Mr. Grinberg continued: “Looking ahead, we believe we will continue to face difficult retail markets in our largest regions – the US and Europe. We have a strong portfolio of brands which we will continue to support with strong product innovation and marketing programs. While we continue to maintain a disciplined approach to spend and inventory management, we will invest in the marketing of our largest brands to ensure we are differentiated in the current environment and have a solid foundation for future growth. Our strong With more than $251 million in cash and no debt on the balance sheet, we are able to navigate this period of uncertainty while continuing to invest in our brand, our team and our customers. We are pleased that, in addition to the In addition to our regular quarterly dividend of $0.35, our Board of Directors has approved a special dividend of $1.00 per share.
Fiscal Fourth Quarter Highlights (See Exhibit for GAAP and Non-GAAP Measures)
Net sales were $194.3 million, compared to $206.0 million in the same period last year;
Generated gross margin of 56.2%, compared to 58.7% in the fourth quarter of fiscal 2022;
Operating income was $26.1 million, compared to $38.2 million in the same period last year. Adjusted operating income of $26.8 million compared to adjusted operating income of $37.9 million in the fourth quarter of fiscal 2022; and
Diluted earnings per share were $1.00 compared to $1.33 in the same period last year. Adjusted diluted EPS was $1.03, compared to $1.32 in the fourth quarter of fiscal 2022.
Non-GAAP Elements (see attached table for GAAP and non-GAAP measures)
Operating results for the fourth quarter of fiscal 2023 include the following charges:
$0.6 million pre-tax or $0.5 million after-tax, or $0.02 per diluted share, related to the amortization of intangible assets related to the acquisition of Olivia Burton; and
A pre- and post-tax charge of $100,000, equivalent to $0.00 per diluted share, related to the amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT.
Fourth quarter fiscal 2022 operating results include the following charges and gains:
$0.7 million pre-tax or $0.6 million after-tax, or $0.03 per diluted share, related to the amortization of intangible assets related to Olivia’s acquisition of Burton;
A pretax and aftertax charge of $100,000, equivalent to $0.00 per diluted share, related to amortization of acquired intangible assets and deferred compensation related to the acquisition of MVMT; and
Earnings of $1.1 million pre-tax or $0.8 million after-tax, equivalent to $0.04 per diluted share, were due to changes in estimates related to corporate initiative expenses primarily in response to the COVID-19 pandemic.
In this press release, references to “adjusted” results exclude the impact of the charges and benefits described above and the items described in the “Non-GAAP Elements” section of the company’s fiscal first, second and third quarter earnings releases 2023, derivation of adjusted results for the twelve months ended 31 January 2023 and 31 January 2022. For a detailed reconciliation of the Company’s reported results to its adjusted non-GAAP measures, please see the accompanying GAAP and Non-GAAP Results Table. Indicator results.
Fourth Quarter Fiscal 2023 Results (See attached table for GAAP and Non-GAAP measures)
- Net sales decreased 5.7% to $194.3 million, or decreased 2.8% on a constant dollar basis, compared to $206.0 million in the fourth quarter of fiscal 2022. The decrease in net sales reflected a decline in wholesale sales, partially offset by an increase in Movado Company stores. U.S. net sales decreased 6.3% as compared to the fourth quarter of last year. International net sales decreased 5.0% as compared to the fourth quarter of last year and increased 0.6% on a constant dollar basis as compared to the prior year period.
- Gross profit was $109.3 million, or 56.2% of net sales, compared to $120.8 million, or 58.7% of net sales in the fourth quarter of fiscal 2022. The decrease in gross margin percentage was primarily the result of the unfavorable changes in channel and product mix and unfavorable impact of foreign currency exchange rates.
- Operating expenses increased to $83.1 million in the fourth quarter of fiscal 2023 from $82.6 million in the fourth quarter of fiscal 2022. Adjusted operating expenses were $82.4 million compared to $82.9 million in the prior year period. This decrease was primarily due to lower performance-based compensation, partially offset by higher payroll-related expenses and higher marketing expenses. As a percent of sales, adjusted operating expenses increased to 42.4% of sales from 40.3% in the prior year period due to lower sales.
- Operating income was $26.1 million compared to $38.2 million in the fourth quarter of fiscal 2022. Adjusted operating income was $26.8 million for the fourth quarter of fiscal 2023 and $37.9 million for the prior year period.
- The Company recorded a tax provision of $4.0 million, as compared to a tax provision of $6.6 million in the fourth quarter of fiscal 2022. Based upon adjusted pre-tax income, the adjusted tax provision was $4.2 million, or an adjusted tax rate of 14.8%, as compared to an adjusted tax provision of $6.5 million, or an adjusted tax rate of 17.1%, in the fourth quarter of fiscal 2022.
- Net income for the fourth quarter of fiscal 2023 was $22.7 million, or $1.00 per diluted share, compared to net income of $31.4 million, or $1.33 per diluted share, in the fourth quarter of fiscal 2022. Adjusted net income for the fiscal 2023 period was $23.3 million, or $1.03 per diluted share, compared to adjusted net income of $31.2 million, or $1.32 per diluted share, for the fourth quarter of fiscal 2022.
Full Year Fiscal 2023 Results (See attached table for GAAP and Non-GAAP measures)
- Net sales increased 2.7% to $751.9 million, or increased 7.0% on a constant dollar basis, compared to net sales of $732.4 million in fiscal 2022. The increase in net sales reflected growth in the International wholesale business and Movado Company Stores. U.S. net sales decreased 3.5% compared to last year. International net sales increased 8.2% as compared to last year and increased 16.4% on a constant currency basis.
- Gross profit was $433.9 million, or 57.7% of net sales, compared to gross profit of $419.1 million, or 57.2% of net sales, in fiscal 2022. The year over year increase in gross margin percentage was primarily the result of favorable changes in channel and product mix, partially offset by unfavorable impact of foreign currency exchange rates and increased shipping costs.
- Operating expenses were $313.5 million in fiscal 2023 compared to $301.6 million in fiscal 2022. For fiscal 2023, adjusted operating expenses were $310.7 million versus $299.4 million in fiscal 2022. This increase was primarily due to higher payroll-related costs, higher marketing expenses and certain other operating expenses to support the increase in net sales, partially offset by lower performance-based compensation.
- Operating income was $120.4 million in fiscal 2023 as compared to operating income of $117.5 million in fiscal 2022. Adjusted operating income for fiscal 2023 was $123.2 million compared to adjusted operating income for fiscal 2022 of $119.7 million.
- The tax provision was $24.9 million in fiscal 2023 compared to a tax provision of $24.8 million in fiscal 2022. Based upon adjusted pre-tax income, the adjusted tax provision was $25.4 million, or an adjusted effective tax rate of 20.4% in fiscal 2023, as compared to an adjusted tax provision of $25.2 million, or an adjusted effective tax rate of 21.1% in fiscal 2022.
- Net income was $94.5 million, or $4.12 per diluted share, for fiscal 2023, compared to net income of $91.6 million, or $3.87 per diluted share, for fiscal 2022. Adjusted net income in fiscal 2023 was $96.8 million or $4.22 per diluted share. This compares to adjusted net income for fiscal 2022 of $93.4 million or $3.94 per diluted share.
Fiscal 2024 Outlook
The Company expects fiscal 2024 net sales to be in a range of approximately $725.0 million to $750.0 million, gross profit of approximately 56.0% of net sales, and operating income in a range of $80.0 million to $85.0 million. Assuming no changes to the current tax regulations, the Company anticipates an effective tax rate of approximately 22% for the fiscal year and earnings of $2.70 to $2.90 per diluted share. The outlook excludes approximately $2.1 million of amortization of acquired intangible assets for fiscal 2024 related to the Olivia Burton and MVMT brands. For the first half of fiscal 2024, the Company expects sales to decline in a range of 9% to 12% relative to the prior-year period as it anniversaries the record first half results of fiscal 2023. This outlook does not contemplate further deterioration due to the impact of economic uncertainty, and assumes no further significant fluctuations from prevailing foreign currency exchange rates.
Special Dividend, Quarterly Dividend and Share Repurchase Program
The Company also announced today that on March 23, 2023, the Board of Directors approved the payment on April 19, 2023 of a special cash dividend in the amount of $1.00 per share as well as the regular quarterly cash dividend in the amount of $0.35 per share. Both dividends are payable on each share of the Company’s outstanding common stock and class A common stock held by shareholders of record as of the close of business on April 5, 2023.
During the fourth quarter of fiscal 2023, the Company repurchased approximately 103,500 shares under its November 23, 2021 share repurchase program. As of January 31, 2023, the Company had $21.0 million remaining available under the share repurchase program.
