Movado Group, Inc. announced first quarter results for the period ended April 30, 2014.
First Quarter Fiscal 2015 Results
Net sales increased 9.9% to $120.9 million compared to $110.0 million in the first quarter of fiscal 2014 driven primarily by growth in the licensed brand category.
Gross profit was $65.2 million, or 53.9% of sales, compared to $59.9 million, or 54.5% of sales, in the first quarter last year. The planned decline in gross margin percentage was primarily the result of the unfavorable impact of changes in foreign currency exchange rates and channel and product mix partially offset by leverage gained on certain fixed costs.
Operating expenses were $54.2 million as compared to $49.9 million in the first quarter last year. This increase was primarily the result of an increase in compensation and benefits expense, higher marketing expenses and an increase due to the translational impact of foreign currency exchange rates.
Operating income increased 9.2% to $10.9 million compared to $10.0 million in the same period last year.
The Company recorded a tax provision of $3.4 million, which equates to an effective tax rate of 31.6%, as compared to a tax provision of $3.3 million and an effective tax rate of 28.8% in the first quarter last year.
Net income was $7.4 million, or $0.29 per diluted share, compared to net income of $8.2 million, or $0.32 per diluted share, including a $0.04 per share gain related to the sale of a Company-owned building in Switzerland, in the first quarter of fiscal 2014.
Rick Coté, President and Chief Operating Officer, stated, “We are pleased with our strong first quarter results which reflect solid momentum in our business driven by a favorable response to our Movado and licensed brands, most notably our ongoing reintroduction of Coach watches and continued strength in Ferrari, which celebrated its one-year anniversary in April. Our growth initiatives, along with the investments we are making in Asia and Latin America, position us to continue our consistent performance well into the future.
“For the year, we continue to expect net sales growth of 10.7%, operating income growth of 19% and diluted earnings per share of $2.44. Looking at our balance sheet, our dividend is an integral part of our capital allocation strategy and the board’s approval of a $0.10 quarterly dividend again reiterates our commitment to aligning our interests with our shareholders. Our consistent cash flow generation affords us the opportunity to continue to invest in the long-term growth of the Company as we remain focused on our business strategies, which we believe will allow us to deliver sustainable profitable growth.”