Good day everyone and welcome to the Movado Group fiscal fourth quarter 2019 earnings conference call. As a reminder, today’s call is being recorded and may not be reproduced in whole or in part without permission from the company. At this time, I would like to turn the conference over to 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, and Sallie DeMarsilis, Chief Financial Officer. Before we get started, I would like to remind you of the company’s Safe Harbor language, which I’m sure you’re all familiar with. The statements contained in this conference call which are not historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested in such statements, due to a number of risks and uncertainties, all of which are described in the company’s filings with SEC, which includes today’s press release. If any non-GAAP financial measure is used on this call, a presentation of the most directly comparable GAAP financial measure to this non-GAAP financial measure will be provided as supplement financial information in our press release. Now I’d like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Rachel. Good morning and welcome to Movado Group’s year-end conference call. I will share with you the highlights for the quarter and the year as well as outline our strategic vision and plans for fiscal 2020, and then Sallie will walk you through our financial results in greater detail as well as our outlook for the coming year. We will then be glad to answer your questions In a challenging global retail marketplace, particularly during the holiday season, we were very pleased to deliver such a strong quarter and end to our fiscal year. Our sales for the quarter grew by 33.6% including the recent acquisition of MVMT and grew by 10.3% excluding MVMT, confirming that our strategic vision of driving innovation, expanding our digital footprint and focusing on our brands and regions is enabling us to gain market share around the world. Adjusted operating profit for the quarter increased 38.5% to $19.9 million, and adjusted EPS increased to $0.67 from $0.52 in the prior year period. For the year, our sales grew by 19.7% to $679.6 million. Our adjusted operating profit grew to $79.2 million, a 24% increase over last year, and our adjusted earnings per share for the year were $2.67 versus $2 last year. At the beginning of the year, we said we expected to return our U.S. wholesale business to growth, and in fiscal 2019 our U.S. wholesale revenue grew 2.9% without the addition of MVMT. We were also very pleased to have ended the year with over $189 million in cash despite having made the important acquisitions of Olivia Burton in fiscal 2018 and MVMT in fiscal 2019. Now I’d like to share with you some of the highlights in our brands as well as some of our plans for the coming year.…

Thank you Efraim, and good morning everyone. For today’s call, I will first review our financial results and then discuss our outlook for fiscal 2020. Before I begin, I would like to point out the special items included in our fourth quarter and full year results for fiscal 2019 and fiscal 2018. Our press release also describes these items and includes a table of GAAP and non-GAAP measures. Movado Group acquired MVMT on October 1, 2018. Included in the consolidated results for fiscal 2019 was $14.4 million of pre-tax charges primarily connected with the integration of the acquisition, $2.4 million of which was recorded in the fourth quarter. After tax, the fourth quarter charge equates to $2.5 million or $0.10 per diluted share. Included in the consolidated results for fiscal 2019 were tax benefits of $12 million or $0.51 per diluted share related to finalizing our accounting for the impact of the 2017 Tax Act as well as certain discrete foreign tax items. $4.4 million or $0.18 per diluted share was recorded in the fourth quarter. Our GAAP results for the fourth quarter and fiscal 2018 included charge of $45 million or $1.95 per diluted share due to the estimated impact of the enactment of the 2017 Tax Act last year. Movado Group acquired Olivia Burton on July 3, 2017. Included in the results for fiscal 2019 was $2.9 million of non-cash amortization of the acquired intangible assets, of which approximately $700,000 was in the fourth quarter. After tax, the year-to-date charge related to the acquisition equates to $2.4 million or $0.10 per diluted share. Included in the consolidated results for fiscal 2018 was $6.8 million of pre-tax charges primarily connected to this acquisition, of which $900,000 was recorded in the fourth quarter. After tax, the charge related to the…

[Operator instructions] We’ll now take our first question from Oliver Chen from Cowen & Co. Please go ahead, your line is open.

Hi, thank you. Good morning. We were curious about your views on the U.S. wholesale channel and how you see that trending in the year ahead, and your thoughts on inventory control within that channel. Also, as you look across globally, there’s a number of macro risks. If you could speak to your thoughts about U.K., France, and how the Chinese consumer is behaving as it reflects on your business, that would be helpful as well. Thank you.

Okay, thank you, Oliver. Let me start with there’s obviously risk in the U.S. today and you’re seeing that in economic numbers and people believe that there’s going to be a slowdown in traffic patterns to stores, so we are taking that into account in our own forecasts. When there’s risk, people are obviously inventory conscious. Inventories are in good [indiscernible] we’ve taken a lot of market share and our growth in Europe has continued, even in a challenging environment, so I believe in the watch category and in the fashion watch category, we’re one of the bright spots for our retail partners in Europe. China for us is still a very small environment, so again we have opportunity there to gain share despite what goes on in the market.

On the smart watch innovation and the announcements you’re making, what is your approach to thinking about how big or incremental this should be as a percentage of total, and how you inventory into this group of watches just to both mitigate risk but also pursue the right level of innovation?

We’re excited about our smart watches. They’ll come for the second half of the year. What we have found in smart watches is that they do extremely well for the first and second season and then get a little more challenging afterwards as you need to bring more innovation into the marketplace, so we’re doing that. We believe we’re inventorying it properly and standing behind a strong marketing program in the second half of the year to support that with our retailers.

The Olivia Burton team Mall Award was also very impressive. What are your thoughts for the Olivia Burton geographic breakout over time, and are there learnings there that help you with the balance of your portfolio as well?

I think we’ve found that the Asian market overall has been very, very receptive to Olivia Burton and helped drive some healthy growth, but still it’s one of the most--Olivia Burton is one of the most significant fashion watch brands in the U.K. and growing its presence in Europe, and this year we’re focused on really beginning to build brand awareness in the U.S. and driving growth in the U.S. behind Olivia Burton as well.

Thank you. Solid results, best regards.

Thank you.

Thank you. We’ll now take our next question from Frank Camma from Sidoti. Please go ahead, your line is open.

Good morning, guys, thanks for taking the questions. First, I’d like to start with just the guidance. Can you just remind us with MVMT the seasonality of that, because I know it’s different than your base business, and how that’s reflected in your guidance?

Correct, so I’m going to start with that and I’m sure Efraim will go in too. MVMT is a very seasonal business right now with our ecommerce, and we mentioned this as we were purchasing them, they are very active in the back half of the year, the last three to four months during the holiday selling season, so that will impact the seasonality, and of course that will be anniversaried next year in the back half of the year with the timing of when we acquired this year.

Okay yes, so--go ahead, I’m sorry?

In that light, we will make investments behind MVMT and all of our businesses in the first half, and I would think that a substantial part of our earnings growth for the year will come during the second half of the year.

Okay, that’s what I was getting at. Of MVMT’s business today versus maybe as you look out longer term, can you talk about what mix is watches versus accessories, because I know that’s sort of an important part of their business, correct, or at least their strategy?

They’ve had a really very nice sunglass business and they’ve also recently had a very nice business in eyeglasses to be used on screens, so for gamers and computers, called Everscroll. It is one of our best selling items today online, as well as the launch of jewelry last year. We believe that is has a big opportunity as a lifestyle brand on a global basis, and overall we think that jewelry can have a significant opportunity for the company in the future. We’ve had now very good growth in Tommy Hilfiger jewelry. We launched Olivia Burton jewelry right when the company was acquired, and that’s done very well. We think there’s some significant opportunities on the jewelry front across our brand portfolio.

Okay, so you do have the rights or ability to perhaps extend those licenses beyond--

Well, some of that--

--or some of them?

Right. We are--currently we will launch Hugo Boss jewelry in the second half of the year, and we will begin testing Movado jewelry as well on our website.

Okay, so just staying on the guidance for a second, if you look at the high end at least, maybe if I did the math right, given that you’re keeping your gross margins roughly flat, that would imply a decent bit of spending or increase in the operating--which I think you explained, so is that mostly on--I don’t want to put words in your mouth, but on the digital side would you say, that increase in spending? Can you just give us a little bit more flavor into that build-up of investment?

Sure. It’s a combination of digital spending, which remember we didn’t have MVMT during the first half of the year, so there’s significant investment [indiscernible] and outdoor as well as influencer campaigns, effective vehicles to reach consumers, so we will invest behind that. As you can see, we’re adding a Movado television campaign in the spring to our fall campaign. We’re excited about that, but those do take investments.

Okay. My last question is just on your balance sheet. It looks like you keep pretty--at least, continue to keep pretty tight controls on your own inventory, but can you specifically talk about the inventory of your U.S. retail partners and how they may be stacked right now?

Our retailers have--you know, their inventories are in a healthy position and they’ve done a very good job of keeping their inventories in a healthy place. They adjust them periodically as the market adjusts.

Okay, great. That’s all for me, thank you.

Thank you.

Thank you. I would now like to close the call, turn it back to management for closing remarks.

Okay, thank you very much everybody for participating today, and as you can tell, we’re excited about the upcoming year and the progress that the company has made on its strategic initiatives. We continue to focus to execute on our goals and we look forward to talking to you on our first quarter conference call. Thank you.

Ladies and gentlemen, this concludes today’s call. Thank you for your participation. You may now disconnect.