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How Did Movado Group Perform in 4Q16 and 2016?

Gabriel Kane

Who Were the Outliers in the Consumer Sector Last Week?

(Continued from Prior Part)

Price movement 

Movado Group (MOV) fell by 2.6% and closed at $28.84 per share at the end of the fifth week of March 2016. The price movements on a weekly, monthly, and YTD (year-to-date) basis were -2.6%, -2.8%, and 12.2%, respectively.

Currently, Movado is trading 3.6% below its 20-day moving average, 4.9% above its 50-day moving average, and 9.8% above its 200-day moving average.

The iShares Russell 2000 Value ETF (IWN) invests 0.03% of its holdings in Movado. IWN tracks an index of US small-cap value stocks. The index selects value stocks from a universe of stocks ranked 1,001–3,000 by market cap. IWN’s YTD price movement was 1.8%.

The iShares Russell 2000 ETF (IWM) invests 0.03% of its holdings in Movado. The ETF tracks a market-cap-weighted index of US small-cap stocks. The index selects stocks ranked 1,001–3000 by market cap.

The market caps of Movado Group’s competitors are as follows:

  • Fossil Group (FOSL) – $2.1 billion
  • Ralph Lauren Corporation (RL) – $8.1 billion
  • Coach (COH) – $11.3 billion

Performance in fiscal 4Q16 and fiscal 2016

Movado Group reported fiscal 4Q16 net sales of $143.3 million—a rise of 7.0% compared to net sales of $133.9 million in fiscal 4Q15. The company’s gross profit margin and operating income rose by 4.6% and 13.9%, respectively, in fiscal 4Q16—compared to fiscal 4Q15.

Its net income and EPS (earnings per share) fell to $7.9 million and $0.34, respectively, in fiscal 4Q16—compared to $10.1 million and $0.40, respectively, in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, Movado reported net sales of $594.9 million—a rise of 1.3% YoY (year-over-year). Its net income and EPS fell to $45.1 million and $1.90, respectively, in fiscal 2016—compared to $51.8 million and $2.02, respectively, in fiscal 2015.

Movado’s cash and cash equivalents rose by 14.2% and its inventories fell by 4.9% in fiscal 2016. Its current ratio fell to 6.3x and its DE (debt-to-equity) ratio rose to 0.33x in fiscal 2016—compared to a current ratio and DE ratio of 7.3x and 0.21x, respectively, in fiscal 2015.

Projections

The company made the following projections for fiscal 2017:

  • net sales of $585.0 million–$600.0 million
  • operating income of ~$65 million–$70 million
  • net income of ~$43.3 million–$46.7 million
  • EPS of $1.85–$2.00
  • effective tax rate of 32%

The guidance doesn’t include fluctuations from foreign currency exchange rates.

The company announced a share repurchase program of up to $50 million of its outstanding shares under various market and industry conditions, share price, regulatory requirements, and other corporate considerations.

It also declared a quarterly cash dividend of $0.13 per share—a rise of ~18% on its common stock and class A common stock. The dividend will be paid on April 26, 2016, to shareholders as of record at the close of business on April 12, 2016.

Rick Cote, Movado’s vice chairman and CEO, will retire in June 2016 after serving the company for 16 years. After June 2016, he will serve as a non-management member of the board of directors.

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