Source: Movado Group
Movado Group reported fiscal 2016 third-quarter results on Nov. 24. Despite a challenging retail environment, the luxury watchmaker says it remains on track to hit its full-year sales and profit outlook.
Movado Group results: The raw numbers
Earnings per share
Source: Movado Group Q3 2016 earnings press release .
What happened with Movado Group this quarter?
Sales decreased 1.6% year over year to $185.6 million, as foreign exchange fluctuations dented results. On a constant dollar basis, sales increased 2.1%.
Gross profit inched up 0.3% to $100.1 million -- with gross margin increasing to 53.9% of sales from 53% in the year-ago quarter -- as price increases, supply chain sourcing improvements, and favorable changes in channel and product mix more than offset the negative impact of changes in foreign currency exchange rates.
Operating expenses increased 0.2% to $66.6 million, primarily because of higher compensation expenses that were mostly offset by lower marketing and selling-related expenses. In turn, operating income edged up 0.4% to $33.5 million, as operating margin increased to 18% from 17.7% in the year-ago period.
All told, net income fell 3% to $21.5 million, mainly because of a higher effective tax rate compared with the third quarter of fiscal 2015. However, earnings per share, boosted by share buybacks, rose 5.7% to $0.92 per share.
What management had to say
"We are pleased with our third-quarter results, which reflect the successful execution of our growth and efficiency strategies during an extremely challenging retail environment," said Chairman and CEO Efraim Grinberg. "Our solid results were driven by both Movado and our licensed brands portfolio, which continue to outperform the overall watch category at retail."
Capital return program
During the third quarter, Movado repurchased approximately 275,000 of its shares. As of Oct. 31, the company had $17.2 million remaining under its $100 million share repurchase authorization.
Movado also announced that its board of directors approved the payment of a cash dividend on Dec. 18 in the amount of $0.11 for each share held by shareholders of record as of the close of business on Dec. 4.
Management reiterated its fiscal 2016 full-year outlook, including sales in the range of $590 million to $600 million, operating income between $72 million and $75 million, and earnings per share of $2.00 to $2.10.
Management also appears optimistic about Movado's entrance into the wearable technology category.
"We are very excited about our recent launches of both Movado Edge, a watch collection developed in collaboration with world-renowned industrial designer Yves Behar, as well as our connected Movado timepieces which merge modern iconic design and technology," Grinberg said. "We believe these new product launches, combined with the strength of our existing brand portfolio, position us well for the upcoming holiday season."
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