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Movado Q4 adjusted operating income increased 43.5%

Movado GroupMovado Group, Inc. announced fourth quarter and fiscal year 2014 results for the periods ended January 31, 2014. Adjusted operating income in Q4 increased 43.5% to $14.4 million compared to $10 million in the prior year period.

In the fourth quarter of fiscal 2014, the company recorded a pre-tax charge of $8.3 million, or $0.20 per diluted share, in connection with its strategy of reducing the presence of ESQ Movado while expanding the Movado brand offering in certain retail doors.

The company expects to reallocate certain of the ESQ Movado retail space in the second quarter of fiscal 2015 to drive incremental sales of its more productive Movado brand watch families and will continue to offer ESQ Movado in select retail locations as well as its direct-to-consumer outlet stores and at Movado.com.

The $8.3 million pre-tax charge consists of anticipated returns from affected customers and the write down of excess inventory, displays and point of sale materials related to this strategy.

Partially offsetting this unusual item was a benefit of approximately $2.5 million, or $0.06 per diluted share, related to the previously announced pre-tax refund from U.S. Customs and Border Protection for duty payments made in the 2008 through 2011 period for imported watches subsequently exported out of the United States.

Additionally, operating expenses for the fourth quarter of fiscal 2014 reflect a $2 million, or $0.05 per diluted share, pre-tax charge related to a charitable contribution to the Movado Group Foundation.

Adjusted net sales increased 9% to $140.1 million compared to the prior year period. Adjusted net sales exclude the impact of the $7.8 million charge in the fourth quarter of fiscal 2014 for anticipated sales returns related to the ESQ reallocation strategy described above, as well as the $4.9 million charge related to the Coach repositioning initiative in the fourth quarter of fiscal 2013.

Adjusted net sales on a constant dollar basis increased 8.4% compared to the prior year period.

Adjusted gross margin was 53% compared to adjusted gross margin of 52.6% last year, excluding the charge to gross profit for anticipated sales returns and the write down of excess inventory related to the ESQ reallocation strategy, in addition to the duty refund in the fourth quarter of fiscal 2014 and the Coach repositioning initiative in the fourth quarter of fiscal 2013.

Adjusted operating expenses increased $2.3 million or 4.0% to $59.9 million in the fourth quarter of fiscal 2014 from $57.6 million in the fourth quarter last year. Adjusted operating expenses excludes the $2.0 million pre-tax charge related to a contribution to the Movado Group Foundation and a $0.8 million write down of excess displays and point of sale materials related to the ESQ reallocation strategy.

Adjusted operating income in the fourth quarter increased 43.5% to $14.4 million compared to $10 million in the prior year period.

The adjusted effective tax rate for the fourth quarter was 15.1% which compares to (7.7%) in the fourth quarter of fiscal 2013.

Adjusted net income was $12.0 million, or $0.46 per diluted share, compared to $10.5 million, or $0.41 per diluted share, for the same period in the prior year.

Adjusted EBITDA increased to $17.9 million compared to adjusted EBITDA of $12.6 million in the fourth quarter of fiscal 2013.

Full Year Fiscal 2014 adjusted net sales increased by 13.3% to $578.1 million compared to fiscal 2013. Adjusted net sales exclude the impact of the $7.8 million charge for anticipated sales returns related to the ESQ reallocation strategy in the fourth quarter of fiscal 2014 mentioned above, as well as the $4.9 million charge related to the Coach repositioning initiative in the fourth quarter of fiscal 2013. Adjusted net sales on a constant dollar basis increased 12.7%.

Full Year Fiscal 2014 adjusted gross margin was 53.7% of sales compared to adjusted gross margin of 55.4% of sales last year, which excludes the charge to gross profit for anticipated sales returns and the write down of excess inventory related to the ESQ reallocation strategy, in addition to the duty refund in the fourth quarter of fiscal 2014 and the Coach repositioning initiative in the fourth quarter of fiscal 2013.

Adjusted operating expenses increased $9.2 million or 4.1% to $234.8 million in fiscal 2014 from $225.5 million last year. Adjusted operating expenses in fiscal 2014 excludes the $2.0 million pre-tax charge related to a contribution to the Movado Group Foundation and a $0.8 million write down of excess displays and point of sale materials related to the ESQ reallocation strategy. Adjusted operating expenses in fiscal 2013 excludes a $3.0 million pre-tax contribution to the Movado Group Foundation.

Full Year Fiscal 2014 adjusted operating income for fiscal 2014 increased 31.9% to $75.5 million as compared to $57.2 million for fiscal 2013. The adjusted effective tax rate for fiscal 2014 was 27.8% which compares to 24.6% in fiscal 2013.

Adjusted net income was $53.6 million, or $2.07 per diluted share, for fiscal 2014 compared to $42.1 million, or $1.64 per diluted share, for the prior year. Adjusted EBITDA totaled $87.7 million in fiscal 2014 compared to $67.9 million in fiscal 2013.




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