Movado Group Inc.

Good day, everyone, and welcome to the Movado Group, Inc. Second Quarter 2023 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'd 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 Grimmick, Chairman and Chief Executive Officer, and Sally DeMarcillis, Executive Vice President, Chief Operating Officer, and Chief Financial Officer. Before we get started, I would like to remind you the company's Cape Harbor language, which I'm sure you're all familiar with. The statements contained in this comments 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 of 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 Efrem Grinberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Rachel, and good morning and welcome to Movado Group's second quarter conference call. With me today is Sally DeMarcellis, our COO and Chief Financial Officer. I will start by giving you a brief overview of our results, followed by an update on our strategic initiatives and brands, and then Sally will review our financial results in greater detail. We would then be glad to answer any questions. In an increasingly volatile global economic environment, we are very pleased with our overall results. Facing significant currency headwinds, our sales for the quarter grew by 5.1% and 10.5% on a constant currency basis. Our gross margin was 58.5% of sales, an increase of 190 basis points from last year. We delivered adjusted operating income of $31.4 million or 17.2% of sales versus $25.5 million or 14.6% of sales last year. Adjusted EPS was $1.07 versus 85 cents last year. Additionally, our balance sheet remains strong with cash of $203 million at quarter end and no debt. Our teams around the world continue to execute against our plan while navigating a challenging environment with a higher level of uncertainty. For the quarter, our U.S. sales declined by 5.4%, while our international sales grew by 15.3% and 25.8% on a constant currency basis. In the U.S., we saw an increasingly difficult retail market impacted by rising inflation and the anniversary of robust stimulus programs that benefited consumers in multiple income categories. We have also seen the slowing of the U.S. economy as the Fed increased rates in its effort to bring inflation under control. In our international markets, where prior year results were less impacted by stimulus programs than in the U.S., we saw continued strong growth in our licensed brand performance, including the launch of Calvin Klein. As we look at our brands, we continue to effectively execute against the Movado brand's elevation strategy. Movado sales for the quarter declined low single digits, driven by slower retail in the United States, partially offset by the growth in our international business, particularly in India. We remain excited about the prospects of Movado as we continue to elevate both the product and the brand image. In Movado, we saw strength in our higher-priced watches, with the average retail price growing by 12% versus last year. Our Movado SE collection, which continues to perform extremely well, both on our website and our wholesale distribution, will be further expanded for the fall, with new colorways for men and women, as well as the introduction of a women's automatic version. In bold, we introduced a new Sport Verso family that has performed very well. For the fall, we are introducing new ceramic models in bold, as well as the new bold fusion automatics. We're excited to be launching our first influencer program in September under the Movado Always in Motion theme, including influencers and artists who are the best at their crafts, from a gold medal Olympian skier to a ceramicist who are at the top of their game. This campaign will run through the holiday season in addition to our television advertising. We'll also introduce a new Bold TV commercial that we are very excited about. Digital trends were more challenging during the quarter, with a slowing of the U.S. consumer and a return to a more normalized balance between brick and mortar and online shopping. As we look at our licensed brands, we saw growth across the portfolio, resulting in 14.8% growth during the quarter. Tommy Hilfiger watches and jewelry performed well for us, driven by strength in Europe and India. Our campaign watch for him, Matthew, sold nicely, driven by our two-tone execution. For women, Libby, featuring a minimalistic sparkle dial connected with the pH consumer. During the third quarter, we will drive performance with the launch of strong campaigns in Europe, Mexico, Brazil, and India. Hugo Boss continued to grow in both our Boss and Hugo labels. The Boss parent brand has amplified their product and marketing message, and we are seeing the benefit. We saw a strong sell-through in our Steer family for him and Novia for her. The Boss brand is resonating with consumers as we partner with Boss' stable of key influencers like Habi Lamy on TikTok and the rising Italian tennis star Matteo Bertolini. In Coach, our sales were driven by the continued focus on our ceramic collection, Grayson, with the pink version being worn by Jennifer Lopez in the parent brand's ad campaign on social media. The quarter for Coach watches was challenged by COVID closures in China, but we're already beginning to see a nice bounce back in that market. We have seen continued strength in Lacoste, with strong performances in our replay family for him, while the iconic 1212 remains our biggest family in the brand. We're excited to introduce the third generation of the 1212 this coming fall. For the launch, we are planning a strong marketing program in Lacasse Home Market of France beginning in September. We expect to begin the launch of Lacasse jewelry during the fourth quarter. We are excited by our launch of Calvin Klein in both jewelry and watches, which began early this year and has exceeded our initial expectations. To date, we have opened over 1,500 retail doors, as well as several key online retailers on a global basis. Watches represent approximately 75% of the sales, with men's watches at 30% of sales and women's at 70%. Products that feature iconic CK branding make up about 20% of the business. During the second half of the year, we will amplify our marketing message in key markets in Europe with both digital programs and billboards and a digital launch in China. We're really excited by the initial reception that CK has received across our distribution network. In our outlet division, we saw single-digit growth with digital growth partly offset by a decline in our brick-and-mortar business. During the quarter, we saw challenging traffic trends driven by higher gas prices and inflationary pressures. We're already seeing traffic and business trends improve in our stores early in the third quarter. In Olivia Burton, we are focused on invigorating our product assortment and updating our marketing message. We're excited by the progress that our team is making, and we are focused on making great new iconic Olivia Burton products with several new introductions this fall. but with the bulk of our introductions coming throughout the next year. In movement, our team is focused on continuing to elevate the product and fine-tuning our marketing message as we head into the fall. As you know, we have put in place a new leadership team in movement, and we are already seeing progress in the evolution of the movement brand, both on product and marketing. We are rounding out the team and are excited about the future opportunities for MVMT to grow with beautifully designed iconic products marketed in an evolving digital landscape. While there is increased uncertainty in the economic environment, we are very pleased with how our teams have adjusted and executed against our strategic plans. As we look at the second half of the year, we believe that we will need to continue to execute in an uncertain environment, including facing the impact of unfavorable currency due to the strengthening of the U.S. dollar. With our strong brand portfolio, amplified design innovation, and effective marketing support, we will continue to deliver against the available opportunities while investing in our brands for the long term. I would now like to turn the call over to Sally, who will cover our financial results in greater detail.