Movado Group, Inc. (MOV) on Q4 2021 Results - Earnings Call Transcript
Operator: Good day, everyone, and welcome to the Movado Group, Inc Fourth Quarter and fiscal Year 2021 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. Thank you. Please go ahead. Rachel Schacter: Thank you. Good morning, everyone. With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; and Sallie DeMarsilis, Executive Vice President, Chief Operating Officer and Chief Financial Officer. Before we get started, I would like to remind you of the company's Safe Harbor language, which I'm sure you're all familiar with. The statements contained in this conference call, which are not historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release. Efraim Grinberg: Okay. Thank you, Rachel. Good Morning and welcome to our fourth quarter and year-end conference call. With me today is Sallie DeMarsilis, our Chief Operating Officer and Chief Financial Officer. I will first share with you some highlights for the fourth quarter we just reported, as well as our plans and strategies for the current year. Sallie will then walk through our financial results in greater detail. We would then be glad to answer any questions you might have. While we are seeing improvements in terms of COVID-19 cases in the United States, we're experiencing closures across European markets and continued challenges in Latin America, especially Brazil and Mexico. We are hopeful that as vaccination rates increase around the world, we will slowly return to a new normal. Our thoughts are with the families that have experienced personal devastation from this disease. Having just finished one of the most unusual years in our history, I couldn't be more proud of our teams around the world operating in the first and hopefully only pandemic in our lifetimes. I am very pleased with our overall execution and results given the challenging operating environment. And I would like to personally thank our teams for all that they accomplished this year. During fiscal 2021, we made significant progress in how we execute as a company which positions as well for the future. For the fourth quarter and the full year, we exceeded our expectations on both the top and bottom-line. Our sales for the fourth quarter were down 6.6% to $178.3 million and showed a sequential improvement from the third quarter. Our adjusted operating profit for the fourth quarter was $23.9 million versus $8.3 million last year a 186% improvement and higher than the $19.9 million reported in the fourth quarter two years ago. For the year, our adjusted operating profit was $30.7 million on sales of $506.4 million. We finished the year with a very strong balance sheet with cash of $223.8 million and debt of $21.2 million. Our inventories declined by 11%. And our adjusted gross margin for the quarter increased by 220 basis points to 54.9%. Given our strong performance and balance sheet, we announced this morning that our Board approved a quarterly dividend of $0.20 and reinstated a share buyback program. As a company we have effectively reinvented and evolved over our history. With the onset of the pandemic, we knew we would have to add a greater sense of urgency as we continue down the path of becoming a consumer first company that we become a leader in the digital marketplace. Sallie DeMarsilis: Thank you, Efraim, and good morning, everyone. For today's call, I will review our financial results for fiscal 2021. My comments today will focus on adjusted results. Please refer to the description of all the special items included in our results for the fourth quarter and fiscal year period of fiscal 2021 and fiscal 2020, in our press release issued earlier today, which also include the table for GAAP and non-GAAP measures. Our performance improves sequentially each quarter of this fiscal year with our fourth quarter results highlighted by growth in ecommerce sales, expansion in gross margin and the disciplined management of expenses. We ended the quarter with a strong balance sheet and significant progress on our strategic initiatives. For the fourth quarter of fiscal 2021, sales were $178.3 million as compared to $191 million last year. As mentioned, we saw sequential improvement in our top-line versus prior quarters. Nonetheless, the impact of COVID-19 was built globally, with restrictions specifically affecting brick and mortar retail, leading to net sales declines across our segments of owned brands, licensed brands and company stores, as well as across most geographies. Importantly, consumer response to our brands and offerings remain strong, which is reflected in our ecommerce sales, both on our owned websites and those of third party marketplaces. Gross profit as a percent of sales was 54.9% compared to 52.7% in the fourth quarter of last year. The increase in gross margin was primarily driven by favorable channel and product mix and favorable changes in foreign currency exchange rates. Operating expenses were $74.1 million as compared to $92.3 million for the same period of last year. The decrease was driven by actions taken to minimize all non-essential operating costs, as well as reductions in payroll expense and the right sizing of marketing expenses to the lower revenue base. At the same time, we maintained our investment spend on focused areas such as digital and ecommerce. Expansion in gross margin and controlled spending in the fourth quarter drove a $15.6 million increase in operating income to $23.9 million, as compared to $8.3 million in the fourth quarter of fiscal 2020. Operator: Thank you. The floor is open for questions. Our first question is coming from Oliver Chen of Cowen. Oliver Chen: You're seeing that encouraging momentum from the customer? What are your thoughts on how you're seeing the trends in wholesale relative to your own stores and do you expect to continued amount of volatility and the traffic levels in both channels? Efraim Grinberg: So we expect to continue to see volatility. I think, what we're seeing is there's some light at the end of the tunnel with the vaccination especially with the progress that we're making in the United States, a lot more challenging in Europe, where three of our biggest markets are virtually closed from a traffic point of view. And what I believe is that you're also seeing the benefits in the U.S. of stimulus. That we see people with increased span levels than conversion rates improve, while traffic continues to be down in stores. And we're seeing that both in our wholesale channels and our own channels. And then online continues to be very strong, particularly in the United States. Oliver Chen: Efraim what are your thoughts about how the wholesale channel inventories look now and how wholesalers and department stores are thinking about planning inventories, relative to what they're seeing and what levels they have currently in store and online? Efraim Grinberg: So I think that the inventories are in a very healthy place. I think the retailers have done an excellent job of managing their inventories, particularly throughout now we're going on almost a year ago or a little more than a year of the pandemic having an effect. So I think they've done an excellent job of managing their inventories and really the sell through and the inventory levels are very closely aligned today and that's on a global basis. Oliver Chen: Okay. And Efraim, as you think about product innovation amidst the pandemic, what's on your mind regarding the pipeline and what consumers want? And given that all experiencing the crisis and how innovation may trend with the changes and at home and flexibility of work? Efraim Grinberg: So I think we are continuing to see is, an increase towards casual and what we call sport elegant collections that that closely aligned with how people are living their lifestyles today. I think what we are also seeing the category I think benefit from maybe a lack of spend in other categories today and disposable income being spent on watches and jewelry and other accessories rather than as much maybe an apparel or entertainment or travel. So -- and as we continue to pursue innovation for us, materials have become very important, colorations have become very important. And we continue to really closely align, especially on a licensing front with our brand partners as they continue to innovate, and we're closely aligned with their innovation. Oliver Chen: Lastly, I'm just done the model, the gross margin has been impressive. How much longer might you have the mixed benefit? Or what should we monitor in terms of when you'll anniversary that and current trends there? And you mentioned the variability of your cost structure as well, if you can elaborate on differences there and what it implies for the model and leveraging the leverage. That would be helpful. Thank you. Efraim Grinberg: Sure. I'll ask Sallie to answer the gross margin question and then we'll both talk a little bit about expenses. Sallie DeMarsilis: So on margin, Oliver this year, obviously, we've benefited from mix as well as currency. Mix was really a component of moving more towards direct-to-consumer, which does have a higher gross margin, but also has some higher operating expenses related to it. I think, we've almost already anniversaried as Efraim said, we're now hit the 12 month mark and moving on where we do think our direct-to-consumer will continue to be strong. That includes both of our outlet stores as well as our ecommerce business. So I think that that probably hits most of your gross margin items. Just keep in mind too, that it is there is some fixed costs element in there. So we have the benefit in bigger quarters to have more leverage on those fixed costs than in smaller quarters. Efraim Grinberg: And then, I think the second part was on cost structure. I think, what we are doing and I really talked about we've applied an increased amount of discipline to our spending, both from an infrastructure perspective, but also from a marketing perspective and as marketing for us moves to more and more digital platforms, we're able to execute much closer to the time of -- that the ads will run. And we're able to use a lot more variability in our spend based on what we're seeing in revenue trends. So we're really, we as a company, we have embraced the digital marketplace and the changes that have occurred over the last year and while at the beginning, you see tremendous challenges as we navigated as we also saw tremendous opportunities. Operator: Thank you. At this time, I'd like to turn the floor back over to Mr. Grinberg for closing comments. Efraim Grinberg: Okay. I'd like to thank all of you today for participating on our conference call. While there's still a lot of obviously uncertainty in the market, we really are very proud of what our team has accomplished this year and we look forward to talking to you in our first quarter conference call. Thank you. Operator: Ladies and gentlemen, thank you for your participation and interest in Movado Group. You may disconnect your lines and log off the webcast at this time and have a wonderful day.
Movado Group, Inc. (NYSE: MOV) Under Investigation for Potential Securities Fraud
- Movado Group, Inc. (NYSE:MOV) is being investigated by Pomerantz LLP for potential securities fraud related to misconduct in its Dubai branch.
- The company has announced the need to restate its financial statements for fiscal years ending January 31, 2024, 2023, and 2022, due to overstated sales and underreported credit notes.
- Despite these challenges, Movado reported strong financial performance with earnings per share of $0.51 and revenue of approximately $181.5 million, surpassing estimates.
Movado Group, Inc. (NYSE:MOV) is under investigation by Pomerantz LLP for potential securities fraud and unlawful business practices. The investigation follows Movado's disclosure of misconduct in its Dubai branch, involving overstated sales and underreported credit notes in the Middle East, India, and Asia Pacific regions. This misconduct, facilitated by the former managing director and certain employees, spanned five years.
Movado has taken corrective actions by terminating the managing director and announcing the need to restate its financial statements for fiscal years ending January 31, 2024, 2023, and 2022. The restatement aims to address inaccuracies in sales and credit reporting. Additionally, Movado identified a material weakness in its internal control over financial reporting, specifically in its risk assessment process related to the Dubai Branch.
Despite these challenges, Movado reported strong financial performance on April 16, 2025. The company achieved earnings per share of $0.51, surpassing the estimated $0.39, and reported revenue of approximately $181.5 million, exceeding the estimated $141.9 million. This indicates that Movado's core business operations remain robust despite the ongoing investigation.
Movado's financial position remains solid, with total assets of approximately $729.2 million and total liabilities of around $245.7 million. The company's stockholders' equity stands at approximately $483.6 million, and it holds cash and cash equivalents amounting to about $208.5 million. Movado's long-term debt is reported to be $75.5 million, reflecting a manageable debt level.
The company's inventory is valued at approximately $156.7 million, and it has net receivables totaling around $102.9 million. Movado's account payables are approximately $34.3 million, with other current liabilities reported to be $78.6 million. These figures suggest that Movado maintains a healthy balance sheet, which may help it navigate the challenges posed by the investigation.
Movado Group, Inc. (NYSE: MOV) Under Investigation for Potential Securities Fraud
- Movado Group, Inc. (NYSE:MOV) is being investigated by Pomerantz LLP for potential securities fraud related to misconduct in its Dubai branch.
- The company has announced the need to restate its financial statements for fiscal years ending January 31, 2024, 2023, and 2022, due to overstated sales and underreported credit notes.
- Despite these challenges, Movado reported strong financial performance with earnings per share of $0.51 and revenue of approximately $181.5 million, surpassing estimates.
Movado Group, Inc. (NYSE:MOV) is under investigation by Pomerantz LLP for potential securities fraud and unlawful business practices. The investigation follows Movado's disclosure of misconduct in its Dubai branch, involving overstated sales and underreported credit notes in the Middle East, India, and Asia Pacific regions. This misconduct, facilitated by the former managing director and certain employees, spanned five years.
Movado has taken corrective actions by terminating the managing director and announcing the need to restate its financial statements for fiscal years ending January 31, 2024, 2023, and 2022. The restatement aims to address inaccuracies in sales and credit reporting. Additionally, Movado identified a material weakness in its internal control over financial reporting, specifically in its risk assessment process related to the Dubai Branch.
Despite these challenges, Movado reported strong financial performance on April 16, 2025. The company achieved earnings per share of $0.51, surpassing the estimated $0.39, and reported revenue of approximately $181.5 million, exceeding the estimated $141.9 million. This indicates that Movado's core business operations remain robust despite the ongoing investigation.
Movado's financial position remains solid, with total assets of approximately $729.2 million and total liabilities of around $245.7 million. The company's stockholders' equity stands at approximately $483.6 million, and it holds cash and cash equivalents amounting to about $208.5 million. Movado's long-term debt is reported to be $75.5 million, reflecting a manageable debt level.
The company's inventory is valued at approximately $156.7 million, and it has net receivables totaling around $102.9 million. Movado's account payables are approximately $34.3 million, with other current liabilities reported to be $78.6 million. These figures suggest that Movado maintains a healthy balance sheet, which may help it navigate the challenges posed by the investigation.
Movado Group Inc. (NYSE: MOV) Earnings Report Analysis
- Movado Group Inc. (NYSE:MOV) reported earnings per share (EPS) of $0.35, missing the expected $0.39 but surpassed revenue expectations with $181.5 million.
- The company's stock price rose post-earnings announcement despite a slight miss in revenue against analyst consensus, highlighting market confidence.
- Movado's financial health is solid with a price-to-earnings (P/E) ratio of 15.01 and a current ratio of 4.34, indicating efficient cash flow conversion and strong liquidity.
Movado Group Inc. (NYSE:MOV) is a renowned watchmaker known for its luxury timepieces. The company operates in the competitive luxury goods market, facing rivals like Fossil Group and Citizen Watch. On April 16, 2025, MOV reported its earnings, revealing an earnings per share (EPS) of $0.35, which was below the expected $0.39. However, the company surpassed revenue expectations, generating $181.5 million against the estimated $141.9 million.
Movado's financial metrics offer insights into its market valuation. The company has a price-to-earnings (P/E) ratio of 15.01, reflecting the market's valuation of its earnings. Its price-to-sales ratio is 0.31, indicating a relatively low market valuation compared to its sales. The enterprise value to sales ratio stands at 0.11, showing the company's valuation in relation to its revenue.
The company's financial health is further underscored by its enterprise value to operating cash flow ratio of 2.53, suggesting efficient cash flow conversion into enterprise value. Movado's earnings yield is 6.66%, providing insight into its earnings relative to its share price. The debt-to-equity ratio is 0.16, indicating a conservative use of debt in its capital structure.
Movado maintains a strong liquidity position with a current ratio of 4.34, suggesting it can comfortably cover its short-term liabilities. This financial stability, combined with its strategic focus on controllable factors, positions Movado well in the luxury watch market despite the challenges posed by external uncertainties.
Movado Group Inc. (NYSE: MOV) Earnings Report Analysis
- Movado Group Inc. (NYSE:MOV) reported earnings per share (EPS) of $0.35, missing the expected $0.39 but surpassed revenue expectations with $181.5 million.
- The company's stock price rose post-earnings announcement despite a slight miss in revenue against analyst consensus, highlighting market confidence.
- Movado's financial health is solid with a price-to-earnings (P/E) ratio of 15.01 and a current ratio of 4.34, indicating efficient cash flow conversion and strong liquidity.
Movado Group Inc. (NYSE:MOV) is a renowned watchmaker known for its luxury timepieces. The company operates in the competitive luxury goods market, facing rivals like Fossil Group and Citizen Watch. On April 16, 2025, MOV reported its earnings, revealing an earnings per share (EPS) of $0.35, which was below the expected $0.39. However, the company surpassed revenue expectations, generating $181.5 million against the estimated $141.9 million.
Movado's financial metrics offer insights into its market valuation. The company has a price-to-earnings (P/E) ratio of 15.01, reflecting the market's valuation of its earnings. Its price-to-sales ratio is 0.31, indicating a relatively low market valuation compared to its sales. The enterprise value to sales ratio stands at 0.11, showing the company's valuation in relation to its revenue.
The company's financial health is further underscored by its enterprise value to operating cash flow ratio of 2.53, suggesting efficient cash flow conversion into enterprise value. Movado's earnings yield is 6.66%, providing insight into its earnings relative to its share price. The debt-to-equity ratio is 0.16, indicating a conservative use of debt in its capital structure.
Movado maintains a strong liquidity position with a current ratio of 4.34, suggesting it can comfortably cover its short-term liabilities. This financial stability, combined with its strategic focus on controllable factors, positions Movado well in the luxury watch market despite the challenges posed by external uncertainties.
