Earnings call transcript Q1 2024

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Operator

Good day, everybody, and welcome to the Movado Group Incorporated First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded and may not be reproduced in full 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

to Act Reform materially in Litigation all constitute Securities XXXX. we not in Actual statements may remind SEC harbor differ Private the Before meaning are a historical the uncertainties, may which you're results of with contained facts, the The sure risks which from such forward-looking described be future the filings familiar of which I'm I of and call, in started, suggested includes those would this company's language, release. you the number conference statements today's company's due to get within of of press safe with. statements to all deemed like which are

on be financial the measure to non-GAAP will is most measure release. our supplemental comparable press any this GAAP directly of If call, measure provided information financial financial used a in presentation financial as non-GAAP this

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

Efraim Grinberg

and today Thank Sallie first quarter questions me Movado you, DeMarsilis, results and Group's to any Good our call. had With greater our highlights answer Rachel. to conference a I've detail. of progress morning, and welcome Sallie then might CFO. on financial COO glad chance the After our is review review first to our in results will We quarter our have. strategic then initiatives, be would you

the States year, key products interest consumers and macroeconomic markets, environment purchases of our remained discretionary As during rates the made we beginning affect rising challenging the inflation Europe. United had of by the and with in continuing to expected,

key discipline, continued has business, improve to first were us This, we the move brand our sought-after our which along met make and we priorities the well while performance quarter, expense pleased our innovation awareness. that we backdrop, for progress that have year. for continuing elevating as with positioned delivering our with to growth teams with expectations results delivered the our the throughout Against

first sheet, $X.XX increased while quarter. Reviewing year $XXX.X versus Board which a and operating we by an million results. $X.XX $XX.X fiscal share previous that with in were and basis were announced per the in million, XXXX's X.X% quarter last approved last at had more first an quarter negatively on strong adjusted including decline strong the balance share earnings compared $XX.X million to from $X record versus X.X% Adjusted in $XXX.X year's Sales impacted special sales was first fiscal XX.X%. XXXX quarter. first the margin XX.X% the Currency in Gross our in profit million dividend We as ended included growth per dividends, remained million cash $XX.X quarter when year. detail. paying

the consumer have very talked about comparing the expected year. first is facing This conference a Europe both in strong difficult call, we and were both half record half we inflation year, As rates. first the against and we year-end of more year rising as a during last interest our elevated U.S. had

or and international sales discretionary reported, constant basis. retailers and a currency X.X% XX.X% X% declined affecting perspective, already As a declining is U.S. U.S. spending. our both clearly on the From have geographical many with international decreasing this and sales

and in front, was growth that the had in we retail by a Europe. China Middle decline strong Brazil, On East, international offset the travel

improving we foundation economic are deal with markets second inventories. for are the a key making half. From very focused their slowing in an retailers growth, that they As perspective, sure on they control brand laying

had vacated to at which consumers we brand, are begins a $XXX. fill Bold our last on that Horizon collection, from We're the Bold through innovation collection Movado in opens over family, our we year. this which response beginning our In very introduce price getting to good points

to continue at year. partners penetration models both automatic elevated with perform from our our well, Our doubling wholesale last own and website on

Mother's program we video lives drove for our marketing both to consumers, with Day. similar emotionally with produced connect and we have [still] Father's Day, For and content content

bolder brand. For results the we our to also make in and on year, refreshing addition this impactful we strong invest Father's will television important saw are we and behind in our feature campaigns. Day the campaigns, brand TV way, in from Movado Mother's Throughout website. Day, image our to particularly most will excited our investment a more digital

consumers on X.X% a licensed decline as brands, in saw our our markets. basis constant back currency we pulled In an European largest

our and by brands, around we Somewhat reach economies In attention Hilfiger, initial her introduce our to with for Brazil, Lars the across Middle China Pipa point by In styles, been for and Monica. of value inflation we East, new a him impacted in trends and retail. price are price the strong particular opening all to to slowing advertised offset the to matrix travel have consumers response world. stronger Norris innovation some pricing points and a our who driving collections, and saw Tommy

family, our the $XXX. campaign, been a XX-millimeter also classically chronograph In new We're new seeing reception Troper for BOSS, brand a parent families highly family. strong has energized Gregor imaging we new styled are where opened strong a results chronograph. Both collection, our seeing driving by a from sporty, at

for perform with new Waterhouse China, well, to excited will are that market at online the collections and as which in Suki the we launch retail brand's both demand jewelry reopens. ambassadors will fall. In feature our a partner SE in our Coach and renewed ambassador seeing also to watches, signature and our watches campaign, continue We're that both with for as high-profile women, BOSS

as We are with global continuing to our Lopez campaign. China Jennifer in and in Gao Curley partner our ambassador with

also connect Stranger sponsorship Things, Green X Education new new Lacoste, a watch colors, Lacoste the We're introducing a Netflix interpretation Polo watches new In in and series, XX.XX Khaki. a that and Sex aluminum iconic of of of Shirt we Lupin. introduced XX.XX versions number including with

Calvin Klein rollout to extremely Our well. continues progress

the awareness new to some watches and points, price successfully appealing in innovation brand jewelry introduction on collaborating dial opening brand. exciting are at and driving a unexpected category asymmetrically including Her, marketing charming We for CK, features which new the a of for bangle. Calvin a are with designed Within the the Klein we parent Sensation build front on bracelet

bracelet. are all-black we Ambitions, men, For new for seeing strong a a response chronograph

business quarter, we in in X.X% the our in highly For first U.S. a outlet the a environment promotional saw decline

year's we calendar Day against Mother's shift improving as We have have a approach we moved seen timing. did the Day as into traffic May last which trends holiday, Mother's later

the look of operating in the a at year, we balance are uncertain highly we environment. As

inflation Interest in risen have pace, to developed rates demand curtail to meant rapid which at a order markets. in most is very consumer slow

While uncertain, invest as to emerge businesses assure that to we develops products remains our the brands will the our and drive strongly more in and environment marketing innovation will our marketplace. in continue clarity in

we manage affords invest will course, inventory. Of to position closely will strong our With continue us growth. to our to behind long-term our cash and we -- prudently continue the and a monitor expenses sheet balance profitable opportunity driving debt, monitor no

licensed their image and investing beginning excited year our the in developed refreshing in Movado initiatives and supporting half in predominantly second are we that behind, brand are brands markets. We most the the of the emerging

on strategic objectives. and our and delivering focused Our teams executing energized are against

the to like turn I call over would to Sallie. now

Sallie DeMarsilis

good morning. Efraim, you, Thank and

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

a for macro Overall, negatively record by quarter performance pleased of year. despite fiscal we the and XXXX, are with performance environment last challenging our impacted a first being lapping

our achieved activity. continuing shareholders to deliver expectations, share discipline and repurchase we year-over-year, compelling down maintaining expense to our returning offerings, dividends and While value through internal

the to a review of Turning quarter.

million quarter geography, net XX.X%. decreased licensed international dollars, In By as market, largest decreased as first sales year. to million decrease sales On compared constant first offset net the sales in of partially were basis, sales sales the constant softening XX.X%. America. stores. X.X% decreased last currency quarter strong fiscal International By last and of and net a our of international segment, markets the compared continued brands, owned Europe, East to a performances across For such net XXXX, company decreased year, $XXX.X decreased certain sales Latin by U.S. X%, with in $XXX.X Middle brands net as XX.X%.

shipping the compared unfavorable quarter by shifts as unfavorable our impact of channel relatively the year of brands, profit of our lower a product foreign of lower Gross percent in and XX.X% primarily result relatively mix as channels driven margin and to results product gross same sales costs. by sales XX.X% was of in period abnormally was is margin prior last compared mix. gross high to and lower the sales offset mix margin first from in year. and last currency year the higher The period higher-margin the to from our The decrease exchange rates, brands partially a channel margin unfavorable product

continue year. comparison period expect went the second last against to up tough in same of We the this quarter

million performance-based expenses. decrease fiscal gross sales the same period by partially as expenses, compensation operating was to $XX.X for to reduction offset by The income an were in $XX.X as first quarter XXXX. and the compared in million margin, expenses year. Operating of of decreased Primarily and increase compared $XX.X result payroll-related $XX.X as the million a million marketing in the million slight last to driven by lower of $XX.X

primarily $X quarter earned XXXX, approximately fiscal tax global comprised $X.X of cash interest first We recorded income income of other recorded which million is the first in quarter the or as million position. share of million We in per of the income in fiscal expense our of nonoperating compared XXXX or year on was the $X.XX fiscal $X.XX $XX.X first compared Net $X.X quarter first million ago quarter diluted XXXX. to million in as $X.X diluted share period. in the per to of

sheet. our of to as quarter the at turning in $XXX.X period. the million first million balance to the prior end was $XXX.X compared Now Cash year

dividend the million, period dividends $XX.X of times, receivable receipts of due comprised last as primarily X.X% a same or quarter lead regular above newest which of share. million $X an of quarterly special of Swiss Calvin for longer During shareholders, $XX.X of the the such were to watches business end timing paid quarter and and to year, brands, extension cash opportunities, to addition Accounts dividend million the the was Inventory cash licensed fiscal $XX per brand, our per in at $X.XX share have Klein our the of $XXX.X increase jewelry. for first of we of million. XXXX,

XX,XXX approximately $X.X amortization repurchase program. the repurchased we the of million $X.X depreciation for quarter, and expenditures shares under quarter and first Olivia were intangible related included to was our million, the which In acquired Burton assets share of Capital and amortization $XXX,XXX MVMT. expense

I Now our outlook. like would to discuss

in purchases to expect $XXX made inflation interest Efraim operating Taking we XXXX fiscal the uncertain net factors As $XXX sales a markets, by consumers in of our States products mentioned, environment these affect range into a rates in to million and account, and key are rising to United discretionary Europe. million. continue with continuing approximately highly of we

first would from Although expect relatively be during XXXX. expect record expect half the first to the We to net in XX% for fiscal to of see continue of prior year. bigger we a decline anniversary period X% X.X% we decline down to results sales year, sales we to the same as the half a flat,

product net the of to Assuming current approximately continue profit we gross rates, and of of current sales. and mix expect composition margin channel -- XX% gross FX

expect initiatives, We discretionary while and a our to $XX in brand million. range $XX spending, customers, we invest in operating continue tightly are manage therefore, million planning we and to prudently our of to building our income employees our

effective per of no share. changes $X.XX a diluted Assuming outlook tax an earnings $X.XX the expected and our of regulations, in rate in tax assumes current to range XX% results

foreign remaining -- I'm As conditions XXXX, does utilize exchange to it million deterioration to not to outlook $XX.X April share million fluctuations from had further This as prevailing plan under program. significant environment, to prevailing repurchases economic we repurchase our sorry, repurchase offset further Subject impact of significant share our we business authorized in share XX, of plan relates and dilution $XX assumes contemplate market no and currency rates. fiscal XXXX.

call the open I would questions. like now to up for

Operator

Our line come Instructions] Oliver first of [Operator TD Chen with questions from Cowen. the

Oliver Chen

mix you So called were of retail mix impact retail with -- also your guidance, -- the seeing the impact customer? from commentary, around tightening in your expected different inventory time around And in then pressure it the was what And with the tightening line and on the caution headwinds, reiterate you're out. the inflation in with what you those the terms cautious take. traffic to love right seeing it why your the Would expectations? we're middle-income given negative

Efraim Grinberg

Okay.

that and consumer. So numbers we're I stress our comps, become our half, against very, built And the And we in both still think the certain we're And in the level that the on assuming very year. plan half, believe on year's the own -- basically, comping a of strong plan comps, for at retail first the than second numbers. last better. was

in we of that, level see despite So the marketplace. uncertainty still a high

tone, a on first inventory, skewed towards especially half from one -- watch very expect inventories, of and retail that that's retail and watch Where did cautious of the perspective, especially the for the have we year. the second terms In we did category a retailers reason be the half. to our is tight

see but going whether rates our think right we're are -- tell lot into terms going a basically recession stop or I So now, I there's into to going I you a a recession. have, we're cautious going of everything uncertainty. outlook a whether think, up, can of Nobody fairly we not think on plan, in

more So a excited including in we place that some and to also who have stressed consumers that bit the buy. vary about reasons be little points we're initiatives reach the And brands, price maybe are filling giving to across economically the our have the for to we we're them that able newness coming, opinions board.

Oliver Chen

love Europe Okay. issues and there? seeing take China on China, you're and would And level? from your reopening about some trends well what We're regarding ex BB. the geographically also, outlet your traffic seeing as retail with And as section I

Efraim Grinberg

with start your let's question. So first

licensed And in is first It's investments continue China. for a we're believe think necessarily it against is our categories other for market. I quarter a focused opportunity indicative really market products and think the very quarter year. China brands we China because don't behind us. a it we've in us for it that long-term nicely challenged small to And first make bounced represents a seen I But us. of small back last in other or that

across year focused as think, again, -- Europe, other easier is the in for stressed Europe Europe. a down in I there become where are the licensed side, the on second to And also, brand and bring we more bringing important half comps as on is market retailers And highly a earlier, continue inventory. comparable of us the us. market said is very I our really exciting big new very for portfolio products the

about your last think the stores. was in question traffic I outlet

been the in decent the the outlet not outlet stores what buyers to return -- China We traffic and are that seeing the stores had are we're previously. seeing there

market And we're are protecting on while our take last a promotional company. highly down -- on our going margins not side still So a -- overall, outlet slightly for and business' the think from that to margins to that's for while year, we're protecting and the that -- But profitability it's reemerge. I side.

Oliver Chen

U.S. model I your we as to the back retail partners, decelerate. little inventory feeling the overall what the you the how of U.S. inventories? have Sallie running line In to we And freshness sales, expect should in some about marketing about retail we perhaps inventories growth on some market. then the your Okay. as concerns take would are worse And your trends promotions getting in and relative half? bit a love of retail

Efraim Grinberg

a nobody there's an on knows I And market, happen rates. -- on think of just interest a positive. think lot economy going consumers. now. said having job what's that with several I've on certainly to uncertainty still call, is and I which So a is times the I think And as the effect strong There's

-- had So for more have but consumers to that buy. need they pay to things

dining and interest eventually that in think somewhat increase an higher been also become there's think stressed. rates with also And I -- but travel I out. will

particularly history, an So needs. now company. I been very consumer-focused at it's uncertain that the a operating think some stressed adapting to generally of why very And throughout our it's some other really areas. the we're And And our in it's in opening something market to we've in consumers brand responses -- consumer and brought that's quickly. some seen points, portfolio become reintroducing environment good price licensed initial we're very we've as things that we've the to good

Sallie DeMarsilis

modeling has Swiss of our time timing some that that inventory Oliver, And and a that becomes There inventory, product line of for the bit we actually assemble. lead in are your a of we other receipts throughout on year. in our was more longer pieces

by end So numbers your expect below the be year-end we the last to year, year's purposes. or of modeling at for

Oliver Chen

will And then to thoughts back gross line? robust of and for on half, Sallie. well? margin we repurchase the as the would sheet as Okay, about the negative the of as balance your Your a has remained well. terms we have model gross special continue margin dividends half And back impact? the in mix should always key dividends What drivers love think

Sallie DeMarsilis

year. the especially Okay. start we'll front call-outs. the get margin is the gross This to some year, abnormally the challenge should strong we to really. questions the margins, of Last year, have the and last comparison I'll dividends half maybe Gross of no happened on unusual to the in year, more like. have margin, we on and then

year. If quarter, at they look throughout each decelerated the you

tough to it's comparison -- a be going it's So this quarter.

are ago, we to X where to it year If a comparison X were years we just It's last ago. back above you go difficult. years makes

seeing due ago. X in you're line, better down increases large come to year, still back just a we This but little last more years saw than were mix. very So those bit you year,

modeling bit the a may on help that you So side. little

dividends on think with a to share then the I And tool per offset we've we're about capital repurchases talked share very regular $X.XX quarter, generous dividend being allocation, repurchases, our and and dilution.

Efraim Grinberg

And then being another there dividend. I wouldn't I think anticipate special

I the to we maintain focus believed would as ongoing event think as strong year. we year the that be our dividend continuing way -- at of shareholders. did on a throughout we our is now the to was when beginning had a well And our to sheet that value balance a an return

Oliver Chen

the you that. Okay. of inning as Last footprint, fan Bold terms in question. And innings driver? a distribution your I address about that in thinking also, of well? portfolio earlier are innovation? if with points was that's what how of big Movado a opening price sure of happening point you What's the And price to make different lower pivoting are relevant you

Efraim Grinberg

Sure.

Okay.

So I baseball analogy. like the

we're I the to or points. think in in the third that the filling inning now get year we'll and the probably in eighth right half inning, second second opening terms or of price of seventh

a have So Bold. coming we're opportunities. excited do And about of innovation lot those in we

In very fact, some of our early some of it introductions. reminiscent of

so that. And quite excited we're about

well. Our retailers continue and are excited family rolled product expect first year. out the new throughout about it quarter this that we've to And already our as

for to you after second I you. like talking quarter. on the all today's we to Oliver. you, thank participating look would you Thank of forward to and call, Thank

Operator

We participation. This does appreciate today's conclude you. Thank teleconference. your

your this rest day. time. You disconnect Enjoy lines your of may at the

Movado (MOV) 25 May 232024 Q1 Earnings call transcript