MOV - Earnings call transcript Q1 2023

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Operator

Good day, everyone, and welcome to the Movado Group Incorporated First Quarter 2023 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

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

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

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

Efraim Grinberg

results to Rachel. initiatives, might have. strategic and call. welcome you, greater our Thank questions to you Good quarter We performance morning, review answer detail. be and our glad then financial Movado conference first our first Group's in and would I any will quarter will then review Sallie

increasingly currency delivered XX.X% million strong XX.X% volatile with on sales to by our strong $XXX.X we first We a grew Despite very Net results. in pleased constant are an by operating basis. very quarter or performance. environment,

the Our quarter improvement last XXX over XX.X%, year. point was gross a basis for margin

for of profit $XX.X million operating was last the million XX.X% year. sales XX.X% or of versus sales quarter $XX.X adjusted or Our

debt. and with of We $XXX.X quarter also ended million no cash the

that first inflationary in recognize began increased an year quarter, consumer. of In beginning a growth we X.X% lapping solid While during challenging environment. reflecting we U.S., strong we on the first the increasingly in quarter, are impact the the that the and by pressure domestic delivered last quarter we very stimulus despite operating sales grew

increasing rise, As appropriately economy on we during brands approach are as rates a our we strategically the businesses expect XX.X% interest constant moderate. to to to sales Internationally, with And support strong invest U.S. in a and to while the we growth maintaining continuing first XX.X% and very such, currency saw biggest basis. spending markets. our our disciplined quarter,

to continue America of rates resiliency, from We impact see markets We're to also India seeing growth as Latin a the pandemic. and of certain to especially East. Middle and the these significant amount begin – Europe in improve the in

geopolitical we As inflation, extremely the such are our look seeing environment higher growth, of our we are U.S. taking of actions an while are not and a strong, was first heightened and currency slowing instability. level outlook. as we quarter believe ahead, increased navigate we volatility We to appropriate increasing uncertainty

work have to up also return people shift and We travel and a activities. to and seen as mortar brick other ramp

Turning Movado to brand. our

retail lapped inventory. our movado.com brand the retailers in an as decline partially a increase as in Movado XX% strong with This to a wholesale For well, perform very by revenues continued our quarter, offset see replenished strong than business our we was as from where Movado, sales Despite strong tripled performance the the become quarter our our sales did – Movado U.S. year performance last we progressed. challenging more more we business. quarter from overall despite

penetration collection of an offerings. strong of increasing performance front, and SE the we product see On automatic continue our to our

saw year. strong associations. reception. of first various continues a green times and very last as have brands, During year-over-year we the as at strong received strong introducing SE our our within innovations quarter began second very dials during Coach performance closed the and quarter, be a Europe to collection licensed much we product by was In led

partnership family were our challenged with continue of continues customers quarter. Lopez Jennifer to China, pleased our resonate closures we're our Hilfiger, sales returning channels In Grayson during with watches. supporting as and Tommy continue are In the to online second consumers. We seeing COVID-related newness

modern in campaign done casual blue spring Our introduced Matthew, color. iconic family Tommy's a

had refresh and start we Boss as on with the our a year Khaby. mesh to marketing Beaver in brand a like her, campaign. associations brand are Leila the star, new takes an strong TikTok Haley important featuring in We marketing For spring bracelet Hugo very on

We the strap innovation throughout in done also we a jewellery strong to event, Boss both participated plan new sport both In Hugo, the in the watch both and branding and Lacoste, Coachella. launched In replay, introduce year. in in brand's and watches bracelets. new Hugo in black we House mesh

We from Lacoste the also strong to had a collaboration. our reception Minecraft customers

Klein in sale jewellery and and throughout of positive Calvin about our partners out points XXX rolled a key world the with with we quarter, watches the very During response.

saw brick become fluctuate quarter with in believe increase and it modest everyone for excited We will in in Klein about signature continue mortar. CK-branded gender-inclusive our sales to are In our to Movado our outlet brand XX% throughout Calvin representing important store we rollout a the as of strong progresses seeing the Group. segment and sales watches year sell-through an business. division, the We're

customers place We of increased brand. experience. MVMT In gross in for we fourth have we million about Burton process for leaders we are exciting process the MVMT points. Olivia continue progress both excited profitability some expenses. products Burton to focus MVMT's are our MVMT new quick We're quarter our a brands. at MVMT, in and category year, occupancy the higher ceramic margin and our making will potential seeing the In developing our the this than the are our almost compensation brand somewhat of of assortment in great and in wins the brands, updating watch new long-term and expanded With by of some we're on in offset database, long-term Olivia and already for higher price deal future. last the X with strategy delivered

strong we a macro a While presents maintain quarter, level outlook our the uncertainty. to for high which environment has had us the of enabled year, very

Over the level at a we very have pandemic. our executed our have years, teams had high several last navigating evolve as global a while plans to

will that Ukraine, a interest world, We in acquired have we inflation the strong to as in a rates, use dollar around war economic and risks, the rising energy discipline including prices we navigate higher increased categories. many continue

we delivering I sustainable and margin manage call to would over like carefully while to We profitable focused to expect turn expenses. strong Sallie. cash With are now gross on growth. position, deliver operating our continuing to balance solid the sheet

Sallie DeMarsilis

Thank you, Efraim, everyone. and good morning

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

increased increase brands sales year, compared of to XX.X%. geographies. company XX.X%. licensed million in as Net Our sales sales our well X.X%. of stores sales owned increase across was last U.S. $XXX.X dollars, $XXX.X net In brands, as across million were net segments as the certain and an increased constant

the costs. slowing to year-over-year. in addition Europe, We strong Latin Efraim see the all a U.S. year's challenging impact quarter America to of The mix, last quarter of by As effect marketing by net Middle International selling $XX.X to especially in certain these for increase XX.X% support increased higher this begin were The on of sales. first primarily in Operating year. in pandemic. net compared the profit inflation increase to growth, in XX.X% expenses increased domestic first percent to favorable stimulus as XX% the gross offset quarter, margin million same the the channel $XX.X compared the easing and last East, comparison sales India last shipping the in from year. and driven which Gross the expenses increase product was last first the of and of as higher trends during of partially mentioned, sales year. began was markets we created saw as year by of period anniversaried compared of a consumer million to and the was driven

quarter of as share per or quarter as operating million recorded the first diluted first XX.X% income of ago expenses expense was margin, income tax $X.X year million in the for to discipline sales diluted in XXXX. of or $X.XX income as operating the to quarter quarter We combined decreased first was $XX first XX.X% quarter, million due fiscal Net million in fiscal quarter $XX.X the $X.XX fiscal in share year. $X.X of the a first in XXXX compared This million increase quarter of in gross a compared expense period. first to million XXXX. in Expansion in the leverage. $XX.X last to of compared in $XX.X the from drove As to continued primarily per to million $XX.X with the percentage sales,

the and timing our XXX,XXX were to million to the repurchased the in was the $XXX.X the our million of the year to same the which sales. same year quarter Burton to acquired first and Cash last million balance primarily related repurchase Olivia for of million up of of sheet. program. $XX.X and from $X.X of under In share due Accounts was due our assets at to $XX.X approximately receivable MVMT. or the prior amortization to amortization of million, Klein million year, Inventory $XX.X were expenditures Capital the we up Now turning million included end Calvin expense period. quarter, increase to the quarter compared addition and in the $X.X the at was first end as of depreciation $XXX last shares $XXX,XXX period receipts portfolio. brand compared of the intangible quarter the $XX million, period

discuss Now our outlook. would like I to

inflation unchanged, had including quarter, are we be be a strong range to a million $XXX in environment we strong we Therefore, remains operating sales of to XXXX instability. $XXX first in currency, fiscal challenging increasingly million, recognize While by XX% approximately year, geopolitical a expect outlook million. operating and that to profit of a to fiscal of we sales impacted $XXX and and $XXX approximately our gross an million start in of to net profit range continue the to

includes rate. a we our point expect we which to do currency. increase like second current Assuming quarter no tax foreign changes And tax up the sales to a quarterly X% I negative to not anticipate laws, outlook, over would XX% for net call provide we to basis the while of XXX now last effective X% questions. effect generally year, open

Operator

you. Thank

a We you. will [Operator now Thank Instructions] conducting question-and-answer be session.

Cowen Our comes with question Company. from Oliver Chen with and your Please question. first proceed

Oliver Chen

Sallie. Efraim, Do… Good Hi, morning.

Efraim Grinberg

Good morning.

Oliver Chen

– You great it's a be saw here. to

encouraging, which model you. where from some to of You And been what do year? nice there very lot saw benefited Could a is see we it of drivers as continue? the volatility strength did channel speak as And there? to expect be Thank may regions. you question, a upside, have you lot Second of will within you that in and also product you customers key mix rest the weaker? Sallie,

Efraim Grinberg

they was America, Europe also a particularly year that later of saw to markets. were India, we reopen other and that So strong. Latin just last lapping And than lot

So U.S. was than the vaccinated we to a all earlier extent great recall, much example, for Europe.

that a continue. And there so saw We of can our believe market. European we resurgence a strength that of lot in really

our we solid to global probably brand a well. for the our Our we East the the brick that's mortar North on whole category, returns performance for America, Latin India in store. us from also into probably year. shift expectations are in world licensed shopping with very as is line expanding digital brands, Europe, And also and seeing back And market a And in in channels. especially and an America, strong are Middle as saw

Sallie DeMarsilis

And margin. that's into a nice segue gross

year-over-year what and for comparisons XX% year, So strong of rest gross to very expect had the margin. this we're have guiding we we

last to to but strong, of So quarters of in our be no the flat with essence margins, the of for quarters to the relatively of fiscal significant year year be callouts in of contributing should remainder each businesses strength our we expect each to the it but real gross the to continue the of year. each anything

Oliver Chen

examples any cost think you. Is a lot are what demand Okay. you inflation of and the And crosscurrents help is we're product higher are there your sold? thoughts of about consumer. your goods seeing a price and/or of of the points? that with the And role happening? playing lower the What versus Thank

Efraim Grinberg

cost So inflation products. It playing our is more us terms headwinds for not the operate in significant costs of of really to today. obviously

we're we've to able really to so sure focused careful cover our growing made on And be on that and margins gross expenses that.

lower is much what they think consumer there's to as point no I of the higher down also United slow you then that the lower a – States, And pressure inflation. is the there this as is trying accomplish headwinds in is level end year. – last stimulus were that has receiving on to at longer of a the which Fed have

the slowdown only in So consumption. the way ultimately do that to is

this year. that think – I that into that for So is outlook factored our will

Oliver Chen

store wholesale how lot of also become what large, are you the in? more of your thoughts the just you at agile department versus and retailers Efraim, positioned is a what sellout inventory sell-in? looking other your And levels And inning at terms partners? in as are how on are

Efraim Grinberg

our I is So inventory. think in It's not healthy over place. a inventory

lead on of companies come of We for out you – plane. not have a has not lot shipping lot in hear times us, a always which having product, about of terms in by we're long fortunately, the CERs inventory

to had never a retailers. and delivering lot this we So then backlog

So now long I inventory continue in a place of think levels to a focus time. we're that dealt really we've but around world, with something healthy quite inventory. the terms retailers that's for Obviously, in on

Oliver Chen

customer which part excited you continue again, you to goes And most evolve your the and the out, product customer wanting? and of Okay. as as innovate are is And assortment thematically, what about? assortment,

Efraim Grinberg

increased. ceramic materials in points, So higher we're also seeing has within penetration of expensive, automatics, so like materials, brand are price a lot of Movado our more interest in which then the

the And rolled with actually very is about And be so the that really goes strategy we'll to our that. the line it's continue focus that and in elevating in to which proven over right last years few brand, out we Movado successful. brand

higher points with to licensed watches with both around and also programs And also big price brands. in potential has the I Hugo Calvin think seeing for the of make in world. begun we has which noise particularly the our their jewellery. a in we're Boss, think Klein, then marketing really now that launch company And

Oliver Chen

priorities you free you're quite anything balance us flows? how And sheet thinking should refresh about cash about the terms Okay. position capital your Sallie, net and know cash we that? remain attractive. Could key in on and working modeling of

Sallie DeMarsilis

join Sure. I will will in. start, sure and I'm Efraim

Our priorities been be like have shareholders, things to value returning to dividends. paying continue and so

obviously share repurchase program. are in active the We

solid in as thing a industry. capital needs expenditures. a far balance with not lot As type sheet of capital we heavy everything like not things We're else, working and very that remain capital and of

So balance it. we the remain pleased really our happy strength of with and sheet and

Efraim Grinberg

but in to key strong priority, That's different maintain continue volatility our as our a sheet. markets, return with money certainly to as priority shareholders, And that we'll continued a is we've well. and always especially balance been to

Oliver Chen

been has a China relevant And Okay. topic.

uncontrollable there, zero tolerance there's are your lot What of Efraim? the a that policy. there Is impacting your Just with business? thoughts

Efraim Grinberg

So on a it first impacted We obviously front. has international there in the quarter. decline our saw business the

for yet We it and for expect are terms to of in our but as in one second market we is future us, it It overall see us. of results is big there a has sales. quarter. to not challenges a material the growth believe But

And would to and in were for to reopen et even the quarter. As have down business closures I the materially reopen see slowed to cetera, online I again. in Shanghai, warehouses beginning really fourth people said China the at expect that's the the but closed, buying beginning third earlier, market returned because dot-com of

Oliver Chen

Thank you.

anniversarying that outlook Lastly, a noticing Has side, return on being Have the you. and/or been retail you're your thoughts you traffic the you're volatile? about presence, in mortar what pleased seeing are what footfall stimulus of your bricks it and there? negative? and been Thank the with

Efraim Grinberg

to seeing stores. are our return in a we traffic So

We stores. somewhat traffic our challenged, positive we're seeing are in mall but seeing traffic

our that well for So bodes business.

that on always have shopping pressure from centers. prices think a a I distance destination gasoline urban centers are

in So of strategy pretty But optimistic that's the stores. historical. of terms been we're outlet long-term our

Oliver Chen

Thank regards. Best you.

Sallie DeMarsilis

Thanks, Oliver.

Efraim Grinberg

Oliver. you, Thank

Operator

no time. over floor to remarks. Mr. back further at Grinberg closing like There questions are the for any turn I'd to this

Efraim Grinberg

call for I Okay. on Thank you very wish our much weekend today. participating United an excellent States. holiday everybody in the here

So again, much. thank you very

Movado (MOV) 26 May 222023 Q1 Earnings call transcript