MOV - Earnings call transcript Q2 2022

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

Operator

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

Second 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. ahead. go Please

Rachel Schacter

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

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

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

Efraim Grinberg

review the to in that you with glad share might questions highlights the highlights Sallie of welcome to a call. you, financial to Good everyone. DeMarsilis, After you have had will quarter detail. chance Group’s Officer Officer. I morning, Thank me and second then any quarter Operating Rachel. second conference We our greater answer today Chief Movado be And would With have. our Sallie is Chief Financial performance,

been we past quarters. several over and very pleased are with We the results second quarter building the that momentum have our

executing excellent plans. Our job on and teams our have done delivering an of

profit The second in and quarter a of the operating terms record revenue period. for both represented

the - Our million by XX.X% sales of from from pre-pandemic to XXXX. XX.X% levels pre-pandemic or grew level $XXX.X fiscal

small versus profit XXXX. in to loss $XX.X fiscal operating grew million adjusted a Our

the for second record a XX.X%, was margin quarter. operating adjusted Our

We with and our $XXX already strong of despite also sheet no on debt, inventory sales. continued with just doubling balance almost X.X%, of net and near cash growing to build million the

innovation our we have delivered ahead results while evolving last and in support opportunities had in Over efforts, prioritize in have our time tremendous made a of last building. continue record efficiency we that the driving XX and the us -- our in marketing drive pandemic we Over digital our marketplace. that performance quickly months we continuing driving two the brand in retail investments and brands We as to profits teams operating our that and unfolded. generated as quarters to investing also improving progress

continued second grow growth for seen quarter company brick-and-mortar ago, stores. performance a versus our brand, U.S. the two With e-commerce foundation Movado improving we margins by year-over-year and company the business to have XXX and laying to both basis very quarter strong our penetration a improved have of digital platforms solid continued years on Movado led gain our stores, momentum our points We in as gross second the continue and XX.X% by improvement.

Coach Europe, brand are still the we strategically a COVID-related brand, well seeing image. a in Hilfiger also versus innovation we and to HUGO quarter had as of in States Movado our performance response strong elevate and in continued China. and continued and That closures Internationally our brand, We led continue ago. years two Coach quarter was drove in strong outstanding the by despite Lacoste. year United Mexico last Europe same growth brand and to led China results by the our we the Tommy as BOSS as In Mexico

driving year, XX% up by higher category. jewelry Movado.com selling our selling grew quarter including the for continued points is price. also in business Movado.com over price Our last our growth average

with relationship strong direct continued a closer building on the in business for focus also brick-and-mortar the wholesale growth consumer quarter, customer. our base consumers department of to the Movado was Movado to shopping. our very The becoming and channel, by to driven return with ultimate continue We store

performance Movado We also distribution. store improved our watches in seeing jewelry from are

On the Movado strong response starts our we BOLD we product a Verso and him develop continued $X,XXX. for which side, our SE continue family for at and our evolution Automatic, we collection both see new our to SE generated to initial and introduced recently her. In in BOLD very strength

experienced we support support programs, marketing front, by marketing giving digital the season. graduation our Mother’s gift complemented to television through and Father’s the strong advertising On Day, response Day

marketing licensed for brands, Movado innovation both her support the watches watches. product in performance. for Boyfriend quarter. pre-pandemic We drove Tommy growth during drove third investments our and and Sporty against and in will year fourth continue by last and we Iconic jewelry watches efforts with both levels increased Parker him our like to driven In Hilfiger,

and For the in for her him collection. new our third crystal quarter, and the introducing in Harley Maverick for families, will we be bolder the embellishments Kennedy looks

marketing brand well performance front, brand the in pre-pandemic U.S. we strong In Innovation the new Mother’s China double- respectively, with and treatments, the campaigns dial experienced and triple-digit Germany around with both the On levels. as Coach, television has embellishments. growth, in Tommy and as digital world. the across been supported we versus Day Hilfiger with crystal driving for Coach strong performance

extensions, saw XX% significant market we biggest a Chinese collection to new which over we despite a in BOSS, will the Coach, with almost month. family Day a well year, this last closures Europe, China chronograph. HUGO sport BOSS. earlier our quarter, introduction in as retail strong Ken Valentine’s expand our the our our with For took line [ph], for seen campaign increase we place have winning In expand Arden as of HUGO In an response third men’s the

pilot performance Santiago our by family Our expansion our and introduction driven the of was family. the of

the are introduction Grandmaster with quarter, assortment, of our of Carano introduction Novia. the and XX our Forks the excited third of expansion and Grand For about women’s new the we millimeter

success of collection and the tiebreaker of continues business brand is truly families. Lacoste Our Lacoste It brand. development iconic our driven by performance drive continue an and to to the be we our by continued the L.XX.XX

the new looking forward during lady quarter. are upcoming to We crystal with this embellishments croc introducing

saw the operating by XX in last we our fiscal improving grow pre-pandemic XXX% During XXXX, versus outlet while XX.X% and -- year quarter, sales margin. division versus

first time and now are the seeing from For our stores response consumers. a initial styles offering for are we we company made exclusively strong Movado

ocean year. For as plastic Both as we that from quarter, the our the that collection, features collections made Burton introduced last edition, iconic of to Party were price is which higher collections new renewed solar quarter, trend are and bring the collection at space. their Burton, over brand. our points new to and successful strong response -- Tea by both our which and chronograph it a In our in we reclaimed in MVMT. MVMT introduced the exceeded we is expand a with early MVMT new about quickly sell seeing Olivia right excited led are we out MVMT ocean on new are already our ceramic interest Olivia performance Raptor to excited a we family seems In plastic in for stages third celestial In in already movement.

U.K. with on planning launching the effort. half, our digital marketing in strong first TV a the second we During complemented Olivia commercial Burton are

marketing controlling driving months, As efforts the expenses, last and innovation delivered have building a we product made efforts while in and the that have progress made in our investing on results. front, still company, great over XX our our teams have brand the strong

strategic support believe Klein are We our in on year. long-term. and have preparing and record quarter additional of initiatives operating growth and and drive we the brands growth We Calvin to jewelry watches our for we January are excited continuing runway focused performance deliver this drive margin fiscal of and launch to to to the investments for are the over

While will new been potential about world, reopening remain we to continue and prudently. markets around have COVID-XX plan of concerned we variants the impact the

the over efforts return our changed, years. last that businesses. investments in over coming see our e-commerce the and continued digital this several higher we with business a have we Over and direct-to-consumer our the continue eight from The channel have to of -- to provided meaningful model a sales has few expect from made proportion growth -- next last years

we proactively the period, set this improvements as and of improve. track not drive ourselves setting I be half company accomplished could successful the and a As to a of times prouder future. for challenging stage during positioning had have second times -- navigating record of what teams the year have our the in

would the I have consumer During company. as to turn call Sallie. to a this now driven pandemic, our like we accelerated transformation truly over

Sallie DeMarsilis

and morning, Thank Efraim, you, everyone. good

period in to of of and results. focus on special and review outlook provide the significant fiscal of XXXX for year. an reconciliation I fiscal in issued for For results. context financial year-to-date and description XXXX refer also release update non-GAAP the the Please table second fiscal and quarter will the then Certain and comparisons XXXX a to our to included our results all of our XXXX the year measures. today’s today today, period quarter will My items COVID-XX comments will GAAP earlier second includes the our of for results I provide which include comments will fiscal additional on to adjusted press call due year-to-date on impact prior

States, and with overall financial highlighted performance as operating second in ended strength and as by quarter -- quarter expectations strategic was in focus and well gross discipline. and initiatives. year our by resulted sales margins strong our United We balance the in a continued to overall this expansion fiscal exceeded continued Our of sales, once net e-commerce our on for the The record profits. global again operational sheet performance

reductions quarter sales to last in benefit to changes as to salary a increase favorable of as company as and due the expenses to the segments in well were expenses prior consumer was compared second million in was recovery increase temporary reoccur to from Europe. XX.X% to but pre-pandemic also did year, of primarily due coupled points employees to $XXX.X of basis declined net net XXX XXXX, based was net license improvement portion as performance the be partial fiscal with included fiscal salary sales Compared of brands the of quarter international this to United directly pandemic of the $XX and notably response second geographies, the brands and reminder stores, sales foreign and was XX.X% and channel temporary which million, currency well Strong which and initiatives driven favorable not and our to last and well as due year. $XX.X partially net relative expenses operating as year. during exchange offset in the to furloughing corporate was of operating offset same fixed quarter than fiscal the costs, also by in Gross sales partially compensation, the higher and executed currency the U.S. expenses seeing partially an Operating sales increased brands, exchange For was increased which by driven operating XX.X% the States, increases furloughing continuing our XXX.X% by quarter compared global offerings favorable margin The product pre-pandemic last the compared increased this percent States, most was owned of sales, such led to changes as spending mix, most as increase operating was second across last second XX.X%. million, XXXX, $XX.X and employees was program, the $X.X expenditures. Total million favorable higher a year XXXX. offset of as second quarter year product performance mix primarily for but year. was a decrease in of last primarily by of significant the period. to compared disciplined certain sales while general of international channel second increase in gross rates. United a in The XX.X%, support in pre-pandemic as with This expenses reductions, a A quarter margin on profit marketing by to the foreign X.X% increase and based this increase compensation. reduce of and expenses Gross to XX.X% rate. compared sales. year. in period million, by restructuring as of primarily This XXXX, fiscal were across --

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

the Now July XX, sales United last period year. an to and points in as than sales, exchange in fixed million six due were as of of XXX international partially million, The States, increased to with six of product on XXXX. $XXX.X fiscal year-to-date month basis months the X.X% compared for $XXX.X our increase sales. sales margin $XXX.X rate in or in was pre-pandemic foreign fiscal changes for Gross margin XXXX, was to and $XX.X ending a Gross XX.X% sales first mix, or by year. results, six to profit offset compared certain currency for rates million pre-pandemic decrease months XX.X% increase to period higher Total XX.X% the compared XXXX, as channel gross costs. favorable turning the was months leverage favorable million six net the XX% of last

income period income of compared of first the months loss For $XX.X fiscal $XX.X to the million, an XXXX. pre-pandemic fiscal XX, than in XXXX, operating million operating XXXX. million six months higher was ended was July $XX.X operating Total six

$XX.X of percentage of in in fiscal fiscal half net for compared net per or the XXXX. of was As Net XX.X% X.X% fiscal $XX.X months to a share of a ago was million to XXXX, net half a sales, share, diluted a of $X.XX of loss diluted $XX.X or per the of loss the first as share first diluted $X.XX year million $X.XX income six income as compared in XXXX. operating the per million or period, income first

and included the and its both million, The million the a net diluted $X.XX. and of were a amortization in XX% and assets million, of in Burton of amortization over million million currently at XXXX acquired turning $XX.X period. above end of down doubled. range the up receivable $XX.X sales. the $XX.X the of to outlook period share to $XXX.X intangible primarily paying net year, the our be quarter year, approximately $X.X of net That million related at to six-month from of earnings the up profit to increase quarter depreciation while in of the Now year annual to was operating of increase period last $X.X debt sales sales MVMT. of same $XXX Inventory approximately sheet. $X.XX expense X.X% expenditures of period or million. for to of XX% $X.X sales, XX.X% due the approximately was expects Cash is the of end nearly million, sales company was million and increasing to an XX.X% first were range balance same during $X.X same while last to per gross $XXX million, profit Capital last almost $XX of that fiscal also Olivia million Accounts

rate. not Assuming results. we like to closures, tax the questions. impact up anticipate outlook updated which effective retail call current laws, significant related a tax XX% no This COVID-XX changes I’d does contemplate open the to additional now for adversely can

Operator

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

question. with proceed may You your

Oliver Chen

the And us guidance will of had that quarter be have might to could to rationale some conservatism, The mix morning. and and be to To and Sallie, Good nice helpful long assumptions gross thoughts margins also Thank some that your you. what’s and and continue speak product Hi. true? guidance? channel momentum. the you such underlying could how the

Efraim Grinberg

yeah. -- So

we So, half comping are lot first comparisons the were half the obviously the completely that year. against in virtually think, closed I year a and I think the the of obviously markets easier in so of are first

our momentum in We are the world. good seeing around sell-throughs

still to the the cautiously We the our that brands really then to able well. behind the one take But we bit have and half will we excited the we pandemic we impact see do gross will side. The but also we the let and have a strong and is been Sallie believe have margins business. I been on but thing and little have we are margins also and that able to on second the will around still pricing gross there about second margin continued on pricing are side see of I over still mix. as raise do the talk a that so the the power half, about believe optimistic during effects that Sallie. So turn momentum it world because gross

Sallie DeMarsilis

Yeah.

the whether it’s all a is of also margin gross U.S., and outlook strong and without strength source. online the our forth or so stores we of Movado where the And reflect very our important product, of to our growth so, channel a the very continuation both brand the the in does know royalty’s the of of and strength has direct-to-consumer, license

leveled continue, for outlook to that you for see remains period year. based it -- So we kind expect that of our the this it on is off do it’s

Oliver Chen

and understand department you less happening are the markets good a what’s -- stores. seeing we and view channel of and your geographically it with return to, markets of And also sustainable? help Okay. you stores to really that like is the us What’s a stronger strong Efraim, traffic return store and on could consumers sell

Efraim Grinberg

Okay.

with is been, ago answer United strong years the been have Geographically, momentum of now of will combination challenging strongest on has digital incremental. years strong but over both the seen brick-and-mortar see performance we which really where those. really we States, because has two return I being it’s region the few So a sustained and to channels, -- our had of nice

have side. performance good we seen on So that really

Europe. see continue strong in performance We to

in us in fact ahead versus had we and sales despite markets second in some really versus last the of have year So China performance two performance was again, then Latin strong a ago really Europe -- the for years last lot Europe. strong e-commerce most years challenges We the the and two year and in the digital period, quarter, continued during in and but closures better of see America, than seen that ago. retail

So we having as make it’s geographically well. good momentum it’s and behind margins it, where you having highest like United pretty our because know -- having strong -- North it we gross seems as the America States

your are stores improved as in based jewelry that store performance United part the brick-and-mortar, States really now of in against -- department had ago and the and well. have question been the and seeing our second two we your trends also So at then mall stores but in versus in improve where the looking performance was are channel, and especially seen years we on department we

to to growth desire a had have that stores consumers the has business. think to and purely I incremental been return So

marketing our to to to with really and omnichannel dividends. innovation support has begun strong pay focus and brands our the strategy marketplace continue So on

Oliver Chen

things and balance prepared of you happening one to consumer also brand And the unit the strong with Movado increases? average magnitude think need from is the What’s pricing and and of offering there I that like Efraim your Okay. the a retail. remarks value.

doing you that? are how So

Efraim Grinberg

and more back and about on ago, we on that to have for And to done through price into aspirational. always embarked innovation, that design, sees to roots building the really So it. product But and consumer two focus pay points, that offering but years had go we benefits our make fantastic Movado It a they strategy been really the we greater higher value. aspirational. through design through

for and the they for the BOLD excellent at collection. while higher is higher BOLD momentum like ESG price price value collection strong Movado price are core products, points points, our they we truly have products So -- Verso at our because are behind consumer. points to seen offer the at higher those high

Oliver Chen

could Okay. your The attractive what should really you cash so structure? balance strategy to balance and return with you and you on us thinking capital are are is respect shareholder your managing sheet refresh well,

Efraim Grinberg

stab Sallie. to the at that So then I take turn and will first over

And stock So that, the to use million and we also year share this we reinstitute are did program buyback and continue at I did we a and beginning with as we pleased then in almost dividend cash, we the think buyback possible of that’s second obviously, reinstituted of a a of $XX build cash. quarter.

And stock and so, buyback Sallie have under we I program. availability that let will still

Sallie DeMarsilis

get covered business, and I forth. you have able think places being in right the running the other capital to so right working it the than regular inventory the

it So that Oliver. covers

Oliver Chen

And and holiday inventory supply you and/or been chain? to have big flexible base topic, and what’s Okay. availability inventory a inventory to know you a approach supply I supply your pressures. Will this? happening chain finally, constraining has have inflationary or you enough also

Efraim Grinberg

and for So, called to flex comments, really terms resources Board in we good have our it just across all I up. flexing COVID I several as comes be availability, of pretty suppliers back then and product down to in done strong on and We I costing job and it back in their the up done planning down our side. has seem shape where think our last excellent think, times, had year team my an to just have

now get end through And to of have of we the right will comfortable pretty feel amount year. the so the right that we inventory

Sallie DeMarsilis

Yeah.

add would to that. I think I

step team shortages to strategic we to and our need definitely and are any placing We that. being potential to great into has the purchases recognizing take as mitigate really able visibility

Oliver Chen

Best you. regards. Thank

Efraim Grinberg

Okay.

Sallie DeMarsilis

Thanks.

Efraim Grinberg

Oliver. much, very Thanks

Operator

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

Efraim Grinberg

our and wish very I’d a to the much. to all summer our we Okay. for today and quarter on look everybody you call. conference like participating third to end thank rejoining of you call Thank you great for forward

Operator

for This conference. you today. joining today’s us Thank concludes

disconnect may your at You time. lines this

Movado (MOV) 26 Aug 212022 Q2 Earnings call transcript