Movado Group Inc.

Good day, everyone, and welcome to the Movado Group Inc. second quarter 2021 earnings conference call. As a reminder, today's call is being recorded and may not be reproduced in whole or in part without permission from the company. At this time, I would like to turn the conference over to Rachel Schachter 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, 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'd like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Rachel. Good morning and welcome to Movado Group's second quarter conference call. This morning, I will share some highlights of the quarter and the strategic initiatives that we are focused on as we begin the second half of the year. Sallie will then review our financial results in detail. We would then be glad to take questions. For the last two quarters, we have been operating amid a global pandemic, which has greatly curtailed consumer discretionary retail businesses, led to significant business closures around the world, and caused dramatic economic dislocations globally. We remain focused on ensuring the safety and health of our employees, customers, and the communities where we operate. Within that context, I am proud of how our teams have reacted and the results that we have delivered for the second quarter. In the challenging environment that we continue to operate in, our teams delivered sales better than our internal expectations, strong gross margins, and close to break-even results on an adjusted basis. We cut expenses by almost $30 million, reduced our inventories by more than $27 million year on year, and finished the quarter with over $170 million of cash while paying back $37 million of debt. During the quarter, we took a number of actions that will enable us to weather the climate that we are operating in and position the company to emerge strongly as we have done during previous crises. While very painful to do, we have reduced the size of our corporate headcount by 24% and lowered our estimated current year operating expenses by $90 million as we evolve into a more consumer-facing company. We currently are running our business with many of our teams operating remotely and have prepared ourselves to be able to continue to do so until the effects of the pandemic subside. We have reopened all of our stores and are achieving high levels of productivity despite reduced operating hours. We've continued to invest in our digital initiatives and are seeing strong results both for our own sites and our wholesale partner sites. Movado.com sales ran up 128% for the quarter, and we continue to see those trends accelerate. Our OliviaBurton.com business in the UK grew by approximately 100%, and Movement.com significantly improved profitability during the quarter as a result of improved return on ad spend. At wholesale, our department store channel continues to perform well in a difficult environment, and we have seen markets like Germany and France exceed last year's sales results. In China, we had a 16% increase in sales for the quarter, with trends continuing to accelerate. We continue to spend very carefully. Our marketing expense is highly variable and is being allocated as close to the time of execution as possible. So that we can incorporate current sales trend information into our level of investment. Driven by product innovation, we have strong brands within both our owned and our licensed brand portfolios that provide an advantage as we have seen continued demand for them across our digital platform and in our brick and mortar locations. I am very pleased that we were able to announce our partnership with Calvin Klein. a tremendous global brand for watches and jewelry beginning in 2022. We believe that the Calvin Klein brand has tremendous potential in our categories and we are extremely excited about this partnership. As we look to the second half of the year, we are operating in a highly uncertain environment and we are prepared to continue to focus on controlling our expenses and our inventory purchases. We expect the decline in sales during the next two quarters to improve each quarter, and we are focused on delivering profitability during the second half while continuing to maintain a very strong balance sheet. Across our brands, we are developing our digital efforts and introducing strong innovation on the product front. In Movado, we will introduce a new Movado Museum SE. a sport luxury collection starting at $995 that will be supported in our holiday television campaign. We will also be expanding our Movado jewelry collection, featured exclusively on movado.com. At Olivia Burton, we will be featuring Sparkle Florals, a glittery interpretation of our iconic florals. In movement, we will be introducing our new Legacy Slim collection, opening at $115 and the Minimal Sport Automatic, a limited edition of 500 units and a $350, our most expensive movement watch ever. This August, we introduced our Lucky 7 Limited Edition, honoring Movement's 7th anniversary, and our 500 watches sold out on our website in under five minutes. Within our licensed brand portfolio, we expect to drive results with a number of new product introductions this fall, including our Tommy Hilfiger Mason collection, featuring branded rubber straps and a sporty look. In Hugo Boss, we will be featuring Globetrotter, a new 46mm athleisure chronograph collection with bold pops of color. In Coach, we are introducing Arden, a beautiful new design with a signature seat crown protection and C001, a new analog digital design for men that will be supported with a strong social media campaign. For Lacoste, we are introducing Boston, a sport-inspired collection featuring Lacoste's iconic green dial. As the world evolves in an accelerated manner, we continue to believe that great brands, innovative design, and compelling values will continue to generate demand from consumers, and we are focused on reaching them in an increasingly digital environment wherever they choose to shop, whether that be on our own websites, in our brick-and-mortar locations, through our wholesale partner stores and websites, or e-commerce marketplaces. I would now like to turn the call over to Sallie to review our financial results.