Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Fossil Group Third Quarter Fiscal 2013 Earnings Conference Call. [Operator Instructions]. This conference is being recorded, today, Tuesday, November 5, 2013. I would now like to turn the conference over to Allison Malkin of ICR. Please go ahead, ma'am.

Good afternoon, everyone. Thank you for joining us today. Before we begin, you should be aware that during this conference call, certain discussions will contain forward-looking information. Actual results could differ materially from those that will be projected during these discussions. Fossil Group's policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in our Form 10-K and 10-Q reports filed with the SEC. In addition, the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. If any non-GAAP financial measure is used on this call, a presentation of the most direct comparable GAAP financial measure and reconciliation of this non-GAAP financial measures to GAAP will be provided as supplemental financial information through this release located in the Earnings Release section under the Investor Relations heading on the Fossil Group's website. Please note that you may listen to a live webcast or replay of this call by visiting www.fossilgroup.com under the Investor Relations section. Now I would like to turn the call over to the company's Chairman and CEO, Kosta Kartsotis.

Thank you, Allison, and good afternoon, everyone. Joining us today is Dennis Secor, our Chief Financial Officer. We are very pleased with the third quarter results that we announced today. The company executed well and maintained the strong momentum that we had coming out of the first half of the year. We achieved growth across geographies and categories, highlighted by double-digit increases in each of our core businesses: FOSSIL, SKAGEN and our licensed watch portfolio. We delivered growth in watches, jewelry and leathers in all of our regions, driving solid increases in North America, Europe and Asia. And we maintained our focus on operational excellence, which drove substantial improvements in gross margin, and we continued to invest in initiatives to support long-term growth. Overall, for the third quarter, we delivered an 18% increase in revenue on a 25% increase in earnings per share, which includes some timing items that Dennis will describe later. Our performance validates the strength of our business model and the ability of our talented team to deliver outstanding results, even as we see opportunities for further improvements. The FOSSIL brand posted another strong quarter, with growth across all regions. In total, we increased FOSSIL sales by 13%, led by the continued strength of watches and an excellent growth in jewelry. We continued to gain traction in this category, especially in Europe, as our new global assortment continues to resonate with consumers. In leathers, our wholesale selling trend improved slightly, but we still feel there are opportunities to improve this business. Handbags are our particularly competitive category right now, so we're continuing to monitor this business carefully. We have some great product flowing to the stores over the next several weeks and into next year that we think can improve the business. And in addition, we are…

Thanks, Kosta, and good afternoon. Third quarter net sales grew 18% to $810 million as we posted sales increases across all of our segments. Our growth continues to be balanced with all 3 geographic regions contributing to our expansion. The current quarterly comparison benefited from $20 million in shipment, which we had anticipated delivering in the fourth quarter, mainly in North America. It also benefited from last year's $17 million delay in North American holiday shipment, which we reported last year and contemplated in our previous guidance. These combined to favorably impact the current quarter's sales growth rate by nearly 6 points. Our global sales growth was driven by a 20% increase in our watch portfolio, with solid increases from many brands. Our proprietary brand also performed well during the quarter, as FOSSIL grew by 13% and SKAGEN posted a 29% increase. Our FOSSIL growth was fueled by continued strong performance in watches, where we posted gains across all of our regions. Our new jewelry line remained strong, and we increased our overall leathers business. In North American wholesale, sales increased 18% to $301 million. Last year's delayed holiday shipments, along with this year's third quarter pull-forward, benefit the quarter's growth rate by about 13 points. Increases in watches and jewelry drove the growth across the United States, Canada and Latin America. Leather's revenue increased with higher sales of prior season products to make room for our new made-for-outlet styles. In Europe wholesale, sales increased 28% to $210 million, which includes $8 million of favorable currency benefit and a small benefit from earlier shipment. Our European growth was very balanced, with FOSSIL, SKAGEN and our watch portfolio all posting solid double-digit gains. We also expanded all of our major categories, with watches, jewelry and leathers also delivering double-digit increases. The…

We're ready for questions.

[Operator Instructions] Our first question comes from the line of Oliver Chen with Citigroup.

Just tactically, could you explain what happened with the shift? And it sounds like it wasn't fully expected. Or what happened strategically? And then my question is on North America Wholesale. If you strip out the shift, it kind of sounded like that was growing at around mid-single digits. What were the strengths and weaknesses within that channel that you were seeing?

Sure. Let me just start with the -- kind of if I can take the opportunity to help people understand, because there's a lot of moving parts. But the way we're looking at the various shifts and the impact, if I step back and I look at the quarterly flows this year, there is really 3 things that are impacting -- impacting that. The first quarter, we had the SKAGEN benefit because of the anniversary in the second quarter. Then we have our NRF and Easter shift that ultimately mostly impacted Q2, and then we have this shift, which is just really a function of the timing of when wholesale shipments roll. If you neutralize for all of that, based on our guidance, you're looking at a quarterly growth pattern that, for most of the quarter, is right in that 12% to 13% range with the first quarter being a little bit shy of that, which fairly tightly aligns with the overall annual growth rate. So I just want to help illuminate that because, first of all, we're a wholesale business. The trucks don't roll, the deliveries don't happen exactly in the same pattern that they happened in prior years. And there was about $20 million this quarter that actually ended up coming out of October and benefiting September.

Okay. And extrapolating -- stripping out the shifts within North America Wholesale, it seems like growth was more modest than mid-single digit. What were the strengths and weaknesses there, and what you're seeing? My follow-up was also related to your comp, the same-store sales comp. It sounds like you're more encouraged, so how should we think about your enthusiasm in context of how we model fourth quarter?

Yes. Let me just sort of double-click on the regional pieces as well, because in the -- there, again, it creates a lot of noise. But we -- if you look -- if you try to look at this business with some of the movements, it just -- you can't really draw the right conclusion quarter-by-quarter. So if you step back and you look at the regional mix, if I factor out the shifts that are happening this quarter and between the third and fourth quarter and look at the whole American business, for -- so far this year, it's grown at about in the high single-digit range. And if I do the same thing and I look at the international market, both Europe and Asia sort of ex-currency are operating in the high-teens, and then Asia gets taken down because of the yen, and Europe gets taken up because of the euro. That's generally, probably the best way to think about the overall growth rate in the various geographies for the year.

If you can just help us think about the comp and the run rate, I know traffic and promos and the handbags are undergoing a transition. So should we still think about negative low single-digit, given the North America relative performance to Europe?

We've looked at -- we have taken into account the current trends that we're seeing or expectations for traffic and our ability to convert that, and some of the initiatives that we have with the new product hitting the stores. So we've factored all of that into our guidance and giving you a range, because we think [indiscernible] performance can obviously, operate within that range. So we've done our best to try to factor all of that in.

Our next question comes from the line of Omar Saad with ISI Group.

Getting back to the regional differences. So like North America's more of a single-digit grower, Europe and Asia on the margin, I think, are growing faster. Is that how we should think about the different markets longer term? I know Asia is, obviously, probably the biggest and most under-penetrated. But is it because in Europe and Asia, you're still filling out the channel in the wholesale side, and whereas North America maybe the channel's a bit more filled out?

Omar, in Europe, we are seeing -- we're up against somewhat smaller increases from last year,I think, as part of that increase. Asia, obviously, is a big long-term opportunity. So I think, just going forward, looking at slower growth Europe and U.S., larger growth in Asia -- larger growth in Asia over time. So we think that's where our most of the growth, the big numbers are going to come from over the next several years. But we do expect to be gaining share in both Europe and the U.S. while we're putting in place a much bigger infrastructure in Asia.

The other opportunity we have here in North America or in the Americas, rather, is Latin America. We've -- we acquired our distributor, and we think that, that can be a potentially very strong market for us as well.

And then Karl Lagerfeld was launched in February, I believe. How's that doing so far? It's kind of your first big new brand, I think, in a while. Kind of from scratch, building from scratch. And I know you got Tory Burch waiting in the wings as well. How is that process going?

Karl's doing pretty well. Still in a small number of doors and typically, as in the past, we've had brands start off, they stay small for a while until they are ready for prime time. We really don't expand them until we see a good operating model of sell-through, and we're not there yet with Karl. And the brand is still relatively unknown and haven't -- there's not a lot of stores out there in the market yet, although they're accelerating that now. And the awareness should increase. And we think, over time, it'll be a grower for us, but right now it's pretty much in an incubator stage.

Is that usually, what, a couple year period poster [ph]? Or is there...

It can be -- I think even in the Michael Kors case, it was 3 years or more. Sometimes it just takes a bit to really get the operating model, the brand to resonate and for us to -- we're doing a lot of testing and learning right now, and that is part of what's going on. So we try to get the assortment tuned and really productive before we push the pedal on distributions. We do think it has long-term potential over time as that brand continues to resonate globally and as we get a good operating model on the assortment, et cetera. So it should be a good brand for us over time.

Our next question comes from the line of Rick Patel with Stephens Inc.

I just had a question on the jewelry business. I know you've had some great success in this category across multiple brands. Where do you see this business going longer-term? Are there any brands in your portfolio where jewelry could make sense? And how should we think about what the sales and margin opportunity is over the long run?

Well, a lot of the growth we're getting this year is in FOSSIL, which, as you know, we had a tough time last year, so we're getting growth there. In addition, the Kors jewelry business continues to be strong. Especially in Europe, it's showing very strong sell-throughs. And as we continue to build watch and jewelry shops with Kors around the world, I think that's going to be a big opportunity for us. We also have an Emporio Armani growing business. We think with our Asian distribution expanding, the Emporio Armani jewelry will grow very nicely. And then, of course, we got DKNY in Europe only. But the way we look at it is jewelry's kind of part of our watch portfolio. It's got similar characteristics in terms of assortment, flow of inventory. Actually, sold in the same stores as watches is, so it leverages our distribution channel sales reps, for example, or selling watches and jewelry to a certain store. And there's a -- obviously, the global jewelry business is much, much larger than the watch business. And increasingly, it will become more globally branded, which gives us long-term opportunities. So for right now, we're focused on the brands we have, expanding our distribution, getting the better operating model. We're working on expanding our capabilities for sourcing and, et cetera. And we're putting plans in place where we can expand over time.

Let me just add to that. Kosta said on his prepared remarks, talked about SKAGEN. We've launched it there. It's still fairly small, but that's an important part of our arsenal to really develop SKAGEN into a full lifestyle brand.

And then just a question on Europe, a follow-up on an earlier question. Can you just help us understand what's driving the strength there aside from, perhaps, easier comparisons? I'm curious if there's something that you're doing different strategically that's gaining traction that wasn't gaining traction in prior years, or if it's just a bunch of consumers feeling better about the marketplace. Just help us think about that.

Well, as I've said earlier, part of it's just, we had a relatively slow growth last year, so we're getting bigger growth in jewelry, plus we have a couple of watch brands over there gaining big share. Kors is obviously one of them, resonating really strong with the customers over there. And then we got a couple of other brands that are doing the same. So we're gaining share in watches and we're expecting that to be an ongoing process over there.

The thing that encourages me about Europe is that the growth we're seeing is fairly broad-based. It's across categories, across countries in both newer and older countries, and it's across brands. So we've seen a fairly broad tick-up in our business over there.

Our next question comes from the line of Anna Andreeva with Oppenheimer & Company. Anna A. Andreeva - Oppenheimer & Co. Inc., Research Division: A couple of questions. Just looking at gross margins have come in significantly better-than-expected for the past 2 quarters already. So if you could maybe conceptualize the opportunity as we look into 2014. And looking at 4Q guidance for gross margins to be up modestly, I understand the tough environment out there, but I'm assuming some of the liquidation initiatives and the mixed shift benefits continue, so why couldn't we see a bigger gross margin upside in the fourth quarter? And also just bigger picture, as the outlook footprint of the business has doubled in the last couple of years, can you just remind us where are you guys with made-for-outlet initiative? Maybe what's the margin differential between outlet and your full price stores and how big do you think the footprint could be down the road?

Okay. So going to -- with respect specific to the '14 margins, we're not yet at a point where we're commenting on what next year is going to look like, but I think if you -- as we get into the margins for this year, we've been expanding our margins with a combination of mix, product mix, regional mix, channel mix, as well as some of the initiatives like you mentioned, liquidation like the reduction that we've had in the SKU count that helped drive some margin improvement. We -- by the time we now get to the fourth quarter, we start anniversary-ing some of that. So obviously, trying to hurdle it again it becomes more challenging. So you're faced with some of that happening as well. The other thing, we sort of evolved our liquidation strategy. And initially, the thought was we were -- we opened outlets so that we could clear, rather than -- clear, [indiscernible] outlets rather than using exclusively off-price partners. As we have developed the made-for line, we are now sort of reengaging to some extent that outlook our off-price partners so that we essentially make room for that product. We in fact, did clear some of those older bags in the third quarter using some of our outlet off-price partners, as well as our own outlet. Anna A. Andreeva - Oppenheimer & Co. Inc., Research Division: Okay, terrific. And just on the outlet opportunity, how big do you guys think that footprint could be? And just a quick follow-up on Asia Pacific as well. It looks like trends slowed a little bit versus the recent performance and the longer-term goal. I think you said virtually every market was up. What regions did not perform?

On the outlets, as you know, we've built quite a few outlets, both last year and this year. Part of that was catch-up from a huge growth we had going back the last 3 or 4 years. So when we benchmark other companies in different merchandising industries, we still have a very small percentage of our business going through well at [ph] a single-digit percentage, and we do have, I think, opportunities to have a better customer experience by having made-for product in the stores, which can increase the productivity and the customer experience in the stores at the same time. Having said that, we're going to take a very balanced approach to it. We're not expanding this dramatically. We don't want to have so much liquidation with outlets that impacts the brand. So it's still going to stay relatively small percentage of total company, but it will expand from where it is now.

And in the Asian business, I mean, the major markets for us were up. Japan was strong, although we lost those revenues because of the yen. China was up. Korea, despite the fact that it's economically not the most robust environment there, Korea grew for us. Australia was up, gave back some of that in currencies. And India was strong, of course, as well. So the largest markets in Asia posted increases.

[Operator Instructions]. Our next question comes from the line of Dorothy Lakner with Topeka Capital Markets.

I wanted to ask about, if you could give us an update on the Swiss watch initiative. What's going on there, what your plans are? And then, perhaps, somewhat related to that, just thoughts on smart watches. You've been there before. Are you going to go there again?

As you know, we've been making Burberry Swiss watches for a number of years now. And we do think that because of the Asia situation and our opportunity there, that we have a huge white space opportunity to put additional brands in Swiss-made. So we added FOSSIL Swiss this year. Still small doing well. We also have our ZODIAC Swiss watch business again small. We are going to be launching Emporio Swiss next year. We think it's got a very large potential in Asia, and there will be follow-on brands over there as well. So we've been ramping up our capabilities to execute more Swiss-made watches. There's this kind of white space opportunity manifested itself in Asia. We've accelerate quite a bit our design team in Switzerland and our capabilities for innovation. We also, as you know, have been making our own automatic movements starting off small this year. We'll expand over the next couple of years, so that we'll have a supply of automatic movements to facilitate our growth into the Swiss market, especially in China. As far as smart watches go, as you know, we've done those for a number of years. It's really quite fascinating to see all the interest in it. And as far as we're concerned, anything that gets people to wear watches on their wrists is good for us. There's a whole generation of people that grew up with cellphones and never worn a watch, so if we can inspire them through branding and storytelling or through technology to wear watches. We feel that's good for us. So we are actually -- we're studying it. We're looking at different opportunities. The one thing that, I think, will happen is there will be increasing miniaturization of the technology and better battery life, which means these watches, over time, may be easier to wear, not as spunky, and the battery situation will be better. So there could be, in the future, we're not sure exactly how far that is, but there could be more access to wearable technology that would actually look and be wearable that would -- we maybe could put the brand's DNA in it. So there could be a convergence in the future, and that's what we're looking at right now.

So stay tuned in other words?

Right.

Our next question comes from the line of Lorraine Hutchinson with Bank of America.

I wanted to follow-up on the slight downward revision in operating margin guidance. Is this solely related to the more promotional environment for the U.S. mall-based stores? Or does it carry to the wholesale's as well?

Primarily, I mean, the change that we saw relative to expectations in the third quarter was that we ended up promoting a little more to drive profit into the outlet. So if you step back and you look at the third quarter performance and we -- and you factor out the shifts, we slightly over-delivered on the top line and probably beat EPS by -- compared to our -- the top end of our own expectations by a couple of cents, but brought the margins down a little bit. And we're essentially just rolling that through to the fourth quarter.

Our next question comes from the line of Matt McClintock with Barclays Capital.

Kosta, I was wondering if you could talk about traffic drivers specific to your retail stores within this -- what we see as a highly promotional environment within retail, not specific to the watch category, but apparel and other stores that we see in the mall. How are your thoughts evolving around driving traffic to your stores in this environment? As I recall, the [indiscernible] sale was one way that you were thinking about this. But are there any other initiatives that you're thinking about to improve the traffic to your stores?

Well, the traffic decreases are in the United States mostly. And obviously, the environment's tough in addition to traffic being down, there's also obviously a lot more activity on online, omni-channel activity, which could be impacting traffic as well. So we're doing a number of things. We have a lot of initiatives based on omni-channel, CRM, et cetera. In fact, we've been testing some different ways of getting traffic to our stores and websites through different offerings, et cetera. We think that we're doing a lot of testing now. We think they're going to end up in a good place with that. We're accelerating our activity in the social media, mobile, et cetera, which we think will manifest itself in getting more traffic to our total organization. Some of that may come through more web sales, but that's where we are there. As far as globally, we think we're seeing very strong reaction to some of the new stores. We opened a new store actually in London today in Oxford Street. We actually have a store there. We took the space next to it and tripled the size, so we're seeing a good response there. The store we opened in Hong Kong very high traffic. We're seeing a lot of new customers, a lot of new faces, telling our story to the larger number of people, especially as a gateway to China, we think it's beneficial. And then we are doing consumer insight, and we're doing research in the U.S. and in Asia on exactly what -- not just the FOSSIL brand, what it means and how we can resonate with consumers, but some of the watch brands also to try to understand what kind of product and opportunities we have in different price points, categories, looks, et cetera. So we're getting more scientific about that. We're going to wrap it all into one and try to drive more traffic.

And then Kosta, if I could follow up on the Hong Kong flagship store, could you maybe explain some of the differences between that store and some of the other stores globally? How are you thinking about building brand awareness with the stores specifically? And then how should we think about translating some of these lessons to other regions where you have a high growth opportunity?

Yes, I think our objective is really to get into some very high-traffic locations. These are small stores, so they're not big, expensive, typically what you say a flagship, but they're very high-traffic, very visible stores. The store in Hong Kong is one of the most visible in the area, so it definitely will be seen by almost everybody that's walking through there. And really just to help us, especially in that case, resonate the brand throughout China as the travelers go back to China or travel around the world, the brand will resonate. So we want to do that in the flagship cities throughout the world, so London, Paris, New York, and all the major cities in New York is have an enhanced experience inside those stores to help resonate the brand. The other thing is that what continues to be a big opportunity for us and in all our businesses is travel retail. And increasingly there's -- the numbers of people traveling globally. These are great opportunities for us not only to sell our product but really to present the brands and the ideas in storytelling that we're presenting to the customers globally. That's another big opportunity for us.

Our next question comes from the line of Scott Krasik with BB&T Capital Markets. Scott D. Krasik - BB&T Capital Markets, Research Division: Can I just ask -- trying to parse out the shift. It's implying about 5% underlying growth rate this quarter. And given that you shipped early with implied retailers wondering what you have, it seems like we're hearing from other people retailers are canceling orders, pushing back orders. So how do you jive that with the 5% assumption of the growth rate?

I'm sorry. I'm not understanding your 5% growth rate. Scott D. Krasik - BB&T Capital Markets, Research Division: Well yes. I mean...

If you look at the impact of the shifts on the total, it's about worth 6 points, and we grew 18% in the quarter. Scott D. Krasik - BB&T Capital Markets, Research Division: I mean 5% for U.S. wholesale after the shifts.

Understood. Okay. So I mean the -- again, what I was trying to explain, I think, we don't -- trying to draw emphasis from a business in very narrow slices is probably not the best way to look at it. I mean, we give you the wholesale business here. It's among our more mature business, but we've taken a look at -- we've gone through our forecast, what we're hearing from all of our account reps based on what they expect orders to be. But it does remain to be seen, as we've said on our prepared remarks, how the reorders will play out. So that's the area where we won't know until we're deep into the quarter. Scott D. Krasik - BB&T Capital Markets, Research Division: Okay. And then if I could just follow up on share buybacks, very impressive the last two quarters. Maybe talk about the commitment you have to capital allocation towards buybacks going forward, please?

Well, I mean, we've -- we're very committed to the buyback. The Board approved $1 billion buyback, I think, 1.5 years ago. We've got $615 million left on it, so we have been actively investing it. It is a -- we get feedback from investors that they feel it's an important initiative, and we've put capital behind it.

Our next question comes from the line of Erinn Murphy with Piper Jaffray.

I just was curious more about the Asia-Pacific region. And just speak to where we're at from an investment cycle perspective, particularly in China. And then if we think about that longer term, how should we think about the leverage in this region?

Yes. The -- we're very pleased with the business. I mean, as I said, if you strip out some of the noise, overall, across all channels, Asia is growing in that high-teen range x currency. And China, as Kosta mentioned in his remarks, over 50% and has been growing at that clip pretty significantly. I think to think about Asia in terms of how we're going to get leverage in Asia is probably not the same way we think about it. I mean, we've got a number of different businesses that we're running. Asia -- the purpose that Asia serves for us is really right now to drive growth, not necessarily to drive expense leverage. We're really trying to distort our growth in that market because we think the opportunity can be big. These other areas of the business that we're mainly focusing on, the more mature businesses, the corporate structure here, where we're hoping to drive greater amounts of leverage. But the purpose of Asia for us, really, is growth, and that's the way we're looking at it. So we're investing in Asia. We think it's an opportunity for us in the long-term, and that's how we view it.

Our next question comes from the line of Barbara Wyckoff with CLSA.

Could you go over -- if you could do over the quarter or the year-to-date, what would you do differently merchandising-wise, operations, et cetera? And then I have a couple of follow-ups.

Well, it'd be nice if we can have do-over. That would be great. I mean, I think we executed pretty well. I mean the great thing about it, if you look over our businesses that we performed well across regions, it was pretty broad-brushed and across regions. Categories, I think, the area that we're really focusing and improving is continuing to drive better performance in the handbag business. We think we've made strides there. We feel good about the assortment as we go into the holiday season, but it's not perfect yet. We feel good about the made-for lines, I think that can be a big driver and a margin expander. And we're looking at ways, Kosta was talking about, in works beginning to experiment in what other ways that we can drive people into our stores and get them there. So what we're finding is that our conversion is up. So once we get those customers in the store, they like the product. It's traffic that's the issue for us right now.

Okay, great. Talk about the thought process between building the sort of standalone stores in greater China versus concessions, how do you decide one versus the other? And then could you talk about the performance of the Armani brand, Emporio Armani stores versus the multi-brands?

Our objective in Asia is to build mostly concessions. So we're going to build a number of stores, high-profile stores like the one in Hong Kong to communicate the brand and tell the story in a broader way. But then mostly, what we'll try to build is concessions, both for the FOSSIL business and the multi-brand business and for SKAGEN as well. So it's largely going to be concessions. As you know, those concessions can -- have a high return on capital and are not as expensive to build that can move faster, et cetera. So that's why we think we have a pretty significant opportunity in China especially.

How many do you have now, concessions? And how many do you think you'll open next year?

Right now, we have 301 over in -- concessions in all of Asia. And we haven't yet -- we're still working on our plans for next year.

Okay. And the Emporio Armani?

Well, we have a small number of Emporio Armani standalone stores. And as you know, they do very well. It's not likely that they would be separate stores that we would expand Emporio Armani. Mostly what we're expanding is concession-type mono brand shops. So we'll have expanded presence for Emporio Armani in a lot of the stores throughout the region inside of department stores as a concession. We think it's a huge opportunity especially as we expand into Emporio Armani Swiss. The Armani brand continues to be one of the most powerful in the region. And I think there's going to be a great result from us expanding the presence for Emporio Armani, both in Swiss and in regular.

Our next question comes from the line of John Kernan with Cowen and Company.

Just -- I think Michael Kors today talked about a big opportunity in their men's business, in the -- particularly in the watch category. Are you starting to design new -- is there a new design there that could potentially get revenues going? When do you think that, that men's business can start growing in a bigger pace and become a bigger portion of their watch sales?

Yes. We actually are working on that now. In some brands, men's is 50% of their watch business, so there's a big opportunity there. So we are working on that and just the entire distortion of Kors Men's, in conjunction with all their other categories and to communicate that very strongly globally, we think, is a very large long-term opportunity, especially as we continue to get penetration with Kors in Asia. The Asia consumers even more skewed towards male shoppers. So it can be a powerful catalyst over there as well. And of course, also in Kors, there's a -- we continue to see large growth in expanding shop-in-shops. We're seeing strong growth in Europe. Travel retail is very strong. Our jewelry business is strong with Kors also. And so we just keep moving forward and expanding into men's could be a pretty large opportunity.

Okay. And then I think you've talked in the past about the Asian concession growth being careful about growing into -- not growing into certain points of distribution there that you viewed as questionable. But have you started to find more suitable points of concession distribution there? And what does that unit growth look like for concessions over the next couple of years?

Well, we're in -- we're looking for high-quality locations in high-traffic, high-volume areas. And as we said before, the market's very fragmented. There's a lot of local ownership involved in all these stores. You have to have relationships for a long period of time. So we've accelerated our use of partners, and we're seeing some strong results from that, and we expect that to continue. And we do think that will reach a point where these will grow at a faster rate than they are now, but for right now there's a lot of learning going on, a lot of relationship building, a lot of discussions going on. And we think we're going to get to a better place over time.

Our next question comes from the line of David Wu with Telsey Advisory Group.

In Europe Wholesale, obviously we found very strong results in this quarter. I was wondering how much of it is driven by stronger-like door sales relative to new distribution.

Well, the stores that we sell to in Europe is pretty much of a fixed set of stores. In fact, over the last couple of years, we've actually reduced our doors over there. We've taken products and brands out of the smaller less-performing doors and expanded our presence in large doors, and we've seen growth from that. I think that's part of the ongoing growth we're seeing. Of course, the Kors is opening stores in Europe, and there's obviously -- new distribution from that is significant. And we are continuing to add additional brands to additional doors, and not all brands are in all doors. And SKAGEN has seen growth there by going through our own distribution, plus adding jewelry, for example. So it's several levers working at one time to continue to gain traction there, get more space and get more sales.

Great. And it looks like you adjusted CapEx down for the year. I want to know if you were postponing any of your spending into next year with that...

Most of that change was sort of -- some of the projects that we have ongoing, where they don't fully complete. So some of that does the flip over into next year.

Got it. And can you talk about performance by price point within the watch segment? If there are any meaningful changes at all to call out?

Well, our -- if you look at us as a company, our average retail is higher. Mostly that's mix that we have as Asia continues to grow at a faster rate, and we capture full retail there. We also -- the category of watches that's growing the fastest is in the 150 to 300 range. So that has been growing the fastest and looks like it continues to. We have a number of brands in there that are growing really quickly. And so the average in retail has gone up for the company.

Our next question comes from the line of Liz Dunn with Macquarie Group.

Most of my questions have been answered, but can you just talk about your commitment to leverage beyond this year, leverage SG&A beyond this year, assuming it's kind of 12-ish percentage in normalized sales growth rate? When will we return to SG&A leverage?

So we're going through -- we're going through our planning cycle right now and working on next year's budget and looking for developing the plan. So it's probably premature to talk about them. I hope you got some color on the commentary we had about Asia. We have invested in significant infrastructure investment, systems initiatives like product life cycle management. We're developing Hyperion and some other tools that are fairly broad-based and enterprise-wide kinds of initiatives. So it's -- tilting them up is step one, and then you got to integrate them into your operations, and we're going through that process right now to try to get the full benefit of that. So we're really attempting to measure that, and that's going to help inform what kind of investments and spending we're going to have for next year. And what kind of benefits that we can derive from it. So that's still under way and we should have more that we can share with you in February.

There are no further questions in the queue at this time. I'd like to hand the call back to management for closing remarks.

So we would like to thank you for joining us today and for your continued interest in Fossil Group, and we look forward to speaking with you when we hold the next conference call in February. Thank you.

Ladies and gentlemen, this concludes the Fossil Group's Third Quarter Fiscal 2013 Earnings Conference Call. We thank you for your participation and, at this time, you may now disconnect.