Good day everyone and welcome to the Movado Group Inc. first quarter fiscal 2021 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 Rachel Schacter of ICR. Please go ahead.

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 supplemental 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, and thank you all for joining us this morning for Movado Group’s first quarter conference call. I want to open my comments by recognizing how upsetting I found the recent senseless deaths of George Floyd, Ahmaud Arbery, and Breonna Taylor. Over the last 10 days, we have had numerous discussions with our associates over the issues of racial discrimination, and as a company we have tried to do what we can to support the continuation of the discussion. Racism exists, and it has no place in our society, our country or our world. As a company, we have been focused on having the difficult discussions surrounding race, diversity, inclusion, and the biases that exist within all of us. We all need to do better. Our support goes out to the peaceful protesters who are focused on eliminating racism and discrimination from our planet. As a company, we have an obligation to take a position, and I know our employees feel very strongly about that. As we entered this year, we had a solid strategy in place focusing on growing our profits and preparing ourselves for continued growth in an evolving landscape for retail and the watch category. For the month of February and the beginning of March, we were exceeding our internal plan, efficiently managing our expenses even while we were continuing to experience supply constraints due to the effects of COVID-19 in China. Then by the middle of March, COVID-19 began making its way throughout the rest of the world. With the safety of our colleagues and customers at the forefront, we acted swiftly to close most of our operations around the world, including our retail stores. Most of our wholesale customers began doing the same. Our teams acted quickly to manage our expenses and our…

Thank you Efraim, and good morning everyone. For today’s call, given our attention has been on navigating the disruption to our business created by the COVID-19 pandemic, my remarks will focus on the key highlights of our first quarter of fiscal 2021 and then I’ll provide an update on our financial performance. As reported in this morning’s release, the first quarter of fiscal 2021, we recorded two charges related to the impact on our business of the COVID-19 pandemic. First, we recorded $155.9 million in goodwill and intangible asset impairment charges associated with recent acquisitions. This non-cash charge was $131.1 million after tax, or $5.66 per share. The company revised its internal forecasts, resulting in a reduction in both current and future expected cash flows due to the COVID-19 pandemic and the uncertain business environment. As a result, during the first quarter of fiscal 2021 the company recorded impairment charges related to goodwill of $133.7 million and intangible assets related to MVMT’s trade name and customer relationships of $22.2 million. Second, the company took a $7.2 million charge, $5 million after tax or $0.22 per share, for costs due to the impact on our business of the COVID-19 pandemic. The $7.2 million included $3.5 million related to an additional inventory reserve which impacted gross margins and $3.7 million related to unfunded trade show deposits, additional reserves against accounts receivable, and restructuring charges which impacted SG&A. The first quarter of fiscal 2021 was also impacted by $700,000 of pre-tax amortization of intangibles and deferred compensation for the MVMT acquisition recorded prior to the impairment, and $700,000 of pre-tax amortization of the acquired intangible assets for Olivia Burton. The first quarter of fiscal 2020 had similar amortization of $1.5 million related to MVMT and $700,000 related to Olivia Burton. Our press release…

[Operator instructions] Our first question comes from the line of Oliver Chen with Cowen & Company. Please proceed with your question.

Hey, good morning. This is Ross on for Oliver. Thanks for taking our question.

Morning Ross.

Morning. The 90% productivity of stores that have reopened is pretty impressive, definitely among the highest that we’ve heard in our coverage. Can you talk about what you view as the strength there, whether you think it’s pent-up demand or some sort of stimulus benefit or otherwise?

I actually think that this pandemic has kind of, to a certain extent, really fortified the need for a certain amount of brick and mortar centers, and especially outdoor ones, so we’re seeing that consumers like to shop and they’re coming to our stores and shopping at a pretty high level, and while traffic is generally down in those stores about 40%, we’re seeing higher conversion rates and higher average transactions. Both of those things, when people are going into stores, they’re really going with the thought of buying, so we’re excited about that. Our people are excited to be back in the stores, and we’re opening more every week.

Got it, thanks. Then in terms of the digital prioritization and the reorg you announced this morning, can you just talk about you expect digital and physical to interplay over the longer term versus how it does today?

Sure. We obviously expect digital to be a bigger part of our business, both in our direct-to-consumer business and our ecomm businesses, so [indiscernible] that over the last two, three years we’ve acquired Olivia Burton and MVMT, which are more digitally native brands and reach their consumers at a high level through digital aspects. In addition to that with our retailers, we’re seeing a much more significant part of their business around the world become ecommerce oriented, so in many cases even during the first quarter, their sales performance penetrated to a much higher level on the digital front, obviously, but also made up for some of the losses in stores that were closed. Then on a third front, you have marketplaces, people like Amazon and Tmall in China, that I believe have a big future also for us, and we’re seeing that around the world as well - Amazon in the U.S., in Europe, Tmall in China. So I think the idea of aligning to reach the consumer wherever they choose to shop, I think will pay some significant benefits for the company.

Just a follow-up on the cost of that, in terms of sequencing the investments, could you just talk about that in terms of building out the digital - you know, your digital presence but also against the context of cash preservation; then secondly on the marketing side, just how the marketing strategy might evolve in terms of how you show up to your customers as you build that digital capability? Thanks.

Sure. We’ve actually invested most of the cash resources that we’ve needed to invest in our digital initiatives over the last few years, so for example what we’re doing now with MVMT is rolling them onto our sales force--on our sales force cloud solution for ecommerce, and so our whole company will be on one platform. The rest of the company is already on that platform and we have all of the support services and organization in place to support that. From a customer acquisition and digital investment point of view, we think also by really consolidating a lot of that effort also against significant efficiencies, we’ve already begun to experience that towards the end of the first quarter and as we enter the second quarter.

Great, thanks so much.

Thank you. There are no further questions at this time. I’d like to turn the call back over to management for any closing remarks.

Really, I would like to thank everybody for participating with us today. I would like to thank our team for the fabulous job that I believe they’ve been doing around the world in navigating this challenging environment, and while the world has been in a challenging place, I am optimistic that better days are ahead on many fronts and that progress will be made, both on the racial initiatives that have been going on and protests that have been occurring, as well as dealing with the pandemic and the world returning to a new normal, and we’re preparing ourselves very diligently for that. Thank you very much.

Thank you, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.