Good day, everyone, and welcome to Movado Group, Inc. First Quarter Fiscal Year 2025 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. 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 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 first quarter conference call. With me today is Sallie DeMarsilis, our COO and CFO. After I review our progress on our strategic growth initiatives, Sallie will review our financial results in greater detail. We would then be glad to answer any questions you might have. Our results for the first quarter were in line with expectations -- with our expectations. Sales declined by 5.7% to $136.7 million and operating income was $3.3 million versus $10.9 million last year. When we reported fiscal 2024 results in March, we shared our new investment growth strategy in which we would utilize our strong balance sheet and cash position to invest behind our brands and drive growth in our biggest and most important markets. We mentioned that we would see an impact to profitability in the short term, but over time, these investments would help build a strong foundation for driving long-term sustainable sales and profitable growth. We're already making progress on these initiatives, which will enable us to drive accelerating growth throughout the year. We are building cohesive storytelling and messaging across our brand portfolio. As the year progresses, we will amplify our marketing investments and support key growth drivers for our brands, particularly in the second half of the year. During the first quarter, we continued to exercise strong discipline on our balance sheet, ending the quarter with $225.4 million of cash and no debt. I would now like to share some brand and regional highlights for the quarter, along with some of the key initiatives that we are working on for the balance of the year. Last year, we began rolling out a brand refresh from Movado, our biggest and most important owned brand. I would like to share with you…

Thank you, Efraim, and good morning, everyone. For today's call, I will review our first quarter fiscal 2025 results and balance sheet and then discuss our outlook for the remainder of the year. Overall, we are pleased with our performance for the first quarter of fiscal 2025. As expected, our performance trailed the first quarter of fiscal 2024 yet included significant progress on our key strategic initiatives, which we believe has us positioned to achieve our annual objectives. Turning to a review of the quarter. For the first quarter of fiscal 2025, sales were $136.7 million, as compared to $144.9 million last year, a decrease of 5.7%. In constant dollars, net sales decreased 6.1%. By segment, net sales decreased across our own brands, licensed brands and company stores. By geography, U.S. net sales decreased 6.2%. International net sales decreased 5.4%, as compared to the first quarter of last year. On a constant currency basis, international net sales decreased 6.1%. Gross profit as a percent of sales was 55.3% compared to 56.6% in the first quarter of last year. The decrease in gross margin rate as compared to the same period last year was primarily driven by unfavorable channel and product mix and the deleverage of certain fixed costs, as a result of lower sales. Operating expenses were $72.2 million, as compared to $71.1 million for the same period of last year. The increase was driven primarily by an increase in payroll-related expenses. Primarily as a result of the reduction in sales and gross margin, operating income decreased by $7.6 million to $3.3 million, as compared to $10.9 million in the first quarter of fiscal 2024. We recorded approximately $2.1 million of other non-operating income in the first quarter of fiscal 2025, which is primarily comprised of interest earned on our…

Thank you. [Operator Instructions] Our first question is from Michael Legg with the Benchmark Company. Please proceed.

Hello.

Hi, good morning, Mike.

Good morning. Sorry, I have bad connection, if I fade out. Can you just talk a little bit about when you give your forecast, we obviously know the marketing spend is going to help move that revenue number. Can you just talk about your viewpoint on [Technical Difficulty]

Mike, you're cutting out.

[Technical Difficulty] from the consumer.

So, I guess, you asked our viewpoint about the consumer, I think. Is that correct?

Yes.

Okay. Yes. So we believe that the consumer is challenged right now, especially in our target audiences in the US and Europe. But historically we have seen that when we do creative things from a product perspective and also from a marketing perspective, which we are diligently working on for this year, that we will be able you know, be able to drive the consumer. You have to work harder when the consumer is challenged to drive demand. And that's what our plan is based on for this coming year. Obviously, when we instituted the plan at the end of last year, we knew that we could affect real change towards the second half of this year and that is -- still remains our plan. We're really excited about the launch of Quest, and so we see that innovation and it's an excellent value opening at $595 and the Movado Bold Collection is doing really well. And that will also accelerate throughout the year as we build demand for the Bold Collection and our Quest family, as well as our Classic Museum Collections. And within each of our brands, we have important marketing initiatives and important products launching throughout the year.

Does making [Technical Difficulty]

Mike, I think there's something wrong with your connection. Mike?

Yes, hi. Sorry, I was just asking does your guidance [Technical Difficulty]

Mike, I'm sorry, we can't hear you. Mike?

Yes [Technical Difficulty]

No, I think there's something wrong with your connection. You may have to hang up and dial back in. Mike, are you back?

I'm going to check on him. One moment. Thank you.

Thank you. Okay, if we don't hear back in a few seconds, I will end the call. Okay. Well, I guess we won't have Mike back. But thank you all for participating on today's call. And we look forward to communicating throughout the year. And we do have very exciting plans in place for the second half and I look forward to sharing those with you on future calls.

We do have Mike back.

Okay, Mike, go ahead.

I apologize. Just wanted to understand if your guidance factors in any interest rate cuts helping the consumer?

Not particularly, no.

Okay.

We're still planning on operating in a challenging environment that doesn't deteriorate.

So if we get interest rate cuts helping the consumer, it could be obviously a positive towards…

I would think that -- Yes. I would think that that would be a positive with the consumer now. I don't think you get an immediate effect of that benefit either.

Okay. Okay. And then just any guidance you can give us. I know it's during the quarter, but graduation, Mother's Day, Father's day, you talked a little bit about seeing strength in some areas. Just any comments on how we're seeing the holidays come in?

Yes, I think it's obviously Mother's Day is past us. Father's day and graduations, a lot of it comes throughout May and June. And so it's a little early for us to see that. But we are seeing some pockets of improvement although it's not and as I talked about, very, very strong trends on our own website. And so that leads us to have a good sense of optimism, some strengthening of our department store channel, which is obviously an important channel for the company. But I would still believe that the really major effect and benefit for the company will begin to come into the second half of this year.

Okay, great. And then just one last question. Just how's jewelry doing versus expectations?

Jewelry is doing very well, so that we're really pleased with it. And that's in our licensed brand portfolio and in Olivia Burton. We are in the process of -- we'll launch some major new collections for the Movado brand as we reposition the jewelry category in Movado during the second half and probably more into the fourth quarter. But within our licensed brand portfolio, we're seeing some real good pockets of strength in jewelry. It is a majority focus for the company, and we did have growth in that area during Q1.

Okay, thank you. Congrats on getting the quarter out.

Okay. Thank you. Thank you very much, Mike. And as I said earlier, we look forward to talking with all of you again during our second quarter conference call and be able to continue to share progress on our marketing initiatives and product introductions for this coming year. Thank you very much.

Thank you. This will complete today's call. You may disconnect your lines at this time. Thank you for your participation.