Good day, everybody, and welcome to Movado Group, Inc. Fourth 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 Allison Malkin, Partner ICR. Please go ahead.

Good morning, everyone. With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; and Sallie DeMarsilis, Executive Vice President and 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 board-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, Allison. Good morning and welcome to Movado Group's fourth quarter and year-end conference call. Before we dive into full-year results, I would like to quickly touch on one matter that we disclosed in our Form 8-K last week. As we were beginning to close our financial results for the fiscal year, we became aware of irregularities in our Dubai sales office. We immediately suspended the leader of that office and began a thorough investigation. This included engaging outside counsel to lead the investigation and ensuring our auditors, Pricewaterhouse Coopers were kept informed throughout the process. As a result of the investigation, the leader of the Dubai sales office has been terminated and we restated our financials for each of the three fiscal years ended January 31st, 2024, and the interim periods within fiscal years 2025 and 2024. Honesty and integrity and transparency are at the core of Movado Group as a company. That is why the unethical conduct that occurred at the Dubai sales office is so disappointing. Nevertheless, we will emerge from this episode as a stronger company with an even more robust control environment in place. As I discuss the state of the business, please keep in mind that all references I make to prior period results are to the results after giving effect to the restatement. While last year was very challenging for the retail industry and our category, we began preparing for the current year by lowering our expense base for what we expected will continue to be a challenging consumer discretionary environment. As a company, we have always taken pride in our ability to execute, and I know that we will do better on that front in the year ahead. For the year, sales were $653.4 million versus $664.4 million last year, a…

Thank you, Efraim, and good morning. For today's call, I will review our financial results for the fourth quarter and 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 2025 in our press release issued earlier today, which also includes a table for GAAP and non-GAAP measures. Although our overall top line performance for fiscal 2025 was slightly down from fiscal 2024, we saw a year-over-year improvement in the fourth quarter. For the fourth quarter of fiscal 2025, sales were $181.5 million as compared to $175.8 million last year, an increase of 3.3%. In constant dollars, net sales increased 5%, reflecting growth in our licensed brands, partially offset by a decline in owned brands and in our company stores. By geography, US net sales decreased 2.9%. International net sales increased 8.8% as compared to the fourth quarter of last year. On a constant currency basis, international net sales increased by 12.2% with growth in each of our international regions. Gross profit as a percent of sales was 54.2% compared to 53.5% in the fourth quarter of last year. The increase in gross margin was primarily driven by favorable channel and product mix and increased leverage of lower fixed costs over higher sales. This was partially offset by the unfavorable impact of foreign currency exchange rates. Operating expenses were $84.8 million as compared to $83.3 million for the same period of last year. The increase was driven by higher marketing expenses, partially offset by a decrease in performance and equity-based compensation. As a result of the increase in sales and gross margin, partially offset by higher operating expenses, operating income increased by $2.7 million to $13.5 million compared…

[Operator Instructions] Our first question is from Hamed Khorsand with BWS Financial. Please proceed.

Good morning. Could you…

Good morning.

Hi. Could you talk about your marketing strategy this year given that you plan to spend less?

So we will focus a greater preponderance of our marketing effort this year in digital venues, and which allows us for more timely adjustments versus our sales and where our sales are tracking. And at the same time, we're also going to focus more of our messaging across our brands on conversion with our retail partners around the world. So, we look to increase the productivity of our marketing efforts this coming spring and into the fall.

Okay, and then, I think I heard you say that you're expecting sales to increase somewhere in your commentary. May have misunderstood it, but.

No, I think with all the uncertainty in the world right now, I think it's hard to predict where sales are going to come in completely. And I think with tariffs and trade and everything going on, we don't know yet the effect that if the tariffs are sustained, what that effect will have on consumers on a global basis, even if other markets aren't tariffed because they export to the US and their economies are dependent on some of those exports as well. So, I think it's very hard to predict what the retail environment will be in the coming few months given the uncertainty. I think it will stabilize and we'll get some more clarity at a certain point. My hope would be that we'll have more clarity by the time we talk on the first quarter call in May. But right now, there's a 90-day pause and we don't know what's exactly going to be beyond that 90-day pause. And even within that 90-day pause, there's a 10% tariff on all non-Chinese products, and obviously the Chinese products are higher. So, I think there's just too much uncertainty to know if this will be a year of growth. But we know that we will really focus on our execution capability, which we've proven in adverse times to be very strong at and control for us the controllable, which generally are our expenses, which a high portion of our expenses tend to be variable in nature as well.

Yeah, I was going to just add, I mean, this is not the first time Movado has seen economic uncertainty. So I'm just trying to understand, is there a product lines that you would focus on or price points they would focus on?

So I think what we're trying to do right now is really understand the tariff structure and see where we have to -- where we will be implementing some price increases but do it in a way that is sustainable for the long term and manageable with both our retail partners and consumers. So, I think that, what I always know is that in times of uncertainty, it's better not to make predictions than just run your business in a really proper and focused way. And we will continue to do that. And obviously, I think I talked about in Tommy Hilfiger, but it applies to all of our brands as well is really a good, better, best strategy. And so we will still always have some value-oriented price points across each of our brands for when the consumer becomes more challenged economically, when and if.

Got it. And then as far as the cost savings initiatives go, you were talking about some offsetting effects. Is there more cost savings that you could have to justify generating free cash flow this year?

Our intention is to generate free cash flow this year, and we're very focused also on our inventory levels, although having some inventory at the time right now is good. And so, I think that as I said, we have a number of variable expenses. Our marketing expenses are generally somewhat variable and what the digital aspect allows us to do is commit closer to the time of execution versus more traditional media. But my hope is that I don't have to reduce that but that our sales that can sustain the level that we've planned at for the year.

Great, thank you.

Thank you very much, Hamed.

With no further questions, I would like to turn the call back over to Efraim for closing remarks.

I would like to thank you all for participating today and we look forward to talking to you hopefully with some more clarity during our second quarter -- our first quarter conference call. Thank you very much.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.