MOV - Earnings call transcript Q4 2022

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Operator

Good day, everyone, and welcome to the Movado Group Inc. Fourth Quarter and Fiscal Year 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’d 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

welcome Thank and and Rachel. you, Good fourth morning, to quarter Group’s Movado everyone, year-end conference call.

any progress We have financial performance our glad and fiscal Officer. I will and in for then Financial and Chief will performance today. Sallie our our today me you answer Officer and fourth overview our Sallie quarter greater us is of an Operating Joining detail. to be review strategic XXXX then our questions Chief DeMarsilis, provide would initiatives, against

powerful XXXX actions our compelling several pleased brands, experience. performance the with innovation us to in with past extremely accelerate an are omni-channel and as growth our elevated fiscal years enabled over We

in world fiscal enter we the XXXX, position. a is precarious As

into months the Ukraine. the this year, improve being affected emanating in devastation we we the While greatly early to operating six is are saw pandemic of from last the that begin now and by over the effects world part a in

and Our situation. this out all affected by hearts those prayers untenable go to

are will Foundation $XXX,XXX innocent a end, aid efforts that impacted. war International are of The know Refugee made between millions Ukrainians Nations support refugees. how Ukrainian Group the the to evenly and being rescue donation Fund not We but Movado Rescue split sure this we and to and United of Committee

knew these now concerns the uncertainty dynamic and backdrop the As the to and economics add we issues being these that as heightened economic the to the a inflation world affected environment. war. operating we being can around see compounded are began navigate – We These heightened continue we geopolitical costs. events energy fiscal by of by XXXX, is macro increased effects

organization to balance fortunate possess times. We agile are an sheet has a proven and navigate that ability to strong uncertain during

to turn own let’s XXXX. for performance fiscal our Now

over XXXX. for a the million, ago. sales versus from sales First, and $XXX last records X.X% X.X% our we profit around only variety up of per the year share. of the surpass for earnings We to I over the Not two for year adjusted performance. on but operating would the sales note year record across XX.X% world pre-pandemic versus metrics $XXX.X like recognize million and results, pre-pandemic a fourth with stellar years last of strong we set teams the up for year did a fiscal up many to ended resulted quarter year, This XX.X% to in

for of Our quarter year. gross profit adjusted percentage was XX.X% XX.X% last versus profit the an gross

XX.X% last adjusted profit percentage of XX.X% was an gross profit For the year, our year. gross versus

We for were increases operating XX.X% quarter year. profit was $XX.X driving adjusted margin of million and that and XXX%, for record the delivered pleased reached quarter fourth a Our record adjusted extremely the $XXX.X respectively. we a the year, for million adjusted operating operating the XX% XX.X% in margin and

Our period. $X.XX were earnings the triple adjusted quarter brought earnings per per $X.XX. share year This of the $X.XX than to for share earnings year, adjusted more in for last versus the $X.XX year’s prior

In terms $XXX.X in from of flow, million for cash sheet our balance cash flow we and operations year. the generated

net million and in $XXX.X despite was cash our Our $XXX.X million year, reinstated dividend position versus stock. $XX.X at million year-end purchased last having

dividend $X.XX announce that share. to our today per increase by delighted has quarterly are to to Board decided We our XX%

we value our shareholders addition, continue program. through share expect In for create to our to repurchase

certainly the will present current global its economic While teams and feel in are we we our that challenges, environment that believe operating prepared. well

we years, a rationalizing done navigated provide well the of highest in return the an few for expenses, building investing while excellent pandemic last the have job and for that extremely company global during Over the areas have and future. the

the and will environment, delivering to adapt We be continue to for focused current nimble while the long-term. staying on

XX.X% America key by Latin performance by markets, our in India. led For quarter, and the strong European business grew international

U.S., grew our in For the slightly with levels. year, the double-digit XX.X% important most our from brand, down sales In the prior for sales increased pre-pandemic but quarter year, our the X.X% growth from Movado. by XX.X% were international by

For grew and two the year, years versus domestic ago. business by XX.X% XX.X% our

have elevation coming are our balanced increased average we XX% more From than a have sales markets. As to brand with international almost that to we holiday and to consumers, model, from continued pleased strategy diversified our slightly Movado season. diversified continues business with to our price the perspective, are resonate see we during a have to with pleased of half grow, –

stellar now brick-and-mortar significant for the We by distribution, XX.X% grew retail increasing e-com seeing by continue business, a in average quarter, movado.com, unit with the business, performance XX%. our is which to performance see improved our in while

sales by movado.com grew our year, the For XX.X%.

year. $X,XXX last to the movado.com the sales watches For is of quarter, and retail that XX% Movado only available the XX% e-commerce quarter sales. doubled jewelry on of over over for that was accounted than brand’s during for more Movado compared

dot-com important role in expect the about plays are moderate it overall back in-store, experience. brand our that would we shift we growth buying the consumers excited as more to While to

of with season, SE the holiday Automatic. our SE our penetration very continue to During iconic perform Movado increased well

collections BOLD continue and both online brick-and-mortar. and Our at Verso perform Evolution to

drive will Series Our continue we sport with digital collections marketing programs. Movado both continue to to support retail. sales at television This XXX and spring,

well both Hilfiger, the and performed in grew drive and for brands In the quarter for the and quarter also very Sales both extremely the XX.X% watches. licensed for year. strong continue Licensed sales and XX.X% growth, both brands Our jewelry year. key markets in to the by grew Tommy we the European quarter particularly for against pre-pandemic year.

League influencers with collaborate to like Star, continue Goretzka. We key and Leon Premier athletes

growing Bollywood Star, Shahid with Kapoor. to continue our India support also market We

will are new we in foundation her. X In they spring, CLAIM implement growth strong the that momentum have the a saw multi-eye strategy. we brand For results their and for and as Matthew Leila introduce strong parent continues gain we excited Boss, two as collections for to him Hugo

both markets. grew Germany, For important those year, billboard UK and the as with the strong drove digital and marketing the well in over quarter key as in markets support levels pre-pandemic major of in we We Hugo cities France the Boss. programs strong

catering with from Last BOSS HUGO to a with for introduce XX, our ocean additional our We results will movement we to consumer. him. Grandmaster through renewed an constructed XXXX extend BOSS younger December a we spring, years solar family five model, Admiral certain plastic new for leading environmentally-conscious license have and agreement rights thereafter. week, featuring for This strong our

to U.S. We the are to has to and results expanded watches both include to Arden strong perform in China, In this Coach, been successful continue continue iconic which BOSS-branded like delighted very well. see beyond leading families continue partnership, Preston jewelry. also and we

executions Lacoste our first Tiebreaker. Swing We against and our Lacoste in Replay two our by Grayson our years lifestyle introduce for both collections campaign her performed last year as our with excited two spring in ago, as will collaborate collaboration ceramic to we well led Lopez, XX.XX new featured active Lacoste new Jennifer watch. him. are spring, extremely also families, well in in new for and and Minecraft leading This marketing introducing and

watches of We are begin and introduction very brand excited jewelry. in the the Klein both Calvin to

about targeting doors We representing the East, markets. retail the and around Europe world our biggest are X,XXX with Middle

about the are opportunities Asia. in excited We also

an of on XX% We XX% will are sales to represent expecting that jewelry basis. annual total

all strong thus seeing of are sell-through. our some are from markets already far, promising response and we initial We seeing

believe can watches. jewelry continue be We that both driver CK a and to in significant long-term growth

the with pleased improving gross very stores. We profitability by in are our improved drove discipline pricing results We outlet margin. and maintaining

Burton, performance expanded pleased Our Gloss White, evolution. were price we to watch support point almost Burton market, both UK. ways and also sensibility, two Ceramic continued our see have our in average strong customer the our digits and with marketing a the Olivia in for single We last decreased challenges be as like designs We year. selling jewelry this down Burton for moderated believe decline acquisition and has efficiencies. prospects unique single-digit In year over price ago. in Olivia will to and brand. were Burton MVMT, grew are higher British we families color year by the the talent with leadership years this In cost saw the we the year for XX% in brand Olivia for to into which we a other continued due committed opportunities key and medium-term XX.X% unique reinvigorated over and the Olivia design strongly the

marketing seasoned the product As St. was are join the we lead and of to CEO brand our to Knits. a previously, executive Eran have MVMT announced last in team Cohen, who night, excited John

an and for will could results, the Movado MVMT. growth proud of plan As Eran his is be executed profitability. part delivered initial they Group. for XXXX as of strategic strategy around year teams our establish comprehensive exceptional record-breaking priorities, in I and both our against world In fiscal sales not summary, a

focused to our and that opportunities. in continue we disciplined biggest on our against support investments will remain we executing we continue strategic make our goals, remain to As sure

the to these as our we — times, commitments will make possible. execution as will operate continue uncertain of Additionally, make to as in we marketing our close and expense time we

there look the to including with begun labor some to we understand pressures, wage for excited offset along these we are pressures have ahead, and about implement. inflationary We As increases pressures, inflationary that future, hope prospects additional cost but we the that price through increases. are of

offset focused in operations. stay costs and our gross to to continuing improving will operate our We increased margins efficiently these on

XXXX, the digits, growth Sallie. operating I stimulus this, headwinds to call the we the as deliver see profit. in will year we our for in dining and to able consumers that other grow activities. expect the would spend over lap turn on U.S. we travel, fiscal for to and in sales to while expect now as reflected like continuing programs also We in coming are Despite outlook to mid-to-high single

Sallie DeMarsilis

Thank you. Efraim, and good morning.

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

for overall quarter strategic Our strength on the margin management sheet sales, in year global our We record expenses. and by fourth highlighted progress fiscal balance was significant the with gross a of initiatives. performance fiscal and year strong the in ended disciplined and expansion

offerings were compared and States. Strong led million an stores increases well the XXXX, increase For across company fiscal net $XXX.X XX.X%. notably, and segments licensed last United $XXX sales quarter response across brands, most brands of of as of most sales to fourth to as million our to as year, brands owned our geographies, the

compared to the Latin sales year. net significant year-over-year primarily in international and year. increase costs, to certain the $XX.X last by general was increase a as saw profit increased sales last and operating primarily as period. of The increase the while in fourth was to prior also million higher expenses quarter year. disciplined growth the operating gross on to XX.X% sales for driven in expenditures. fourth million XX.X% We the margin compared in sales period and support in of be were percent XX.X% America, net of year mix compared product as favorable was expenses last same $XX.X Europe, driven the continuing fixed marketing of leverage India. increase sales, expenses by Operating U.S. in quarter to increased that over due The Gross and XX.X% channel and directly

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

share favorable fiscal the favorable in increase demand. margin to changes $XXX.X and as or income was turning net to $XXX.X Now in $XX.X COVID-XX ongoing million per costs fiscal the partial attributable compared certain were or XX.X% income foreign income Gross exchange of million sales and Sales fiscal or of was compared was compared diluted year rate was $X.XX in net million higher last was $X.XX $XX.X $XX.X Operating million period. due year XXXX. $XXX.X of as leverage of in Net profit pandemic primarily mix, and The ago currency income increase from to diluted per an The results. our to fixed sales increase to recovery million, the share to product in sales rates. channel million XX.X% of from XXXX. or on $XXX.X gross year. million operating XX.X%

$XX.X million, of over our last of the end during down debt Now increase fiscal of Cash even turning at year. $XXX.X million balance was the – the of to million stock at paid and as million an year, we the end year year $XX.X repurchased $XX.X of the sheet. common

flow. same Inventory of million, $X.X in to expenditures the in end the and due Burton up fourth of up and the was During last million was Accounts primarily XX.X% above of related Olivia assets depreciation MVMT. the same which the sales remaining Capital of fiscal the $X.X XXXX, X% we were from period generated receivable $XXX.X increased expense amortization sales. million $XX.X last the acquired included period to and cash $XX.X million year, million $X.X operating quarter. year, of million, while or at of quarter $XX.X million amortization intangible increase were the

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

approximately current rates, we million, fiscal issues. we we increasing cautious look a However, XX% XXXX $XXX as of million of remain currently $XXX XXXX, sales to a profit the million. disruptions expect net net and in in around into operating impact fiscal chain inflation, income interest of the $XXX Taking range gross million due range and of sales approximately supply rising to to uncertainty $XXX of account, geopolitical this into

tax regulations, Assuming a the current no tax changes our rate. to effective assumes outlook XX%

XXX,XXX share repurchased under to relates approximately it shares company XXXX, share As repurchases, the its repurchase program. fiscal during

remaining under execute the of now company to market conditions January would plans $XX.X in in repurchase environment, an its for million prevailing pace up the at its the plan aggregate accelerated company repurchase programs. had Subject XXXX. to call of like business fiscal to I questions. open authorized XX, an the As share XXXX, share

Operator

your At we Please first with Oliver session. conducting be this Cowen. Chen proceed from a time, is will Our [Operator question-and-answer question. Instructions] question with

Unidentified Analyst

Katie Hi, on is Oliver. there. This Good for morning.

have what you. to QX few would If would you Calvin helpful? got quantify I’ve questions, be far are how really, then of stimulus that, a first last you love some great And And the your sales think could so sort Klein know from follow-ups. impact Thank did of year? I much really launch? like our results. learnings I your that

Efraim Grinberg

Katie, you, and Thank morning. good Okay.

just of I launch, so Calvin from I fabulous a team the Klein against DNA. think has our think done brand – job executing the

we our so ultimately, the Movado contributor but a to really to product. out, will roll very as be pretty excited. We’ve to Again, seen seen beginning strong year, really Group. it’s at And significant anticipated of it initial we’re good sell-through. We’ve small be reception it the

of last probably So would an impact will – month a in in you stimulus. know April. the first number had different sales, impact on predominantly early March, And the assume, U.S., we We energy do excited fourth of have variables well quarter the – but stimulus don’t year but war know of probably retail domestic in in of the really the effect in that higher it I that inflation, quarter the first that, Certainly, costs, we’re about exact launch. was the the sales. including as as

Unidentified Analyst

you’re to sort product and of of broadly, maybe and sort And great. expansion I thinking of about more thoughts the around your implications know how of maybe would love jewelry some category Okay, that then that, staying that on you. XX to what your it the sort points behind of gross for as gross basis expansion Thank relates expansion of drivers primary plan margin, margin? are And XXXX? then

Efraim Grinberg

selling – I it’s I our will helpful our brands, jewelry, we gross really and which continue which And very we’re still across to to think of is it’s margin. expensive think – is X% more product, sales. about expand

– piece becomes of margins to fit within we manage total a business, it be our to able overall bigger we I our believe the as will As mix. that gross

a see that really I glasses We nice don’t now other do and categories the in blue don’t see business for product have sunglasses brands. other called expanding brand. light beyond MVMT, we So that. Everscroll into expanding MVMT right which into But is

Unidentified Analyst

impressive across been That’s increases growth just around then question implement helpful. business. you’ve able really and price And the AUR is the Okay. really that my last to

increases consumers Thank far? those do price fiscal yet any planned have price have to increases how And responded you So you. so XXXX? for

Efraim Grinberg

brand increases quite last the smoothly. went year, particularly, and price Movado limited that implemented So we in specifically

cost personnel, all costs, of and doing costs labor now more that our things store like including across as brands. We’re and follow-on some increases

of the we’ve acceptance in for right increases good that in I price things as now. consumers we’ve used out. paying are to historically now, implementation we’re process So seen more but And rolled doing fairly think

We going also is up. continue really That AUR probably up, the raising retail and to unit our was going add value push biggest to price, our the in product. average

more values Movado sport for a upper of getting in We’re ceramic the is the things end at MVMT, really collection. luxury our family like family SE

see to deliver when nice are willing consumers really more to it’s you So money the more value. spend that

Unidentified Analyst

Absolutely. much. so Thank you

Sallie DeMarsilis

Katie. Thanks,

Efraim Grinberg

Thank you.

Operator

remarks. end Mr. closing reached of the now turn have over I to call question-and-answer We And for session. will Grinberg the the

Efraim Grinberg

Very well. today. I would like participating to of for all you thank

our again for we last quarter you forward look first to results pleased year, Thank to We’re call. very for very talking earnings and with again our much. you

Operator

conference, you may lines This this concludes today’s your at Thank and disconnect for you time. participating.

Movado (MOV) 25 Mar 222022 Q4 Earnings call transcript