Movado Group Inc.

Good day, everybody, and welcome to the Movado Group second quarter fiscal 2026 earnings call. As a reminder, today's call is being recorded and may not be reproduced in full or in part without permission from the company. At this time, I would like to turn the conference over to Allison Malkin of ICR. Please go ahead.

Thank you. Good morning, everyone. With me on the call today are Ephraim Grinberg, Chairman and Chief Executive Officer, and Sally D. Marsalis, Executive Vice President 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 Efren Grimberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Alison. Good morning and welcome to Movado Group's second quarter conference call. With me today is our Executive Vice President and Chief Financial Officer, Sally DeMarcellis. After I review the highlights of the quarter and share our progress on key strategic initiatives, Sally will take you through the financial results in more detail. We will then be happy to answer questions. We are pleased with our overall results this quarter. as we return to growth in both sales and profitability. Sales grew by 3% to $161.8 million, and adjusted operating profit more than doubled to $7 million from $2.6 million last year, despite a $2.2 million impact from unmitigated U.S. tariff expenses. Although we've taken certain actions to partially offset tariffs, Those actions will predominantly impact future periods. After the quarter ended, the United States implemented a tariff rate of 39% on Swiss imports. During the second quarter, we have built a strong position in inventory of Swiss-made watches in the United States and would expect a substantial portion of the year's needs are covered. We are hopeful that over the next several months, the United States and Switzerland will agree to lower tariff rates. Of course, we continue to monitor the situation closely and to develop mitigation plans. We continue to operate with a strong balance sheet with over $180 million in cash and no debt. Overall, we are pleased with the progress that we have made on our strategic initiatives with a focus on returning the company to growth and profitability. We would expect to see approximately $10 million of annualized savings spread evenly throughout this year as a result of the actions we took late last year to reduce operating expenses. Although we experienced a 5.6% sales decline in our Movado brand, we continue to make progress on our Movado strategy. which I will discuss later in my remarks. In our licensed brands, we grew by 6.5% on a constant currency basis or 9.5% on a reported basis. Overall, we reported gross margins of $54.1 million versus 54.1% versus 54.3% in Q2 of last year, despite the 130 basis point impact of additional tariffs in the U.S. Most of our strategic pricing actions to partially offset the impact of tariffs became effective July 1. Our international business grew by 6.9% or 3.9% on a constant currency basis, led by a strong performance in Europe, Latin America, and India, with Europe seeing particularly strong trends. As expected, this performance was offset somewhat by the Middle East, where we were in the process of rebuilding our team. Our U.S. business declined by 1.6% as we focused on rebalancing our chain jewelry store distribution, although we had an improved performance in our domestic department store and e-commerce channels. Our outlet store segment grew 2.4% for the quarter, and we're excited by the recent initiatives and accelerating trends in that channel. As we look at the progress that we're making in our brands, We're particularly pleased by the success that we are seeing in the overall performance of TrendRight products across our brand portfolio. In Movado, we're making significant progress in returning the brand to growth in our wholesale distribution. We have seen strong performance in our own e-commerce site with 6% growth and strong trends in our digital partners. In brick and mortar, Movado Brand Sell-Through has returned to growth in the second quarter in our department store channel, where we have implemented and expanded our coverage as a point of sale and installed our new point of sale display. We will continue to execute behind these initiatives as the year progresses. On the product front, Movado has seen increased penetration and success in women's watches, including our new iconic bangle watches and our new mini quest in bold, which along with our bold tank watch is a bestseller. On the men's side, we're seeing strong performance in the Movado Bold collections, including Verso Automatic and Quest Automatic. Our Heritage collection, inspired by Movado's rich heritage, continues to do particularly well while in a limited distribution across the country. The Movado brand marketing campaign for the second half will include new creatives featuring our Movado icons, Ludacris, Jessica Alba, Julianne Moore, Christian McCaffrey, and Tyrese Halliburton. We're very excited by the digital-first content that our team has executed with a greater focus on products associated with each of the icons. We have exciting new products debuting this fall, like the new Museum Imperial with Christian McCaffrey and our Heritage 1917 with Tyrese Halliburton. On the women's side, Jessica Alba and Julianne Moore will be featured with different shapes of our Museum Bangle collection and a women's version of the Museum Imperial and Heritage 1917. Turning to our licensed brands, we're seeing a return to the fashion watch and jewelry category with increased interest by Gen Z consumers across digital platforms like TikTok, Reels, and YouTube. Sales in our licensed brands grew by 9.5% for the quarter or 6.5% in constant currency. In Hugo Boss, we have experienced strong growth in our iconic families, Time Traveler and Kander. Our new updated Grand Prix is quickly becoming a bestseller. We're also excited by our new women's watches led by the May family with a petite square shape. In Tommy Hilfiger, we're very excited to be refocused on the women's watch category. Our Mia family is already showing signs of strong sell-through and will be featured in our fall campaign. Complimenting Mia is Moira, a new mini east-west oval that has gotten a strong reception. On the men's front, we're excited by our new 70s-inspired chronograph Hudson collection, which will be featured in our holiday campaigns. as well as by Regatta TH, a new sports watch collection in exciting colors opening at $139. In Lacoste, we're introducing a new black and gold version of our iconic LC33 collection and will complement our Tang Parisienne with a new oval version. Our Lacoste jewelry business continues to exceed expectations, and we're very excited to introduce the Arthur and Crocodile families, to complement our best-selling Metropole bracelet collection. In Calvin Klein, we're launching a new mini version of our best-selling Pulse collection, as well as a new 18-millimeter contemporary collection that has really piqued our retailers' attention. Coach continues to perform extremely well, particularly in the United States, and is now showing momentum in Europe as well. For the second half, we have several new introductions in our best-selling Sammy Oval collection with a strong new 20-millimeter Reese tank. We'll also be expanding our best-selling Charter collection for him. As we enter for the second half of the year, we recognize that uncertainty remains around tariffs and the broader retail environment. At the same time, we're excited by the new products we have introduced and encouraged by the resurgence we are seeing in the fashion watch market. As a leadership team, our focus remains on driving profitability and delivering consistent growth in both sales and operating margin, while maintaining the strength of our balance sheet and executing against our strategic plans across all of our businesses. While some of our initiatives have longer time horizons, we're confident that we're taking the right actions for the long-term and positioning Movado Group for sustainable success. I'm happy about the plans that we're building for the year ahead, and I would now like to turn the call over to Sally.