Movado Group Inc.

partner, ICR. Please go ahead.

Good morning, everyone. With me on the call is Ephraim Grimberg, Chairman and Chief Executive Officer, and Sally DeMarcellis, Executive Vice President and Chief Operating Officer and 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 would like to turn the call over to Ephraim Grimberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Alison. Good morning and welcome to Movado Group's fourth quarter and year-end conference call. Before we dive into full year results, I would like to quickly touch on one matter that we disclosed in our Form 8K last week. As we were beginning to close our financial results for the fiscal year, we became aware of irregularities in our Dubai sales office. We immediately suspended the leader of that office and began a thorough investigation. This included engaging outside counsel to lead the investigation and ensuring our auditors, PricewaterhouseCoopers, were kept informed throughout the process. As a result of the investigation, the leader of the Dubai sales office has been terminated and we restated our financials for each of the three fiscal years ended January 31st, 2024 and the interim periods within fiscal years 2025 and 2024. Honesty and integrity and transparency are at the core of Movado Group as a company. That is why the unethical conduct that occurred at the Dubai sales office is so disappointing. Nevertheless, we will emerge from this episode as a stronger company with an even more robust control environment in place. As I discuss the state of the business, please keep in mind that all references I make to prior period results are to the results after giving effect to the restatement. While last year was very challenging for the retail industry and our category, we began preparing for the current year by lowering our expense base for what we expected will continue to be a challenging consumer discretionary environment. As a company, we have always taken pride in our ability to execute, and I know that we will do better on that front in the year ahead. For the year, sales were $653.4 million versus $664.4 million last year. a 1.7% decline. Adjusted operating income for the year was $27.1 million versus $48.5 million last year. Our earnings were affected by our planned investment of an incremental $17.4 million in marketing in support of our brands. Our performance improved in the fourth quarter with sales growing by 3.3% to $181.5 million and adjusted operating profit increasing $2.8 million to $13.5 million. Our adjusted earnings per share for the quarter and the year were 51 cents and $1.12 respectively. We also ended the year with $208.5 million in cash and no debt. we were pleased to announce last Friday that our board had declared a quarterly dividend of 35 cents, and we remain committed to returning shareholder value through both dividends and our share repurchase program. Since we began the year, we were all aware of the increased level of uncertainty in the economic environment and friction in global trade. As the year progresses, we intend to make every effort to protect our gross margin in the U.S., taking into account the current incremental tariff rates, of 10% for all global imports and over 100% on the Chinese bracelets or leather straps that are component of our fashion watches. US sales in our fashion watches and jewelry represent approximately 20% of our overall fashion watch sales. We're in the process of developing plans to help us mitigate some of the cost increases deriving from increased U.S. tariffs through partnering with our vendors and customers and implementing selective price increases. Of course, there continues to be uncertainty with regards to the final tariff rates, when and if they are ultimately implemented. During the third quarter and fourth quarter of last year, we took certain difficult steps that included right-sizing our organizational structure in order to navigate an uncertain retail environment. During the fourth quarter, we took an additional charge of $1.8 million to cover incremental severance costs. On an annualized basis, we expect these changes to deliver $10 million in total savings for fiscal 2026. In addition, we anticipate a $15 to $20 million year-over-year reduction in marketing expenditures this coming year. These planned reductions in operating expenditures will be partially offset by inflationary cost increases, such as merit increases and performance-based compensation. Considering the uncertain global environment that we are operating in, we will not be providing outlook at this time. We continue to make progress in our strategic brand building efforts across our brand portfolio, and I will highlight some of these collectively. In Movado, we're continuing our comprehensive brand refresh journey that we embarked on 18 months ago, and we're making significant progress. Last fall, we launched our new brand building campaign featuring a new set of Movado icons, including actor and rapper Ludacris, actress and business entrepreneur Jessica Alba, and basketball superstar Tyrese Halliburton. We also introduced a new Movado display in a selection of our retail partners. We quickly saw improved metrics for those points of sale. We were able to launch the new display and will continue to roll out this program in the coming quarters. From a marketing perspective, this spring we have fine-tuned our campaign to increase visibility both in-store and across the most important digital venues, including the biggest social media platforms, digital publishers, YouTube and YouTube TV. Last fall, we began reducing the number of promotional events in which the Movado brand was available in order to preserve the brand image and integrity. And while we knew there would be a short-term hit to sales, we're confident that it was the correct action for the long term. As we enter the second half, we believe we'll begin to see the benefits of this initiative. We're very excited by the new products that we're introducing this spring, especially in women's watch styles. that while maintaining the Movado brand DNA are also right on trend. These include a new Bold Mini Quest, which is already performing very well at retail, and a new collection of Mini Bangles in three different shapes that our customers are very excited and will be available from Mother's Day. This spring, we'll also be introducing our first set of Movado watches featuring lab-grown diamonds that will allow us to offer beautiful, high-quality diamond watches below $2,000. On the men's front, our penetration of automatic watches continues to grow. Just like in the Movado brand, we're seeing an increasing opportunity in women's watches across our licensed brands with more feminine, smaller designs true to each brand's DNA. We're fortunate enough to partner with some of the fashion industry's most important brands. The Coach brand's success among the Gen Z consumer is well documented, and I can say that we're seeing the same success within the watch category. Our Sammy bangle introduced last year has been a huge success and is beloved by the younger Coach consumer. In addition to the Sammy collection, our cast collection with a square case is right on trend and already performing very well. In Tommy Hilfiger, we are big believers in our good, better, best positioning across affordable price points. We are seeing strong sell-through in our skeleton families like Stewart, Baker, and Legend. On the women's front, we feel there's a big opportunity in new smaller offerings like our Tia family and jewelry offerings like our new Toggle Heart with TH's famous corporate stripes. In Lacoste, our new LC33 collection received a tremendous response from consumers. This rugged, anti-digi watch is true to Lacoste's sporty lifestyle and has numerous opportunities for continued development and expansion. This spring, we will be introducing a translucent version in new colorways, as well as a new smaller version suited for smaller wrists. We will also introduce our new Parisian collection, A new hexagonal shaped watch just for her. Our Metropole bracelet has proved to be a global bestseller. In Hugo Boss, we have brought back a classic in a new evolution, and it's performing better than ever. Our Grand Prix chronograph is already selling out in many variations, and we hope to be back in stock soon. Arcandor Chrono continues to perform very well. On the jewelry side, our big, bold statements for Hugo Boss Jewelry are doing well for him and her. In Calvin Klein, we're excited by the new collections that we are introducing in both watches and jewelry with a big emphasis on women. Our Pulse collection has proven to be a bestseller for CK, and we will be expanding it into a smaller version this coming fall. We also introduced Meridian and CK Adore, two new shaped collections that have received a strong reception. On the jewelry front, we're excited to introduce our new spiral collection. While the outlet business was challenging last year, we're focusing on improving the areas within our control. We have seen improving trends where we have enhanced our point of sale with our new Movado fixtures. And this past month, we increased the penetration of the new fixtures from 10 doors to all of our doors. We're also seeing benefits from improving our outlet assortments. While this past year represented challenges for the company, history has shown that these are the moments when our teams rise to the occasion and deliver. It's in these times that we identify what needs to be corrected, tighten our focus on variable expenses, and raise the bar on execution. Following the events in our Dubai office, we've acted swiftly, made necessary personnel changes, and believe there are new opportunities ahead in that region under fresh leadership. As always, we remain committed to our core values of ethics and transparency. Those principles continue to guide everything we do. With the current global uncertainty, both economically and in trade, we're staying focused on executing where it counts and capitalizing on the opportunities we see for our strong portfolio of brands across our global distribution network in watches and jewelry. We've always taken a long-term view of the business while remaining agile and responsive to market dynamics. This past year has taught us a lot. But what stood out most is the incredible dedication and resilience of our team. Their continued commitment to the company and to delivering from Avado Group has been truly inspiring. With that, I'll turn it over to Sally to walk through our financial results in more detail. We'd then be glad to answer any questions you might have.