Good day, everybody, and welcome to the Movado Group, Incorporated Fourth Quarter 2024 Earnings Conference Call. As a reminder, today's call is being recorded and may not be reproduced in full or in part without permission from the company. At this time, I would like to turn the conference over to Cody McAllister 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. 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 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 direct comparable GAAP financial measure to this non-GAAP financial measure will be provided as supplemental financial information in our press release. Now, I would like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Cody. Good morning, and welcome to Movado Group's fourth quarter and year-end conference call. With me today is Sallie DeMarsilis, our COO and CFO. Today, I'm going to review the highlights of our year-end results and the launch of our new investment growth strategy. Sallie will then review our financial results as well as provide our financial outlook for the current year. For the fourth quarter and the fiscal year, we were pleased to meet our revised financial expectations. For the quarter, sales declined by 7.5% to $179.6 million and adjusted operating income was $13.8 million versus $26.8 million last year. For the fiscal year, we delivered sales of $672.6 million, a 10.5% decline from last year. Adjusted earnings per share, $2.13, including $6.4 million of interest income. We continue to maintain a very strong balance sheet, after generating $76.8 million of operating cash flow, reducing inventory by $38.2 million and ending the year with $262 million of cash and no debt. For the past year, we've operating in a challenging retail environment in our largest markets, the United States and Europe. A continuation of post-COVID dynamics a rebound in travel spending, multiyear inflationary pressures, and increasing geopolitical uncertainty are all affecting consumer demand for discretionary products. As these macroeconomic pressures mounted, a significant headwind to our top line in fiscal 2024 [Technical Difficulty]

And ladies and gentlemen, we do apologize for that. And we do now have Movado Group, Inc. They are now back. Efraim, you can go ahead and begin. Efraim, are you there? [Technical Difficulty] Ladies and gentlemen, once again we do apologize. We will try again to see if we can have Efraim and Sallie join us again. Please standby. Hello Efraim and Sallie, you are now live. You may begin.

Okay. Again, it looks like we had some more technical difficulties. I hope this is corrected now. So I will restart. And again I apologize for that. Good morning and welcome to Movado Group's fourth quarter and year-end conference call. With me today is Sallie DeMarsilis, our COO and CFO. Today I'm going to review the highlights of our year-end results and the launch of our new investment growth strategy. Sallie will then review our financial results as well as provide our financial results for the current year. For the fourth quarter and the fiscal year, we were pleased to meet our revised expectations. For the quarter sales declined by 7.5% to $179.6 million and adjusted operating income was $13.8 million versus $26.8 million last year. For the fiscal year, we delivered sales of $672.6 million, a 10.5% decline from last year. Adjusted earnings per share were $2.13, including $6.4 million of interest income. We continue to maintain a very strong balance sheet after generating $76.8 million of operating cash flow reducing inventory by $38.2 million and ending the year with $262 million of cash and no debt. For the past year, we’ve been operating in a challenging retail environment in our largest markets, the United States and Europe. A continuation of post-COVID dynamics, a rebound in travel spending, multiyear inflationary pressures, and increasing geopolitical uncertainty, are all affecting consumer demand for discretionary products. As these macroeconomic pressures mounted a significant headwind to our top line in fiscal 2024, we focused on the parts of our business most directly in our control, strengthening our balance sheet and building for the future. In the fall, we worked with our teams to develop a comprehensive plan to leverage our strong cash position to return the company to grow across our biggest brands…

Thank you, Efraim and good morning. For today's call I will review our financial results for the fourth quarter and fiscal 2024 and then discuss our outlook for fiscal 2025. 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 2024 and fiscal 2023 in our press release issued earlier today, which also includes the table for GAAP and non-GAAP measures. Overall, our performance for fiscal 2024 was negatively impacted by a challenging retail environment. Despite being down year-over-year, we continue to make good progress on our strategic initiatives and maintained an extremely strong balance sheet. Turning to the fourth quarter results, which were in line with our updated expectations. For the fourth quarter of fiscal 2024 sales were $179.6 as compared to $194.3 million last year, a decrease of 7.5%. In constant dollars, net sales decreased 9%. The decrease reflects a sales decline in owned-brands, licensed brands and in our company stores. By geography, US net sales decreased 12.4%. International net sales decreased 2.9% as compared to the fourth quarter of last year. On a constant currency basis, International net sales decreased by 5.8% with continued challenges and our biggest -- in our largest international market, Europe. Gross profit as a percent of sales was 53.9% compared to 56.2% in the fourth quarter of last year. The decrease in gross margin was primarily driven by decreased leverage of higher fixed costs over lower sales, the unfavorable impact of foreign currency exchange rates and unfavorable channel and product mix. Operating expenses were $82.9 million as compared to $82.4 million of the same period of last year. The increase was driven by higher marketing expenses and an increase in payroll-related expenses…

Thank you. And at this time, we will be conducting a question-and-answer session. [Operator Instructions] And our first question comes from the line of Michael Legg with The Benchmark Company. Please proceed with your question.

Thanks. Good morning. Congrats on the quarter. I wanted to dive into the brand refresh a little bit with the $25 million spend. Can you first tell us what did that $25 million -- what does that compare to for marketing spend for fiscal before?

So the incremental $25 million marketing spend so we're raising our percentage of advertising this year.

But at the year, we just finished it was a little over 19% as a percent of sales. In the year coming up it will be a little bit over 22% of sales the marketing spend.

Okay. Great. And then did that start early January? Or when is it being phased in? What's the timing of it?

No. It's mostly going to be second third and fourth quarter. We obviously started spending some in the first quarter of the year, but it will accelerate as the year goes on. But we will spend significantly more this spring than we did last year, especially as we invest behind some of the initiatives that we tested last holiday season.

Okay. And then obviously it's a long-term focus on the brand refresh. Can you -- I just want to kind of understand like if we didn't put this extra $25 million spend in place what do you think would have happened to sales? And is this -- I'm just trying to understand the state of the consumer today with the higher debt with the interest rates if we get interest rate cuts what that may mean. So just kind of give me an overview of where you see the consumer, and if you didn't do the spend what you think might have happened?

Sure. So well I think this is forward-looking. So we're doing the spend in the next four quarters. And I think that what we're trying to do is make sure that we invest behind our brands for the long term both in the US and Europe where we see opportunities not only to build for the future, but also over the next quarters to gain significant market share in both the fashion watch category and the accessible luxury watch category with the Movado brand only in the United States. And so I think the consumer has been somewhat struggling for a while. And historically what we have found as a company is that in these times, if we take certain initiatives and invest and change how we run our business model that will pay off. Historically, coming out of recessions we've done very well. But we're not in -- technically in a recession. I do believe that the consumer is challenged. And I think as we make these investments, they will certainly pay off for the future.

Okay. Great. And then obviously you're holding your gross margin so you're not getting promotional and pricing. But what are you seeing from a competitive perspective on pricing in the industry?

I think the market is promotional, but it has been for a number of years. So coming out I think at the beginning of COVID, it was not coming out of COVID, but then -- as there were shortages. But over the last two years, it's already been promotional. I don't think it will be increasingly more promotional than that. There are some competitors who are stressed and we may see some more promotionality from them. But that's -- I think our ability to invest behind these marketing efforts, particularly in our largest markets the United States and Europe, I think is what's really going to differentiate us as a company and differentiate us from our competitors.

Okay. And I'm not looking for guidance here, but obviously this is a long-term campaign. And what do you think it means for the longer term fiscal 2025, 2026 type numbers? And where do you think this puts you after you get this campaign done?

So I think, look, the idea behind this campaign, I think and we alluded to that in my comments is that it will pay some long-term dividends. And I would expect that we'll be able to leverage our market investments over time. So while they've gone up this year to 22%. I think that over the next few years that will come down as a percentage of sales. And I think driving growth is really important for us as a company. And I don't think that we would -- that we can drive success by shrinking our expenses to drive success. And fortunately, we've built a really strong balance sheet that allows us to take some of our cash and reinvest this year behind the brands, and the company and growing business organically.

Okay. Great. Congrats. Look forward in 2024. Thanks.

Okay. Thank you, Mike.

Thank you. We have reached the end of the question-and-answer session. I'll now turn the call back over to management, for your closing remarks.

Thank you very much for listening with us today and for participating. I want to apologize again for the technical difficulties. But I can tell you that we at Movado Group are very excited about the initiatives that we're embarking on and driving our growth strategy. And so we look forward to updating you throughout the year. Again, thank you very much.

Thank you. And this concludes today's conference. And you may disconnect your lines at this time. Thank you, for your participation.