Movado Group Inc.

Good day, everyone, and welcome to the Movado Group's Inc. First Quarter 2022 Earnings Conference Call. As a reminder, today's call is being recorded. It 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 Ephraim Grimberg, Chairman and Chief Executive Officer, and Sally DeMarcillis, Executive Vice President, Chief Operating Officer, and Chief Financial Officer. Before we get started, I'd 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 Ephraim Grimberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Rachel. Good morning and welcome to Movado Group's first quarter conference call. This morning, I will review the highlights of the quarter and our strategic initiatives, and then Sally DeMarcellis will cover our financial results in greater detail. We would then be glad to answer any questions you might have. We had a very strong start to the year and are pleased with our financial and operational results. During the first quarter, we anniversary the height of the pandemic closures. And although we still saw significant closures during the quarter in Europe and Latin America, we delivered a 93.5% increase in sales to $134.8 million. Our adjusted gross margin percentage expanded 420 basis points to 55% versus 50.8% last year. and we delivered $14.1 million in adjusted operating profit versus an adjusted operating loss of $17.6 million last year. Our operating income represented a record for the first quarter of a year. Our balance sheet continued to strengthen with net cash of $177 million versus net cash of $105 million last year. Our U.S. sales exceeded our plan, driven by strength in our Movado e-commerce and wholesale business, our coach brand, and our Movado company stores, with all three areas exceeding our pre-pandemic sales levels. Our U.S. business increased 131% versus last year and 10.8% versus the first quarter of fiscal 2020 or calendar 2019. Our international business grew 67.5% despite significant continued closures in Europe and Latin America. We are hopeful that these markets will continue to reopen during the second quarter as vaccinations begin to accelerate and case counts and hospitalizations drop. As a company, we continue to focus on our strategy of expanding our digital footprint on our website, our customers' websites, and our marketing initiatives. and driving product innovation while keeping a stringent focus on our expenses. As we look at our brand, we are very pleased with the performance of Movado. Over the last 18 months, we focus on delivering an increasingly aspirational message to our consumers, driving innovation in our products, and drawing new customers to the brand. This strategy has proven to be effective with the success of our new Movado SE introduced last fall and our most recent introduction in our bold collection, Verso. During the quarter, we also introduced a collaboration with the world-renowned photographer Alexey Lubomirsky, a limited edition highlighting Alexey's doorways to veganism, featuring our first vegan straps that received an excellent reception from consumers. We also saw strong and growing demand for our Movado jewelry, which is only available on movado.com. During the first half of this year, we're supporting the Movado brand with cable television advertising, as well as social and digital marketing efforts. We were extremely pleased to see continued robust performance on our movado.com website, which grew by over 250% during the quarter, demonstrating that our focus on digital is continuing to deliver results. Our Movado wholesale results continue to be strong, with our department store channel showing double-digit increases over pre-pandemic results for the quarter and showing strength in both digital and brick-and-mortar locations. We are also beginning to see improvements in our chain jeweler channels. During the second quarter, we are launching a new SE Automatic that will be supported with a comprehensive digital marketing program that we are excited about. In our licensed brands, we were pleased with our performance, exceeding our plan, with sales growing 89.5% compared to last year and off 7.1% to pre-pandemic levels, despite the continued closure of some of our most important markets. The strong performance was driven by our e-commerce channels around the world and the reopening in our U.S. markets. In Tommy Hilfiger, our performance was driven by our innovation in watches and jewelry. Both Parker and Baker, featuring iconic Tommy blue dials and our iconic ID bracelet, performed extremely well. We were also excited to introduce a collaboration this spring between Tommy Jeans and the Space Jam movie franchise. In Coach, we saw strong results in both the U.S. and in China, driven by new products like Preston and Harrison. We're supporting Coach with a strong social media marketing campaign, particularly in China, with compelling key opinion leaders. Hugo Boss performed well in the U.S. department store channel and in our e-commerce partners in Europe. Our new pilot edition chronograph, featuring a black dial and brown strap, performed very well. We're also expanding our Hugo Boss jewelry collection. Lacoste had a strong quarter in our U.S. department store channel and in our key European markets through our e-commerce partners. We introduced the new iconic Lacoste 1212, featuring multicolored crocodiles that perform very well. In movement, we continue to focus on fine-tuning our e-commerce business while driving the efficiency of our brand building and marketing campaigns. During the first quarter, we introduced a new white ceramic family, which quickly sold out of our best sellers. With these models now replenished, we are running a new television campaign on our white ceramics for Father's Day and graduation that we are very excited about. While Olivia Burton's home market of the UK was closed for much of the quarter, our e-commerce sales drove performance. We're getting strong reception around the world to our new Tea Party collection of watches, and we continue to see jewelry grow within our assortment. Our Movado Company stores are performing extremely well, with our sales growing 190% over last year and 23% over our pre-pandemic results. Our gross margin percentage for our company stores is trending substantially higher than our pre-pandemic numbers, showing that there is strong demand for our products. At Movado Group, our role as a corporate citizen has always been very important to us. Our company and our brand's contribution to our society, how we take care of our environment, and the importance of diversity and inclusion within our workforce have always been high priorities for us. This year, we're very proud to issue our first ESG report, which can be found on our corporate website, MovadoGroup.com. In this report, we are establishing baselines from which we can measure our improvement as we strive to be better in these areas. In summary, we're extremely pleased with the results the team has progressively delivered on as we have navigated our way through a global pandemic. We are not taking anything for granted and continue to remain steadfast in managing our company in an environment that will continue to contain a level of uncertainty. Even with one of our largest markets, Europe, closed for much of the first quarter, we were still able to deliver record operating results. While it's difficult to predict what will happen as we reach improving levels of normalcy from a pandemic, we are extremely focused on managing what we can control and trying to do it as close to the time of execution as possible. The investments that we have made across our e-commerce infrastructure and digital capabilities are paying off. We will continue to focus on driving innovation and excellent design in our products and brands, which has been an important element to the results that we have been able to deliver. I would now like to turn the call over to Sally.