Good afternoon, ladies and gentlemen, and welcome to the Fossil Group Fourth Quarter and Full Year 2024 Earnings Call. At this time, all parties are in listen only mode. 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 me on the call today is Franco Fogliato, Chief Executive Officer; and Andrew Skobe, Interim Chief Financial Officer. Before we begin, 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 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 as well as certain non-GAAP financial measures. 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 on fossilgroup.com. There you will also find a supplemental presentation which outlines our Q4 results, turnaround plan, and outlook. With that, I'll now turn the call over to Franco.

We're pleased to have concluded the year with fourth quarter results that exceed our top and bottom line guidance as our early initiatives have already started to gain traction. Most notably, we expanded gross margins, reduced cost, and delivered positive adjusted operating margins. I'm incredibly grateful to our global teams for their hard work and dedication to Fossil Group. During my first six months in the CEO role, we moved swiftly and took a number of pivotal actions to set up the business for long-term success, while formulating a comprehensive turnaround plan. We're clear-eyed about the amount of work required to execute this turnaround, and we are energized by the opportunity in front of us. We have tremendous optimism and confidence in our ability to propel the business forward, fueled by our core foundational assets, iconic brands, innovative design, global reach, and talented teams. Fossil has a meaningful 40-year history of making watches accessible to consumers around the globe. We have unique design, manufacturing and selling capabilities worldwide in The Americas, Europe and Asia. Our strong brand equity is also reflected in our global industry rankings. Time Magazine ranked Fossil as number four in 2024 in the global watch market and more recently in late February our Fossil Raquel watch ring was awarded the fashion jewelry of the year 2025 at the Inhorgenta trade show in Germany. Our plans reflected the opportunity we see to unleash these assets and optimize them more effectively. We have moved quickly to implement change and create a path for the company to return to profitable growth. We have introduced a turnaround plan centered on three primary pillars: refocusing on our core; right-sizing our cost structure; and strengthening our balance sheet. Diving into our first turnaround pillar, refocusing on our core. These are stuff we…

Thank you, Franco. Good afternoon, everyone. We concluded the year with positive adjusted operating income in Q4 despite a year-over-year sales decline. This performance reflects our ability to strengthen our gross margin profile and maintain strict cost control. Fourth quarter net sales totaled $342 million, down 18% in constant currency. 600 basis points of the decline is attributable to our smart watch exit and store closures. During the quarter, our Fossil traditional watch business increased 2% globally versus the prior year, excluding store closures. Notably, this positive performance during the holiday season enabled our U.S. wholesale partners to enter 2025 with healthy inventory positions. In fact, after narrowing our sales decline in the U.S. wholesale during Q4, the channel continues showing signs of improvement in 2025. Gross margin expanded by 630 basis points compared to last year, coming in at 53.9%. Gross margin included restructuring charges of approximately 8 million or 220 basis points related to the closure of our Swiss manufacturing operations. Excluding these costs, gross margin increased by 850 basis points. The year-over-year increase primarily reflects increased product margins in our core categories driven by improved product costing, our exit to connected watches, and reduced promotional activities in our e-commerce business. SG&A expenses were down $35 million to $172 million compared to last year, representing a 17% decrease from our cost takeout actions. The year-over-year reductions are attributable to lower store operating costs on fewer stores, lower compensation and administrative expenses, and a planned decrease in marketing spend versus the prior year. During Q4, we closed six stores ending the year with 248 stores. 18% reduction compares you to 2023. All of these closures occurred at natural lease expiration with very minimal closing costs. Turning now to the bottom line, our focus on gross margin expansion and cost…

Thank you, Andy. I would also like to take the opportunity to thank you for the value you have added during your interim time with the organization and wish you the best going forward. I'm inspired by our teams who are demonstrating tremendous dedication to fossil, a commitment to turning around this business. We're all energized by the opportunity in front of us and look forward to keeping you updated on our progress throughout the year as we strive to build lasting value for our shareholders.

This concludes today's call. Thank you for joining. You may now disconnect. Thank you. End of Q&A: