The president is appealing an order that allowed his tax returns and other financial records to be released to the Manhattan district attorney.
— NYT: William K. Rashbaum and Benjamin Weiser
The president is appealing an order that allowed his tax returns and other financial records to be released to the Manhattan district attorney.
— NYT: William K. Rashbaum and Benjamin Weiser
~ Second Quarter Net Sales of $88.5 million ~
~ Second Quarter Loss Per Share of ($0.28), or ($0.07) Excluding Restructuring Plan and Other Items ~
~ Ends Second Quarter with Cash of $170 million ~
~ Announces Licensing Partnership with Calvin Klein ~
PARAMUS, N.J.–(BUSINESS WIRE)–Movado Group, Inc. (NYSE: MOV) today announced second quarter and six-month results for the period ended July 31, 2020.
Efraim Grinberg, Chairman and Chief Executive Officer, stated, “We remain focused on ensuring the safety and health of our employees, customers and the communities where we operate. In a quarter that was significantly impacted globally by the COVID-19 pandemic, I am proud of our team’s ability to build on our multi-year investments in our digital center of excellence and adapt to support our ongoing mission to put consumers first, allowing them to connect with our great brands, designs and platforms wherever and whenever they choose to shop. These efforts allowed us to capture strong online demand where our Movado brand generated a 130% increase in our own and third party ecommerce sales. In North America, we reopened our outlet stores in June and were encouraged by the improved sequential performance in July, despite reduced stores hours. We are also seeing encouraging demand in our domestic department store channel. In China, we had a 16% increase in sales for the quarter with trends continuing to accelerate and we had positive top line growth in France and Germany, despite our customers being closed for nearly half of the quarter.”
Mr. Grinberg continued, “The aggressive actions we took at the height of the pandemic have positioned us well to continue to navigate the current environment. We have implemented initiatives that are expected to generate $90 million in cost savings in this fiscal year and have strengthened our financial health as evidenced by our cash balance of $170 million after repaying $37 million on our revolver at quarter end. As we look to the remainder of the year, we continue to expect improving sales trends in the second half relative to the first half with improved profitability and we will continue to be disciplined and agile in managing the business given the continued uncertainty. The actions we have taken, combined with our strong liquidity, enable us to leverage our powerful portfolio of brands which will be further strengthened by the exciting new licensing partnership announced today to design and develop Calvin Klein timepieces and jewelry. As a result, we have confidence that we will emerge from this extraordinary period a stronger company that is even better positioned to deliver long-term shareholder value.”
Non-GAAP Items (See attached table for GAAP and Non-GAAP measures)
Second quarter fiscal 2021 results of operations included the following items:
Second quarter Fiscal 2020 results of operations included the following items:
Second Quarter Fiscal 2021 (See attached table for GAAP and Non-GAAP measures)
First Half Fiscal 2021 (See attached table for GAAP and Non-GAAP measures)
Fiscal 2021 Outlook
Given the dynamic nature of the COVID-19 crisis and lack of visibility, the potential financial impact to the business cannot be reasonably estimated. The Company is not providing fiscal 2021 guidance.
Conference Call
The Company’s management will host a conference call and audio webcast to discuss its results today, August 27, 2020 at 9:00 a.m. Eastern Time. The conference call may be accessed by dialing (877) 407-0784. Additionally, a live webcast of the call can be accessed at www.movadogroup.com. The webcast will be archived on the Company’s website approximately one hour after the conclusion of the call. Additionally, a telephonic re-play of the call will be available at 12:00 p.m. ET on August 27, 2020 until 11:59 p.m. ET on September 10, 2020 and can be accessed by dialing (844) 512-2921 and entering replay pin number 13708469.
Movado Group, Inc. designs, sources, and distributes MOVADO®, MVMT®, OLIVIA BURTON®, EBEL®, CONCORD®, COACH®, TOMMY HILFIGER®, HUGO BOSS®, LACOSTE®, SCUDERIA FERRARI®, REBECCA MINKOFF® and URI MINKOFF® watches worldwide, and operates Movado company stores in the United States and Canada.
In this release, the Company presents certain financial measures that are not calculated according to generally accepted accounting principles in the United States (“GAAP”). Specifically, the Company is presenting adjusted gross profit, adjusted gross margin, adjusted operating expenses and adjusted operating income, which are gross profit, gross margin, operating expenses and operating income, respectively, under GAAP, adjusted to eliminate the amortization of acquisition accounting adjustments related to the Olivia Burton and MVMT acquisitions, corporate initiatives and the impairment of goodwill and certain intangible assets. The Company is also presenting adjusted tax provision, which is the tax provision under GAAP, adjusted to eliminate the impact of charges for the Olivia Burton and MVMT acquisitions, corporate initiatives, the impairment of goodwill and certain intangible assets and the gain on sale of a non-operating asset. The Company believes these adjusted measures are useful because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. The Company is also presenting adjusted net income, adjusted earnings per share and adjusted effective tax rate, which are net income, earnings per share and effective tax rate, respectively, under GAAP, adjusted to eliminate the after-tax impact of amortization of acquisition accounting adjustments related to the Olivia Burton and MVMT acquisitions, corporate initiatives, the impairment of goodwill and certain intangibles and the gain on sale of a non-operating asset. The Company believes that adjusted net income, adjusted earnings per share and adjusted effective tax rate are useful measures of performance because they give investors information about the Company’s financial performance without the effect of certain items that the Company believes are not characteristic of its usual operations. Additionally, the Company is presenting constant currency information to provide a framework to assess how its business performed excluding the effects of foreign currency exchange rate fluctuations in the current period. Comparisons of financial results on a constant dollar basis are calculated by translating each foreign currency at the same US dollar exchange rate as in effect for the prior-year period for both periods being compared. The Company believes this information is useful to investors to facilitate comparisons of operating results. These non-GAAP financial measures are designed to complement the GAAP financial information presented in this release. The non-GAAP financial measures presented should not be considered in isolation from or as a substitute for the comparable GAAP financial measures, and the methods of their calculation may differ substantially from similarly titled measures used by other companies.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company has tried, whenever possible, to identify these forward-looking statements using words such as “expects,” “anticipates,” “believes,” “targets,” “goals,” “projects,” “intends,” “plans,” “seeks,” “estimates,” “may,” “will,” “should” and variations of such words and similar expressions. Similarly, statements in this press release that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the Company’s actual results, performance or achievements and levels of future dividends to differ materially from those expressed in, or implied by, these statements. These risks and uncertainties may include, but are not limited to general economic and business conditions which may impact disposable income of consumers in the United States and the other significant markets (including Europe) where the Company’s products are sold, uncertainty regarding such economic and business conditions, trends in consumer debt levels and bad debt write-offs, general uncertainty related to possible terrorist attacks, natural disasters, pandemics, including the effect of the COVID-19 pandemic and other diseases on travel and traffic in our retail stores and the stores of our wholesale customers, supply disruptions and delivery delays from our Chinese and other suppliers as a result of the COVID-19 pandemic, adverse impact on the Company’s wholesale customers and customer traffic in the Company’s stores as a result of increased uncertainty and economic disruption caused by the COVID-19 pandemic, the stability of the European Union (including the impact of the United Kingdom’s process to exit from the European Union), the stability of the United Kingdom after its exit from the European Union, and defaults on or downgrades of sovereign debt and the impact of any of those events on consumer spending, changes in consumer preferences and popularity of particular designs, new product development and introduction, decrease in mall traffic and increase in e-commerce, the ability of the Company to successfully implement its business strategies, competitive products and pricing, the impact of “smart” watches and other wearable tech products on the traditional watch market, seasonality, availability of alternative sources of supply in the case of the loss of any significant supplier or any supplier’s inability to fulfill the Company’s orders, the loss of or curtailed sales to significant customers, the Company’s dependence on key employees and officers, the ability to successfully integrate the operations of acquired businesses without disruption to other business activities, the possible impairment of acquired intangible assets including goodwill if the carrying value of any reporting unit were to exceed its fair value, volatility in reported earnings resulting from changes in the estimated fair value of contingent acquisition consideration, the continuation of the company’s major warehouse and distribution centers, the continuation of licensing arrangements with third parties, losses possible from pending or future litigation, the ability to secure and protect trademarks, patents and other intellectual property rights, the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis, the ability of the Company to successfully manage its expenses on a continuing basis, information systems failure or breaches of network security, the continued availability to the Company of financing and credit on favorable terms, business disruptions, and general risks associated with doing business outside the United States including, without limitation, import duties, tariffs (including retaliatory tariffs), quotas, political and economic stability, changes to existing laws or regulations, and success of hedging strategies with respect to currency exchange rate fluctuations, and the other factors discussed in the Company’s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. These statements reflect the Company’s current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time. The Company assumes no duty to update its forward looking statements and this release shall not be construed to indicate the assumption by the Company of any duty to update its outlook in the future.
(Tables to follow)
MOVADO GROUP, INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended |
|
Six Months Ended |
||||||||||||||
July 31, |
|
July 31, |
||||||||||||||
|
|
|
|
|
|
|
||||||||||
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
||
Net sales |
$ |
88,538 |
|
$ |
157,816 |
|
$ |
158,204 |
|
$ |
304,365 |
|
||||
Cost of sales |
|
43,182 |
|
|
72,477 |
|
|
80,955 |
|
|
140,153 |
|
||||
Gross profit |
|
45,356 |
|
|
85,339 |
|
|
77,249 |
|
|
164,212 |
|
||||
Operating expenses |
|
54,272 |
|
|
76,563 |
|
|
112,409 |
|
|
150,462 |
|
||||
Impairment of goodwill and intangible assets |
|
– |
|
|
– |
|
|
155,919 |
|
|
– |
|
||||
Total operating expenses |
|
54,272 |
|
|
76,563 |
|
|
268,328 |
|
|
150,462 |
|
||||
Operating (loss)/income |
|
(8,916 |
) |
|
8,776 |
|
|
(191,079 |
) |
|
13,750 |
|
||||
Non-operating (expense)/income: | ||||||||||||||||
Gain on sale of a non-operating asset |
|
1,317 |
|
|
– |
|
|
1,317 |
|
|
– |
|
||||
Change in contingent consideration |
|
– |
|
|
13,627 |
|
|
– |
|
|
13,627 |
|
||||
Interest expense |
|
(590 |
) |
|
(225 |
) |
|
(861 |
) |
|
(449 |
) |
||||
Interest income |
|
8 |
|
|
24 |
|
|
23 |
|
|
45 |
|
||||
(Loss)/Income before income taxes |
|
(8,181 |
) |
|
22,202 |
|
|
(190,600 |
) |
|
26,973 |
|
||||
(Benefit)/Provision for income taxes |
|
(1,559 |
) |
|
4,741 |
|
|
(33,889 |
) |
|
5,588 |
|
||||
Net (loss)/income |
|
(6,622 |
) |
|
17,461 |
|
|
(156,711 |
) |
|
21,385 |
|
||||
Less: Net loss attributable to noncontrolling interests |
|
(7 |
) |
|
(44 |
) |
|
(103 |
) |
|
(45 |
) |
||||
Net (loss)/income attributable to Movado Group, Inc. |
$ |
(6,615 |
) |
$ |
17,505 |
|
$ |
(156,608 |
) |
$ |
21,430 |
|
||||
Diluted Income Per Share Information | ||||||||||||||||
Net (loss)/income attributable to Movado Group, Inc. |
$ |
(0.28 |
) |
$ |
0.75 |
|
$ |
(6.75 |
) |
$ |
0.92 |
|
||||
Weighted diluted average shares outstanding |
|
23,240 |
|
|
23,292 |
|
|
23,191 |
|
|
23,370 |
|
||||
MOVADO GROUP, INC. | |||||||||
GAAP AND NON-GAAP MEASURES | |||||||||
(In thousands, except for percentage data) | |||||||||
(Unaudited) | |||||||||
As Reported |
|
|
|||||||
Three Months Ended |
|
|
|||||||
July 31, |
|
% Change |
|||||||
|
|
|
|
|
|||||
2020 |
|
2019 |
|
|
|||||
Total net sales, as reported |
$ |
88,538 |
$ |
157,816 |
-43.9 |
% |
|||
Total net sales, constant dollar basis |
$ |
88,461 |
$ |
157,816 |
-43.9 |
% |
|||
As Reported |
|||||||||
Six Months Ended |
|||||||||
July 31, |
% Change |
||||||||
|
|
|
|||||||
2020 |
|
2019 |
|||||||
Total net sales, as reported |
$ |
158,204 |
$ |
304,365 |
-48.0 |
% |
|||
Total net sales, constant dollar basis |
$ |
158,813 |
$ |
304,365 |
-47.8 |
% |
|||
MOVADO GROUP, INC. | ||||||||||||||||||||||||||
GAAP AND NON-GAAP MEASURES | ||||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Net Sales |
|
Gross Profit |
|
Operating (Loss)/Income |
|
Pre-tax (Loss)/Income |
|
(Benefit)/Provision for Income Taxes |
|
Net (Loss)/Income Attributable to Movado Group, Inc. |
|
Diluted EPS |
||||||||||||||
Three Months Ended July 31, 2020 | ||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
88,538 |
$ |
45,356 |
$ |
(8,916 |
) |
$ |
(8,181 |
) |
$ |
(1,559 |
) |
$ |
(6,615 |
) |
$ |
(0.28 |
) |
|||||||
Olivia Burton Costs (1) |
|
– |
|
– |
|
671 |
|
|
671 |
|
|
139 |
|
|
532 |
|
$ |
0.02 |
|
|||||||
MVMT Costs (2) |
|
– |
|
– |
|
284 |
|
|
284 |
|
|
108 |
|
|
176 |
|
$ |
0.01 |
|
|||||||
Gain On Sale of a Non-Operating Asset (3) |
|
– |
|
– |
|
– |
|
|
(1,317 |
) |
|
(474 |
) |
|
(843 |
) |
$ |
(0.04 |
) |
|||||||
Corporate Initiatives (4) |
|
– |
|
– |
|
7,368 |
|
|
7,368 |
|
|
2,353 |
|
|
5,015 |
|
$ |
0.22 |
|
|||||||
Adjusted Results (Non-GAAP) |
$ |
88,538 |
$ |
45,356 |
$ |
(593 |
) |
$ |
(1,175 |
) |
$ |
567 |
|
$ |
(1,735 |
) |
$ |
(0.07 |
) |
|||||||
Three Months Ended July 31, 2019 | ||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
157,816 |
$ |
85,339 |
$ |
8,776 |
|
$ |
22,202 |
|
$ |
4,741 |
|
$ |
17,505 |
|
$ |
0.75 |
|
|||||||
Olivia Burton Costs (1) |
|
– |
|
– |
|
690 |
|
|
690 |
|
|
131 |
|
|
559 |
|
|
0.02 |
|
|||||||
MVMT Costs (2) |
|
– |
|
– |
|
1,125 |
|
|
1,125 |
|
|
270 |
|
|
855 |
|
|
0.04 |
|
|||||||
Change In Contingent Consideration (5) |
|
– |
|
– |
|
– |
|
|
(13,627 |
) |
|
(3,270 |
) |
|
(10,357 |
) |
|
(0.44 |
) |
|||||||
Cost Savings Initiatives (6) |
|
– |
|
– |
|
(320 |
) |
|
(320 |
) |
|
(77 |
) |
|
(243 |
) |
|
(0.01 |
) |
|||||||
Adjusted Results (Non-GAAP) |
$ |
157,816 |
$ |
85,339 |
$ |
10,271 |
|
$ |
10,070 |
|
$ |
1,795 |
|
$ |
8,319 |
|
$ |
0.36 |
|
|||||||
Net Sales | Gross Profit | Operating (Loss)/Income |
Pre-tax (Loss)/Income |
(Benefit)/Provision for Income Taxes |
Net (Loss)/Income Attributable to Movado Group, Inc. |
Diluted EPS | ||||||||||||||||||||
Six Months Ended July 31, 2020 | ||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
158,204 |
$ |
77,249 |
$ |
(191,079 |
) |
$ |
(190,600 |
) |
$ |
(33,889 |
) |
$ |
(156,608 |
) |
$ |
(6.75 |
) |
|||||||
Olivia Burton Costs (1) |
|
– |
|
– |
|
1,356 |
|
|
1,356 |
|
|
258 |
|
|
1,098 |
|
$ |
0.05 |
|
|||||||
MVMT Costs (2) |
|
– |
|
– |
|
981 |
|
|
981 |
|
|
373 |
|
|
608 |
|
$ |
0.03 |
|
|||||||
Goodwill and Intangible Asset Impairment (7) |
|
– |
|
– |
|
155,919 |
|
|
155,919 |
|
|
24,867 |
|
|
131,052 |
|
$ |
5.65 |
|
|||||||
Gain On Sale of a Non-Operating Asset (3) |
|
– |
|
– |
|
– |
|
|
(1,317 |
) |
|
(474 |
) |
|
(843 |
) |
$ |
(0.04 |
) |
|||||||
Corporate Initiatives (4) |
|
– |
|
3,508 |
|
14,608 |
|
|
14,608 |
|
|
4,592 |
|
|
10,016 |
|
$ |
0.43 |
|
|||||||
Adjusted Results (Non-GAAP) |
$ |
158,204 |
$ |
80,757 |
$ |
(18,215 |
) |
$ |
(19,053 |
) |
$ |
(4,273 |
) |
$ |
(14,677 |
) |
$ |
(0.63 |
) |
|||||||
Six Months Ended July 31, 2019 | ||||||||||||||||||||||||||
As Reported (GAAP) |
$ |
304,365 |
$ |
164,212 |
$ |
13,750 |
|
$ |
26,973 |
|
$ |
5,588 |
|
$ |
21,430 |
|
$ |
0.92 |
|
|||||||
Olivia Burton Costs (1) |
|
– |
|
– |
|
1,402 |
|
|
1,402 |
|
|
266 |
|
|
1,136 |
|
|
0.05 |
|
|||||||
MVMT Costs (2) |
|
– |
|
140 |
|
2,598 |
|
|
2,598 |
|
|
624 |
|
|
1,974 |
|
|
0.08 |
|
|||||||
Change In Contingent Consideration (5) |
|
– |
|
– |
|
– |
|
|
(13,627 |
) |
|
(3,270 |
) |
|
(10,357 |
) |
|
(0.44 |
) |
|||||||
Cost Savings Initiatives (6) |
|
– |
|
– |
|
(320 |
) |
|
(320 |
) |
|
(77 |
) |
|
(243 |
) |
|
(0.01 |
) |
|||||||
Adjusted Results (Non-GAAP) |
$ |
304,365 |
$ |
164,352 |
$ |
17,430 |
|
$ |
17,026 |
|
$ |
3,131 |
|
$ |
13,940 |
|
$ |
0.60 |
|
|||||||
Contacts
ICR, Inc.
Rachel Schacter/Allison Malkin
203-682-8200
With tax season almost here, employees and contractors are thinking about the forms the Internal Revenue Service (IRS) will require them to use to report their earnings and to file their taxes.
There are two main types of workers: The self-employed (freelancers, contractors, business owners), and also employees who work for employers who deduct their taxes.
You need to understand the Internal Revenue Service (IRS) guidelines so that you can derive joy, satisfaction, benefits, and total happiness from your dream career.
Whether to select a W2 or 1099 as the primary tax form is an important decision that will have an impact on ones work condition. It affects the ability to simply accept insurance, assignments, and benefits, and also influences tax liabilities. It is not merely a matter of decision, but it can legally implicate you. Therefore, it is necessary to make the right decision about your employment and the forms you will use.
Breakdown
For two different kinds of workers, W2 and 1099 are two distinct tax forms that are recommended. If you’re an employee, you will obtain a W2. If you’re an independent contractor or freelancer, you will use a 1099 form.
Decision
If you are a W2 employee, all payroll taxes are automatically removed or deducted from your paycheck and then your employer forwards the deductions to be paid to the government. On the other hand, it is the self-employed, contractor, or freelancer’s responsibility to make the necessary calculations about their payroll taxes and then forward the sum to the government on a quarterly basis.
Choosing
The most important factor that must be considered in your decision-making is your personality or behavior. W2s and 1099s both vary in complexity when setting up your own business. The 1099s are the most complicated with W2s being simpler. You just have to decide what best fits your way of life. This is because the cash you save on taxes at the end of the day will not appear to be justified, despite all the trouble you have gone through. They are basically the same.
Consider these factors when deciding how you want to work:
1. Are you a procrastinator? Consider W2
You should try picking a W2 to save yourself a lot of sleepless nights and troubles if you are someone who dislike tax time and would prefer a root canal than completing and submitting 1099 government forms.
W2 Pros
• Simplest and easiest option if you are not a savvy employee.
• You are not totally responsible for the employee tax burden.
• Little or no accounting required.
• W2 employee can deduct or itemize business expenses.
W2 Cons
• Deductibility of unreimbursed operational expenses and medicinal insurance premiums are extremely restricted.
• Limited capacity to withhold income if a 401(k) is unavailable.
• Transportation is not deductible
2. Do you like challenging authority? Try choosing 1099
If you have the courage and strength to find your way out and overcome all the troubles of IRS, you should try using the 1099 form. In any case, there are a few drawbacks to this option that will probably make you consider choosing W2: like your sales will probably get the attention of the IRS. Since contractors may sometimes be irresponsible about paying their taxes, the IRS has been vigilant. The government has gathered $9.5 million in back wages from employers who misclassified workers as self-employed since 2011.
1099 Pros
• Easy to begin.
• You may be qualified to collect the Home Office Deduction.
• Losses may be used to counterbalance other income (limits apply).
• Easy to cease when your agreement closes.
1099 Cons
• An unlimited obligation for the sole proprietor.
• You must make quarterly calculated tax installments.
• More complications and accounting than the W2 option.
• All benefit is liable to self-employment tax notwithstanding the income tax.
Conclusion
Whether you are an employee or an employer, the issue about W2 vs. 1099 and employees vs. contractors/freelancers is worth thinking about. With regards to who ought to be classified as independent contractor and employees, the keyword here is “control.’’ It is all about who controls the work you choose to do and how you will be taxed.