Good morning ladies and gentlemen, and welcome to Movado Group, Inc. Fourth Quarter Fiscal Year 2014 Earnings Call. At this time, all participants are in a listen-only mode. (Operator Instructions) As a reminder, ladies and gentlemen, this conference is being recorded and may not be reproduced in whole or in part without permission from the Company. I’d now like to introduce Ms. Rachel Schacter of ICR. Please go ahead, ma'am.

Thank you. Good morning, everyone. With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; Rick Coté, President, Chief Operating Officer; and Sallie DeMarsilis, Chief Financial Officer. Efraim is joining us from Basel, Switzerland today as he is preparing for the Basel Watch Fair, which begins tomorrow. Before we get started, I’d 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, our 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’d like to turn the call over to Rick Coté, President and Chief Operating Officer of Movado Group. Richard J. Coté: Thanks, Rachel. Good morning, everyone, and welcome to our conference call. We’re quite pleased with the pace of our business in our very strong fourth quarter and full-year financial results. This is our 16th consecutive quarter of strong financial performance. Importantly, we continue to see broad based strength across our business, with strong consumer demand and customer sell-through. Our GAAP results for the full-year were $570 million in sales, operating income of $67.7 million and diluted earnings per share of $1.97. These results included a number of new special items occurring in the fourth quarter. A duty refund benefit of $0.06 per…

Thank you, Rick, and good morning, everyone. For today’s call, I will first review our income statement and balance sheet and then discuss our outlook. Before I review the quarter and the year in total, I’d like to point out the special items included in our fourth quarter and full-year results for fiscal 2014 as well as fiscal 2013. Please refer to our press release for a description of these items, as well as the table of GAAP and non-GAAP measure. As Rick mentioned, our results for the fourth quarter and fiscal 2014 include an $8.3 million pre-tax charge in connection with our strategy of reducing the presence of ESQ while expanding the Movado brand offering in certain retail doors. On a GAAP basis, net sales included $7.8 million charge for anticipated sales returns associated with this strategy. This charge along with the related write-down of excess inventory impacts gross margin on a GAAP basis by $7.5 million or 240 basis points for the fourth quarter and 60 basis points for the full-year. Operating expenses on a GAAP basis include $800,000 for excess ESQ displays and point of sale materials. The ESQ strategy impacted earnings per share by $0.20 for the quarter and fiscal year. In the fourth quarter of fiscal 2014, we reported a $2.5 million or $0.06 per diluted share pre-tax duty refund from U.S Customs and Border Protection to recover payments made in prior year’s for watches subsequently exported out of the United States. On a GAAP basis, the duty refund impacted gross margin by 190 basis points for the fourth quarter and 40 basis points for the full-year. In the fourth quarter of fiscal 2014 and the third quarter of fiscal 2013, we reported contribution to the Movado Group Foundation. The pre-tax donations were $2 million…

Thanks, Sallie. We are very pleased with our strong fourth quarter and full-year results. For the full-year adjusted net sales grew by 13.3% and we increased adjusted operating income by 31.9%, reflecting our consistent ability to present powerful innovation and leverage our developed infrastructure across our Movado and licensed brands to drive sales and operating margin growth. We’ve demonstrated our ability to introduce new brands and optimize our existing portfolio to bring greater value to consumers and expand our long-term growth potential. In advancement of this objective, fiscal 2014 saw the successful introduction of our Scuderia Ferrari watch brand and included a highly positive response through our repositioned Coach watch brand into the fashion watch category. We are focused on investing our resources and talent and opportunities that have high returns. As Rick and Sallie touched on and in keeping with this objective, we made the strategic decision to reallocate and reduce the presence of the ESQ watch brand in certain retail doors. This move will allow us to expand a more productive Movado brand in these doors beginning in the second quarter of fiscal 2015. This ESQ reallocation strategy combined with the growth initiatives already in place position us well to continue to execute towards reaching our strategic brand objectives. Our guidance for this year translates to a compounded annual growth rate of 12% net sales and over 25% in operating income for the first two years of our multi-year strategic plan. We are equally focused on maintaining a strong balance sheet which at yearend included a net cash position including short-term investments of over a $190 million. Given our positive outlook and balance sheet strength, today we announced 25% increase in our quarterly dividend to $0.10 from $0.08 previously. We are excited about the innovative new products that we are launching in Basel across our brand portfolios starting tomorrow. We are very proud of our teams around the world, and our many achievements in fiscal 2014 and remain excited about our opportunities in the year ahead. We remain confident in our strategies and are looking forward to driving increased value for our stakeholders. We’d now like to open the call up to questions.

Thank you. (Operator Instructions) We’ll take our first question from Oliver Chen from Citi.

Hi, congratulations on your results. Regarding your strategic choice to change ESQ, what was the background around that, I know you’re repositioning that brand and also the Movado product portfolio is going to change with respect to the range of prices you will offer?

Well I think what we’ve seen with the -- and I’ll take that first and then see if Rich would like to add anything. What we’ve seen with the really explosive growth of Bold and the continued expansion in growth of our core assortment and as we add more product innovation into the Movado brand that, that really gives us some more opportunities and that the space that today is allocated in a lot of our national accounts whether chain stores or department stores could be reallocated to Movado where it would be more productive overall for the retailer and therefore for the company as well. Richard J. Coté: And just to add to that piece, I think it's all about the future growth opportunities and when we are done ESQ is going to be an ongoing position for us, but rather than trying to focus on significant growth there we have a better opportunity of having greater growth with Movado brands, so that’s behind the strategy there. From a standpoint of the Movado price point range we do not see a change in that; we compete in that $300 to $3000 range. Our focus is continuing to increase our share of market in the U.S. as well as globally but within that price range.

Okay, thank you. And on your new revenue guidance, could you just give us framework for thinking of how much Coach and Ferrari are going to contribute to the growth with next year and I just wanted some more color on the gross margin and why it's prudent to think about flattish rather than upside as you engage in all these further brand expansions? Richard J. Coté: Thank you. Again we don’t give sales growth by each of our individual brands, but again we repositioned Coach in the second half of last year and seen very strong growth in well door expansion there. We would expect to see those types of trends not the same level of door expansion, we had 500 last year we would have much less this year, but we would expect to have a full-year impact of that which I think is positive. Scuderia Ferrari again the same thing we had three quarters of a year, opened 2300 doors, we will have an increase 1000 doors just so this year. So those two will obviously be above the average growth for the overall company and help contribute to that close to 11% growth that we’re projecting this year. Gross margin, I’ll pass to Sallie.

Yes, so gross margin the rate is going to be relatively flat year-over-year to what we experienced for fiscal ’14, and that’s a result of the overall mix of our business. Coach and Ferrari if you’ll remember were partial for last year, so those will impact the full 12 months of this year and that will keep it kind of at that same level phase with what we have experienced this year into the other drivers that we have will kind of in total get it to that number. Some will be a little stronger, some will have -- and then we’ll have the 12 first -- the full 12 months of those two offsetting it.

Great. Congratulations on a great holiday.

Thank you, Oliver.

We’ll take our next question from Edward Yruma with KeyBanc.

Hi, thanks so much and congratulations on great results.

Thanks.

I just wanted to ask the question about use of cash. I know that you are taking the dividend up pretty meaningfully, but given obviously what is a fairly robust cash balance, I guess how do you think about the cash that you need on the balance sheet and potential other uses other than the dividend increase?

Again I think our cash position is one where coming out of the great recession, we felt it was important to provide ourselves with great flexibility, so not having that increasing our cash balances we’ve been able to do that. When we look at our cash position, a good part of it is outside of the U.S. about 25% of it is in the U.S. So, we look at it as providing us flexibility. We don’t have any specific plans for it other than it gives us great flexibility to be able to seize opportunities whatever they maybe down the road if anything kind of materializes, but we like having that flexibility and we will continue to probably grow our cash over the next couple of years. Richard J. Coté: And then in addition to increasing the dividend and as Sallie mentioned in her comments we do have a stock repurchase program in place to offset dilution from compensation plans, so we expect that to continue as well.

Got it. I know the ESQ One was in test or it is a roughly small rollout, does the pull back in ESQ signal that, that didn’t work and kind of how do we think about the remaining ESQ portfolio?

Well, I think our opportunity and as we’ve tried to highlight today is really to focus on the significant opportunities for the company and we believe that our investments and our focus from a space utilization as well as design point of view is really best spent continuing to grow Movado at a healthy growth level and really using the company’s resources and putting it behind that effort both domestically and internationally and that’s where resources are best utilized. We did a very minor test in ESQ One, I don’t think that it would be conclusive one way or the other, but we really believe that our company’s focus is best utilized behind Movado.

Great. Thanks so much.

We’ll take our next question from Rick Patel with Stephens.

Hi, good morning everyone and congrats on a terrific year. Could you talk about the ESQ transition, the impact to sales; I am curious if you had any kind of negative impact in the fourth quarter as your customers sort of saw this transition coming. And if there is any way to quantify the negative impact that we should expect in the first half before Movado watches are rolled out. And then secondly can you touch upon the economics of the transition, I’m curious by replacing this assortment with the Movado family of watches with the price per unit change will be like as well as the margins per unit? Richard J. Coté: There’s lot in that question there. I guess from the first piece when we look at the sales impacts for the year, we don’t give quarterly guidance, so we’re not going to breakout by quarterly sales impact, but certainly ESQ growth we made a point of not having that in the fourth quarter and really not having heavy replenishments that we otherwise could have know we had. So, if I take out the ESQ both years our growth would have been probably closer to 11% for the fourth quarter without, if I took the ESQ off of the two years. So yes, we certainly had an impact on that, number one. Number two, in the first quarter we will each quarter be impacted by ESQ particularly as we have less planned growth and we were looking at in keeping it at a good stable level, but that will be impacting us for each of the first four quarters and Movado will only really start picking up in the second quarter. So, we see a full-year impact basically a watch between the two but certainly an impact --…

All right, great. And then a question on gross margins, I know you’re guiding to flat. But I think you mentioned earlier in 2013 that Coach and Ferrari watches had a lower margin, so I would think that there would be some type of pressure from sales mix. So, does your guidance imply that Movado watches will outperform the license portfolio for the year, just help us think about that?

Well I don’t know, the word out-performance is stronger, but Movado as we said publicly does have a higher gross margin overall than the remaining -- than the other pieces in our portfolio, but it's the overall mix, they’re all kind of tugging at each other and in the end the gross margin stays flat with the growth that we are planning. And let’s not forget, in gross margin for us it's a scale that we’re aiming towards as we look out into the future. We would drop more dollars on the gross margin line, but the growth that we’re going to get on the operating income is not based on the gross margin percent increase. Richard J. Coté: Yes, so I think this is a year where again, I think that’s flattish with the mix of what's taking place and I think from there we’ve been trying to position ourselves or saying okay, how do we start inching it forward.

Great. And then just a last question on smartwatches; could you just talk about any potential there is to partner up with an electronic component company to participate in this potential market and whether this is a near or long-term focus?

Well, I think it's something that if you’re in the watch business you have to keep your eye on and obviously we are and, but we certainly believe that we are in the design and fashion arena and branded area and as such really that’s predominantly why people buy our products. It's also my experience being in this business long time, that being first to market is not necessarily best to market in this category and we’ve seen that numerous times in different areas, both in the watch business and outside of the watch business. So we are exploring our options in the area and keeping our -- and keeping open to the possibilities but understand that I don’t believe it's a short-term phenomena, this is a longer term. It will be a longer term market.

Thanks very much.

We’ll take our next question from Jeremy Hamblin from Dougherty & Company.

Good morning, congratulations and thanks for taking my questions. I wanted to just add or ask a quick follow-up on that, in terms of smartwatches and one; do you think that it kind of grows the overall category as a whole. I think one of the concerns certainly from investors has been that it's going to hurt traditional watch sales. But do you see fashion watches and I believe that you offer is really the area of the watch business that would get hurt or would you see it more along the lines of impacting traditional or lets say running watches or sports watches?

I mean there have always been and there have always been alternative watches that do different things for different people and what our belief is that it generally has grown the overall market, the overall watch market and you can see that from the watches that tell you the altitude. There are watches that give you your pulse rate. There are watches that tell you how fast you’re running and how far you’re running. And those have been now around for a number of years. And the overall market and the fashion watch market and the accessible luxury market and the luxury market have all grown during that time as well. So, I think it's an incremental opportunity and it's not a replacement opportunity. That’s our perspective on the business and that we are in a different category and than just being in the technology segment. So, I think it's a very different marketplace.

Okay, great. And then I wanted to just ask or come back to the question about cash and obviously you guys have a really strong balance sheet. A lot of that is overseas which may limit some of the options that you have, but would you consider or have you considered other opportunities for potential brands to acquire international brands that might be a good use with that cash? Richard J. Coté: I’ll take that. I mean obviously one of the things that our strong balance sheet provides us is opportunities and flexibility. Certainly part of our job is to understand what's happening in the market place and decide if there is anything that makes some sense to us. So, again our strategic plan does not require us to acquire anything, but that would certainly be above and beyond. Our balance sheet certainly gives us the potential and the flexibility to participate in that arena if we so desire and if there is something that would make sense to us as a company. So, not something that we need to do to deliver our strategic plan, our balance sheet gives us the flexibility of being able to look at those things and if something ever made some sense we certainly would have the (indiscernible) to be able to look at that. But our plans do not require it and there’s nothing that we have built in that is needed to happen in that arena.

Okay. And then just in your -- coming back to Coach for a second, in your prepared remarks it sounds like from the commentary that you had on the third quarter call that the Coach business actually accelerated into the fourth quarter potentially significantly. Is that really being driven by sell through or is that just some additional doors that were added in Q4 versus Q3, any additional color you can provide on that. Richard J. Coté: I would sit there and say that both of those happened. Obviously as you open new doors you have sell in, but we focus very much on making sure whatever we have been selling is going out from a sell through standpoint. Sell through has been very strong. I think one of the comments I made is that retail sell through is up 30% for Coach across all of those doors, some of those obviously being new doors, so that’s on a comp that’s just an overall number. We are very pleased with the performance of Coach repositioning and very pleased that that is happening from a sell through standpoint.

And then last question, you called out in the Movado collections the Cerena brand continuing to -- or collection continuing to do well. Can you speak at all to the kind of the bangle bracelet watches Amorosa, Bela, Belamoda et cetera, how those are performing, I have been seeing some competitors also looking to follow these style lines, any color you can add on that?

Bangles within our Movado segment and I think because of the iconic Museum dial lends itself, it's really a very strong area for us in Movado and continues to be a strong performer. And I think Rick in his comments also pointed out that we introduced the Bold bangle last for the holiday season and that’s also been a very strong performance. So it's an area that we continue to focus and one that where Movado really has a very strong presence.

Thanks so much for taking my questions.

Thanks, Jeremy.

Thank you.

We’ll take our next question from Eric Beder with Brean Capital.

Good morning and let me add my congratulations for the solid quarter. Could you talk a little bit about Coach? I know that Coach has got -- Coach is going to kind of do a metamorphosis in their full price stores, go to higher pricing, a little bit more fashion forward. How are you going to respond to that in the back half of this year when they start bringing in the new designer collection?

We’re very excited about where Coach is going with their brand and obviously we’ve seen the previews and are working with them to continue to evolve the collection and positioned across various price points, but we continue -- we will continue to operate within the fashion watch arena which really allows us to have a broad assortment, a very stylish assortment, an on trend assortment collaborating with the Coach design team and think that certainly as the brand continues to grow in prominence really represents continued tremendous opportunity for the company.

Okay, and in terms of Movado Bold line, you kept the doors pretty much flat, it's kind of obvious -- I think maybe what you’re saying about ESQ, you want to add more doors back, what do you think is the door potential and what should we expect for that for this year?

I think it's not only adding in new doors. I think we will add some selectively and I think that’s what Rick said in his comments but we’ll also be able to expand the space, so we will be able to display Bold in a larger environment and it is more -- and really more of a fashion segment for the Movado brand, but in addition to that we’re also expanding some of our core assortments that are highly productive where we believe there’s growth opportunity within that distribution as well. It's really about adding, more about adding additional space within retail doors than adding new doors.

Great. Thank you and congratulations again.

Thank you.

We’ll take our next question from Kristine Koerber with DISCERN Securities.

Good morning. A few questions. First just to follow-up on expanding space for Movado brand and how should we think about that in terms of possibly the launch of new products and SKUs, is that number going to increase meaningfully?

We don’t think it's really going to increase the number of SKUs within the overall Movado brand. Although Bold has expanded over the last few years, so that segment in itself has grown, and I’ve added some SKUs to the Movado brand. But we don’t see an intensification or an adding of SKUs rather what we call a distorting of the current assortment and an intensification of the current assortment.

Okay, that’s helpful. And then as far as Ferrari, you said an additional 1000 doors this year, any plans to expand Ferrari into the U.S. at this point? Richard J. Coté: Well Ferrari already is in the U.S. with one of our key retailers. We see a greater level of expansion happening in the U.S. So, of the 1000 doors I would think the U.S. is certainly an important part. But what we’ve done is we’ve launched globally in lot of our key partners and we have the opportunity of expanding as we see success expanding the doors in those existing retailers that they have as well as adding new doors. So the U.S. does have an existence today and yes that will continue to grow.

It's a small existence though in the U.S. correct, I mean relative to the …

Well it's smaller than it is globally, but you also have to remember that Formula 1 which is really what Ferrari is known for is much bigger also outside of United States than it is in the United States, but certainly the Ferrari brand is an iconic brand in any market around the world and everywhere that we’ve had it we have had very strong results.

Okay. And then as far as the number of outlets this year, do you plan to grow the retail store outlet.

From a standpoint philosophy there is to focus in on some key markets and key prime real estate in the outlet business, we have grown a couple of doors each over the last few years. I would expect that we probably may have another one or two doors. Our philosophy is we’ll open up new doors in key markets. We may be closing some other less productive doors that may take place as that real estate leases come up. So we may have an increase of one or so door this year.

Okay, great. And then lastly, you mentioned infrastructure investments. Can you just give us a little more color on the investment spending plan for this year?

Yes, one of the things is, as you know we’ve got strong presence around the world. We do look at taking the opportunity of adding more talent particularly international markets to help us focus in and grow those markets in that particular arena. So, this past year we made some adjustments in people particularly in our Latin America as well as our Asia market place. Probably not as much as we thought would have happened this past year so some of that’s going to fall more into this year. But we see a continued investment of bringing in additional competencies, additional expertise particularly in our key markets around the world whether it's Asia Pacific, whether it's our European market, our Middle-East markets where we have made some investment last year as well as in our Latin American market place.

So is it mostly headcount and not technology?

It's predominantly our -- we have a worldwide platform, so our SAP platform is fully globalized, standardized and integrated everywhere around the world. It's really more people and competencies and adding to the strong management team that we have and enhancing the skill sets in the local markets.

Great. Thank you.

We’ll take our next question from Mike Richardson from Sidoti.

The doors where you’re replacing ESQ with Movado, are those doors that didn’t already have Movado in it or is it just going to be a larger assortment and then how many doors are we talking about?

There are doors that have Movado in them, so it's really the growth of the real estate for the Movado brand. And so that makes it not only more productive for us but also we believe and so do our retailers will be much more productive for them as well and I think it's an initiative that represents a very good opportunity for us down the road. So, I don’t -- Rick do you have a number on the number of doors? Richard J. Coté: I’ll just give you an order of magnitude, so you can sit there and think of it from a standpoint of around a 1,000 doors.

Okay, thanks. Can you give us an update on China and sort of where things stand over there maybe sales, number of doors or any plans for expansion?

China remains an important strategy for us. As you know there’s been a lot of noise in China from a standpoint of the market scaling back a little bit from the crazy growth that’s taken place. Our approach has always been there of saying, we’ve got an iconic brand, how do we get in there. And rather than rushing to get a high sales level we focused about; how do we make sure that we expand, expanding the right doors that have the right staying power, so the number of doors have not dramatically grown over the last couple of years. What we have done is we had focused a little bit more in some of the concessions where we play more active role in the retail sales in perhaps getting a little bit more of the full retail dollars. So, it remains an important market for us. That’s an area that we’ll continue to invest in infrastructure, but we look at it that positioning ourselves for a good continued growth taking place over the next number of years. So we’re pleased with where we are. The growth has been fine, but it's not at an outrageous level, it's more in line with what the market has been doing in China.

Okay. Thank you and good luck.

Good. Thank you very much.

Thanks Mike.

I would now like to turn the conference back over to Efraim Grinberg for any additional or closing remarks.

Okay. I’d like to thank all of you for joining us today and for some very good questions. We look forward to speaking to you when we report our first quarter results in May. So again, thank you very much for being with us today.

And this does conclude today's conference call. Thank you all for your participation.