Fossil Group, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Fossil Group third quarter 2023 earnings conference call. At this time, all parties are in a listen-only mode. This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company. I'll now turn the call over to Christine Greeney of the Blue Shirt Group to begin.

Hello, everyone, and thanks for joining us today. With us on the call are Kosta Katsotis, Chairman and CEO, Jeff Boyer, Chief Operating Officer, and Sunil Doshi, Chief Financial Officer. I would like to remind you that information made available during this conference call contains forward-looking information, and actual results could differ materially from those that will be discussed during this call. Fossil Group's policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in the company's Form 8K, 10Q, and 10K reports filed with the SEC. In addition, FOSA assumes no obligation to publicly update or revise any forward-looking whether as a result of new information, future events, or otherwise, except as required by law. During today's call, we will refer to constant currency results. Please note that you can find a reconciliation of actual results to constant currency results and other information regarding non-GAAP financial measures discussed on this call in Fossil's earnings release, which was filed today on Form 8K and is available in the Investors section of FossilGroup.com. Now I'll turn the call over to Costa to begin.

Thanks, Christine. Good afternoon, everyone, and thanks for joining us today. The third quarter proved more difficult than expected, mostly because of headwinds in the wholesale channel in Europe and because of soft consumer spending in China. From a high-level perspective, we are facing challenging category, consumer, and channel dynamics. While working against these headwinds, including tough macro conditions globally, we remain focused on our objectives, most notably the execution of our Transform and Grow plan, which we are making solid progress on. Three quarters into the TAG plan, which we announced in February, we are tracking to deliver the cost of goods and operating expense savings we previously outlined, which are expected to drive approximately $300 million in annualized operating income benefit by the end of 2025. Year-to-date in 2023, we have captured approximately $80 million in annualized expense savings. Under the extended plan we announced last quarter, we are advancing our strategies to improve our sourcing practices and to further streamline roles and responsibilities across the organization. Both of these initiatives are laying the groundwork to help us generate improved operating margins in 2024. Our third quarter net sales decline of 21% primarily reflects ongoing headwinds in the wholesale channel in both the Americas and Europe, and a slower than expected recovery in Greater China. The overall decline includes approximately five points of headwinds related to declines in our smartwatch business and due to store closures. Importantly, we are seeing some encouraging signs in our core fossil brand, where our product and marketing initiatives are bolstering our traditional watch sales which were up 2% and up 11% in the US and India respectively. To address the industry-wide pressure in the wholesale channel, we have put a dedicated team in place that is focused on driving sell-through in key accounts globally. We also have a number of initiatives underway to improve performance in third-party e-commerce. We are using our increasing digital capabilities to collaborate with our largest digital accounts in order to optimize their holiday sales on our products. In our direct-to-consumer channel, our owned e-commerce platform continues to drive results, with sales up 8% in the quarter. Our investments in people and technology are paying off, as our teams were able to increase their capability to drive sales and margin in the channel. Overall, we are aggressively addressing the challenges impacting our business in order to improve performance. We are taking actions to strengthen our operating model, right-size our cost structure, and to restore growth. The key pillars under our growth plan include revitalizing the fossil brand, maximizing our licensed brand portfolio for watches and jewelry, and expanding our premium watch offerings. Under our fossil brand revitalization strategy, we are making highly targeted investments in marketing to support our key initiatives across traditional watches, jewelry, and leathers. Over the past year, we have conducted extensive consumer insight work to better understand our target consumer. The results of this deep dive led to the successful launch of our global brand campaign in early September, which debuted with a special Fashion Week event in both Paris and New York. The campaign revealed a broad-based overhaul of creative expression across all our touchpoints in both traditional and digital media. Early reads tell us it's driving more consumers into the funnel, evidenced by global traffic increases to our website in the United States and in Europe. In India, our wholesale partners and end consumers also responded well to the brand's campaign and overall positioning. More recently, we launched a fossil brand collaboration with Disney in celebration of their 100th anniversary. In October, we unveiled our first release of watches, leather goods, and jewelry, including a capsule of limited edition products made for collectors. There's more to come under this collaboration, which we're supporting with targeted campaigns leading to the holidays. We are fortunate to have an experienced team and a strong partnership with Alvarez and Marcel, underpinned by a highly disciplined operational approach to execution. Together, we have laid out a clear path to reduce costs, improve efficiencies, and drive sales productivity. We have taken decisive actions in 2023 to reshape our business model and focus on our most compelling and profitable opportunities to advance our goals and drive the business forward. The revised guidance we are providing today reflects the early traction we're gaining under TAG, offset by a soft consumer spending environment globally. Looking at 2024, we are confident that we will narrow our sales declines and leverage our TAG initiatives to drive year-over-year improvement in operating income performance. More on this from Sunil shortly. We appreciate the dedication and hard work of our teams throughout the organization and the ongoing support of our shareholders. And we remain committed to delivering shareholder value as we continue to deliver against the benchmarks of our tag plan. And now I'll turn the call over to Sunil to discuss the financials.