wholesale, our in during seen oliviaburton.com approximately well the by have in grew China, last year's department trends we continuing improved to

We to spend very carefully. continue

in global watches close announce trend of We have them Driven extremely believe digital jewelry allocated across for product is I that level this and being our beginning and that is an able into Klein, the strong we to in of brand to licensed excited about and incorporate Calvin variable partnership tremendous both time brand our sales as owned continued information categories, current we our marketing am execution tremendous potential by very highly in our that locations. we portfolios with brands innovation, are demand we and has were as brand Our platform for our investment. our and that seen pleased advantage Calvin expense XXXX. as the within Klein brick-and-mortar we possible, can a provide our so have partnership.

As purchases. we the to are we prepared second uncertain inventory and half look the focus we a year, operating controlling on in of expenses our to and environment, our are highly to continue

to decline are next will half, maintain very innovation each quarter, developing sport our on holiday introduce we collection quarters $XXX at the SE, delivering our balance second Movado, our to expect supported on will Museum digital the starting campaign. strong new a efforts front. be luxury In sales we Across improve sheet. a television we that focused during the brands, and product during Movado introducing the continuing strong profitability in two We are a while and in

movado.com. be of watches and MVMT, be edition limited Lucky watch Arden, X the are minimal straps This crown Mason look. In Florals, Seventh our introducing In new MVMT also opening most introducing XXX expanding that beautiful our Sparkle introductions featuring men introduced units new our portfolio, Olivia on we Limited campaign. a protection and for out will licensed Hilfiger digital of florals. new MVMT's will XX-millimeter XXX this Movado brand in we X results we our with jewelry our honoring will and including rubber pops our In sporty sold Anniversary our product collection BOSS, glittery fall, chart, globe $XXX Edition with website a our Within number be sport a Tommy legacy to minutes. August, collection, drive social with ever. automatic, collection be a branded we'll featured a and analogue HUGO expensive be featuring design We a featuring At we Burton, iconic interpretation our slim we exclusively at on C of $XXX, design expect a new a Athleisure supported color. Chronograph CXXX, and will Signature strong with media Coach, new bold a a of under collection,

featuring a Lacoste, are For Boston, Lacoste's Dial. Green introducing collection, sport-inspired iconic we

the continue evolves wherever choose brands, values now marketplaces. to shop, great As our from demand turn our them like to on the manner, website, to to or I will whether an our innovative and review world over compelling financial continue consumers, design focused wholesale to and websites to that in in increasingly locations brick-and-mortar be are an believe and Sallie they would own environment reaching our we in digital on partners' accelerated e-commerce that call through generate stores we results.

Sallie DeMarsilis

Thank you, Efraim, and good morning, everyone.

I on of position. XXXX. of For will fiscal the period My update I'll second adjusted our and an then quarter will comments year-to-date financial our call, today's focus And today key on provide results. highlights address

$X.X $X.XX or reduce all a after which the to the recorded the results included equates Switzerland. matters the out areas. charge, in the pretax fiscal special which Before and a a description the share the half adjusted the operating fiscal all press the part new results expenses across the in GAAP XXXX, $X.X $XXX,XXX impacted corporate of for second of related in will per functional first earlier reconciliation sale or which I nonoperating for items I the begin, Also the $X equates of restructuring non-GAAP remarks GAAP company asset the again, during to our $X.XX per as our will on refer results. million balance to to fiscal fiscal quarter of focus million XXXX plan which table share on of company's initiatives today, the of the second Once XXXX. of fiscal gain, quarter point took my of million measures. of company also issued after-tax XXXX, to XXXX quarter tax In Please a release of includes and second pretax

quarter as compared sales to XXXX, year. of fiscal million $XXX.X million second last were the $XX.X For

of stores and quarter retail the the impact majority the first the fiscal the XXXX, COVID-XX During of of company's of closure the resulted stores the customers. of in wholesale company's

fiscal quarter, all of During XXXX, modified of of the worldwide the the lifted second of the quarter had reopened. stores company's restrictions. stores company's second majority governments the local wholesale and the retail and customers By or the of many end regional

hours by a decrease in stores traffic have many impacted these at and locations. However, been reduced retail

the restrictions in retail some world those wholesale trends sales foot quarter, second of in the through of progressed various and across improved began the COVID-XX easing we stages return customers. traffic as stores company's its As enabling

by were spending U.S. the temporary gross expenses contributed decrease profit share of costs, tax own compared and an second partially the net for million during company XXXX. to product taken of XXXX. of staff with were fixed loss our U.S. our marketing fiscal $X.X quarter second XX.X% of of or last decrease maintaining the in channel of those savings due loss and However, tariffs. reductions. base ago reported exchange quarter of permanent marketplaces. revenue was customer rates of a second tax was $X.XX the $XXX,XXX million on operating quarter small compared all second change for on driven to strong a per nonessential of brands $XX.X over of unfavorable e-commerce $XXX,XXX the million or quarter brands, followed actions websites The in quarter net portion compared to fiscal $X.X most by sales, primarily e-commerce XX.X% to period by furloughing to albeit and breakeven expenses second despite both minimize licensed of reductions of year of to expense loss The by in the to all nearly income employees focus salary income quarter while operating sales. down period. million was in the the foreign currency second of in year. a The income and is the third-party Owned compared considerable international are million margin $X.XX as XXXX across fiscal in special share digital The stores second last quarter, and as $X.X both rightsizing sales as additional an Operating mix, offset the unfavorable closure quarter a businesses, Gross same in of controlled a segments. driven lower costs, and $XX.X sales in of year. period declined We stores including the The acquisition. the per quarter, the expense in of the lower most on and on These to

the XX% reasons stores or million of or similar sales Now as closure last the net months quarter stores of XX% $XX.X Sales the decrease and the attributable our XXXX, six XX, The July the of turning $XXX.X ongoing $XXX.X ended discussed. The our wholesale and to just as result decrease Gross second six was temporary profit gross $XXX.X to results. month the for the was million pandemic the majority to compared year. the our million for were in of margin rate last first sales period of customers. million year. in primarily to COVID-XX year-to-date compared retail was to sales of

months $XX.X per of net income $XX.X six to to a XX, share $XX.X loss of July loss million The ago the year diluted share or diluted operating million income was of an $X.XX per was the net fiscal operating compared as compared period. million XXXX. For $X.XX in ended $XX.X in or XXXX, million loss

Now sheet. our turning balance to

a maintaining minimizing sheet company's been In addition balance to the strong nonessential priority. has expenses, top

managing closely we initiatives. primarily providing such and expenditures as inventories, investment, reduced on certain have allowing a capital only are We digital projects return

on facility manage end notice. until $XXX.X was previously second during our Accounts in after This announced, million revolving at we quarter. the repaying receivable million second of the quarter to As further suspended period. compares repurchase program share dividend last million was credit Cash the was last our is compared $XX.X $XXX.X the year million prior year. of and due capital. year million, cash million quarterly the down $XX same end $XXX.X The actions million at our to the taken primarily sales. a decrease of $XX.X to closely in from due to as the quarter working period $XXX reduction Inventory to the

Depreciation and million for of by operating were Capital In expenditures last $X.X the result the Burton over and million, of we over flow $XX just assets the included fact, amortization lower quarter $X.X acquired $X million $X.X and fiscal remaining was XXXX. the discussed. of positive had to of Olivia first million which cash half disciplined are the of of related expense months six a year intangible the amortization actions as MVMT. in million second than

In guidance. terms specific not are providing outlook, we of

we would results to year, the While up for now last we to open expect I below expect to call half in questions. sequentially the be continue year. improve of to the second like trends

Operator

question [Operator Instructions] comes Oliver proceed with your question. Our first the Cowen. of from line Please Chen with

Oliver Chen

love relative of in digital The And there. footprint go Where productivity? over are distribution on do you're to markets. insights wholesale And how I different and momentum regionally would aspects there you impressive. to of with distribution the what handling been closures you penetration has time? seeing of side, Thanks expect points terms

Efraim Grinberg

Sure.

varies So well. France other now to and basically momentum. we're of progressing we've obviously, starting retail we're the it India seen But U.K. said as and happy brick-and-mortar and Germany performance normal, in and America returned Latin really digitally, I then see very And as more to strong markets world we've like around China, both seen the challenging. nicely. the earlier,

look have doing that's that, And from at performance generally malls. you're U.S., think department are best better the side digital brick-and-mortar also stores stores at penetration. that we entrances retailers good seeing very the perspective. As of a department have And I why street

growing we're business So exponentially. their seeing is digital also

company, will but all the then be and will our the for digital over obviously through So owned both really partners our it in and I future through a digital the growth significant think wholesale marketplaces have world.

seeing we're have in Amazon think in Zalando, And a amount those of growth So Europe, in in potential. Germany. tremendous I

Oliver Chen

how relative And do on in manifestations? any from provide So digital guidance help how would dimensionalize modeling? become that aid you we could those big margins may our

Efraim Grinberg

Sure.

our try But us, the to I natural have due retail look of for rate can basis just When of at from -- higher if anywhere a accelerated it's it a we own, maintain on profitability account. think an it's digital. equal I evolution it's going think of and an was wholesale to the just sense than where it's profitability pandemic. it

company. that things company in opportunity do, -- So the evolved think taken accelerated a really wholesale-focused and to I one a from the of we've and an is consumer-focused to manner

really is So that's they And want to about. serving shop. the consumer think wherever future I what all the

Oliver Chen

quarter that on the flow of inventory. trend overall you're margin sustainable gross a have love your been mix flow throughout in is Sallie, how dynamics going forward I take shifts terms also might And line, cash that the second would and cash seeing? positive on And encouraging, year.

much. been don't some to within inventory, Supply the relative inventory what have cleanliness your to What's people some And for have hasn't seeing chain too retailers enough easy now? environment. dynamic you're of this deal

Sallie DeMarsilis

Okay.

pipe we'll Efraim especially -- take side. will supply let's chain in, sure and the So take I'm on inventory and step-by-step, it

well, in mix. very talking Efraim like things was the wholesale we're about with gross e-com that light especially managing So we're and -- what doing margin, of

how that. -- of So is continue fixed margin. look and any at very of margin was been we're obviously, cost that gross type of part our to strong we've And XX%, at portion a of look taking gross will we over the at happy

like it not deteriorate flow So that. that, on very highly anything we're sale cash because to perspective, or like margin of that's being going promotional being our anything we're a or managing From closely.

cash the is whole We tribute was quarter this with having thicker impacted generally was, significantly inventory to third with cash do how really that be a the holiday. is quarter as We and forth are flow where into some things. head we organization by pandemic with seasonality little would doing a with we're managing thrilled a so global positive flow we to quarter in second have how

I think managing jump expect I on So have in I would be you very closely. words but And I'll and would speak -- very inventory, know are that we few I watching have to but then a seasonality do we're in, that that for flow. also closely, expect cash Efraim some I'll going built

Efraim Grinberg

Yes.

And to as objective think inventories. teams is been able really bring it So internally, think I I being that -- our prepare watching and manage terms the to have ahead really would reactive end we're for our of in our planning carefully. our obviously third always the them by continue year. we quarter, we to down the shipments. quarter of is And fourth

our we beginning In I retail, we see inventories where better-than-expected So people think channel. -- inventories but shape. comfortable pretty and see in especially good varies locations, and in are in retail to we needing replenishment. by with be by And should brick-and-mortar brand sales pretty as feel decline they

good slowly and of that and heavier inventory continue retailers good that throughout So are end And expectation year, my to the the by itself is to position, in be that's balance be more a sign. But really in up a have that's we'll balance. started out expected. the year a

Oliver Chen

last Klein. footprint deal. the And of price on business? does be? it risk? distribution the the there into you current that might How this see portfolio cannibalization do minimize is and to Congrats how where about fit Our question Calvin magnitude points your Also,

Efraim Grinberg

Sure.

any in also in strong our footprint, strong now. really international business brand where Asia the a a of has side, in but really have China. its portfolio, that It brand actually really comfortable is where global place one have American has which the opportunities don't in those of that. top, So especially mega is really Europe few I our as would a we or And on three iconic a brand has and great, it anything is licensed feel been brands. like has It's great we really -- we and it great minimalist four is the of say, the designers, brand own fashion of and

see it obviously So within brand BOSS for $XXX of and partnership. have MVMT with now and a about Olivia to as the launched is and us on is includes to especially Europe. Burton, this thrilled gotten the it's Price our Today, jewelry good are U.K. opportunity. the a business, points have jewelry, PVH opportunity. Movado Tommy both and at jewelry in it in that we meaningful And range. what well, is Hilfiger beginning which HUGO we excited also we're probably year, We and really becoming We partner and we're price a growth as watches the long-term reaction Hilfiger have and $XXX Tommy very jewelry. a both jewelry

believe we the so And several next in years. that a company opportunity for that's growth the

Operator

We have no this additional time. questions at

So floor back I'd comments. the closing like to management to pass for

Efraim Grinberg

continue like for us hopefully, a today and comes thank would a as with point to I in everything to improve. balance Okay. to of summer participating wish it Thank everyone view the a -- will from very much. end. safe everybody health and an you world of And safe the

Operator

you time. Ladies We and your conclude for teleconference. thank lines disconnect this your today's at does gentlemen, you may this participation, and

Movado (MOV) 27 Aug 202021 Q2 Earnings call transcript