Good afternoon, ladies and gentlemen, and welcome to the Fossil Group First Quarter 2024 Earnings Call. [Operator Instructions] This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company. Now I'll turn the call over to Christine Greany of The Blueshirt Group to begin.

Hello, everyone, and thank you for joining us. With us today on the call Jeff Boyer, Interim CEO; and Sunil Doshi, Chief Financial Officer. I would like to remind you that information made available during this conference call contains forward-looking information, and actual results could differ materially from those that will be discussed during this call. Fossil Group's policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in the company's Form 8-K, 10-Q and 10-K reports filed with the SEC. In addition, Fossil assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. During today's call, we will refer to constant currency results. Please note that you can find a reconciliation of actual results to constant currency results and other information regarding non-GAAP financial measures discussed on this call in Fossil's earnings release, which was filed today on Form 8-K and is available in the Investors section of fossilgroup.com. Now I'll turn the call over to Jeff to begin.

Good afternoon, everyone, and thank you for joining us. As we reported earlier today, we delivered first quarter net sales and operating margin in line with our expectations. As we continue to navigate challenging top line trends, our ability to drive gross margin expansion and reduced costs, enabled us to narrow our operating loss and improve our free cash flow from a year ago. Benefits from our Transform & Grow Plan are at the core of our improved gross margin and our reduction in operating costs, execution of the broad-based program, which spans 7 work streams started in 2023. P&L benefits were realized starting last year and are expected to accelerate meaningfully in '24 and carry into '25. About half of the work streams in TAG are designed to structurally improve our gross margins. First quarter gross margin was up 300 basis points versus last year and reflects benefits from the exit of our smartwatch category improved product margins in our core categories and lower freight costs. Our work streams on product sourcing and supply chain are expected to generate benefits in the latter part of 2024, enabling us to deliver year-over-year improvement in gross margin. Importantly, our TAG initiatives have us on track to historical gross margin levels in the mid-50s over the next 2 years. The balance of our TAG work streams are focused on taking costs out of our expense structure with the goal of: a, recalibrating our operating model for greater efficiency and lower fixed costs; b, driving savings in our procurement practices; and c, optimizing our direct channel operating costs. Our Q1 operating expenses declined 20% compared to a year ago reflecting savings across headcount, labor and services, which were initiated in 2023. We anticipate that our initiatives will continue to generate year-over-year OpEx declines…

Thanks, Jeff. First quarter net sales totaled $255 million, down 21% in constant currency. With better gross margins and lower SG&A, both driven by our TAG program, we narrowed our adjusted operating loss by $6 million to $19 million. First quarter cash flow from operations was slightly positive, a significant improvement versus last year when we used $86 million. The improvement in cash flow was primarily due to closely managed working capital, timing of payments in the current year and lapping heavier than normal seasonal working capital needs last year. We ended the quarter with $113 million in cash and $123 million in liquidity. Diving deeper into our Q1 trends. As Jeff noted, there are 3 underlying themes that we have seen playing out across our business for several quarters now, which continued into Q1. First, about 5 points of our 21-point revenue decline in the first quarter was attributable to the year-over-year decline from closed stores and the exit of our smartwatch business. The revenue impact was roughly 4 to 6 points in each of our regions. As a reminder, the stores we are closing are at lease expiration and in aggregate, did not have a material contribution in terms of 4-wall profitability. And since announcing our exit from the smartwatch category, we've more aggressively worked to move through our remaining inventory. Second, we are seeing signs of stabilization in about half of our Q1 revenue base. Across this portion of our revenue base, net sales in the quarter were down 1%. Global net sales in fossil brands, traditional watch and jewelry categories were negative 4% on a comparable basis. This reflects comp growth in the direct channels in India and our Asia region offset by declines in the indirect channels in the Americas and Europe. Growth in India…

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.