MOV - Earnings call transcript Q1 2022

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Operator

Good day, everyone, and welcome to the Movado Group, Inc.

First Quarter 2022 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

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

will to Thank and quarter our call. welcome Rachel. our will you, Good quarter results highlights morning, then financial detail. of the strategic DeMarsili, Movado conference review Sallie first Group's cover and in This and the morning, greater I initiatives

pleased financial operational to start the have. had strong We then our to be might and glad are and a We any answer you questions will results. year very with

in And we Latin significant saw the a in closures the increase delivered at sales pandemic and anniversary During the still to $XXX.X we first the we XX.X% million. Europe although quarter a during closures. America, height quarter, of

loss of Our versus versus last million $XX.X $XX.X last operating gross operating an And in profit adjusted XXX XX% basis to year. XX.X% percentage points we adjusted margin expanded adjusted year. delivered million

Our represented a for the record of first operating quarter income a year.

net with of last net year. of Our cash balance $XXX million versus cash $XXX strengthen continued sheet million to

Our three levels. US wholesale strengthened all our sales brand business, company areas pre-pandemics with exceeded our driven e-commerce and Movado exceeding and our stores, sales our by Movado Coach plan,

Our XXX% and of first XXXX. fiscal versus US to business versus increased the year or XX.X% last XXXX quarter calendar

Latin business Our despite significant international grew closures America. and continued Europe in XX.X%

We continue will and are to accelerate during these as hopeful markets hospitalizations second and vaccinations begin counts the reopen quarter drop. to that case

footprint our company while marketing we expenses. driving As our to digital customers’ our Web our on on our site continue a and Web site, focus a of stringent product on focus our keeping expanding innovation strategy and initiatives,

performance As we we look Movado. pleased with of brands, are very at our the

in customers the consumers, to innovation collection, introduction brand. effective BOLD to new most on our with last be increasingly the XX and the Over aspirational message driving delivering products last drawing strategy of Verso. in our This Movado to recent SE and fall our we new our an introduced months, focused our proven success is

photographer, Alexi renowned a Alexi's our we featuring to from a Lubomirski, doorways excellent world that an straps veganism, collaboration consumers. quarter, vegan with edition the During limited introduce received the reception also highlighting first

movado.com. growing strong demand Movado We is Jewelry, from available only and a which also saw on

to marketing demonstrating our site, during advertising, on Web mavado.com that performance extremely first year, well as cable Movado on is pleased the continuing the focus During deliver with were supporting quarter, digital grew see by social efforts. television half robust the to We of continued this digital over results. brand as we're which and XXX% our

results digit digital for store in and department and and locations. increases pre-pandemic results strong wholesale be Movado channel both mortar over brick showing continue to double Our quarter our the with showing strength

in improvements see We are to beginning also chain our channels. jeweler

a some pleased of launching by world Parker closure excited SE our was we dials X.X% despite are comprehensive were second be our new [ID] last In important year brands, iconic performance growing and well. we strong the featuring In innovation digital driven bracelets about. Jewelry, that that iconic performance the the are both Watches our most our licensed and Tommy Blue our in reopening with levels our quarter, pre of will off channels by with e-commerce With Tommy to around performed markets. Hilfiger and marketing our our pandemic was Automatic markets. the compared to The we & in performance a exceeding program supported During plan. XX.X% sales extremely our and Baker US driven continued

introduce department to Tommy we partners Jam campaign, and Harrison. collaboration supporting and spring both with Coach, a China, in in driven new movie US social excited China by saw Preston with results in strong particularly We're strong franchise. and also are Space store In like in US this e-commerce products media Jeans between and well We in channel the a the opinion Coach leaders. our the HUGO marketing BOSS performed key Europe. compelling in

black strap chronograph edition performed featuring well. brown pilot a style new and very Our

continue very while brand to building our We e-commerce are jewelry our We a the that featuring strong a multi our In in collection. marketing also performed on expanding US Lacoste driving movement, quarter new through key in business department colored e-commerce markets focus of and efficiency store fine-tuning our iconic BOSS XX.XX, our we and Lacoste European well. introduced had our crocodiles campaign. partners. channel HUGO

ceramic first of During a white best which the our quickly we quarter, new sellers. out sold introduced family,

Day ceramics campaign on excited With these white now about. for we replenished, models are new are that a very running Father's we and graduation television our

was party jewelry the reception our e-commerce strong UK continue the our drove home we We're performance. Olivia new getting While for quarter, our sales market the to closed collection within much and of world to watches, grow Burton's around see assortment. of of tea

pandemic over stores performing sales growing well, results. pre are and last XXX% our company Movado year Our extremely our with over XX%

substantially demand for us. Movado that a corporate strong always been is as At company percentage products. our numbers, margin role our for higher trending gross showing our Group, Our very to stores has there important is pre-pandemic citizen our than

society, a these our delivered diversity as site, as and we are how been summary, our are better This we results movadogroup.com. proud this extremely contribution In have our inclusion to of we and we progressively team for through measure pandemic. our our very care pleased our our environment navigated areas. to found company be be that with importance we corporate which high year, take always we're and which on report, baselines have brand's can In issue priorities to establishing improvement Our workforce in first has from the on Web within us. of strive can our global the report, the way we ESG

continue one steadfast largest for We Europe, environment in to are managing of deliver Even the that in were continue operating markets, contain to uncertainty. to an for taking company closed and record much our our we not of anything with a will quarter, able first remain granted results. of level still

e-commerce trying that close of what digital difficult normalcy capabilities as execution managing and and it we are The off. as will it's investments control we from on to we of to the happen While levels improving what our the infrastructure reach do are can predict we time made as extremely across to possible. paying have pandemic, focused

been design our now element important We call has to we've which in products been to and will an results brands, continue Sallie. deliver. to over turn to and innovation that I focus the the to like excellent able on driving would

Sallie DeMarsilis

Thank you, Efraim, and good everyone. morning,

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

performance for first resulted record profit. Our year our of quarter and operating this in expectations exceeded fiscal the

increase for due to of the million to in due to the executed higher product and brands, period was operating of performance easings expenses XXX the and channel programs restrictions certain expenses Strong United with certain and of Gross channel expenses. our compared by in and well the driven changes foreign reflects by million, as to US continued offset the were pre-pandemic increased closure primarily United last year, as currency primarily the to declined international Latin fiscal of across pre-pandemic year. and XXXX, XX.X% points sales retail of XX.X% to sales, first and of increase were company's foreign beginning Europe coupled higher product of an brands percent XXXX, of basis expenses as increase favorable offerings, partially States, international to $XXX.X net XXXX, brick-and-mortar first certain based first exchange increased sales compared rates. currency XX.X% the favorable year. by Total with million sales quarter a was X% changes margin reduce XXXX as increases net XX.X%. Gross in quarter in such million and focus result year. decreased fiscal fiscal Operating exchange our of by response of higher margin rates. by of quarter mix, compared consumer of to first corporate initiatives $XX.X profit increase XX.X% favorable brands XXX.X% the the as the favorable notably in in well and geographies primarily last expenses. owned For $XX.X States. was led stores, The sales The segments on driven of as net decrease first first net gross costs as most sales that $XX.X as as company million $XX compared operating a fiscal pre-pandemic the in licensed in restructuring geographies, quarter quarter retail fixed than Compared XX% to last last across sales as continuing same and marketing compared to net of mix to This compensation, stores quarter leveraging sales. the America. was offset

and operating quarter benefit a quarter of pre-pandemic of As the in operating which first first fiscal year controlled million million year in to $X.X tax per compared gross XXXX. before. XX% in in expense quarter spending income the in XXXX quarter recorded pre-pandemic of in $X.XX the was of margin sales, diluted drove first of fiscal increase We fiscal the income expenses million fiscal million million quarter XXXX, million of the the $XX.X in year compared million. the first operating as of share for decreased $X.X the for double a and in XXXX $X.XX operating was in the first as of percent as $X.X of to $XX.X income The to Expansion fiscal to fourth from income XX.X% first quarter of last diluted first $XX.X ago quarter of to the of a quarter quarter was quarter first loss or net first income the compared the million $XX.X per the $XX.X almost XXXX. Net share in period. loss XX.X% or

turning our was year. the the end quarter sheet. Now relatively Cash to flat million, to $XXX balance at last first of

over of Inventory due million, of for [Movement]. million end same of year, This However, was $XXX,XXX of increase to million amortization sales. debt receivable last and the $X.X we the at same paid quarter the amortization was expenditures the acquired $XX.X last depreciation to down the was were period in $XXX,XXX the from Accounts primarily and expense for the period. of Olivia quarter of the and million. million period $XX.X Capital up included assets related $X.X year. Burton intangible down same $XX.X

$XXX performance. restrictions across strength continue the Latin operations e-commerce, that of mobility world We with in negative contributed of regions, our and Europe first has become operating factors range of several these of account, strong approximately Taking sales along in approximately net restrictions of additional and sales to have as impact in store we $XXX XX% continued including While to XX% to gross markets sales. remain closures currently we which, million the relaxation XX% parts reopen of will XXXX more to of vaccinated. million, the be and people to XX% other see America, benefited quarter COVID-XX-related from hopeful our in begin to be to profit to in of and consumer on the the expect profit into fiscal range

call current open changes the anticipate no laws, XX% up Assuming would like to rate. now the to effective tax we questions. for tax I

Operator

line the from first Oliver Co. question Our Instructions] [Operator & of Chen comes with Cowen

Oliver Chen

you do really continuing? contributed backdrop to consumer What and And The the you the US right particularly that the wholesale. factors how upside impressive, do now? performance was see US and momentum are environment view

Efraim Grinberg

wholesale products. of pretty to So combined now we we've the see and delivered think, brands pretty our a One, excitement doing we're within I their second US optimistic channel, innovation consumers we're you flushed have our product with factors year, increased those to brands, I began a especially of last to that the watches factors. keep terms think innovation starting overall and resources create continue a you the within all and for of category now discretionary to contributed. of US for demand that number across have We're the that also much that to purchasing spending, the quarter as for store going from and that channel the our resurgence have chain things in department is channel, And the in as think with well. jewelry consumer we're I see a and

Oliver Chen

Efraim, in people as styles terms go the out what's nature points whether popular that's that’d price the be reopening, or of product now? of

Efraim Grinberg

we Movado and year. seeing watch designs. at extremely new in SE that doing the our that's In up the We're done reintroduced and more actually innovation And SE, redesigned extremely second that's goes price well. that's Verso a half $X,XXX I've that company called well. the BOLD And very new iconic less $X,XXX new and and excited last introducing about. Movado We're then an starts why that we're to which resistance about is interest out introduced

and to So innovation that we demand. see creating really continue newness is

Oliver Chen

also Do that? how that manage forward? And pricing, different your sales, And think going inflation you Sallie, see should about how others. we you inventory and think versus that we labor and as factors, about might impacting transport

Sallie DeMarsilis

we'll take So it separately.

number our level, going inventory forecasting. line to nice we So be are that but a the top do on sales obviously, monitoring we purchases, have, we're

for be will as those line we purchasing in obviously, adjusting demand. with the our possible numbers, as purchases So but sales tightly

said, for very So we'll as product current in core happy inventory. going product. continue to And now manage Efraim are we're forward. we're with right Everything and seeing that demand where our our is we high

any our increases so as us And deliver chain, or to where as it we managing it not we're needs supply to coming are what product our far seeing well in is in, what cost costing -- be. as seeing to with that major it's get

Efraim Grinberg

a And time. about that our we elevated our $XX minimum had at internal workforce in of hour warehouses two years ago to an

labor, I opportunities think And there's so of in terms that but as pricing is for pressures some pretty while marketplace there's in there marketplace. demand think inflationary we're a also in position the And well. definitely in the we good

and process the others -- have we So implemented we're implementing will some well. in as we be

Oliver Chen

the attuned about priorities to of in context report. Congrats you Cowen ESG much on social do creation? more How issues. are think ESG new your environmental believes your many customers and demand

Efraim Grinberg

ESG put watch able and think have and Hilfiger, brands, different where people on bracelet. accessibility for we or a an Tommy popular or emphasis our regular the from Well, to initiatives strap who have on we front, put with issues I being across on product

collection in of reception ocean, California. Web current we've enabled next And and site. areas, be month to straps the our And really to by X% in recycled involved Alexi our pathways some the a on options we then on plastics environment in introduction in we’re to we got in close their introducing we with In those and excited in So most the movement very accessibility in participate vegan with to actually that's home of other our or because products. like they'll watch the two, for veganism and Movado, also were the planet. ocean

digital So of able about taking initiatives and consumers we're to those to a using think we're number initiatives and I media those. be with social marketing communicate and excited

Oliver Chen

reopen, very that interplay as happens between the what rate Our strong, the has last been innovation and digital as stores you think do question, growth your channels? to

Efraim Grinberg

really growth opportunity -- -- requirements the see gets prevalent. Masking as some people requirements channel more balancing and better, masking welcoming acceptable. the are vaccinations you'll now of think become I especially, become e-commerce of and out the more the weather

of you're desire seeing a into people shift to stores. think a for I go

still you're a the going well. as shopping e-commerce our area to because from business see perspective, think people much in as have I more comfortable growing way and become that

So you'll omni-channel see really performance. a true

We continue to invest development. omnichannel in areas for

than So much Movado that's the were our more we point-of-sale advanced in where we'll in a into past. be stores system putting new company

So be I the environment. grow continued opportunities are think there omnichannel to going to

Operator

turn to session. we would remarks. have of to closing this gentlemen, Grinberg and reached I the for over end call question-and-answer today's Efraim like back Mr. Ladies

Efraim Grinberg

I like would Okay. throughout employees return the of to weekend. thank been thank they I'd States that you. our pandemic. first I'm would United a to all I we doing to this hopeful like beginning all, really holiday -- of in have everybody job that to wish the a to And Thank normalcy. happy great like for are see

Operator

This concludes today's conference.

this lines disconnect of your may your You at your participation. rest Thank the Enjoy you day. time. for

Movado (MOV) 27 May 212022 Q1 Earnings call transcript