- Earnings call transcript Q3 2023

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

Operator

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

Third 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

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

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

Efraim Grinberg

experienced we third might would any rates, inflation as highlights in and in greater and would unfavorable currency Officer for the you Thank we We our well financial results have. rates the Chief Since during With third quarter quarter Financial review me operating Sallie substantial we our year. then you currency the be last a seen further I you, conference the of to have intensified Rachel. quarter. will like unfavorable you Globally, Operating operating to answer of environment. environment. Officer. of I spoke first detail the call. and our outlook have and DeMarsilis, both high change glad which today questions balance welcome to to Movado in the review Chief then Group’s the is the August, current will as Sallie

European our addition, In items we environment, its a their despite Within managing consumers excellent power. our as job our strong have this taken to and deliver executing an reduce buying American on done against toll their basis, and of teams have on begin discretionary inflation prevailing the results, particularly seen of purchases currency-adjusted headwinds. has strategy expenses to

For XX.X% strong the operating basis. grew our $XXX.X third currency-adjusted have $XX.X a despite quarter, year. however, of by would basis, million actually our On X.X% increased gross on currency versus sales margins the headwinds. million million, delivered currency-adjusted to We X.X%. were a sales declined Adjusted $XXX.X last by profit

$X.XX. adjusted were per share Our for earnings quarter the

Additionally, of prices have at $XX.X end, of consumers’ In the inflation toll this sheet to share we shareholders our returning expect States $XXX and trend balance year through repurchases greater for and remains continue higher goods million our take debt a to and while and everyday no into Europe, that year. balance we the quarter begin energy on purchasing of to and year. in strong since cash with and dividends next the power million the beginning United seen

their constant currency U.S. consumers a retailers on X.X% grew declined and pulled international on sales While by our sales XX.X% as back our by basis. purchases,

outlet brick-and-mortar larger saw our in a includes Xx our than business, In both businesses wholesale format, sales international Our are our mid-single-digit sales. and we our digital which U.S. increase business. now almost

with certain uncertain economic in rates, are caution. the challenges continued approaching retail environment we Europe, currency Given in faced by prevailing quarter challenges and the consumers, fourth

retailers early competition particularly and strong buy out completely in risk or dining. they were urged of with is fantastic season In the products. environment from that different. holiday and less being Today, addition, shape, was to best-selling run last travel The would take a year the was consumer

strong we are brands during Movado, the collection, our the automatic movement. is in introduce important the excited selling to season, period to of most year. and ceramic Alpha brand by marketing Alpha important to continue rich that which our of sell-through jewelry inspired enter represents luxury features, assortment. we the the will including support Movado we holiday As make Movado’s campaigns bezels In new our and chronograph maximize sure product for Pinnacle the with incorporates watches we heritage Movado and

our offerings, our also in As support bold ball aspirational have automatic. we our product strategy, introduced versions will most part we our continue first Fusion to assortment, mechanical in elevation To automatic of particularly movements. expand Swiss-made bold

We Verso through watches about last week major our BOLD be This television her. holiday our campaign campaign complemented our are we for last run the that that with featuring first launched will just will excited month and influencer season. campaign was and him launched holiday

the ongoing consumers development as even On website brick-and-mortar Movado significant the a the our play digital return front, of in continues movado.com locations. role brand, to to

first ago. licensed constant X down growth our delivered X on ahead basis against slowing currency of the year, economies we in markets this up years In our of brands, largest the movado.com were For XX% a in our but sales background months sales of XX%, XX.X% Europe.

driving our and portfolio across innovation online compelling offer to both and in-store. are brand demand, continue We we

to and exhibited In on BOSS, see the continued a brand’s have seeing in Spear continue Purity. pandemic as in and well. we India continue influencers Middle to are China, regional Mexico, on multi-eye Hilfiger, of associations and strong vintage-inspired continues a we HUGO to as In impact momentum strong parent markets. XX-millimeter Luca, to the two the repositioning resonate received closures. We new Brazil, and still drive results and of a it of results with we family. sport-inspired and and Tommy successful with the dial East, the key our advertised reception consumers bracelet families, introduction We see a In mesh miles the family with ongoing blue our by

Katy visual introduced venues badge by like the family, watches in logo Lopez. who Ambassador, Khaby, as one on well In by modeled BOSS associations where followed being most with connect influencers, worn Coach TikTok, continue Jennifer worn to we BOSS the iconic is tank We collaborate of are platform. the is the and as Coach’s Coach, which the individuals with is consumer after the our

drive to online our continuing with China are business in influencers. We Coach digital with online associations key

This We inspired third introduce start. in polo third collection generation family quarter. iconic the during Lacoste are by fast already XXXX our excited to off the iconic XXXX to shirt. of a is is Lacoste new the

seeing In just we jewelry, sell-through. addition, strong and we are already introduced Lacoste

jewelry, are seeing the consumers, are Calvin we about on a everyone our out of represents roll of watches response the about sales. from Klein and for XX% strong to XX%. continue watch We launch Men’s and XX% front. especially watches the segment, Women’s brand watch in and about

our We season. European holiday with the support will billboard markets advertising key for well efforts as digital as

to and our for out MVMT plans developing in retail Burton teams market. our continue progress in in strategic and We Olivia building make an evolving

challenged, by collaboration we is is Raptor also retailers be progress In to newness response Olivia be on at will Kitty the product higher We and automatic, brands we are out will expensive we our innovation price with holiday gotten component sunglasses. with newness at while seen MVMT, and Burton, both that are $XXX, we the UK the which arriving making MVMT our continues ever, price success from arriving And strong and points. watches that most next our elevating of that have the our Hello and we brand, are In economically encouraged for which a includes additional spring. the sell have points. to

consequences results uncertainty intended beginning have retail control. and cautious. be As to challenging with cautious the it continues will of heightened revised to that The we tamp a recession central posture. a to visibility, to the context, inflation our of retailers to and navigating of this think forecast focus the about we level a the risk the down of the effect that economies we balance around holiday slow. reduced for and controlling more increasingly things believe and are are season, our and banks becoming take consumers are can environment we beginning makes There year, we we reflect upcoming world on outlook Within to are

to for business. manage the our expenses We continuing opportunities support tightly will long-term growth while

gross to and profitability drive cash flow. will positive and protect continuing margins focus on We

our increasingly volatile balance an effectively, to and climate. We retail sheet have very puts managed it navigate position strong us a in

like Our teams managing our on have executing against call to of inventory, our margins now an while excellent done gross our and sales. job the over Sallie. turn would strategic I focus and maximizing our expenses, to objectives

Sallie DeMarsilis

Thank morning, you, good everyone. and Efraim,

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

impact appropriate, sales a constant basis. significant the Additionally, also currency our will on given currency results, be on where provided

XXXX for certain despite the performance and progressed. the by with U.S. key fiscal impacted the economic as pressures quarter continued the strength our markets of pleased in of being are We intensifying negatively third overall dollar quarter by

and on operational a global constant highlighted We discipline. once balance was our performance with again in margin, currency financial basis, quarter Our by a sales gross sheet. an strong ended strong increase net

sales compared our by quarter decreases included brands. For growth in increase net increase owned sales. the decreased dollars which and decrease category company’s with licensed decline $XXX.X in customers of in last the offset sales an year, was in constant million. X.X% and fiscal brands, U.S. X.X%. company as an net a offset online, in of $XXX.X partially wholesale to This were store In to our XXXX, million dollars, a company million in sales Klein by our owned brand increased the both third X.X% $XXX.X Calvin constant partially in stores reflects

is seeing expenses. compared the as International we decreased the third to to gross quarter year. markets offset Efraim net foreign margin by by basis, was mix. As sales driven although basis quarter was to as as in mentioned, period decrease a percent the XX of XX.X% in a costs, grew for On the XX.X%, last by year. and in point was and partially compared key The million well we quarter of third exchange of see were in of international effects shipping sales all performances as marketing product favorable driven U.S. X.X% last impact XX.X% year. net on as by international markets. key softening compared primarily International the Gross $XX.X consumer currency having progressed. rates inflation payroll-related offset started sales performance-based are a channel strong as constant expenses increase with $XX.X expenses, million regions, and profit across the unfavorable the in Operating to by The an increased compensation in decrease last decline the of same lower currency in

XXXX, our foreign to For when the the X currency exchange subsidiaries positively $X.X to expenses ended months foreign period. by compared related XX, million fluctuations October prior operating rates year in impacted

the of of sales As a of in in fiscal decrease fiscal the year in XXXX. to income compared per share to net $XX.X $XX.X million $X.X reported million of fiscal in million million or We as third to quarter, quarter decrease Net ago of expense third as was diluted a tax the third of by operating gross and $X.X income the in the the quarter $XX.X share diluted offset million the in result per third was expenses $XX.X operating XXXX. compared margin, compared partially XXXX as quarter in third in million income period. $X.XX quarter income $X.XX or the

last in year-to-date of Now XX.X% to profit or first compared by turning were was October or partially shipping exchange declined product Gross International X for increase the rates $XXX.X in increased compared as sales due million currency net and our the sales The In increased constant net $XXX.X of XXXX, sales the currency was increase last rate XX.X% and changes to basis, in year. favorable mix, sales for period million channel constant million X-month margin U.S. gross unfavorable dollars, to $XXX.X sales XX.X% a million offset XX.X%. year. costs. results. to foreign or XX, months XX.X% by was as X.X%. ended Sales $XXX.X on

was the $XX.X October For $XX.X months ended income X XXXX. million fiscal operating to XXXX, XX, compared million in

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

$XXX.X cash at the were our end Now from of $XXX.X at turning of million, as approximately end primarily was $XXX,XXX last same Klein million the of quarter balance of Accounts million the to or of receivable last the $XX.X sheet, down the approximately to timing year. of of $X million Inventory last period the $XXX.X compared receipts third same million of the year. same was the addition of Calvin XX.X% quarter period the due to and year, inventory. above period up

XXX,XXX XXXX, period million which fiscal were line Capital expect amortization with MVMT. the intangible receipts composition third for end months In and the at repurchase the sales Burton net the share $X.X under at and levels and quarter. be program. to $XX.X quarter, level shares levels. the or inventory and nine repurchased related million $X.X We expense upon of are inventory million, anticipated amortization of of to and the comfortable based of first historical the year-end fourth Olivia our included in million in nine-month we with $X.X we acquired more assets And expenditures of was depreciation approximately

Now, discuss I like our would to outlook.

we are weaker In currency spending addition in headwinds, markets. environment experiencing to also a key

revising positioned of are we our our quarter, are retail strongly as we result heading a Although the fourth into uncertain environment. outlook

are the $XXX be to currently of sales $XXX range net to Our expected in million. million

for approximately We XX% sales expect continue gross year. to profit of of the

we and rate. currently now first assumes outlook tax like questions. the We to fluctuations from for further XX% up income foreign operating anticipate the profitability, Given months does impact million. and not increasing open no contemplate focus effective of now significant to our or a would updated unrest further $XXX on million in prevailing significant exchange rates. expect nine of range inflation $XXX currency strong a geopolitical call This I

Operator

Instructions] Cowen Company. & with first [Operator Oliver proceed. Our Chen question is Please from

Tom Nass

Nass Tom It’s Hi. on for Oliver.

Sallie DeMarsilis

Tom. Hi

Tom Nass

the for question. taking Thanks

What On profit given the quarter? could impact do you this? guide? additionally, elaborate that do to expect with the guidance to FX, gross you efficiencies you at margin revenue regard following reconfirmed how on expect XX%, gross that revenue over targeting and guys in And lowered the

Sallie DeMarsilis

So, I start the will question, with will margin pick and up. Efraim gross

So, we have strong margin very gross a had all year.

be period have fourth expect quarter, continue is very which heavy – for we not strong fourth us. quarter. a our heavily that will the But the a and direct-to-consumer that promotional We into had in mix to

So, very we margin expect gross a strong to continue.

last We are year. anniversarying tough numbers from

your guiding we And are to question So, entire XX% on… the for year.

Tom Nass

should regard With how and revenue to also gross margin? that impact

Sallie DeMarsilis

Right.

I So, a in will a will and Efraim am take pop bit I fill. little with sure that,

the currency, using the fourth guide, business, we we are certainly also in have and we know what guide And because are in our if Kong. rate a having FX the our of had current significantly most that outlook our international our complexity we using FX significant are for today. We multicurrency the So, quarter. for gross will, into shift chain in the Hong impact supply very aware and third is heading Switzerland quarter. fourth of you margin of being and in significantly, does our in also most quarter,

Efraim Grinberg

at our And a the year And U.S. currency, because our in an of the sales earlier a call, rate. in quarter, stated into been that all stronger this translated the has dollars material. I material shift get year back sales as especially third on effect European throughout has dollar effect had and –

Tom Nass

curious to prices trends play in to slight then as and talk but and seeing Great. seen little in expect gas you the channels across have could you U.S., We traffic about a that you how gas out? just guys prices moderation And some bit geographies? are retail

Efraim Grinberg

Sure.

told have products. of So, a I variables people into season. run they is were last playing to year, think consumer you and they buy – be One out of combination would run coming holiday or – earlier, factors the would would this they

to we see going you was pattern year, last which later year the regular think this of past. I the Christmas So, are not saw a than

on seeing gas factors continue going at there I it’s just food are inflation And to greater inflation and of but prices are has believe all is have side. discretionary a will time. the focused now also food, also I toll taken think their on part think middle as consumer consumers some moderate, the – middle these particularly, I required moderated, gas versus and upper but goods take income income income rent of a items. like Eventually, and

Tom Nass

holiday ahead sequential trends provide then on a question. growth inventory relatively your freshness speak appeared and details inventory last flat. one the the of pricing On some And season? Can basis, of you to

Efraim Grinberg

Sure.

So, our the is did clean in in And quarter, so very and get And of we inventory. inventory is in inventory year. throughout drop we receipts to the – of but shape. early it good in it a terms very the newness expect fourth quality

So, second we of we help the of any believe trends, What Europe. that more was some I pass it price increases that the year while, that did did have were now we will no offset currency concerns I in about that. and in part, that. the stable don’t pricing and especially stay early some so anticipate And a for facing, headwinds

see a to not I our on our be intention think more more you But own promotional holiday from side. is retailers. promotional season will

Tom Nass

Great. Thank very you much.

Operator

I There closing for turn would like conference comments. back are to no questions time. at this to over Efraim the

Efraim Grinberg

look much you our wish everybody talking after Okay. Thanksgiving Well, I Thank to we everybody again very a you forward great thank and you year-end. and with holiday, again.

Operator

Thank conference. you. This today’s conclude does

your for time thank you and this You lines at your may participation. disconnect

Movado (MOV) 22 Nov 222023 Q3 Earnings call transcript