Movado Group Inc.

Good day, everyone, and welcome to Movado Group Incorporated's second quarter fiscal 2027 earnings conference 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 Mackin of ICR. Please go ahead.

Thank you. Good morning, everyone. With me on the call today are Efraim Grinberg, Chairman and Chief Executive Officer at and Sallie DeMarsilis, 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 Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

Good morning. Thank you for joining us and welcome to Movado Group's second quarter conference call. With me today is Sallie DeMarsilis, our Executive Vice President and Chief Financial Officer. Following our prepared remarks, we'll be happy to take your questions. We were very pleased with our results for the quarter and the first half of the year. We continue to see momentum across our business and strengthen consumer demand despite the ongoing challenges related to the conflict in the Middle East, which reflects meaningful progress, advancing our strategy, and favorable trends in our categories. For the quarter, sales increased 4.9% to $169.8 million. Adjusted operating profit increased to $15.1 million from $7 million last year and included $3.2 million of IEPA duty refunds received in the quarter. Adjusted EPS increased to 54 cents from 23 cents last year and included 11 cents per share attributed to the IEPA duty refunds. As I've done on previous calls, I'd like to reiterate our four key strategic priorities. First, putting the consumer at the center of our universe, learning more about who they are, how they relate to our brands, and how we build long-lasting emotional connections across our portfolio. Second, driving innovation and delivering trend-right product while remaining true to each brand's DNA and their unique target customer. Third, connecting with those consumers through compelling content and digital storytelling. There has never been a greater opportunity to tell our brand stories directly to customers. And fourth, driving profitability and strengthening gross margin through higher average selling prices, greater full price selling penetration, and a more optimized product assortment and supply base. Our teams continued to make progress against these priorities during the quarter, with sales growth in the U.S. and across our principal international markets. In the U.S., we saw increased sell-through rates in both Movado and our licensed brands. Internationally, we delivered strong growth in Latin America and India and low single-digit growth in Europe. This was partially offset by a decline in the Middle East, where the region continues to face headwinds. particularly in the markets that rely heavily on international tourism. Gross margin for the quarter improved to 59.4% from 54.1%. Excluding the IEPA duty refunds received, gross margin for the second quarter of fiscal 2027 would have been 57.5%, a 340 basis point improvement. Gross margin benefited from business mix and strategic pricing initiatives we implemented during the first quarter. I will go into this in further detail after I update you and our brands. We also ended the quarter with a very strong balance sheet with $212 million of cash and no debt. And year to date, we returned over $16 million to shareholders through quarterly dividend payments. We continue to see strong results from our customer-centric approach, particularly from trend-right products in new shapes and sizes that are resonating with younger consumers as they increasingly engage with traditional watches. A great example is the Movado Spring Launch of our Baby Face Mini Strap Watch. The product sold out quickly, with more than 400 units sold on movado.com in less than a month. We plan to follow that success with new fall colorways available both on our website and through a limited group of retail partners where we would expect a similarly strong response. As I review our brands, I'll highlight both the product innovation we're bringing to market and how we're connecting with today's consumers through storytelling initiatives predominantly across digital platforms. Across our portfolio, we're seeing consumers respond to innovation that's both trend-right and authentic to each trend. At Movado, two of our recent women's collections, Museum Bangles and Veloura, are great examples of this trend. Veloura is a beautiful new round museum watch on a classic Milanese bracelet with and without lab-grown diamonds. On the men's side, this spring we introduced the new Bold Verso S. and have quickly seen a strong customer response. We will expand Verso S's collection over the next several quarters, including the introduction of the Verso S chronograph during the third quarter. On the marketing front, we're elevating our engagement with consumers as we celebrate Movado's 145th anniversary. We have launched a compelling collection of digital content highlighting Movado's heritage, iconic design and Swiss craftsmanship. As we move into the second half, we will further amplify our consumer engagement and storytelling through our 145th anniversary content, as well as through our Movado ambassadors, including Ludacris, Christian McCaffrey, Julianne Moore, and Tyrese Halliburton. Movado.com and our Movado outlet stores also continue to perform extremely well, with sales increasing 8% and 3%, respectively. as we continue to elevate average selling prices and drive improving margins. Consumer-focused innovation is also helping drive growth across our fashion brands. We have seen very strong momentum in coach watches, particularly with Gen Z consumers driven by the continued success of Sammy and the recent introduction of Iris, a mini round jewelry-inspired collection. We will continue that innovation in the second half with a new mini Sammy, and the addition of Greta, a new tonneau-shaped collection for Coach. This fall, our marketing campaign will feature Lola Tung, star of The Summer I Turned Pretty, helping us further connect the Coach brand with a younger generation of consumers. Innovation also continues to drive success at Tommy Hilfiger. led by the TH Oxford family, which offers a tailored look designed for today's customer. We also recently introduced the Bryant family of men's chronographs with beautiful dials and a 38 millimeter case size. Bryant is receiving a strong response from consumers. As we continue to innovate within our women's assortment, we have seen women's watch penetration increase around the world. Collections such as Mia and Nora are now proven successes. On the jewelry side for Tommy Hilfiger, our hard charms continue to drive sales. Bryant, TH Oxford, and Mia will be featured prominently in our Tommy Hilfiger storytelling this fall. At Lacoste, we continue to see success in our rugged LC 33 collection. while also driving innovation through new introductions that elevate average selling prices through a combination of materials, including rubber and metal. Our Lacoste jewelry business also continues to perform very well, led by the success of the Metropole Collection, which will expand with new designs and feature crystals. Our fall Lacoste content will feature both LC33 and Metropole jewelry across digital channels and at the point of sale. I am also encouraged by the improvement we are seeing in Calvin Klein watches, particularly in women's. Our new sophisticated square watch collection sold out quickly this spring across markets around the world. It is a great compliment to our already successful twisted bezel collection and CK Pulse. We are equally committed to growing our Calvin Klein men's business and are excited by the response to our new cushion shape collection, aptly named Shape, which will be featured prominently in our upcoming campaign. We have also received a strong response from retailers to the introduction of our new Command jewelry collection for men. At Boss, we will continue to support our two leading hero collections, Grand Prix, and Sky Traveler, while introducing the new Grand Prix Vitesse, which will be the focus of our fall campaign. We're also excited about the introduction of Archer jewelry collection for men. For women, we have received a strong response to violet. Its distinctive shape and 21 millimeter size are right on trend, and it will be the focus of our women's marketing this fall. At Olivia Burton, our strategy of focusing on the United Kingdom and the United States is working, with sales increasing 23% for the quarter. Small, shaped watches continue to drive the business, led by key collections, including Minnie Grove and Minnie Grosvenor. Our campaign watch for the fall will be the new Cambridge family, our first tonneau-shaped collection for the brand. The Olivia Burton campaign will evolve, from our successful Mini to the Max concept with a new message, Mini is More, further solidifying Olivia Burton's position as an authority in smaller women's watches. Across our portfolio, innovation and compelling storytelling allows our brands to connect with customers, particularly younger consumers, as they increase their engagement with traditional watches and learn more about the category. In that regard, we are excited to be expanding our long-term partnership with Tapestry, and beginning next fiscal year, we'll be launching Kate Spade watches. We have already begun to preview our introductory collection and are receiving a strong response from partners around the world. We are excited by the resurgence that we see in the watch category, and we believe our brands are well positioned to capitalize on it. As I've previously mentioned, our fourth strategic priority is to expand margins and drive greater profitability. As mentioned, excluding the IEPA duty refunds, gross margin for the second quarter improved 340 basis points, reflecting improved sales mix, strategic pricing actions, and reduced promotional activity. Gross margin also benefited from a favorable mix of inventories sold during the period including inventory carrying lower duty rates following the repeal of IEPA tariffs in February 2026. We continue to streamline our assortments, reducing skew counts and improve efficiency across our value chain. We are driving higher levels of full price selling through stronger brand positioning while reducing promotional activity. At the same time, our brands remain focused on increasing average selling prices where appropriate while continuing to offer consumers compelling value. As we look ahead, we remain pleased with the performance of our business and the positive trends we have now delivered for five consecutive quarters. We believe this momentum reflects the successful execution of our strategy and the strength of our brands, our teams, and our consumer-focused approach. Going forward, we remain committed to providing transparency and meaningful insight into our business, our markets, and the trends we are seeing. At the same time, we have decided to discontinue providing an annual outlook. We believe our focus is better served by executing our long-term strategy and making the right decisions to drive sustainable, profitable growth and create increased value. We entered the second half encouraged by the momentum in our business, excited about the innovation and storytelling we have planned across our portfolio, and we are focused on continuing to execute against our strategic priorities. With that, I'll turn the call over to Sallie to review our financial results in greater detail.