MOV - Earnings call transcript Q3 2022

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Operator

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

Third 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

be had financial welcome then We questions. Thank Operating will review Chief Officer quarter and Rachel. chance me you, greater initiatives, and glad results Sallie And 's review Sallie good Officer. in detail. our to quarter DeMarsilis, our performance and answer I've to third today After Group Movado a morning our our would conference strategic Financial is call. to third With Chief

quarter. the our results We are extremely for third with pleased

very against world execute at strategic high Our teams objectives. continue to around level the our a

year. third third quarter, last million, were versus $XXX.X quarter increase the earnings. sales the for $XXX.X of operating million we XX% an For Revenues and record delivered

of was year. the operating Our $XX.X from income $XX.X from adjusted last increase quarter XX.X% million, by XX.X% to also adjusted year. partially basis a last was XX.X% record, of margin million points Adjusted driven operating XXX expansion income XX.X% sales, for a gross

continue same marketing which were We the last year, improvement operating focus XX.X% while period against of with of by an basis last year. disciplined XXX $X.X points million increasing remaining to sales, expenses over expenses, on

Our We Balance while remains in increase share Sheet $XXX.X $XX.X our our million quarterly has the dividend million strong. cash, today and with announced that million net directors additional increased to that $X.XX also repurchasing program. by $XX for XX% cash repurchase XXX,XXX quarter board an year-over-year shares of We're to a to pleased in we approved our million. end $XX

omni several consumer-focused in These shop. the efforts. developed a we've the began initiatives COVID-XX our to focused -channel wherever accelerating choose on serving we transform Over Company and invested our consumers into pandemic proved last these as capabilities, beneficial they digital years, to

evolved media also marketing have as more continued to capabilities be focused our evolve. landscape We has to digitally the

across to our around and XX months, industry-leading our and driving innovation demand. We're world-class made we Company consumer brands Over product build continuing design. the efficient, more last business driving our have portfolio building

store, a to site, e-commerce has consumers a our partners, retail We're they serving of and our one in our the outlet right stores. place chain or store, our continue our department to us a consumers, in website, stores. supply choose flexible Our inventory allowed our whether shop, to brick-and-mortar for have wherever jewelry

both by our strong in and results performance sales in grew quarter, in were driven international online. XX.X% the our the For and brick-and-mortar markets. XX.X% These U.S. by by

results the and demand Our powered we Throughout compelling increased both have in marketing portfolio, quarter. continues core television its advertising. assortment. led by have Movado with our across performance of brands strong Movado an year, by to by The experienced all penetration robust efforts, of our the brand drive product of innovation growth complemented been for for the digital our strongest BOLD

excited limited enhancing extremely brand quarter, by as a third on artist, the well were During series well to we our Carmen launch movado.com image. that Herrera, as designed the has performed Cuban-American

website the to continued drive Our for growth, and is familiarize generator a as flagship Movado both brand the Movado. a for becoming today place consumer to the revenue with Movado themselves

XX grew our For the Movado quarter, website almost by %.

to $X,XXX. average We our a also response seeing sales continue XX% women, this on from and that website watch growth strong with we a retail men season. continue to increasing In Movado, for holiday watches introduced price our penetration the And Movado raise for commercial we're important to the of we spring. play new role a our strong our in over selling Automatic, automatic and on believe above response Movado website, $X,XXX. and watches the jewelry both an seen Movado. coming TV launching We're support of SE to we this which will an have of

campaign television last third be to typical support season. will against Stores than what longer year's shopping earlier believe we We Movado holiday in Sales our grew a have begun XX.X% by is our quarter. Company also division

tourism. increases for retail increased is and of our continued has less be in while by average And continued be brick-and-mortar Our it traffic in promotional Overall, has division to channel. this strong our challenged drive growing E-commerce has profitability. to stores activity this business component unit a decrease to an increased, important in

America, drive strong year, portfolio East, and continues last to brand and growth by the strong Europe Latin results in in India, powered licensed with Our U.S. XX% almost the a over Middle and recovery continues increase

licensed in innovation This and Kennedy performance. Hilfiger, Hugo the performed and Tommy drive On Harley feature Coach, with him side, for each her. In Lacoste. to campaign our will of growth our season, strong Hilfiger, continues our brands holiday biggest Boss, for brand extremely well Tommy strong

her. Hilfiger both also design to We and great drive continue in Tommy for him jewelry,

collection at like grand holiday course seeing local will from marketing We key in This BOSS, for results retail markets feature hugo platforms using digital strong chronograph. a continue also coach iconic signature of sports in the Europe. strong India, show Europe. markets. and BOSS C features our our strong digital in looks HUGO proud. collection, brand We're and platforms HUGO key have jewelry we Mexico, support we In on expanding like our Tommy in our celebrities business we're Admiral. the Boss to _____ support In our Arden Coach We'll have interpretation which for

We of driving These are support. continuing with character, the new eco is China. men's the Coach new in its Castrol materials vegan straps This for In coach and case both and jewelry. digital strong watches with both movement, Kingdom. that we're strong market watches campaigns made the in a United category In with are innovation in will feature first-ever Lacoste point. introductions to and develop. price we're sport driving Celestial and Lacoste our we brand watches and This our offerings. in higher We're collection in Snoopy. growth Burton, U.S. fall, introduced luxury movement. Peanuts our and a holiday marketing contain being campaign in the of home commercial -friendly launching iconic TV solar iconic out supported Olivia feature

an our collection to also $XXX received excellent and to exceeding our gotten ceramic an watch strong price We've our average colorway Honey point reception with have We across to Smoke our a collections. families. Raptor response

across also their well. to Movement Our our advertising we marketing very will this movement television Plastic Ocean perform digital increase edition driving as focus fall, continues investment. efficiency on

profits a year, teams market. first our For delivered despite have revenues of months record the volatile X the and

We continue pandemic, manage by that inflation, and proactively market an and to volatility. challenged navigate is a currency ongoing

at persist. look believe we that year, the As proceed will the of -- balance we these pressures

to business with managing will the awareness-building remain in to and the support continuing our also marketing. while focused important of agile investments disciplined brands, we the growth So, cost, on attention including make

of patterns our from wholesale to the full-year our shipments retailers, raising normalized the quarter our results. purchasing strong helped terms today outlook we're to us which year, drove In reflect more into third for the deliver and return outlook increased

lie have. we that We growth. detail, continuing results profitable to be teams consumers our are excited will as any plan, and at then of our to you and Group, answer do review center our outlook Movado and evolve deliver everything continue about we financial might ahead questions Sallie greater will to in our from sustainable, the glad now putting strategic the prospects

Sallie Demarsilis

you, good Thank And Efraim. morning, everyone.

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

third performance our for and operating and resulted Our profits. quarter the record expectations exceeded this year of in net fiscal sales

Our balance strong strategic financial our operational expansion sheet made overall highlighted initiatives. margins, again sales, a We global performance and and strength progress in with discipline. was gross our meaningful in ended on quarter by once

net compared directly -pandemic prior-year expenditures. as The U.S. increased For million increased $XX.X and most of increase a XX.X% U.S, in by sales increased and expenses brands XX.X%. last compensation, total increase the improvement sales The to while was an X.X% to for XX.X% third to the $XXX.X increase seeing third last sales million mix performance-based licensed favorable driven Gross also the America. of I'm third net compared support year, year. $XXX.X sales notably well Strong in Company across continuing XXXX, fiscal with operating the quarter across the over the to international and quarter XXX-basis increase as of channel as in an and of year. of our disciplined point response in but still sales Net XX XXXX, significant of well Latin last same uncertain million and the costs, increases the marketing increase stores, the third in be international XX.X% period. profit expenses were in expenses due segments -- pre margin X.X% the most was were a increase as and sales by Europe quarter in driven $XX.X increase was Operating brands, sales to primarily sorry, sales period general net X.X% led our as of as as to -- primarily net higher in as percent compared to to product leverage last net gross sales. XX.X% to sales quarter fixed operating and brands, U.S. of as offerings fiscal owned compared million to and compared geographies, year.

year. the last We the a net period. third recorded in million tax $X.XX Expansion expenses of As from leverage of gross million income XX.X% in a of quarter diluted a $XX.X to compared for in the sales, million XX.X% compared quarter in third margin quarter fiscal operating to income in of diluted or in Net $XX.X of XXXX and in expenses percentage of as $XX.X per third operating to $X.X decreased million per third $X.XX XXXX. share increase quarter million income year-ago the in million third fiscal as the our to of $XX.X income million the quarter the expense operating the on third was XXXX. or as drove to $XX.X quarter $X in share quarter fiscal compared

as for sales. or increase net million as margin XX.X% $XXX.X rates, was was channel international gross XX.X% XX, profit in in as the year-to-date XXXX in a XXXX the X-month period Sales X-month ended year. product compared and and of months October last a Gross to costs. currency the -pandemic Now, mix, $XXX.X to offset to X.X% sales in year. favorable due to partially by certain decrease favorable changes compared fixed turning rate our increase of million increased X million foreign with XX.X% on net to million X.X% for results. sales were last sales pre exchange or U.S, Fiscal $XXX.X compared $XXX.X The the Total of period leverage

ended to million fiscal of $X.X XX, million $XX.X million income higher October Total X-month compared the XXXX. period For $XX.X was XXXX. than as fiscal the XXXX, pre X months was operating operating in -pandemic income

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

of $XXX.X increase acquired X.X% million end below quarter $XX expenditures the the end almost and of of period. Olivia Now intangible increased down amortization while repurchasing from to million, during related year, $X.X same our Cash at million the period turning of over $XX.X the included the year, were were which million, last the same %. increase million year, $X.X million, was common period receivable X-month period million $XX.X sheet. Capital paying last in stock of third were up million of assets last down at sales. million, of due debt expense the balance Movement. the of Inventory and or to XX $X.X amortization of and over an while quarter sales depreciation $X.X Burton to same the and primarily was $XXX.X Accounts million the $XX for

net shipments a more results, and purchasing of sales, sales are range range outlook the to to in net some increasing earnings and degree we year. overall of of as share our pattern, wholesale approximately contributed such, diluted million, Efraim $X.XX. We $X.XX net in the and to XXXX to a fiscal drove third XX.X% normalized per As during gross to of profit which our returned of of retailers expect approximately XX% XX% strong profit currently to operating the $XXX sales, quarter, approximately million XX.X% to $XXX for mentioned,

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

Operator

you. Thank

[Operator We session. will questions. One for moment Instructions] now we poll you. be a please question-and-answer conducting while Thank

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

Oliver Chen

much. into quite sounds Thank on Hi. the with it to went Thank nice detail more And hear like you accretive the for you. on that you're great love quarter. would implies Could consumer. results. for chain. Congrats seeing relative were The thoughts those the I upsides very fourth you guidance provide you're expectations of to optimistic supply guidance? health what that

Efraim Grinberg

not time. think Well, first, the with I'll of start some And pattern. our always supply have right shipping and we've at had inventory job had that so experienced. us, right a We inventory I team delays for we've continue we to going fortunately into fabulous chain, that feel our the we're has managing so most flown that also of -- done like have markets and we've

healthy key I that's back and around in quarter. consumer over think seeing a demand, last continuing a and America seen in also in both brick-and-mortar markets world, we're e-commerce -- and most bounce Latin our we've of the the

our key investments key expenses I we're and continuing are think in monitor to our continuing very marketing especially Obviously, pretty also increase behind and the good inflationary short-to-medium I affect overall inflation time, brands. while season headwinds holiday the markets now feeling closely to term, same for the at but right about we're can there in like results that So, some consumer. think the pressures

Sallie, So the excited to you'd prospects quarter. we're about add like fourth if that. right something to now, for the

Sallie Demarsilis

covers No, that I most -- it think of

Oliver Chen

Sallie And Okay. --

Sallie Demarsilis

looking season, healthy -- the to that's forward sure. holiday for

Oliver Chen

should on sales, that? or versus leverage items sold and inventory looks you're expect of? could goods model position. lost a aware we should It near there And being and on we margin Are -- then model cost like continued you in how in of fixed do table you -- longer-term, to happening there Are be on the a you sales are as gross costs? that Sallie, not? tight be we

Sallie Demarsilis

with start We'll inventory. Okay.

is forecasted today, like slightly really and the challenge feel and did an place up out as So, around facing season inventory which Q now. inventory, that chain the have our has actually We our our is is sales good good later a Efraim we're based holiday finished again, down, small to when that our meeting slightly led, are. what's actually in job everyone goods outstanding fluctuation see for place a you'll supply at upon we is globe our componentry And what right really done is as a I mentioned, in be.

as continue containment brand our in like of will we It's working. in selling. core, -- will our just good with we wholesale, of on feel we're to of it's all that current, It's have a U.S. place what's strong the growth the the this with that as that gross we -- been so should how a to gross manage will cost to there contribute third that's right that we margin, continue On gross that margin, experienced we've like for such product, gave. its The are Movado so changes lot part in quarter. So, we it's we and things in fourth continue all based the yes, strong the quarter seeing gross costs very It's the a margin, quarter fourth outlook fascinating what been it was Those as those. look inventory. to that growth year relative the quarter year-over-year. are margin see to to

Oliver Chen

you globally a call-outs as how store there well. regions, longer weaker? trends Department mentioned you indoor channels Are U.S. You Efraim, you're feeling seeing been have season really run stronger there? are on that about And diversified the a model. front, the business have for versus

Efraim Grinberg

North was as America, nice since I well. results last Mexico. -- we're I on Brazil improved happy really that. back is stronger in we're we're seeing having its nice year. Brazil also so few certainly having it that, but a East, for in height, The Latin not performance in from Middle it to a basis, which are us our think a up markets biggest it's And -- bounce where and say and a in that America about Europe been seeing in quite seeing can regional strongest our We're and performance years

right I be is person of it if there's probably think because as increased out China, malls one shopping of or where really COVID. as people brick-and-mortar limited in challenge would over challenged now, stay concerns

Oliver Chen

What about --

Efraim Grinberg

We've in also jewelry to India back continues be seen also our store sorry. business We're our seeing very pretty channel. improvement our And then store I'm bounce store -- chain department well. strong. jewelry

So, us well has a department now. for performing performing quite store and for both well been while are

Oliver Chen

like-for-like about how work as thinking prices you the about price inflationary of through especially mix, you're pressures? and what and Efraim, increases, versus some

Efraim Grinberg

in price We've especially now we're already increases continue enter accepted certainly we'll environment our the year. have think some consumer And I increases. Movado, allows to see those in next think an to I has some, us the far, some and of passed so strength as next and price we leverage year. right pricing brands

Oliver Chen

digital customer on you center and acquisition -- other and the called What's frontier, strategy the excellence, the happening And Okay. of why with television and digital out mediums. cost

Efraim Grinberg

sure. Oh,

all seems And television think rebuild other. been demand our place It's always advertising increased. complements has the it as where to awareness well that digital known complement can I it is advertising increased brand has each also marketing and cost and the well. very digital we probably of

So, things a includes increased but this outdoor, that having year I beneficial our like -- things sale, Company of also on global we've like basis. effort the the certainly XXX-degree and our really is budget marketing television important. think And a to visuals point at

Oliver Chen

and Black any history for what and the be other all season, unlike out there our holiday, Black the holiday you're Okay. stores and And highlights of for in your Friday the [Indiscernible]. approach strategy doing Friday are to for we'll careers we as in but for

Efraim Grinberg

the Black before for it's days We're over especially the consistent category. Friday important Black month whole also, holiday, past not And compelling be a the consumers values We're weekend. XX and last there'll promotional highly but what Friday. our on with the fairly done really in important, we've Black while Friday, is being certainly in

any don't also as to the Friday, this markets, limited And those I get year hopefully, fact exist there allowed vaccinated. U.S, restrictions think should more this one in stores the Black year, benefit really, at continue more year that that was at last time. was from capacity people least and many in in

Oliver Chen

really classic Okay. executing lot front, mind highlights at as for and And and any consumer you've of well. made on What's great pursuing what and the product features your on the also changes core reinvention the some across on portfolio? Movado, what of the and styling other Efraim, wants of innovation you're a

Efraim Grinberg

we increased team in our to the our leadership across materials portfolio; plastic, think use consumers. I across also give use really of being ocean ceramics has to diverse design job of executing our a from able good driving portfolio, innovation and done our Well, what and then brand an upgrade

points, give higher we're were While to value. to selling continue also them able great at price

Movado was movado.com sales mentioned, And really of impressed XX% within number. for $X,XXX. us, with healthy it I business on automatic increased a use really our were as movements an online watches -- brand. I over the was our was So, of selling over That's --

Oliver Chen

to technical, then -- Apple is had priorities. the And business? the remind your privacy on the Last just much has IDSA Okay. this us iOS that impact of changes, changes, and but different little a on shareholder returns,

a you shareholders balance nice cash well. record as and have have You funds of returning track a to

Efraim Grinberg

our the -- improved but complicated and believe that have of I efficiency that digital made also it's more raise And to digital raised, restrictions Certainly, which made as earlier, the also other complement the talked have marketing. marketing. areas there -- of cost -- it do are we increase privacy privacy

of digital the funnel consumers our then starting parts reach consumers the with across our funnel, a the strong partners ourselves campaign top So, wholesale of marketing there convert for and and online, really executing consumers. many have at both part are them of all the convert is and help of to top to the you funnel, reach different ways

learning think And that to how the efficiently. can remind I then question, second navigate we're you me. So,

Oliver Chen

Shareholder returns.

Efraim Grinberg

in another stock also increased year, beginning dividend. million $XX that also of a We increased repurchase of we've the quarter. And of program since returns. We I'm our share this and Oh, it we believe shareholder for back the and by our $XX really million. did pleased. in We returns. dividend Shareholder most paying obviously second the bought quarter,

on and $X have $X we will million. existing incremental an plan, think this million be or then left still $XX the million I

to it generate and to intention Our continue cash to be able to appropriately. is utilize

Oliver Chen

regards. Season's you. Thank Best greetings.

Efraim Grinberg

very Oliver. a Have great Thank much, Okay. you holiday.

Operator

We end like would comments. of have floor now the the I turn reached to management for session. back question-and-answer the over to closing

Efraim Grinberg

wish look important like listening forward ahead today, the for you season to Thank and I'd and holiday, much. everybody thank great Okay. selling to a all participating Thanksgiving as that's we of you and very I well.

Operator

Ladies teleconference. and gentlemen, does conclude this today's

may at You time. you and wonderful your day. your have lines Thank for disconnect this participation a

Movado (MOV) 23 Nov 212022 Q3 Earnings call transcript