Good day, everybody. And welcome to Movado’s First Quarter and Fiscal Year 2026 Earnings 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 of ICR. Please go ahead.

Good morning, everyone. With me on the call are 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 first quarter earnings call. I am joined today by Sallie DeMarsilis, our Executive Vice President and CFO. I will first review our first quarter results and our progress against our strategic initiatives. Sallie will then review our financial results in greater detail. We would then be glad to take questions. We are pleased by our performance in the first quarter, especially as it involved navigating through an increasingly uncertain global economic environment. For the quarter, we delivered sales of $131.8 million versus $134.4 million last year, down 1.9% or 1% on a constant currency basis. Our adjusted operating income for the first quarter of fiscal 2026 was $870,000 versus operating income of $2.1 million last year. We made good progress on reducing our operating expenses through our cost savings initiatives, although some of the benefits were offset by unrealized losses due to significant currency fluctuations. Our adjusted earnings per share for the quarter were $0.08, down slightly from $0.09 last year on a lower tax rate. We ended the quarter with $203 million in cash and no debt. We are pleased that our board approved a dividend of $0.35 per share for the first quarter. Despite an uncertain retail environment, we continue to execute on our strategic priorities, introducing product innovation and delivering compelling value for our consumers worldwide. For the first quarter, our US sales were down 1.6% while international sales were down 2.2% or 0.7% on a constant currency basis. We continue to make meaningful progress on our Movado brand refresh even as we navigate a challenged retail environment. We're particularly pleased with the recent introduction of our new Mini Bangle collections and the Bold Mini Quest which have received a strong consumer response. These new styles, opening…

Thank you Efraim and good morning, everyone. For today's call, I will review our financial results for the first quarter of fiscal 2026. My comments today will focus on adjusted results. Please refer to the description of the special item included in our results for the first quarter of fiscal 2026 in our press release issued earlier today, which also includes a reconciliation table of GAAP and non- GAAP measures. Overall, we are pleased with our performance for the first quarter of fiscal 2026, although results continue to be negatively impacted by an uncertain economic environment. Despite net sales being down low single digits year-over-year, we continued to make good progress on our strategic initiatives and maintained an extremely strong balance sheet. Turning to a review of the quarter, sales were $131.8 million as compared to $134.4 million last year, a decrease of 1.9%. In constant dollars, the decrease in sales was 1%. Net sales decreased across owned brands and to a lesser extent company stores, partially offset by an increase in licensed brands. By geography, US net sales decreased 1.6% as compared to the first quarter of last year. International net sales decreased 2.2% and on a constant currency basis, international net sales decreased 0.7%. Gross profit as a percent of sales was 54.1% compared to 54.3% in the first quarter of last year. The year-over-year decrease in the gross margin rate was primarily driven by a negative impact of fluctuations in foreign currency exchange rates, increased shipping costs and the deleverage of certain fixed costs over lower sales. This was mostly offset by favorable channel and product mix. Operating expenses were $70.5 million as compared to $70.8 million for the same period of last year. During the quarter, we made progress on our cost savings initiatives such as…

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

Hi, good morning. Just firstly, if we could just talk about the sales momentum. Could you just provide a little bit more insights to the momentum you were talking about last quarter and the trend you're seeing now and how that isn't really showing up in the actual numbers you're reporting and what's driving that?

Well, I think, and I think we've been clear that the sales are vary by market and by brand and we're seeing pockets of growth and then pockets of more challenged marketplaces. So I think overall, given the uncertainty in the marketplace and the retail environment, I think we're satisfied right now with where our sales are, but we're focused on improving the trends over the balance of the year. And the uncertainties that have been injected into the marketplace over the last several months certainly have taken some toll on consumers, especially in the United States and Europe.

I guess what I'm trying to get to is like you implemented this marketing strategy last year to increase sales momentum. It seemed like things were going great. Is tariffs that much of an impact on the consumer as far as your markets are concerned?

Well, I think that we never expected the journey that we implemented to be a short term strategy, but a longer term. And I think we're seeing a lot of interest from consumers in newness and innovation. In smaller watches, we're seeing a renewed interest from younger consumers. So I think those are positive things. I think the challenges are that discretionary purchases are challenged and value still continues to be really important. So we are focused on delivering value for our consumers. And I would say that this journey that we're on from brand building perspective, that doesn't happen overnight. And what we are doing this year is rationalizing our expense infrastructure to deliver better financial performance over the year.

And that was going to be my segue there. When will there be a lining up between earnings per share and the cash dividend? Earnings are still lagging the dividend right now.

I think the benefit that we have is that we obviously have a very strong balance sheet and a really strong cash position. We built inventory over the quarter. I would expect that to come down by the end of the year, which produces more cash. We're also very focused and always have been on delivering strong operating cash flow. I would think that as we go towards the second half of the year, we'll see improved operating cash flow and that should ultimately continue to strengthen our balance sheet. I think the more difficult part right now is that it's difficult to predict the current economic environment. We saw last night even the current tariffs were ruled illegal by a trade court, which is a federal court. So that in itself, although that's probably a positive from a business perspective, if it holds, that creates even more uncertainty.

Okay. And then lastly, you were talking about this unrealized loss in the foreign exchange. Will that be realized as a loss or will that eventually be neutralized in some way?

Yes, so with resulted -- that resulted from a sharp decline really in the value of the US Dollar at the end of the quarter due to headlines that hit really out of -- this out of the Washington. So it was unrealized. It will be, we will make sure that we mitigate that risk going forward and take advantage of any other maybe offsetting increases in future quarters. So it will only be realized when paid basically, it's because we are such a multinational company and have currency situations and interactions between all of our entities around the globe.

That will conclude our question-and-answer session. I would like to turn the conference back over to Efraim for closing remarks.

Thank you all for participating with us today. And we look forward to talking with you after our second quarter. Thank you again.

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