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Good day, everybody, and welcome to the Movado Group, Incorporated Third Quarter Fiscal Year 2025 Earnings Conference Call. As a reminder, today's call is being recorded and may not be reproduced in full or in part without permission from the company. At this time, I would like to turn the conference over to Allison Malkin of ICR. Please go ahead.

Good morning, everyone. With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; and Sallie DeMarsilis, Executive Vice President and Chief Operating Officer and Chief Financial Officer. Before we get started, I would like to remind you of the company's safe harbor language, which I'm sure you're all familiar with. The statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release. If any non-GAAP financial measure is used on this call, a presentation of the most directly comparable GAAP financial measure to this non-GAAP financial measure will be provided as supplemental financial information in our press release. Now, I would like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Allison. Welcome to Movado Group's third quarter conference call. With me today is Sallie DeMarsilis, our COO and CFO. I will first review our overall results and our progress against our strategic initiatives and then Sallie will review our financial results in greater detail. Over the last year, we have made significant progress on a number of strategic initiatives, including the introduction of iconic new product families across our brand portfolio and revitalizing our marketing efforts and storytelling across our brands and regions. As we began the year, we made the decision to invest in driving revenue growth and brand awareness with increased marketing spend. While net sales are down 2.9% for the year-to-date period, we continue to believe that the investments we've made have strengthened our brands and provide a solid foundation for growth in the coming years. Nonetheless, given the challenging environment for both our category and retailers in the US and Europe and consistent with the message conveyed on our second quarter conference call, we have started to take the steps needed to drive improving financial performance. Our focus now is on a successful holiday season and building a strong business model for next year that will reduce costs, continue our brand-building initiatives while rationalizing marketing investments, delivering on key growth opportunities such as jewelry and growth markets like India and Southeast Asia and returning North America and our Movado brand to higher levels of profitability. With $182 million of cash and no debt, we continue to have a strong balance sheet and believe that our dividend is a priority to continue to return value to our shareholders. Today, we also announced that our Board of Directors approved a new $50 million share repurchase plan. During the third quarter, retailers continued to tightly manage inventories in both the US and Europe. The US retail environment was also further affected by the later Thanksgiving holiday and compounded by the uncertainty surrounding the election. As Election Day approached US digital marketing costs escalated post the election, we have seen those costs begin to moderate. In Movado, we began to launch our campaign featuring our new set of iconic brand ambassadors in early September, and we received a lot of positive feedback from consumers. On our movado.com website, we saw our quarterly sales increase by 16.9% with both September and October sales growing by over 25%. We saw very strong performance in our Movado BOLD and Heritage watch collections driven by new introductions. Our shipments to retail and digital partners in the US and Europe were pressured by tighter inventory management. In addition, a delay in the launch of our Amazon Premiere platform also pressured sales. This launch has now occurred, and we expect a strong holiday season on their platform. As it relates to holiday, while early in the season, our newness is resonating well, and our new campaign -- and our new marketing campaign is broadening consumer interest, which we expect to improve our trend at our retail partners. We continue to be excited about the power of this campaign and its ability to build brand image and demand. On the international front, the Movado brand continues to perform well in India, where we saw a 20% increase and believe it can become a big market for us. In our licensed brands, our sales grew by 3.8% and driven by growth in Coach, Lacoste, Calvin Klein and HUGO BOSS during the third quarter. Coach has performed extremely well over the first nine months of the year, driven by strong new product that -- product introductions that are resonating well with consumers, including our new Sammy collection a unique Oval collection inspired by the Coach brand's iconic turnlock and is generating demand from Gen

Thank you, Efraim, and good morning, everyone. For today's call, I will review our financial results for the third quarter and year-to-date period of fiscal 2025, and then I will provide an update on our outlook for the year. My comments today will focus on adjusted results. Please refer to the description of the special items included in our results for the third quarter and year-to-date period of fiscal 2025 in our press release issued earlier today, which also includes a reconciliation table of GAAP and non-GAAP measures. Overall, our performance for the third quarter of fiscal 2025 continued to be negatively impacted by a challenging environment, both in our category and by retailers in the United States and Europe. Despite being down year-over-year, as Efraim mentioned, we made good progress on our strategic initiatives and maintained an extremely strong balance sheet. Turning to a review of the quarter. Sales were $182.7 million as compared to -- I'm sorry, $187.7 million last year, a decrease of 2.6%. In constant dollars, the decrease in net sales was 3.5%. Net sales decreased across owned brands and company stores, partially offset by an increase in licensed brands. By geography, US net sales decreased 7.1% as compared to the third quarter of last year. International net sales increased 0.4%. On a constant currency basis, International net sales decreased 1.1% with continued softening in our largest international market, Europe. Gross profit as a percent of sales was 53.8% compared to 54.5% in the third quarter of last year. The year-over-year decrease in gross margin rate was primarily driven by unfavorable channel and product mix and the deleverage of higher fixed costs over lower sales. Operating expenses were $89.1 million as compared to $81.6 million for the same period of last year. The increase was driven by an increased investment in marketing and in payroll-related costs. As a result of the reduction in sales and gross margin and the increase in operating expenses, operating income decreased to $9.3 million as compared to $20.7 million in the third quarter of fiscal 2024. We recorded approximately $1.4 million of other nonoperating income in the third quarter of fiscal 2025, which is primarily comprised of interest earned on our global cash position as compared to $1.5 million during the same period of last year. We recorded income tax expense of $2 million in the third quarter of fiscal 2025 as compared to $4.5 million in the third quarter of fiscal 2024. Net income in the third quarter was $8.3 million or $0.37 per diluted share as compared to $17.4 million or $0.77 per diluted share in the year ago period. Now turning to our year-to-date results. Sales for the nine-month period ended October 31, 2024, were $478.7 million as compared to $493 million last year. Total net sales decreased 2.9% as compared to the nine-month period of fiscal 2024. In constant dollars, the decrease in net sales was 3.2%. The International net sales decreased 1.7% or 2.3% on a constant currency basis. US net sales declined by 4.5%. Gross profit was $260.3 million or 54.4% of sales as compared to $273.6 million or 55.5% of sales last year. The decrease in gross margin rate for the first nine months was primarily due to unfavorable channel and product mix and the deleverage of higher fixed costs on lower sales. For the nine months ended October 31, 2024, and Operating income was $15.6 million as compared to $41.2 million in fiscal 2024. We recorded approximately $5.2 million of other nonoperating income in the 9-month period of fiscal 2025, which is primarily comprised of interest earned on our global cash position as compared to $3.8 million during the same period of last year. Net income was $14.9 million or $0.66 per diluted share as compared to $34.6 million or $1.53 per diluted share in the year ago period. Now turning to our balance sheet. Cash at the end of the third quarter was $181.5 million, as compared to $201 million at the same period of last year. Accounts receivable was $139.2 million, up 2.7% from the same period of last year due to timing and mix of business. Inventory at the end of the quarter was down $3 million from the same period of last year and aligned with our sales performance. In the first nine months of fiscal 2025, capital expenditures were $6.4 million and we repurchased approximately 120,000 shares under our share repurchase program. This morning, we also announced that the Board of Directors approved a new three-year $50 million share buyback program. The previous share buyback program had expired on November 23, 2024. I would now like to discuss our outlook. As Efraim mentioned, we continue to operate in a challenging environment, especially for our category and in our key markets of the United States and Europe. Our net sales are currently expected to be approximately $665 million, which reflects the low end of our previous guidance range. We expect gross profit of approximately 54% of sales for the year. As previously discussed, we are taking action to reduce our operating expenses and are managing our discretionary spending. We, therefore, expect operating income of approximately $23 million, also at the low end of our previous guidance. We continue to anticipate a 25% effective tax rate with expected earnings of $0.90 per diluted share. As we plan for fiscal 2026, we are focused on delivering a meaningful improvement in profitability as compared to our expected outlook for fiscal 2025. This expectation includes $6.5 million in annualized savings from the cost savings initiatives taken this most recent quarter. I would now like to open the call up for questions.

[Operator Instructions] Our first question comes from the line of Michael Legg with The Benchmark Company. Please proceed with your question.

Thanks, good morning. On the new stock buyback authorization, is there any change to your usage of it as far as being active in stock buyback versus just offsetting dilution.

Right now, it's focused on offsetting dilution. And then as we hopefully will generate more cash, we're open to change that as well.

And then you mentioned that inventory levels at retail are light. Can you talk about historic when you see trends [Technical Difficulty]

You've gotten quiet, Mike. It's gone very quiet.

Can you hear me now?

Yeah, I can hear you.

Okay. So retail inventory levels, you mentioned were light, can you talk about any leading indicators that you've seen in the past as when purchasing trends change and how lead time you have with that and any of the leading indicators you look for positive consumer behavior? Thanks.

Sure. So I think the inventory levels now are pretty -- getting to a historic historically low level in both the US and Europe, which are the two markets for us that are the most developed and the markets that are most sensitive and focused on that. Historically, as the economic environment improves and retail improves, I think that we've seen a bounce back and an openness to rebuild inventories as retailers realize that they're losing sales. I think one of the differences in the dynamic today is that people have built e-commerce businesses that carry less inventory than in-store businesses. But in really no cases is the dot-com business more than 20% to 25% of a retailer's overall business.

Okay. Thank you.

Thank you. And we have reached the end of the question-and-answer session. I'll now turn the floor back to Efraim Grinberg for closing remarks.

Okay. Thank you very much for being with us on the call today. I am optimistic about the category overall, beginning to see improvements in the future. But we are really focused as a company of continuing to focus on what we can control and very focused on driving down our expenses next year as a company and returning to an acceptable level of profitability. With that, I'd like to wish everybody a great holiday season and wish you all the best. So, thank you very much.