Movado Group, Inc. (NYSE:MOV) Q3 2019 Earnings Conference Call Transcript

Dec 04, 2018 • 09:00 am ET


Movado Group, Inc. (NYSE:MOV) Q3 2019 Earnings Conference Call Transcript


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Good morning everyone and welcome to the Movado Group Fiscal Third Quarter 2019 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

Thank you. Good morning, everyone. With me on the call is Efraim Grinberg, Chairman and CEO, and Sallie DeMarsilis, CFO.

(Forward-Looking Cautionary Statements)

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

Efraim Grinberg

Thank you, Rachel. I would like to welcome you to Movado Group's third quarter conference call. I will first walk through the highlights of our third quarter results and share with you some of our products and marketing plans for the holiday season, as well as an update on our acquisition of MVMT, which we just completed on October 1st. Sallie will then review our financial results in greater detail and we will open up the call to your questions.

We are pleased with our third quarter and year-to-date results and the progress we are making against our strategic initiatives, including our Digital Center of Excellence. For the third quarter, sales grew by 9.6% to $208.9 million and adjusted operating income rose to $35.7 million, up $2.1 million from $33.6 million last year. Our adjusted earnings per share grew by 13.5% to $1.18 per share. Year-to-date, sales grew by 14.7% to $480.2 million and adjusted operating income grew by 20.4% to $59.2 million. We continue to maintain a strong balance sheet, with $142.7 million in cash despite the acquisition of MVMT, which was partially funded by a $50 million borrowing on our amended bank agreement at a current interest rate of 1%. We continue to make excellent progress on our strategic initiatives and are pleased with our positioning as we begin the important holiday selling season.

For the quarter, our domestic watch and accessory brands business grew by 11.5%. Excluding one month of MVMT sales, our domestic watch and accessories brands posted a 7.3% sales increase for the quarter, with strong growth in TOMMY HILFIGER and COACH. We are very pleased with these results which demonstrate that the strategies that we have been working on in our domestic businesses are delivering the desired results. On the international front, our business grew by 9.3%, with very strong growth in our TOMMY HILFIGER and LACOSTE brands as well as the introduction of Olivia Burton into China.

It has been a little over two months since we closed on the acquisition of MVMT, a digitally native brand focused on a younger consumer. MVMT is a key strategic acquisition for the company, intended to drive long-term growth and profitability for Movado Group. MVMT has demonstrated a proven ability to reach younger consumers through the ecommerce channel. Our plans call for leveraging our global distribution capabilities, combined with our supply chain, systems and fulfillment capabilities to drive cost