Good day, everyone, and welcome to the Movado Group Inc. Fourth Quarter and Fiscal Year 2022 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’d 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, Executive Vice President, Chief Operating Officer and 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 the 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. Good morning, everyone, and welcome to Movado Group’s fourth quarter and year-end conference call. Joining me today is Sallie DeMarsilis, our Chief Operating Officer and Chief Financial Officer. I will provide an overview of our performance and our progress against our strategic initiatives, and then Sallie will review our fourth quarter and fiscal 2022 financial performance in greater detail. We would then be glad to answer any questions you have for us today. We are extremely pleased with our performance in fiscal 2022 as our actions over the past several years enabled us to accelerate growth with powerful brands, compelling innovation and an elevated omni-channel experience. As we enter fiscal 2023, the world is in a precarious position. While we saw the effects emanating from the pandemic begin to improve over the last six months and into the early part of this year, we are now operating in a world that is being greatly affected by the devastation in Ukraine. Our hearts and prayers go out to all those affected by this untenable situation. We are not sure how this war will end, but we know that millions of innocent Ukrainians are being impacted. The Movado Group Foundation made a donation of $100,000 evenly split between the International Rescue Committee and the United Nations Refugee Fund to aid and rescue efforts and to support Ukrainian refugees. As we began fiscal 2023, we knew the world is being affected by the heightened concerns around inflation and increased energy costs. We now can see that these issues are being compounded by the effects of the war. These economics – these economic and geopolitical events add heightened uncertainty to the macro backdrop as we continue to navigate a dynamic operating environment. We are fortunate to possess a strong balance sheet…

Thank you. Efraim, and good morning. For today’s call, I will review our financial results for the fourth quarter and fiscal 2022 and then introduce our outlook for fiscal 2023. My comments today will focus on adjusted results. Please refer to the description of the special items included in our results for the fourth quarter and full year of fiscal 2022 and fiscal 2021 in our press release issued earlier today, which also include the table for GAAP and non-GAAP measures. Our record performance for the fourth quarter and fiscal year was highlighted by overall strength in global sales, expansion in gross margin and the disciplined management of expenses. We ended the fiscal year with a strong balance sheet and significant progress on our strategic initiatives. For the fourth quarter of fiscal 2022, sales were $206 million as compared to $178.3 million last year, an increase of 15.5%. Strong response to our brands and offerings led to net sales increases across our segments of owned brands, licensed brands and company stores as well as across most geographies, most notably, the United States. We also saw year-over-year growth in Latin America, Europe, and India. U.S. net sales increased 18.5% and international net sales increased 12.7% as compared to the fourth quarter of last year. Gross profit as a percent of sales was 58.7% compared to 54.9% in the fourth quarter of last year. The increase in gross margin was primarily driven by favorable channel and product mix and leverage on certain fixed costs, primarily due to the increase in sales over the prior year period. Operating expenses were $82.9 million as compared to $74.1 million for the same period of last year. The increase was driven by higher marketing expenses and general operating expenses that directly support the significant increase in…

At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Oliver Chen with Cowen. Please proceed with your question.

Hi, there. Good morning. This is Katie on for Oliver. I think some of our first questions, you have great results. I would love to know sort of like what are your learnings so far from the Calvin Klein launch? And how much did stimulus impact your Q1 sales last year? If you could quantify that, that would be really, really helpful? And then I’ve got a few follow-ups. Thank you.

Okay. Thank you, Katie, and good morning. I think – so from the Calvin Klein launch, I think our team has just done a fabulous job of executing against the brand DNA. And so we’re really excited. We’ve seen really good reception to our product. We’ve seen very strong initial sell-through. Again, it’s anticipated to be pretty small at the beginning of the year, but as we roll it out, ultimately, it will be a significant contributor to Movado Group. So we’re really excited about that launch. Certainly, stimulus in the fourth – in the first quarter of last year had an effect on domestic sales. We don’t know the exact impact of that, but we do know it was probably predominantly in the month of March, early April. And – but you have a number of different variables probably that will impact retail sales, I would assume, in the first quarter in the U.S., including inflation, higher energy costs, the war as well as the stimulus.

Okay, great. And then maybe more broadly, I would love to know your thoughts around product category expansion and sort of how you’re thinking about jewelry and maybe some of the sort of implications of that expansion as it relates to your gross margin? And then staying on gross margin, what are sort of the primary drivers behind that, that 80 basis points of expansion plan for 2023? Thank you.

I think it’s – we’re selling more expensive product, which is – and really across our brands, which is very helpful to gross margin. And I think we will continue to expand jewelry, it’s still about 5% of our sales. As we – as it becomes a bigger piece of our overall business, I believe that we will be able to manage the gross margins to fit within our total mix. So we don’t really see expanding right now into other product categories beyond that. We do have sunglasses and blue light glasses called Everscroll in MVMT, which is a nice business for the MVMT brand. But I don’t see expanding that into other brands.

Okay. That’s really helpful. And then my last question is just around price increases and the really impressive AUR growth that you’ve been able to implement across the business. So how have consumers responded to those price increases so far? And do you have any price increases planned yet for fiscal 2023? Thank you.

So we implemented limited price increases last year, particularly, specifically in the Movado brand and that went quite smoothly. We’re now doing some follow-on increases as costs, including labor costs and store personnel, and things like that cost more across all of our brands. So we’re in the process of doing that implementation now, but we’ve seen fairly good acceptance in historically as we’ve rolled price increases out. And I think consumers are used to paying more for things right now. We also continue to add value to our product. That was really probably the biggest push in raising price, and the AUR is going up, our average unit retail going up. We’re getting more values for things like ceramic in MVMT, the SE family is really a sport luxury family at the upper end of our Movado collection. So it’s really nice to see that the consumers are willing to spend more money when you deliver more value.

Absolutely. Thank you so much.

Thanks, Katie.

Thank you.

We have reached the end of the question-and-answer session. And I will now turn the call over to Mr. Grinberg for closing remarks.

Very well. I would like to thank all of you for participating today. We’re again very pleased with our results for last year, and we look forward to talking to you again for our first quarter earnings call. Thank you very much.

This concludes today’s conference, and you may disconnect your lines at this time. Thank you for participating.