Fossil Group, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Fossil Group third quarter 2024 earnings call. At this time, all parties are in 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. Now, I'll turn the call over to Christine Greeny of the Blue Shirt Group to begin.

Hello, everyone, and thank you for joining us. On September 4th, Fossil Group announced the appointment of Franco Fogliato as Chief Executive Officer on September 18th, and he will be joined on today's call by Andrew Scobie, Interim 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 8-K, 10-Q, and 10-K reports filed with the SEC. In addition, Fossil assumes no obligation to publicly update or revise any forward-looking statements, 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 FossilGroups.com. With that, I'll now turn the call over to Franco.

Good afternoon, everyone, and thank you for joining us. I'm thrilled to be here for my first earning call as a Fossil Group Chief Executive Officer and look forward to getting to know our shareholders in the coming months. First of all, I would like to take the opportunity to thank our team globally particularly Jeff for leading the company during the transition and for the warm welcome I have received. In my first weeks with the company, I have immersed myself in the business, spending time with employees throughout the organization and meeting customer, partners, and vendors. I'm conducting this deep dive across all of our key geographies, the Americas, Europe, and Asia, as well as our channels and our incredible portfolio brand. It's been exciting and empowering to hear universal support for Fossil Group and a strong desire to see us win. It's also been incredibly helpful to learn the biggest issues facing the company. Importantly, in my first 60 days, I have gained conviction about the opportunities we have and the action we need to take. Before I talk about the future, let me tell you why I'm here. I have great admiration for the Fossil brand and the role this company has played in shaping the watch industry. The heritage of our core Fossil brand runs deep. We are recognized around the world, and this year, Time Magazine ranked us as the fourth watch brand overall, just behind world-class brands like Apple and Rolex. Over the past 27 years, I've been fortunate to lead iconic global brands, gaining valuable experience running business portfolios with omni-channel operation in multiple geographies. Fossil Group has 14 brands in three channels across 120 countries, a level of complexity that my background is well suited for. I own my skills in product operation and strategy over decades. and orchestrated a successful turnaround at Salomon and Columbia Sportswear. Most recently at Salomon, I started with building a competitive and execution-oriented team and culture. During my two and a half year tenure, we reignited the top line and drove double-digit sales growth. We achieved this by creating a new brand platform, streamlining our product offering, building joint business plans with our vendors and partners, and refocusing our distribution and pricing models. At Fossil, we have incredible brands, talented people, and the power to unlock greater potential for the future. By the full confidence in our capabilities to return this business to growth and value creation, we can achieve this through discipline, simplification, and focus. Our core strength is creating great, innovative watches and marketing them with compelling storytelling. We provide a seamless shopping experience for our customer primarily in the wholesale channel, with our direct-to-consumer business serving as an important expression of our brand and emotional connection to consumer. As we build a game plan to turn around the business, we will be developing a brand-led and consumer-focused model to execute our plan. There are three key areas we are prioritizing in the immediate term. Number one is redefining and focusing on our core. First and foremost, we believe there is an opportunity to reassess the core business and simplify our operating model. Anything that is not core is a distraction, and we will evaluate options for these non-core assets. We see significant potential to drive change across the category, distribution, and geography. This includes the traditional watches, wholesale, digital, and key markets globally. Focus and simplification will again be key drivers of strategic choices. In short, you can expect to see us make bold moves to reignite growth in our fossil brand. As we speak, we're working on a new brand platform, a new pricing architecture, a new go-to-market approach to prioritize our profitable channels and region and reduce penetration in the unprofitable ones. Some of the specific action we are taking in the near term to reignite sales include the following. First, we're bringing a global brand ambassador for the fossil brand, which we expect to announce next week. A second action we're taking is the return to a more normalized level and cadence on promotion, which may create a headwind but is expected to drive further improvement in gross margin while also strengthening our overall brand profile. Third, are leveraging the success of our women's Raquel line and our leadership position in the watch ring with design and materials updates. And lastly, we have the relaunch of our popular machine platform coming to market in early 25 as part of our effort to strengthen our mass offering. Ultimately, we need outstanding product offerings at the right price point with stronger after funnel marketing and less promotional intensity. Our new fossil brand platform will be aimed at our connection with consumer and deepening fossil cultural relevance. This will be supported with a strong innovation pipeline and compelling marketing. In fact, we're preparing to launch a major global campaign in 2025, featuring our new brand ambassador. As we focus on these initiatives to grow the fossil brand, we're also taking action to stabilize the sales into our major licensed brands. We expect to revitalize our key partnership under new and more realistic scenarios. From a distribution perspective, we see a clear opportunity to rebuild our relationship with our wholesale partners and return to our roots in this important channel. This means prioritizing our partners from a product, merchandising, and promotional perspective. We also see a significant opportunity to strengthen our digital business and operate this channel more profitable. We're moving as quickly as possible to execute against this plan, the majority of which are already underway. Returning now to our key focus area, number two is right-sizing the business. In tandem with reassessing and simplifying our core We plan to right-size our infrastructure to ensure that we are optimized for profitability from a smaller and more focused base. This work will begin next year and will be incremental to our current TAG plan, which Andy will talk more about during his remarks. Our third priority is a commitment to strengthening the balance sheet and improving liquidity. We're moving quickly here and aggressively pursuing option which may include action to monetize assets as we define our core and simplify our operations. The board and I are fully in line on the opportunities at hand. and the change that needs to occur to execute this turnaround and create value for shareholders. We have a strong sense of urgency, and you can expect to see us moving swiftly. When we hold our year-end earning call, I will add another few months at the end. At that time, I will provide an update on the action we have taken thus far, and share our comprehensive strategy and game plan for Fossil Group's next chapter. Now I will turn the call to Andy to discuss the financials.