MOV - Earnings call transcript Q4 2021

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Operator

Good day, everyone, and welcome to the Movado Group, Inc Fourth Quarter and fiscal Year 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. Thank you. Please go ahead.

Rachel Schacter

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

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

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

Efraim Grinberg

first results detail. welcome would as Okay. questions to will walk Operating strategies the Chief Officer year-end and you glad Sallie for have. you, we with me Thank greater answer then just and Rachel. quarter some We Sallie reported, Good financial Officer. you our might current fourth as the well DeMarsilis, our be and will to any and plans today our I quarter fourth then our share through year. Morning highlights in conference Financial is call. for With Chief

terms Mexico. markets especially cases in in we're closures States, experiencing continued COVID-XX the While and America, Brazil across of improvements and European in United seeing challenges we are Latin

we world, to new around that rates a hopeful vaccination as will We normal. slowly increase the are return

Having one of with history, pandemic Our the just in unusual finished thoughts our the most our families execution am personal lifetimes. first are proud experienced that and year. be our around challenging I teams that have results the in overall like disease. thank operating of world more in for this the our And operating I pleased the they with our I this only all given couldn't very from hopefully accomplished and devastation years to personally teams would environment.

a which we During the company fiscal progress future. for significant XXXX, well positions how as made as execute we in

fourth we and on For the and year, the quarter full exceeded top expectations both our bottom-line. the

Our million down and fourth sequential quarter. quarter improvement were the $XXX.X to the X.X% from third sales a showed for

adjusted last and a ago. profit than reported $XX.X operating improvement quarter the million in for was the million XXX% $X.X Our year versus $XX.X the quarter million fourth fourth higher two years

our million. of very year, operating debt the of million $XXX.X million balance the was profit strong $XX.X sales sheet cash adjusted and million. with a We of $XX.X For with finished year on $XXX.X

the quarter for by to declined And XX.X%. increased margin our adjusted basis inventories XX%. XXX Our gross by points

sheet, share a we and $X.XX buyback that program. performance dividend quarterly strong announced our a Given of morning balance approved Board reinstated and our this

our history. As have evolved effectively a reinvented company and we over

first pandemic. Center of the transformation highlighted digital With during our because focused Digital marketplace. accelerate those a the in of become a the the timely Several were we urgency on of onset digital positioned knew we consumer greater of with years add setting ago, as to we decisions, becoming of up those the the and company Excellence well priorities sense path have a we of pandemic, that we down would we to continue leader our

time committing for possible. as by of as operating We our XX%. a operating expenses to the We our of expenses, quarter variable, almost prioritize of now to as expenses management execution focused on well as the as declined adjusted disciplined significant close also keeping expenses part

As also continuing our and wholesale focus we business growing tightly digital enter this to year, while our operating manage expenses to partnering with on continue we customers. intend to our

of We are in our consumer seeing first marketing and the strategy benefit our a innovation product driving in programs.

in has jewelry pleased for performance still very in with excited opportunities significant We both across that are which growth. a is and believe us launching We're of will the Klein organic our brand a have watches and and category brand for we portfolio Calvin watches growth for jewelry, XXXX. continued the overall calendar that potential that we be also small our

last at XXXX. with as fiscal very our As momentum continued the we brands, year pleased that we're we enter performed look and seeing how Movado we're

Father's the for our Day, Movado in limitations business sequential will gift sequential Valentine's and traffic delivered giving the its during strong rollout movado.com our serious prospects up continued demand e-commerce see the Movado they and as execution a the grew quarter, collection, about fourth jewelry Mother's the excited retail by With despite important by driven growth brand. Our supported we're by leading as growth with Day well performance the the continued bold we we to our watches. advertising Movado collection We're outlet and the in in also in be of improvement June of and brick our of the in customers, This channels, acquisition in which support overall SE profitability increased holiday improvement collection, team season. growth wholesale launch television on excited May mortar. XXX% of strong very new our our as the future by strong jewelry of In Movado division in continued our season. about Day, to performance SE of spring also pleased for graduation are with

our have to of continued the we during strong far, year. in see So the beginning momentum stores

market less for digital Mason watches and a an our decline In brands, performed saw numerous X% shifted the third-party America for in in continued Liberty brands closures Hilfiger, as licensed Him considering for licensed licensed and important and Our for well region quarter. our marketplaces. largest campaign we Tommy channels fourth sales In our our than total, Latin very for strong the Her. Europe, we saw brands demand to

We collection Hilfiger and to for both online see continue Tommy also our jewelry men of strong women. performance

For which Boss, in we and share biggest the television brown France are of featuring spring, gains with our blue the in supported Parker and in to new true Hugo these tried two with drive Europe. markets, combination. Germany campaigns, continued dial In markets our strap we

our pilot We have gotten new our new watches. to strong and a edition Hugo response

to Hugo we're In addition, continuing for grow develop and jewelry Boss.

newness present for seeing are The strong iconic on new features Tea Coach's disk. to motif our with we rotating consumers. response a a Coach, her For Rose

a the to continue watches Our men's is now penetration iconic Lacoste In new strong the we marketing Lacoste, on collection tied to Tiebreaker trim In collaboration our from Boston and performance watch. last profitability the a Lacoste collection brand with our XX%. Polaroid. collaborating spend. new Coach with Movement and we'll rationalized also like the We're brand's we see year, his collection with as expand improved

ceramic, our strong selling encouraged this new growth collection the the to and year, are by look we average now in focused price. introduction spring which first of white to crafted we're response on our raises As

vehicles new the and invest spring. to for marketing test continue will We

the well Burton's mortars and in fourth watches respond our quarter, OB much home United impacted of Kingdom our brick continue While which jewelry Olivia was online. the market to to sales business, consumers closed of and for

watches already quarter, jewelry. spring collection net the the For strong We're our for ib.com new and on by Bee grew both response in our sales XX%. seeing to a Rainbow

the of look pandemic an programs reopening we a of As amount are and retail return of then basis, ahead, of in life delays still and vaccines as the environment continues to the in rollout to rollout world. certain a On uncertainty see there global believe vaccination uneven new expand, normal. will brick a of areas we global mortar remains as we we seeing significant the begin in

As a actions to profitability. and both company, sales position well we that and continue drive have grow to as taken the

the variability margins. our We of and our diligently working cost have structure on increased improving are

for drive for present consumer brand the demand portfolio Our innovation digital and our our company our proven future. footprint helped across in investments the the product has our position have to and to

with we focused profitability while capturing the sense are improving on the opportunities, world Our acted driving and a results. throughout teams of and urgency available have

company actions to jewelry the right excellent taking job in will brands. brands XXXX, in continue invest growing and our across category did our fiscal in an significantly During of the our the presence while sheet, business. strengthening in driving to and our balance XXXX, opportunities, our we our digital innovation invest fiscal In

maintain to I call uncertainty to manner While will we would the there disciplined proactive in is remaining, like environment Sallie. a navigate a over to the significant turn and to spending. approach still now continue

Sallie DeMarsilis

everyone. morning, good Thank you, and Efraim,

the for review My results. call, today, quarter included the results today focus adjusted and of the measures. non-GAAP our today's refer fiscal in Please issued for items comments fiscal also For will special fiscal results period XXXX fiscal for fourth I financial earlier of year description XXXX, which table in GAAP will XXXX. our release to on press all and include the our and

by Our performance ecommerce our initiatives. in with with improves We significant results strategic the of management sheet sales, growth year and gross and quarter fiscal expansion progress a sequentially each our balance margin expenses. strong in disciplined quarter fourth ended the quarter of highlighted this on

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

top-line well brands our quarters. in most brands, net segments versus licensed was of retail, Nonetheless, built and stores, restrictions to the as of geographies. leading prior across declines improvement COVID-XX mortar specifically sequential saw as we mentioned, brick affecting across globally, our As company impact owned and with sales

as and in offerings sales, and our to margin Importantly, a favorable party profit our our response XX.X% consumer in fourth the Gross owned $X.XX in gross ecommerce. same is driven marketplaces. to of quarter was ecommerce third drove $X.X $XX.X controlled percent primarily base. reported XX.X% income compared million in a and lower or margin of in strong, quarter million, to fourth was by favorable to on as million quarter compared in for non-essential fiscal revenue of investment the in fourth spending remain those of XXXX of XXXX. the $XX.X diluted million period. and payroll in as Expansion quarter the gross Operating costs, on the as in $X.X in websites fiscal taken reflected year. as exchange increase was expenses as The The brands share decrease were fourth fourth to compared ago expense which per channel We driven the was and year. by time, per income and last spend $X.X expense as product of of such fourth digital both in or increase sales to $XX.X $X.X in well million actions million period million foreign rates. we of compared $XX.X quarter diluted to to the reductions compared million as the focused $XX.X million expenses income XXXX. tax marketing right At areas year quarter same operating share in the the currency sizing of fiscal changes operating all last minimize maintained Net to mix $X.XX the and our

a XX.X% to Now million, by of year driven slight in million, sales of primarily per $XXX.X $X.XX or was in the to in turning $XX.X last ongoing operating exchange primarily attributable our income $XXX.X changes to million Operating million foreign $XX.X per The net in decrease XXXX. Gross rates. $X.XX compared from million period. rate to fiscal the diluted XX.X% or The of profit margin million, fiscal $XX.X favorable or net of Net of share year. was sales $XX income was diluted compared year impact income currency increase sales COVID-XX the XX.X% was in fiscal compared $XXX income pandemic. as sales to the were results, of gross was or million as ago XXXX. share decrease

year for and our digital. this a To year. $XXX.X fiscal a drove to Now end million to flow in which reduction including Overall, year. cash generated was we sheet, last closely balance in from saw during we inventory believe, compared lower billion strong capital of us an operating we at $XXX.X operations turning XXXX, as flow $XX.X cash on expenditures, we the give hand, capital cash while million and areas increase cash managed end, working our our levels increased return, will investing in

$XXX.X and by to the million, intangible end year Capital included was XXXX million disciplined lower year. related outstanding the acquired the the was the million year. was of $XX.X quarter million million of remaining of $XX.X $X.X last the Additionally, last fiscal receivable reduced just to XXXX. fiscal last and actions at amortization at were a million down million, compared expenditures of Depreciation the million of Burton debt Accounts $XX.X from down than end result which $XX.X $XXX.X at million Olivia $X.X XX% same amortization Inventory end of $X discussed. expense as period $X.X from year assets were and of million, for the were Movement. as to

are environment. we this made are challenging pleased we we our we to drive have in mentioned, Efraim As right believe the with taking And the actions business. progress

However, remain COVID-XX other in around pandemic uncertainty resurgence continued the duration due the cautious we Europe to the and important and of the markets.

currently the sales of on to to our sales quarter be We would million visibility million first annual basis. the an outlook of into net our are questions. call quarter term not up In fiscal in expect open providing operating XXXX to be time, million expectations first given are in for like outlook, near while for we to we first fiscal XXXX providing of this net $XXX to of compared terms the XXXX. performance, slightly I $XX.X XXXX fiscal range quarter at $XXX and profitable certain now

Operator

The coming floor for Cowen. open is questions. Instructions] Oliver of is Our Chen question [Operator you. Thank first from

Oliver Chen

seeing customer? how encouraging that are relative thoughts and you're channels? both amount in seeing your the from continued of and in expect the to volatility own What do on You're stores levels you the momentum traffic trends wholesale to your

Efraim Grinberg

volatility. So to see to expect continue we

light some are in span closed benefits than our States, lot strong, that And think, markets in biggest with and States. in what That challenging vaccination rates seeing there's a tunnel progress then the our continues in a of conversion point channels is wholesale where in And see especially levels while from traffic in is very to to three what making down be people I stores. also we increased traffic end we're the we're the the And continues of seeing that seeing believe the at with that U.S. we're improve, you're stimulus. the United with the I virtually be of of channels. Europe, own the both online our view. United particularly more

Oliver Chen

relative are what Efraim levels now how and are store they department the wholesale online? planning about what how channel in seeing currently thoughts look they're and thinking your inventories stores what and inventories, about wholesalers to and have

Efraim Grinberg

inventories in are very So place. a I the think that healthy

or the we're than their think of an the done an retailers I having almost effect. have job of excellent year a on going managing inventories, little more particularly ago now year a a pandemic throughout

think aligned really the excellent an today levels sell and that's their done inventories global a basis. and and job closely they've inventory of through I So on the are very managing

Oliver Chen

the given the and innovation changes innovation Efraim, what's about product want? And with work? on consumers experiencing the you what Okay. as trend and And flexibility and mind think amidst of regarding your pandemic, home how that may crisis and pipeline the all at

Efraim Grinberg

increase is, with today. that call we are casual to and collections that how sport their closely So elegant think living see we aligned are towards people lifestyles an I continuing what

entertainment what rather seeing watches we much or the category an accessories being lack and think in maybe categories think today and maybe also apparel I or and spend benefit I from than on other a disposable other of spent income as jewelry are travel.

continue and their brand they have licensing and So become innovation. with have closely aligned for pursue very continue align, on And as we continue materials front very closely -- to especially really partners we're with innovation we colorations to important. as important, to our innovate, become us, a

Oliver Chen

you. much anniversary terms done if what monitor you And would mixed and helpful. for you you longer of the Lastly, might model, Thank model on trends has been variability we cost you'll elaborate what mentioned the leverage. the differences should be gross it when leveraging your well, margin impressive. implies That Or in there have there? as and of benefit? I'm can How and the structure the the just current that

Efraim Grinberg

gross I'll about ask then margin both answer Sure. a bit expenses. to Sallie talk the we'll little and question

Sallie DeMarsilis

from a year, margin, which this higher component related has also but operating Oliver margin, Mix we've moving was obviously, a as towards to on expenses higher gross more some as well So of direct-to-consumer, really benefited have mix currency. it. does

we're month as already we've XX stores we think, our business. the direct-to-consumer our well almost as mark will I both anniversaried ecommerce includes hit moving Efraim now of on That continue be outlet where said, to our think and do strong. as

think most I that that probably So of margin gross hits your items.

Just too, there element it costs in mind is fixed in keep is some there. that

on to bigger those have than fixed quarters quarters. leverage in we in benefit have more So the costs smaller

Efraim Grinberg

then, was on cost part second I the think structure. And

closer I marketing I more perspective, as think, to increased digital we're talked from for execute doing more but more discipline perspective we're a lot and what on the both time our in trends. the also infrastructure And variability we're able run. amount applied use and based of an spend in -- really to and we platforms, will spending, revenue us that an ads of from are to about seeing able to to much we've a our marketing moves what

as changes we really, see we're we a tremendous over at and and we you digital as while have occurred challenges the company, marketplace the the So tremendous beginning, that opportunities. the year last have embraced also we as saw navigated

Operator

over to At like you. the closing to floor Grinberg Thank Mr. I'd comments. back for turn this time,

Efraim Grinberg

you on today call. for Okay. like our participating I'd all to thank conference of

Thank call. obviously our forward year quarter of to accomplished really look in you talking uncertainty market, the we first in what team lot of has you. our this conference a to we proud still and there's While are very

Operator

participation Group. and and in for Movado Ladies your gentlemen, interest you thank

have webcast time your disconnect and the and wonderful day. off at this a may lines You log

Movado (MOV) 25 Mar 212021 Q4 Earnings call transcript