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Movado Q4 results in line with revised expectations
05 Apr '10
5 min read
Fiscal 2010
Adjusted net loss in fiscal 2010 was $11.9 million, or $0.48 per diluted share, compared to adjusted net income of $16.4 million, or $0.64 per diluted share in fiscal 2009. On a GAAP basis net loss was $54.6 million, or $2.23 per diluted share, which includes: (i) the aforementioned items recorded in the fourth quarter related to the reserve for excess non-core component inventory and asset write downs totaling $16.4 million pre-tax, or $0.57 per diluted share; (ii) a pre-tax charge in interest expense of $1.3 million, or $0.03 per diluted share, related to the refinancing and repayment of the Company's former credit and note agreements that was recorded in the second quarter of fiscal 2010; (iii) a pre-tax charge of $2.4 million, or $0.06 per diluted share, for sales of excess discontinued product; and (iv) a tax provision that includes a non-cash deferred tax expense of $34.5 million, or $1.41 per diluted share, related to a valuation allowance on net deferred tax assets, partially offset by a cash income tax benefit of $8.0 million, or $0.33 per diluted share, attributable to the recent U.S. tax law changes. This compares to net income of $2.3 million, or $0.09 per diluted share, in fiscal 2009, which included one-time items, totaling $14.1 million, or $0.55 per diluted share.
Net sales in fiscal 2010 decreased 17.9% to $378.4 million compared to $460.9 million in fiscal 2009. The decline is primarily the result of the challenging macroeconomic environment, retailer destocking which occurred throughout the year, and proactive sales management in light of industry liquidation and credit risks. Net sales for the year included $14.6 million of excess discontinued inventory.
Gross profit in fiscal 2010 was $184.5 million, or 48.8% of sales compared to $284.9 million, or 61.8% last year. Excluding the impact of the sale of excess discontinued product and the reserve for excess non-core component inventory, gross profit as a percent of sales was 53.8%.
Operating expenses decreased by $60.6 million, or 21.5%, to $221.0 million versus $281.6 million in the same period last year, primarily as a result of the Company's cost reduction plan.
Fiscal 2011 Guidance
Rick Cote, President and Chief Operating Officer, stated, "Executing our strategies to return to top-line sustainable growth will be the driver for us to improve our profitability long-term. In the coming year, we will build the business for our core portfolio of brands – including Movado, Ebel and ESQ by Movado – with a focus on product innovation, improved execution of product segmentation and pricing and increased marketing investments. At the same time, we will focus on maintaining our strong licensed brands business and reducing the negative contribution from areas of our business that are underperforming. We are currently evaluating our long-term business plans to incorporate the changed consumer and market environments and we continue to expect to share our multi-year growth plan with investors when we report second quarter earnings."
Adjusted net loss in fiscal 2010 was $11.9 million, or $0.48 per diluted share, compared to adjusted net income of $16.4 million, or $0.64 per diluted share in fiscal 2009. On a GAAP basis net loss was $54.6 million, or $2.23 per diluted share, which includes: (i) the aforementioned items recorded in the fourth quarter related to the reserve for excess non-core component inventory and asset write downs totaling $16.4 million pre-tax, or $0.57 per diluted share; (ii) a pre-tax charge in interest expense of $1.3 million, or $0.03 per diluted share, related to the refinancing and repayment of the Company's former credit and note agreements that was recorded in the second quarter of fiscal 2010; (iii) a pre-tax charge of $2.4 million, or $0.06 per diluted share, for sales of excess discontinued product; and (iv) a tax provision that includes a non-cash deferred tax expense of $34.5 million, or $1.41 per diluted share, related to a valuation allowance on net deferred tax assets, partially offset by a cash income tax benefit of $8.0 million, or $0.33 per diluted share, attributable to the recent U.S. tax law changes. This compares to net income of $2.3 million, or $0.09 per diluted share, in fiscal 2009, which included one-time items, totaling $14.1 million, or $0.55 per diluted share.
Net sales in fiscal 2010 decreased 17.9% to $378.4 million compared to $460.9 million in fiscal 2009. The decline is primarily the result of the challenging macroeconomic environment, retailer destocking which occurred throughout the year, and proactive sales management in light of industry liquidation and credit risks. Net sales for the year included $14.6 million of excess discontinued inventory.
Gross profit in fiscal 2010 was $184.5 million, or 48.8% of sales compared to $284.9 million, or 61.8% last year. Excluding the impact of the sale of excess discontinued product and the reserve for excess non-core component inventory, gross profit as a percent of sales was 53.8%.
Operating expenses decreased by $60.6 million, or 21.5%, to $221.0 million versus $281.6 million in the same period last year, primarily as a result of the Company's cost reduction plan.
Fiscal 2011 Guidance
Rick Cote, President and Chief Operating Officer, stated, "Executing our strategies to return to top-line sustainable growth will be the driver for us to improve our profitability long-term. In the coming year, we will build the business for our core portfolio of brands – including Movado, Ebel and ESQ by Movado – with a focus on product innovation, improved execution of product segmentation and pricing and increased marketing investments. At the same time, we will focus on maintaining our strong licensed brands business and reducing the negative contribution from areas of our business that are underperforming. We are currently evaluating our long-term business plans to incorporate the changed consumer and market environments and we continue to expect to share our multi-year growth plan with investors when we report second quarter earnings."
Movado Group Inc
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