Movado Group, Inc. Broadcasts File Third Quarter Outcomes; Will increase Annual Outlook

Movado Group, Inc. introduced third quarter and nine-month outcomes for the interval ended October 31, 2021.

Efraim Grinberg, Chairman and Chief Govt Officer, said, “We’re more than happy to report document third-quarter outcomes that continued our constructive momentum from the primary half of the yr, highlighted by gross sales progress of 28%, gross margin growth of 330 foundation factors and an almost 80% improve in working earnings. I’m pleased with our staff’s disciplined execution of our technique that elevates our highly effective manufacturers with elevated digital capabilities and awareness-building advertising and marketing.

This execution led to an acceleration in our efficiency globally, overcoming pandemic disruptions. The quarter noticed sturdy gross sales progress throughout geographies and channels with strong progress in our Movado model. We attribute our ongoing energy to the success of our digital transformation that started a number of years in the past and has made us a extra agile firm with a strengthened platform to maximise the ability of our international watch and jewellery manufacturers.”

Mr. Grinberg continued, “As we start the ultimate quarter of the yr, we now have the plans in place to proceed our sturdy momentum and drive our manufacturers with product innovation and assortments which have us poised to ship sturdy outcomes this vacation season. This, mixed with a return to extra normalized buying patterns from retailers drove elevated wholesale shipments into the third quarter, is mirrored in our raised outlook for the yr. Past the vacation, we’re excited in regards to the investments we’re making to additional our progress, together with making ready for the launch of Calvin Klein early subsequent yr. Total, our sturdy steadiness sheet, together with internet money of almost $202 million, affords us the chance to spend money on the help of our future progress, whereas additionally returning worth to shareholders by way of an elevated dividend and new share repurchase program introduced at this time, as we concentrate on delivering sustainable, long-term worthwhile progress.”

Fiscal 2022 Third Quarter Highlights

• Delivered topline progress of 28.2% over third-quarter fiscal 2021. Whole internet gross sales elevated 5.9% as in comparison with pre-pandemic third-quarter fiscal 2020 with an 8.3% improve in U.S. internet gross sales and a 4.1% improve in Worldwide internet gross sales;
• Drove gross margin growth of 330 foundation factors from prior yr interval to 57.7% and 420 foundation factors from third-quarter fiscal 2020;
• Generated third-quarter working earnings of $41.4 million as in comparison with working earnings of $23.1 million within the third quarter of fiscal 2021. Adjusted working earnings was $42.2 million as in comparison with adjusted working earnings of $25.1 million final yr and adjusted working earnings of $24.3 million within the third quarter of fiscal 2020;
• Delivered diluted earnings per share of $1.33 as in comparison with $0.63 within the third quarter of fiscal 2021. Adjusted diluted earnings per share have been $1.36 as in comparison with $0.70 and $0.82 within the third quarter of fiscal 2021 and 2020, respectively; and
• Ended third quarter with internet money of $201.8 million, a rise of $75.9 million as in comparison with the third quarter of fiscal 2021.
• Non-GAAP Gadgets (See connected desk for GAAP and Non-GAAP measures)

Third-quarter fiscal 2022 included the next expenses:

• $0.7 million pre-tax expenses, or $0.6 million after-tax, representing $0.03 per diluted share, related to the amortization of acquired intangible belongings associated to the acquisition of Olivia Burton; and
• $0.1 million pre-tax expenses, or $0.1 million after-tax, representing $0.00 per diluted share, related to the amortization of acquired intangible belongings and deferred compensation associated to the acquisition of MVMT.

Third-quarter fiscal 2021 included the next expenses:

• $0.7 million pre-tax expenses, or $0.5 million after-tax, representing $0.02 per diluted share, related to the amortization of acquired intangible belongings associated to the acquisition of Olivia Burton;
• $0.6 million pre-tax expenses, or $0.3 million after-tax, representing $0.02 per diluted share, related to the amortization of acquired intangible belongings and deferred compensation associated to the acquisition of MVMT; and
• $0.8 million pre-tax expenses, or $0.6 million after-tax, representing $0.03 per diluted share, associated to company initiatives primarily in response to the COVID-19 pandemic.
Third Quarter Fiscal 2022 (See connected desk for GAAP and Non-GAAP measures)

Internet gross sales elevated 28.2% to $217.7 million as in comparison with $169.9 million within the third quarter of fiscal 2021. The rise in internet gross sales mirrored progress in wholesale prospects’ brick and mortar shops, in on-line retail (each within the Firm’s owned and wholesale prospects’ web sites) and in Movado Firm Shops. Internet gross sales on a continuing greenback foundation elevated 26.7% as in comparison with internet gross sales within the third quarter of fiscal 2021. U.S. internet gross sales elevated 41.7% as in comparison with the third quarter of final yr and elevated 8.3% as in comparison with pre-pandemic third-quarter fiscal 2020. Worldwide internet gross sales elevated 19.7% as in comparison with the third quarter of final yr and elevated 4.1% as in comparison with the pre-pandemic third quarter of fiscal 2020.

Gross revenue was $125.6 million, or 57.7% of internet gross sales, as in comparison with $92.5 million, or 54.4% of internet gross sales, within the third quarter of fiscal 2021. Adjusted gross revenue within the third quarter of fiscal 2021 was $92.5 million, or 54.5% of internet gross sales, which excludes $0.1 million related to company initiatives associated to the impression on the enterprise of the COVID-19 pandemic. The rise in gross margin share was primarily the results of beneficial modifications in channel and product combine and a rise in leverage of sure mounted prices on account of increased gross sales, partially offset by elevated transport prices.

Working bills elevated from $14.8 million to $84.2 million, as in comparison with $69.4 million within the third quarter of fiscal 2021. Excluding the working expense expenses talked about above within the Non-GAAP Gadgets part, working bills have been $83.4 million and $67.4 million for the third quarter of fiscal 2022 and monetary 2021, respectively. This improve was primarily as a result of increased advertising and marketing bills and performance-based compensation and a rise in sure working bills to help the rise in internet gross sales. Excluding the working expense expenses talked about above within the Non-GAAP Gadgets part, as a p.c of gross sales, working bills decreased to 38.3% of gross sales from 39.7% within the prior-year interval primarily as a result of improved gross sales leverage.

Working earnings was $41.4 million in comparison with working earnings of $23.1 million within the third quarter of fiscal 2021. Adjusted working earnings, which excludes the costs listed above within the Non-GAAP Gadgets part, was $42.2 million and $25.1 million for the third quarter of fiscal 2022 and monetary 2021, respectively.

The Firm recorded a tax provision of $9.6 million, as in comparison with $7.5 million within the third quarter of fiscal 2021. Primarily based upon adjusted pre-tax earnings, the adjusted tax provision was $9.7 million or an adjusted tax fee of 23.1% as in comparison with an adjusted tax provision of $8.0 million or an adjusted tax fee of 32.7% within the third quarter of fiscal 2021.

Internet earnings was $31.4 million, or $1.33 per diluted share, as in comparison with internet earnings of $14.8 million, or $0.63 per diluted share, within the third quarter of fiscal 2021. Adjusted internet earnings for the third quarter of fiscal 2022 was $32.1 million or $1.36 per diluted share, which excludes the third quarter fiscal 2022 internet expenses listed above within the Non-GAAP Gadgets part after the related tax results. This compares to adjusted internet earnings for the fiscal 2021 interval of $16.4 million, or $0.70 per diluted share, which excludes the third quarter fiscal 2021 internet expenses listed above within the Non-GAAP Gadgets part after the related tax results.

9-Month Outcomes Fiscal 2022 (See connected desk for GAAP and Non-GAAP measures)

Internet gross sales elevated 60.5% to $526.4 million as in comparison with $328.1 million in the identical interval of fiscal 2021. The rise in internet gross sales mirrored progress in wholesale prospects’ brick and mortar shops and in Movado Firm Shops as a result of partial restoration from the COVID-19 pandemic and in on-line retail (each within the Firm’s owned and wholesale prospects’ web sites). Internet gross sales on a continuing greenback foundation elevated 56.8% as in comparison with internet gross sales within the first 9 months of fiscal 2021. U.S. internet gross sales elevated 89.6% as in comparison with the primary 9 months of final yr and elevated 15.4% as in comparison with pre-pandemic first 9 months of fiscal 2020. Worldwide internet gross sales elevated 41.6% as in comparison with the primary 9 months of final yr and decreased 5.4% as in comparison with pre-pandemic first 9 months of fiscal 2020.

Gross revenue was $298.2 million, or 56.7% of internet gross sales, as in comparison with $169.7 million, or 51.7% of internet gross sales, in the identical interval final yr. Adjusted gross revenue for the primary 9 months of fiscal 2021 was $173.3 million, or 52.8% of internet gross sales, which excludes $3.6 million in company initiative expenses associated to the impression on the enterprise of the COVID-19 pandemic. The year-over-year improve in adjusted gross margin share was primarily the results of beneficial modifications in channel and product combine, leveraging sure mounted prices on account of increased gross sales and beneficial international forex alternate charges.

Working bills have been $218.9 million as in comparison with $337.7 million in the identical interval final yr. For the primary 9 months of fiscal 2022, working bills would have been $216.4 million excluding $2.2 million of bills related to the amortization of acquired intangible belongings associated to Olivia Burton and $0.3 million in changes related to the amortization of acquired intangible belongings and deferred compensation associated to the MVMT acquisition. For the primary 9 months of fiscal 2021, working bills would have been $166.4 million excluding $155.9 million associated to the impairment of goodwill and sure intangible belongings, $11.8 million in company initiative expenses associated to the impression to the enterprise from the COVID-19 pandemic, $2.0 million of bills related to the amortization of acquired intangible belongings associated to Olivia Burton and $1.5 million in changes related to the amortization of acquired intangible belongings and deferred compensation associated to the MVMT acquisition. The underlying improve in working bills was primarily as a result of increased advertising and marketing bills and performance-based compensation and a rise in sure working bills to help the rise in internet gross sales. Excluding the aforementioned impairments, company initiative expenses, and impacts of the amortization of acquired intangible belongings and deferred compensation associated to the MVMT and Olivia Burton acquisitions, as a p.c of gross sales, working bills decreased to 41.1% of gross sales from 50.7% within the prior-year interval primarily as a result of improved gross sales leverage.

Working earnings was $79.3 million as in comparison with an working lack of $168.0 million in the identical interval final yr. Adjusted working earnings for the primary 9 months of fiscal 2022 was $81.8 million, which excludes the fiscal 2022 expenses listed within the instantly previous bullet. This compares to adjusted working earnings for the primary 9 months of fiscal 2021 of $6.9 million, which excludes the fiscal 2021 expenses listed within the instantly previous bullet.

The Firm recorded a tax provision within the first 9 months of fiscal 2022 of $18.2 million as in comparison with a good thing about $26.4 million within the first 9 months of final yr. The primary 9 months of fiscal 2022 included a good thing about $0.5 million primarily related to the amortization of acquired intangible belongings associated to Olivia Burton and MVMT. The primary 9 months of fiscal 2021 included a good thing about $0.4 million related to the amortization of acquired intangible belongings associated to Olivia Burton, a $0.6 million profit associated to the amortization of acquired intangible belongings and deferred compensation associated to MVMT, a $4.7 million profit associated to company initiatives taken in response to the COVID-19 pandemic, and a $24.9 million profit associated to the tax-deductible portion of the impairment of goodwill and sure intangible belongings, partially offset by a $0.5 million provision for tax related to the sale of a non-operating asset in Switzerland.
Internet earnings was $60.2 million, or $2.54 per diluted share, as in comparison with internet loss for the primary 9 months of fiscal 2021 of $141.8 million, or a lack of $6.11 per diluted share. Adjusted internet earnings for the primary 9 months of fiscal 2022 was $62.2 million, or $2.63 per diluted share, which excludes the fiscal 2022 expenses listed above after the related tax results, as described within the instantly previous bullet. This compares to adjusted internet earnings for the primary 9 months of fiscal 2021 of $1.7 million, or $0.07 per diluted share, which excludes the fiscal 2021 expenses listed above after the related tax results, as described within the instantly previous bullets.
Fiscal 2022 Outlook

The Firm is growing its outlook and at the moment expects fiscal 2022 internet gross sales in a spread of roughly $715 million to $720 million, gross revenue of roughly 56.5% to 57.0% of internet gross sales, working revenue in a spread of 15.0% to fifteen.5% of internet gross sales and diluted earnings per share of roughly $3.35 to $3.45. Assuming no modifications to the present tax guidelines, the Firm anticipates an efficient tax fee of roughly 25% for the fiscal yr. The outlook excludes roughly $3.3 million of amortization of acquired intangible belongings and deferred compensation for fiscal 2022 associated to the Olivia Burton and MVMT manufacturers. This up to date outlook doesn’t ponder important extra COVID-19 associated retail closures which may adversely impression outcomes. The Firm’s outlook assumes no additional important fluctuations from prevailing international forex alternate charges.

Quarterly Dividend and Share Repurchase Program

The Firm introduced at this time that the Board of Administrators accredited a 25% improve to the common quarterly money dividend to $0.25 per share from $0.20 per share. A $0.25 dividend might be paid on December 17, 2021, for every share of the Firm’s excellent frequent inventory and Class A standard inventory held by shareholders of document as of the shut of enterprise on December 3, 2021.

The Firm additionally introduced at this time that its Board of Administrators has accredited a brand new share buyback program underneath which the Firm might buy as much as $50 million of its excellent shares of frequent inventory every so often, relying upon a wide range of components, together with market and trade circumstances, share worth, regulatory necessities and different company concerns, as decided by the Firm. The authorization expires on November 23, 2024, topic to extension or earlier termination by the Board of Administrators. The Firm might buy shares of its frequent inventory in open-market and/or privately negotiated transactions in accordance with relevant securities legal guidelines and laws, together with Rule 10b-18 of the Securities Alternate Act of 1934, and repurchases could also be executed pursuant to Rule 10b5-1 underneath the Securities Alternate Act of 1934. The authorization could also be suspended or discontinued at any time with out discover. In the course of the 9 months of fiscal 2022, the Firm repurchased roughly 548,400 shares of frequent inventory underneath its preexisting $25 million share repurchase program. As of October 31, 2021, the Firm had $8.0 million remaining underneath the preexisting program, which expires on September 30, 2022.