Good day, and welcome to the Fossil Group Q2 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the call over to Mr. Eric Cerny. Please go ahead.

Thank you. Good afternoon, everyone. Thank you for joining us, and welcome to the Fossil Group's Second Quarter 2014 Earnings Conference Call. I'd like to remind you that information made available during this conference call contains forward-looking information and actual results could differ materially from those that will be projected during this call. 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 on our Form 10-K and 10-Q reports filed with the SEC. In addition, the company assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Please note that you may listen to a live webcast or replay of this call by visiting fossilgroup.com, under the Investors section. Now I would like to turn the call over to the company's Chairman and CEO, Kosta Kartsotis.

Thanks, Eric, and good afternoon, everyone. And joining us today is Dennis Secor, our Chief Financial Officer. Dennis is traveling today, but dialing in remotely, and both of us will be available for questions following our prepared remarks. We are pleased to continue our positive momentum, delivering second quarter results consistent with our plans, with sales growth driven by the disciplined execution of our strategies and the benefit of operating a diversified business model with global reach, powerful brands and a strong innovation pipeline. Sales grew across geographies, demonstrating the worldwide demand for our brands, with notable strength in Europe and Asia. Globally, we continue to see the strongest gains in watches and jewelry. The branded jewelry trend continues to gain traction. It's a category we can grow meaningfully, leveraging the synergies of our design, production and global distribution capabilities. Once again, watches led our growth across brands, with the quarter seeing noteworthy progress on some of the key opportunities we highlighted at the start of the year. We are encouraged by the leathers performance within our FOSSIL brand. And while it's still early, customers have responded well to our new deliveries. For SKAGEN, sales accelerated from the first quarter, delivering 12% growth, even as we continue to refine distribution as we align doors with the aesthetics of the brand. Overall, we look back on a solid quarter that was very much in line with our expectations and gives us confidence that we are on track for the year. The FOSSIL brand grew during the quarter, highlighted by double-digit growth in watches, with increases across all regions, showing positive momentum in our core product category. FOSSIL's strongest growth was in Asia, where we have been investing in brand-building and also expanding our distribution. Our goal is to continue to build…

Thanks, Kosta, and good afternoon, everyone. Second quarter net sales grew 10% to $774 million, reflecting sales increases across all of our reported business segments. For the quarter, we slightly exceeded both our sales and earnings expectations, as we offset modest gross margin headwinds with lower expenses. Growth during the quarter came from strong performance in Europe and Asia, with both regions delivering growth across channels, markets and brands. The FOSSIL brand grew 4%, posting strong increases in watches and a small increase in leathers. In jewelry, we continued to refine our wholesale distribution, which led to a modest decrease in the category, though performance in our retail stores was strong. SKAGEN sales were up 12% in the quarter, with solid growth in all 3 regions, and our remodeled stores continued to perform very well. Our multibrand watch portfolio remained very strong, growing 12% in the quarter, with the vast majority of our brand posting increases. In North America wholesale, sales increased 2% to $265 million. Our North American wholesale channel delivered growth during the quarter despite a continued decline in mall traffic and a very challenging and promotional retail environment. Our U.S. sales increase drove the region's performance and grew even while key department stores and boutiques actively pursued leaner inventories. Sales to our off-price partners increased during the quarter, reflecting our strategy to reengage the channel to reduce the liquidation burden on our outlet stores and make room for made-for-outlet product. Our multibrand watch portfolio delivered the greatest volume improvement for the quarter, with jewelry growth in the high-teens and leathers declining primarily due to declines in the RELIC brand. In Europe wholesale, sales increased 19% to $202 million, which includes $9 million of favorable currency benefit. Our European growth was driven by strong double-digit gains on our…

[Operator Instructions] And our first question will come from Rick Patel with Stephens Inc.

Just a question on your investment spending. Can you just rank order the buckets of SG&A during the quarter just to give us some context on where the biggest focus is, and perhaps give us a little bit more detail on which expenses will be moving to later in the year and how much that will be?

Sure. The big drivers this year -- if you remember last year, we invested in the back half of the year in some structures, as well as we're opening stores. So for this year, up until we get to now the quarter that we're in, the third quarter, we're lapping that. So if you compare the second this year to last year, you see a greater number of stores. That also includes the $5 million impairment charge that we took. In addition to that, a lot of the increase year-over-year comes from a greater level of displays. We've been wanting to invest more at the point-of-sale. So we have a concerted effort to invest more in the customer experience at retail. So that was also a significant part of the year-over-year increase. Advertising, both advertising that we do ourselves, as well as the advertising royalties that supports the efforts of our license partners, those also were a part of the increase. And then we also had, overall, just some of the increases that we're making in the overall structure. Now the thing to think about going forward is that, as we said in the last call, now that we're in the third quarter, we feel we've reached that inflection point where you'll see a changing trajectory of that rate. We don't expect to deleverage that in the third quarter anywhere near as we guided, that we saw in the second quarter. And that's because we finally lapped a lot of those investments. So more of the expenses will come from those growth driving initiatives, like marketing and displays. In the second to third quarter, we did shift out a little bit of our marketing investments to push those investments a little bit nearer to the holiday season in the back half of the year, which is where the majority of our revenues come from.

Got it. And congrats on the renewal of the Armani license. Just given that seems to be doing very well, especially in international markets, are there any ramifications for royalty fees that we need to be thinking about as the new contract gets executed? I'm curious if royalty rates will stay the same.

No -- we were very excited. It's an important relationship for us and to have now an executed contract that gives us 10 years more partnership is a win-win for both us and for the Armani brand. So we're very excited about it. Now specifically on the economics, we don't specifically disclose that. I think the best way though to understand it is that, that relationship with Armani, and that brand fits very well within our long-term operating plans and our financial expectations. So it's a great relationship for us.

And our next question comes from Ike Boruchow with Sterne Agee. Irwin Bernard Boruchow - Sterne Agee & Leach Inc., Research Division: I guess, Dennis, I just wanted to ask you about the inventory, how do you feel, with the level that you're at? And can you kind of let us know about how you feel about the handbags and the watches and the jewelry? And does that have anything to do with the gross margin performance in the second quarter and the gross margin you're kind of talking about to expect for the back half of the year?

Yes. We feel we positioned ourselves well in inventory. The biggest part of the year-over-year growth is we've taken positions in some of our best-selling, the hottest brands on watches, to make sure that we are properly inventoried for the upcoming half of the year. So we feel that we've got our best placed well with that inventory. And again, the great thing about our model is that these are long shelf life items. So that if the second half of the year doesn't improve to be as strong as we are planning, it's inventory that easily moves into the second part of next year without any significant deterioration of the margin structure. Leathers is the smaller part of the increase. Obviously, that is a category where some of the prior seasons have not met our expectations. And that's also affecting again, but to a lesser extent, than the watch growth in the inventory. And then the other aspect of inventory change year-over-year is that there's just a change in the componentry of how much inventory is running through plants or factories that we own versus a third-party. So we actually, in some cases, compared to last year, we've got whip [ph] on our balance sheet that we didn't have before. But those are the 3 components of the inventory. The change -- the slight change in our view of margins going forward is really about outlet promotions. We were a little more promotional than we had expected driving traffic into the outlet stores. That's the big driver there.

The next question comes from Omar Saad with ISI Group.

Kosta, could you elaborate on the Watch Station comments and the decisions around the domestic business, and then the catalyst for that, and then also what you see internationally for that multibrand concept for watches?

Yes. As you know, Omar, we started opening Watch Stations numbers of years ago. We actually have a large number of outlets, something like 34 in the U.S. We found that those are working really well. The regular priced outlet stores are doing okay. But if you look on balance, and the return on capital, and most importantly, where we need distribution the most is in Asia. So we felt it was more prudent for us to just focus on regular-priced stores where we need distribution, so Asia and the U.K. for example. And the Watch Station outlets are very successful not only in the U.S. but globally, and they obviously provide a very important function for us of liquidating and obsolescence. So we feel now we're in a better position to go-to-market in a more cohesive way. We actually have moved the operations of planning, brand-building, et cetera, for the Watch Station organization, regular-priced organization, to Hong Kong. So it's on the ground there where we need the distribution the most. And it dovetails really nicely with our concession strategy because to a certain extent, our Watch Station store that we're building is also basically a concession that we're building in Asia. So the 2 things using these shared services and going to market in a cohesive brand-building, storytelling way we think is very compelling and it's where we need it most.

And are there Watch Stations today internationally? Or is that something that we can look forward to in the future?

Yes, no, actually we have about 50 outside the United States. Most of those are in Asia and a few in U.K. and about half of those are actually outlets, in some markets around the world, we have Watch Station stores and outlets in the markets.

And our next question comes from Erinn Murphy with Piper Jaffray.

I was just hoping you could speak a little bit more on the leathers business. It seems like you're seeing some green shoots within retail for that core FOSSIL brand. I mean, could you just speak about how you're planning the second half in particular, just given how promotional the space is, and how we should be thinking about that business potentially building back within wholesale?

As you know, the handbag business was very competitive and has been a very promotional business of late. We have struggled mostly, I think, on the product side. And we had spent a lot of time over the last year or so building a more enhanced design team, looking closely at our offerings and really, I think we've gotten much better product and that we're starting to see some results of that in our own stores, where we have a positive comp increase and we're seeing -- some of the product going forward, we think, looks terrific. So we think we are in a good place for growth. And as we've always said, our stores basically were built to really showcase handbags. And we have, as I said, it's over spaced in our stores, it's an important category, it's much larger than the watch business. And we think that as we continue to do more brand-building, make the brand more aspirational, tell a clearer story, we will be able to grow the handbag business to a much larger level. So I think we're starting to see some results. We're still early in the game. And of course, all that work we're doing should manifest itself also in growth in department stores, where we're actually building shop-in-shops in some of the larger stores in the United States right now. We just started that last year, we're continuing it this year, we'll continue next year, to give a better customer experience at the point-of-sale in department stores. And we think that will enhance the brand better and enable us to sell even more. So we think we are in a pretty good position. And moving forward, we think it's a big opportunity for us.

Great, that's helpful. And then maybe just, Kosta, on the wearables business. It sounds like you are working on launching some new product for 2015. Could you just maybe share a little bit about kind of how you're thinking about the important features that kind of that smart watch category, as you reflect on your brand portfolio, should have? Is it going to be more fitness-oriented? Or what kind of functions or features do you think kind of the brands that you have could kind of take on as this category continues to gain some traction in the space?

Okay. Well, first of all, I mean, it's pretty amazing to watch all the interest in wearables and smart watches. And we feel it's just basically good for the business. If more interest is put in wearables and wrist devices, I think, we benefit from it. So our point of view is that it's good for us long term. And we think that we can continue to gain share in the traditional watch market, we should continue to grow. There's -- all signs say that will happen, and we see estimates that it's going to grow at 5.6% the next 5 years. So we think we'll be able to gain share there. In addition, we feel like we'll be able to build a wearable technology business. But just based on all the interest and brain power and the converging technology that's going on, we feel like we're in a good space right now with Google and some other partners. We're getting a lot of good collaboration with other companies. And what we've learned basically is that not just in smart devices and smart watches, but in other wearable items that could be health and fitness-related, or just could be a communication device that helps build engagement with the community and communicates with them, there's a lot of opportunity not just in selling devices but just in the network effect of a community. So we're working on that and we're very interested in the results of that. But having said all that, it's still early. And we're working diligently with a lot of different groups to come up with something. We definitely will have something in the market starting next year. But we feel like long term, there's a pretty significant opportunity for us to be, right in the middle of this space, as the interest continues to grow and the technology gets better.

And next will be Oliver Chen with Citi.

Regarding North America Wholesale. What are -- how should we think about the ongoing growth rate? And could you just speak to the strategy regarding off-price? It sounded like you're embracing this channel on a more regular basis. I want to know what your thoughts are there. And you also mentioned in your prepared remarks about key department stores actively managing your inventories. If you could help us understand what you mean there and what happened there, that would be great.

Yes, let me start with the Americas, just the overall growth rate. Obviously, America is our most mature market. So if you want to think of it -- or understand how we think of it in terms of our long-term growth trajectory, we think there's opportunities for us to continue to grow this business. There's areas that's challenged to begin with. There's areas of the business where we think we can make improvements and drive growth. The leathers business we've talked about continues to be promotional. We're seeing, we believe, some signs of improvement in that business. So we think it's a business that we can grow. But I think the important thing is that when we look across our entire -- the expanse of our portfolio around the world, we see the biggest opportunities for growth coming from the international markets. Asia is clearly at the top of our list in terms of growth rate expectations followed by Europe and then North America. So when we look out, in order for us to achieve our goal, which is to be a double-digit grower over time, North America does not -- and we don't expect it to do, to grow at the same rate. So we go into -- as we run our business, our expectation continues to be modest in terms of the growth opportunities -- or the growth rate that we need to deliver overall in the Americas. So with respect to the off-price, over the last year, what you've heard us say is that our initial goal with off-price was to seriously reduce the volume that we were going to sell through off-price, and then allow that volume to run through our outlet stores. What we found was that, that was preventing us from bringing higher-margin made for product into the outlet. So last year, we had -- in the early part of the year, we had shut off a lot of the off-price, and then we reengaged that later on in the year in order to make sure that we had ample opportunity to put that made-for product into the outlet. So if you look at last year, the second quarter was the lowest volume of off-price. And then as we reengaged later in the year, the fourth quarter proved to be the highest off-price volumes last year. So it does create a little bit of choppiness just understanding the complexion of the margin structure this year. But fundamentally, we've reengaged with that part of distribution in order to make sure we've got an appropriate balance coming out of our outlets.

And what about the comment on key department stores choosing to actively manage this category?

What we discovered or what we experienced in the second quarter was that both with department stores and some of our boutiques, they were really focusing on managing their inventories tightly. And relative to our expectations, we saw some compression on sales because they were reducing their inventory level.

And Kosta, just as a follow-up regarding wearables and your experience there. Do you envision the route to market and the distribution channels to be similar? Will these products be merchandised alongside the fashion and lifestyle offerings that you have in place? How do you think that may play out?

Well, it's still too early to tell exactly. But our idea is that we can make watches under the different brands that we have and have them be distributed in our watch distribution and potentially, other places. Obviously, online would be a big opportunity as well. And then we potentially could have some other products that would go in a different, maybe a more of, say, tacker [ph] communication channel that may not have our brands on it but it could be an opportunity for us to get some additional distribution. So it's still early to see. But we think there is an opportunity for us to really enhance, I think, and bring more interest to the watch counter just by having the technology there, and whether the customer wants to buy that specific smart watch or smart device or wearable or not, it just brings more people to watch counter and enable us to sell them some other products. So I think just the feeling that the incredible amount of interest in this idea, I think, is nothing but a positive for us. And we're looking at it from that aspect.

And the next question will come from Dorothy Lakner with Topeka Capital Markets.

Just wanted to follow up on the question on outlets and wondered if you could just update us on where you are in made-for-outlet product and where you expect that to go. And then with what you're doing in the off-price channel plus what you're doing in outlets, kind of where -- what impact that has on overall margins? And then, lastly, just wondered if you could also just fill us -- give us a bit more color on the Swiss opportunity? Obviously, you've launched the Armani Swiss watch this year. What else is in the pipeline? And then just lastly, also on the Tory Burch initial distribution. I know you've said that's going to be small. But if you could just give us a little bit better idea of where the initial distribution will be for Tory Burch?

Okay. Well, to start off, we have been making more merchandise for our outlet stores mostly in handbags. And it's a -- the largest percentage we have is actually in handbags. That's probably 50% of our assortment there. In our other categories, it tends to be smaller. So it has actually given us the benefit of having a better customer experience in the stores that we're managing. We have more season correct handbags when people go to our stores, and I think that's been a big plus to us. So we're continuing to watch it really closely. We have, as a company, a relatively small percentage of our entire company's sales is actually liquidation or outlet. Still -- and we were very conscious of that. And we're continuing to look at it that way and make sure that it doesn't overwhelm the company. And so we're actually thinking that it's a good opportunity for us to give, mostly in our outlets, a better customer experience. In the past, we had been somewhat of a liquidation channel. So we had fall handbags in our store during the summer and our competitors had fresh new assortments. And our brand didn't look as good as theirs. So I think that's the biggest plus for us. As far as the Swiss opportunity goes, yes, we launched Armani, it's been very, very strong as far as we're concerned globally, especially in the Asia market. And just Asia travelers, which means Europe as well. So we're very pleased with that. And we're proceeding with -- our operations in Switzerland. We're still doing really well, making our own Swiss-made automatic movements. That's progressing very nicely. And Tory Burch will be launching in just a couple of months at a very small amount of distribution globally, mostly their stores and then some other stores in the United States and around the world. The response has been terrific. The product looks great. It's -- we think it's going to be kind of a new category and a new idea. And we feel like it can bring a new customer to the watch counter as well. So off to a good start, and we'll see what happens when we start selling them in a couple of months. But so far, so good.

[Operator Instructions] And the next question comes from Liz Dunn with Macquarie.

Just a point of clarification on one of the previous questions. I guess, you mentioned a larger wearable strategy beyond the Google relationship. Was that meant to encompass other operating systems? Or did you mean to suggest other sort of non-watch types of wearables? And then also, do you have developers in-house that can use the Google platform to build this watch? Or do you need to work with outside talent?

Well, the -- in wearables, we're actually working on smart watches, and as well, smart devices, or it could be items that have sensors, for example. There's an app that you could read health fitness, sleep patterns, et cetera. So we're actually working on both. There could even be some communication devices that have to do with jewelry. So it's not just a smart watch device, it's all types of wearable technology. And there's a lot of research and development going on in all over the world on these types of items. And because we're a relatively large player in the wrist and jewelry space, we're getting a lot of attention. And we're able to use -- we have our own development team here. But we're also being able to outsource and use other companies’ developmental resources as well. So we're kind of right in the middle of a lot of discussions, a lot of different companies, and we're all working closely together on a collaboration to come up with some products that we think will be very compelling and putting us right in the middle of it, gives us a good position, so that we can bring to market some great ideas and great products in the future.

And next will be John Kernan with Cowen and Company.

This is Jerry Gray, on for John. Just on the Michael Kors business. They guided to a significant deceleration in their licensing revenues for the second half of this year. I was just wondering if you are concerned at all about a moderation in sell-throughs for Kors, particularly in North America. And then if you could also talk about the size and potential for the Kors business in Europe and Asia?

Well, we are seeing, as we mentioned in the past, very strong growth continue in the U.S., but also accelerating very quickly in Europe. And the potential in Asia is huge. We are seeing very high growth rates in jewelry in the U.S. and around the world, and that looks like it's going to be a much larger business. We're launching a big launch on men's watches in the next couple of months, which is, we think going to be a catalyst for us to grow another category there that we're relatively small in, in that business. And then there's also, obviously, a massive travel retail opportunity. And there could be a smart watch opportunity for Michael Kors also. So all in all, when we look at the business, both companies, us and the Kors company are working very closely to kind of be disruptive in the market, come up with new ideas and new categories and new price points, and these 2 ideas to have a much larger business over time. So we're seeing nothing but growth in the future.

All right. Great. And Dennis, on the expense side, it seems like we should think about the SG&A rate up a little bit in Q3. I was wondering if you could talk a little bit about SG&A growth into next year and if there was anything unsustainable about the prior peak margins that you guys were able to generate a couple of years ago.

Yes. So it's probably too early. We're still working on our plans for '15. So it's too early to get into any specifics. But I think if you -- the commentary that we made about the second half of the year is really the way that we're thinking about the business. We've -- really starting in '14, the entire organization has been focused on really holding tight and optimizing the infrastructure that we have and doing everything we can to create capacity within that structure and to then redeploy that to growth-driving initiatives, like a lot of things we talked about, in terms of increasing our marketing and our advertising expenditures and investing in CRM and getting more intel into how the customer is motivated. That's the philosophy. That's the strategy of the company. And we've got the whole organization deployed behind it. So that's the way we're thinking about going into '15. But let us get on the other side of all the planning and we'll talk about more specifics when we specifically guide to '15.

And our next question will come from Anna Andreeva with Oppenheimer. Anna A. Andreeva - Oppenheimer & Co. Inc., Research Division: A question on leathers. Can you guys remind us how big is RELIC and talk about some of the opportunities to turn that brand around. Obviously, it's a pretty promotional environment out there. And just looking at the new guidance for the year, embeds a pretty big improvement in the fourth quarter, I think 25% EPS growth if you back out the $0.10 charge. Talk about how should we think about gross margin versus SG&A. And I guess, what gives you confidence for that degree of earnings growth acceleration?

So with respect to RELIC. RELIC is still a relatively small part of our overall model. The reason we highlight is to really help people understand some of -- the dynamics in the leathers business. And it's -- that brand is isolated to 1 -- really, the change is 1 category in 1 region. So it's relatively -- the change is relatively impactful to this particular quarter. But overall, it's not that meaningful for the overall business. With respect to the fourth quarter, we were looking at the rest of the year sort of based on existing top line trends and not expecting things to get significantly better or worse. I did share some things on the prepared remarks in terms of how we think about the rest of the year. But as I just said, the organization, I think, has really done a lot of work on managing the cost structure, holding tight on those in the infrastructure investments. And I think we'll begin to see that play out in the operating margins in the fourth quarter. If the sales perform within our expectations, then that's the quarter where we could see some overall leverage. Still, under the covers, you're getting leverage from the operational and infrastructure, and we're redeploying some of that towards marketing investments and other initiatives that we think drive growth for the longer term. But in terms of the structure and how the operating margins could expand in the fourth quarter, it's largely driven by the work that we've done on the expense structure. We do see, on the gross margins, there's the lingering benefit of mix throughout the entire year. But some of the headwinds on the gross margins should abate. Most notably, it was, as I said earlier, the largest quarter last year of off-price. So if our plans maintain themselves, then we should not see that kind of headwind or certainly not to the extent that we did last year.

And next will be Matt McClintock with Barclays.

Kosta, I was wondering if you could focus on distribution in Asia again. As we think about the Watch Station expansion in that specific region, can you maybe remind us how -- in your current distribution in Asia, what's the mix of owned brands versus portfolio brands? And how do you think about Watch Station maybe maintaining more of a 50-50 mix that you have in the U.S. and other regions?

Well, as we discussed earlier, we're actually moving our Watch Station operation over there. We actually have a new store design, and we actually changed the name slightly. So it's called WSI. And the new store design, which we're opening -- I think we've opened a couple of them the last month or so, look very good. They're a little more Asia-focused, more branded, look a little more luxury. They have the opportunity, I think, to really communicate the brands and storytelling better. So it's really much more tuned to that market, which we think is very helpful. And as -- if you look at our distribution over there, especially in China, there's not a lot of places where we can just automatically go and sell. We have to build concessions, our own distribution, our own stores, et cetera. So having Watch Station as a catalyst for that over there, whether it's an actual store on a street or it's a concession in a mall or in a department store, it all fits together. And it enables us to do exactly what you said. When we first go into a market, typically, the brands that are in our portfolio are much more well-known than FOSSIL. So Armani is an extremely powerful brand throughout Asia and especially in China. So it's kind of a door-opener. It enables us to get locations, then we add the other brands, and we bring our own brands along. So FOSSIL and SKAGEN will get the benefit of getting distribution in those locations. So as you said, with Watch Station, we're able to put our whole portfolio in there, tell the stories we want to tell, tell the Swiss story. And being able to scale that over across Asia long term is a very significant opportunity for us. Because it's largely pioneering a category that doesn't exist at this point. There's a huge amount of interest in luxury brands and there's a huge amount of interest in watches and there's a huge amount of interest in Swiss. And we're bringing all of that to life in one place under the WSI banner, which should be very successful for us.

And then, Kosta, you touched upon the Swiss opportunity in that specific region. As you think about fashion Swiss watches in global markets specifically Asia, does that make you rethink your distribution strategy in those regions for that specific product? Or do you think that -- does that open up new doors or new channels that you historically haven't operated in, in that region?

Well, it actually opens up a whole new amount of white space for us. So all this interest in Swiss-made watches for us to put lifestyle brands in Swiss opens the doors to a very significant portion of the market that doesn't exist yet. So that's the reason we're doing it. And it should manifest itself in another additional opportunity. It's not just cannibalizing our existing businesses in price points lower than that. It enables us to break ground in a category and price point that we don't participate in largely, which we feel has a very significant potential. If you look at our company's history, starting with the FOSSIL brand, the idea of lifestyle branding, storytelling, really started displacing watch brands, starting with the FOSSIL brand. And we did that again as we added additional brands for DKNY and Michael Kors and MARC by MARC and DIESEL at higher price points somewhat displaced typical watch brands globally. So as we continue to move up the cycle in the watch business moving towards Swiss, there's a lot of Swiss watch brands that are just watch brands, and we think we can come to market with brands in a lifestyle way that customers around the world have an affinity for, that they want to own rather than just a watch brand. And we feel like being able to do that on a global scale with some of the most powerful brands in the world is a great opportunity for us. The fact is that the world is getting increasingly globally branded, and we're right in that place, and we're going to optimize it the best we can.

And that is all the time we have for questions today. I'll now turn the conference back over to you for any additional or closing remarks.

So thank you, everyone, for joining us today and for your continued interest in Fossil Group. We look forward to speaking with you on our next quarterly call, which will be in November. Thank you very much.

Thank you. And that does conclude today's conference. We do thank you for your participation today.