Good morning, ladies and gentlemen and welcome to Movado Group Inc. Third Quarter Fiscal 2015 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, ladies and gentlemen, this conference is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Ms. Rachel Schacter of ICR. Please go ahead, ma'am.

Thank you. Good morning, everyone. With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; Rick Coté, Vice Chairman and Chief Operating Officer; and Sallie DeMarsilis, 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, maybe 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 Rick Coté, Vice Chairman and Chief Operating Officer of Movado Group. Rick Coté: Thanks, Rachel. Good morning everyone. Our third quarter results were in line with our updated guidance we issued on November 14, 2014. Softer than expected sales reflected inventory tightening at retail, Slowing growth -- category growth and the performance of LACOSTE, SCUDERIA FERRARI and our Movado brand internationally being below our plan. At the same time, our decision to continue to make the right long-term investments behind our brands and our organization investments focused on future growth tempered our operating profit. Importantly, we believe the majority of these headwinds are temporary as we expect inventory levels to normalize. Improve performance from LACOSTE and our Movado brand internationally and continued growth from SCUDERIA FERRARI. Our largest brand, Movado, continues to…

Thank you, Rick and good morning everyone. Today I will present our financial results for the third quarter and the first nine months of fiscal 2015. I will begin my remarks with a review of our operating results followed by the balance sheet and close with guidance. Before I review the quarter and the year in total, I would like to point out the special items included in our results for fiscal 2014. Please refer to our press release for a description of these items as well as a table of GAAP and non-GAAP measures. During the first quarter of fiscal 2014, we reported $1.5 million or $0.04 per diluted share pre-tax gain from the sale of a building in Switzerland. In the second quarter of fiscal 2014, we reported $1 million tax benefit or $0.04 per diluted share one-time item. The balance of my remarks will exclude the special items just discussed. For the third quarter, our reported sales decreased 0.6% to $188.6 million. In constant dollars, sales rose 0.1%. Our U.S. sales declined by 0.2%, driven by the wholesale brand category and our international sales declined by 1.1% compared to last year with the decrease in luxury brand sales partially offset by growth in our licensed brands. Sales in our wholesale segment were $172.8 million or 1.2% below sales of $174.9 million for the same period of last year. In constant currency, wholesale segment sales declined 0.5%. By geography, our U.S. wholesale business decreased 1.3% to $91.3 million, compared to $92.5 million last year. Our international wholesale business decreased 1.1% to $81.5 million, compared to $82.5 million in the prior year. Sales from the company’s retail business were up 6.8%. At the end of the period, we operated 38 outlet stores. Gross profit was $99.8 million or 53%…

Thank you, Sallie. Our third quarter results were in line with our updated guidance though they were below the initial plan we laid out at the beginning of the year. We have a great portfolio of brands and have made some very important investments over the past several years which we believe will help drive improved sales and profitability for the future. Our Movado brand remains one of the most powerful watch brands in the United States and has tremendous growth opportunities internationally. Our license brand portfolio consists of iconic brands that have helped drive double-digit growth over the past several years. In the emerging arena of wearables, we are exploring the melding of technology and design that are true to the identities of our brands. We continue to strategically invest in support of our brands and talent base to capitalize on the significant opportunity for growth we see ahead. We have plans in place to drive our growth internationally in Latin America, Asia and Europe, and through innovation to broaden our reach to meet more of the lifestyle needs of our consumers. And while we have tempered our outlook for the current year, we remain optimistic about our prospects during the holiday season with a terrific lineup of styles and marketing to fuel sales. We look forward to updating plans with you at our year-end conference call. We would now like to open the call up to questions.

(Operator Instructions) And we will take our first question from Rick Patel with Stephens Incorporated.

Sorry if I missed this, but can you talk about your marketing dollars for holiday and spring. Just curious if there is any big changes in spend versus the prior year. And in terms of communicating, your messaging to customers, do you feel like you are talking to the consumer through the right channel. Just curious if we should expect any changes on that front over the next year? Rick Coté: This is Rick. First of all, yes, the spend as we have for each year does increase. So obviously the fourth quarter is by far our biggest spend period for our marketing dollars. As I tried to outline in my script, we have a lot of activity taking place this holiday season as we do with every holiday season. We thing that we have made all the right adjustments to really focus into our consumer and reach him where we believe they look at the marketing. Whether it's on TV or print, whether it's in social, the digital. Doing a lot of outdoor billboard as well, lot of catalog focus for the holiday season. So, yes, we do increase our spend and, yes, we do adjust our marketing features to make sure that we reach the consumer that we want to reach.

And as you think about your outlook for mid-single-digit sales growth, can you touch upon how much of this will be driven by distribution versus organic growth? And then also comment on pricing, just curious how that's changed given the performance of the Movado brand versus the licensed ones and if there is any opportunity to take pricing higher down the road.

Well, I think, first of all we look at -- our philosophy has been with the strategic plan and continues that we will be outperforming the watch category growth. So we see that as being much more in that flattish to low single-digits and therefore our mid-single digits continues to outperform that. That will be -- historically has been driven very much by volume. Pricing has not been a major factor from a standpoint that we really have provided excellent priced value proposition to the consumer. As we look forward and as we see the watch category growth being at a much lower level, we certainly will be looking at pricing as one of the components. But we do see volume as being a critical component to our growth propositions but pricing certainly will come into play next year and probably over the next couple of years.

Great. And then just one last one if I may. Just a question about the Movado brand performance in the U.K. I know it's still relatively new in that market. Are you still seeing good sell through there and perhaps can you touch upon any new markets that you might enter with the Movado brand in Europe as we think about the next few quarters?

So we have seen sell through growth there although not up to what we would like in our overall plan but we continue to invest in the marketplace and are optimistic about the potential for Movado international growth basically across the Middle East, Europe, Asia -- Europe, U.K. and also reaching the traveling consumer. And that's one of the reasons I think you will see with Ricardo on board that will focus a great deal on the international marketplace and we are glad to have him on board. And as Rick mentioned in his comments, he will join us for our fourth quarter conference call and give a little bit of color on opportunities around the world.

And we will take our next question from Ed Yruma with KeyBanc Capital Markets.

I guess first on the wholesale front. Historically when you have see these periods of watch industry slowdown, do you see the wholesale channel either repositioning case lines to non-watch areas? Do you see kind of increased competition for specific slotting? And then I guess, I know you don't provide markdown dollars but in this environment are there changes or requests that the wholesale channel may have in order to move product?

So we don't anticipate there would be any reallocation of space. Our brands are still driving very good growth at retail and I think as Rick mentioned, we are very pleased with that growth. I think overall, retail as a whole has been somewhat challenging and so retailers are being cautious with their inventory purchases. And in a brand like Movado which has a -- it's a longer-term and a core aspect to the brand, retailers are able to manage their purchases. What was your, second part of your question? The market has been promotional for several years, we are not promotional. And one of the things that we take very seriously is the integrity of our brands and one of the things that we focused on making sure that we continue to make sure that we support them with advertising and marketing and not through promotional aspects.

Got it. And a follow-up if I may. I notice you increased your share repurchase authorization. Could you just quickly update us on the percentage of cash that's in the U.S. that's available for share repo versus international. And I guess, would you consider repatriating some cash to do share buybacks?

I will start with where our cash is. So you are correct, there is a -- the majority of our cash is overseas. So between 15% and 20% of our cash in the U.S. that is currently available for things like share purchases or dividend. One last thing just to keep in mind, we do have a revolving credit facility with our bank so we always do have availability to borrow at very low interest rates if necessary here in the U.S.

Got it. And one final follow-up if I may. In terms of pricing architecture I noticed you mentioned in the last question. But just as you think about the Movado brand and then I guess in tandem, Movado Bold, is the weakness more pronounced in a specific price bands and I guess how comfortable are you overall with the pricing architecture of the Movado brand. Thank you. Rick Coté: I think, number one, we are very pleased with our pricing architecture and the structure that we have. No, we are not seeing any issues with any of our product offerings on the price proposition that we have there. Obviously, when we look at the potential for pricing down the road, we do look at ourselves versus competition and making sure that we continue to provide excellent priced value for our consumer. So we think we have done a great job over the last number of years of really getting our product well aligned from a price point. Having very interesting price ranges for our consumers out there. And we will make sure that we keep that proper balance as we go forward.

And we will take our next question from Jeremy Hamblin with Dougherty & Company. Jeremy Hamblin - Dougherty & Company: Wanted to just have a follow-up on the buyback. Has the company since the pre-announcement on November 14, has the company been any more aggressive then you have been the rest of the year in terms of utilizing the currently authorized share buyback plan that you have in place?

Jeremy, we have an automatic purchase plan in place that is allowed to trade in during closed periods and that is what was operating currently from the pre-announcement until now. So it's been on the regular volume of our repurchases that we have had in place for throughout this entire quarter. We will now look at it going forward now that this has been approved as to what the appropriate purchase level would be with the stock price and with the open authorization. Jeremy Hamblin - Dougherty & Company: And then just a follow-up to your comment on the revolving line of credit. Is it something that you would potentially do in looking at this new buyback plan or the increase in authorization to $100 million that you would utilize a revolver in the sense to repurchase shares more aggressively moving forward? Or would you be willing to borrow at all in doing that?

You know, I think the rates are very attractive right now and we have support of bank group on a current deal that does allow us to borrow with a lot of flexibility. So, yes, that would absolutely be something we would look to. Jeremy Hamblin - Dougherty & Company: And then wanted to come back to the ESQ for Movado reallocation of display space. In terms of the commentary about it not fully materializing, what do you think has happened with that, in terms of -- is there any concern that the company is not getting as much shelf space allocated as you had hoped for? Or how -- I'm hoping that you can maybe just elaborate on why it hasn't materialized in the way that you had anticipated?

So we definitely took over the space and we still have the space, and the space is performing extremely well. And in fact for retailers it's performing even better than we anticipated. I think we expected that there would be a higher sell-in component throughout the year based on that then what we currently saw and are seeing. But as we have said numerous times, Movado continues to perform extremely well in the United States at our largest points of sale and where we have reallocated the space, it's even driving greater growth. But I think we had anticipated higher sell-in behind that effort. And so we are maintaining the space we are seeing both growth in our core component to Movado and very good growth in our Bold component to Movado as well. Jeremy Hamblin - Dougherty & Company: So as a follow-up to that. It's now been kind of three quarters or so that there seems to be this mismatch between sell-through and sell-in to your customers. How long can that dynamic last before there's just no inventory at your channel partners on the retail side of things? There is some... Rick Coté: Well, I think that -- the response to that is, we believe that that will be at a more normalized level by the end of this year. We would have expected inventory growth levels, particularly with the Movado ESQ plans that we had in place. That inventory growth component did not materialize, I think, for a multitude of reasons. Part of that being our retail partners being quite aggressive in managing their own inventory for a multitude of reasons. We believe that we -- the levels of inventory that we have out there are appropriate to be able to sustain the level of growth that we have. And we certainly see that as our plans go forward, that our sell-in should certainly be equal to our sell-through even though the sell-through has been much higher than the sell-in for the last number of quarters. Jeremy Hamblin - Dougherty & Company: And just to clarify, because your guidance for Q4 -- actually you're right, it factors in an acceleration, or deceleration I should say, in Q4 versus the previous quarters. So, in terms of the comment that it's going to normalize by the end of the quarter, you're really thinking in terms of Q1 next year? Rick Coté: Yes, it's the end of the year. Sorry, I said -- so it's certainly the end of the year which would be in the first -- when we look at next year, our next fiscal year, we would see ourselves in equaling our sell-through. We believe the inventory adjustments that have taken place will occur by the end of this year. Have been occurring and will be completed by the end of this year and we don't see a reason for us trying to aggressively grow that level of inventory.

And we will take our next question from Mike Richardson with Sidoti.

Just a couple of quick follow-ups from some of the things, questions that people had asked before. With regard to the buyback, is the plan to execute the entire amount of the authorization? Rick Coté: What we have is the original ending period was January 31 of 2016 and even though we have increased from 50 million to 100 million, we kept that same end date. So, yes, the rationale for buying originally was to offset equity dilution that was taking place with grants. Obviously, that will be on a more accelerated basis now.

Okay, thanks. And then, Rick, in your prepared remarks, you mentioned you expect overall mid-single-digit top line growth going forward. I'm just wondering how that might breakout in terms of owned brand versus licensed brands? Rick Coté: I we will have that level of detail more when we have our fourth quarter conference call. Again, we continue to perform well in all of our businesses and brands, licensed brands continue to be very strong. Movado, very strong. There were pockets, whether it be Movado international and/or LACOSTE, where obviously we have levels of improvement. But we will get more clarity at that on our fourth quarter conference call.

Okay, great. And with the introduction of FERRARI, especially in southern Europe, has that opened any additional doors for any of the other brands? Rick Coté: One of the things is, we have very strong distribution for all of our brands globally and, obviously, as we added a new brand like SCUDERIA FERRARI, we look at our traditional markets and sit there and make the assumption that we can expand into most of those doors. So we have been doing that. We will continue doing that. But I also think SCUDERIA FERRARI offers us an opportunity of having perhaps a very different balance than we have with the HUGO BOSS or TOMMY HILFIGER between traditional retail as well as some of what I'll call the sporting shop retail distribution. So I think our going in this year is having a more of a balance of that, focusing on that arena which we haven't. But we will continue to expand doors in the traditional retail. Probably we will not get to the same level as a HUGO BOSS, as a FERRARI, but we may have the same number of doors distribution but in some different channels as well.

Okay. And then just the last one for me. Has there been any loss of shelf space with your retail partners? Rick Coté: From an overall standpoint, absolutely not. If anything, we continue to expand in pretty much across all of our brands and businesses. So, again, very powerful brands that are performing. Brands that are very much desired by retail partners because we are leading growth above the watch category overall growth.

And we will take our next question from Kristine Koerber with Barrington Research Associates.

I have a couple of questions. First, just looking at the overall watch category and the slowdown that's being experienced. You indicated that most of that may be due to high growth rates over the last couple of years. Are you sure you're not seeing any change in consumer taste or anything else? Maybe consumers are waiting for a smart watch launch or whatever it may be?

So we don’t think you are seeing consumer tastes change. I think we are still happy with the momentum of our brands retail. We have just seen the category, overall growth, slow. And it has grown very strongly over the past several years, especially in the United States. We would expect in a few years to return to that growth especially as we continue with innovation. We think wearables will add interest to the category, not take away interest for the category. So I think that there are a lot of opportunities ahead for us as we choose to be able to play in the wearables space as well as opportunities globally and internationally. And you have seen some economic issues internationally and I think as Rick mentioned in China, in Turkey, Argentina. And some of those should moderate in the future as well.

Okay. And then as a follow-on to the wearables or the smart watch, you mentioned that you hired a new General Manager. Can you give us some color on his background and your timing on the wearables category, where you stand with a product launch at this point? Rick Coté: Well, from an overall standpoint as I mentioned in the last conference call as well, in the second quarter, that is certainly an area that we are spending time and attention and looking and exploring options here. We continue to expand the strategic alliance opportunities that we have with partners out there. When we are done, we certainly, when and if we decide to launch, we would certainly launch from a luxury branding philosophy standpoint. So for us it is not purely a technology opportunity as opposed to a lifestyle and a very important branding opportunity for us. So we continue to focus on our strategic alliances. We continue to move forward bringing people aboard helping us with that from a standpoint of helping us with those alliances, managing some of the opportunities there, as well as we contemplate business plans as we move forward. So we are going down the path that gives us the opportunity to be able to do something but when we are done we will only do it from a very strong branding perspective. So there are no timelines that we are willing to commit to at this point in time with the launch or anything but we certainly are spending time in activity in that arena to understand what we can do and to certainly be able to do it if we do in a point of difference perspective.

And the new General Manager you brought on board, what is his background, [indiscernible] background? Rick Coté: His background is in the technology arena, on the west coast. So certainly brings an additional set of competencies to us as an organization, knowing a bit more from a technology standpoint, knowing a bit more on the marketing from a technology standpoint, the consumer rationale and all. And obviously being in the same locale where a lot of these technology partners live and play.

Okay. And then lastly on FERRARI. I know you slowed the door growth to tailor the product to certain regions. How should we think about door growth going forward? You were targeting 1,000 doors at year-end, I think you're around 350 or so. When do you expect to get to that 1,000 doors at this point? Rick Coté: I think we will provide a little bit more clarity on that on our fourth quarter conference call, but our game plan was to basically open about 1,000 doors per year for the next couple of years with the first year being around 2,500. We will certainly look at that and as I said, I am not so sure we will have a dramatic change in that, it may be more the mix of the type of retail that we have there. But I will be able to give you better clarity on that as we formalize our plans at the end of the year.

And we will take our next question from Oliver Chen with Cowen and Company.

Regarding the marketplace, are there big distinctions between the fashion category versus fine and if you had any comments there? And then, on your detail on the core international Movado brand, what would you say are the big opportunities? Is it more about the backdrop and the sell-in versus product innovation that needs to take place there as you look to improving the performance?

We have seen strong sell-through across our licensed brand portfolio with the exception of the brands that Rick mentioned. So LACOSTE is one where we are seeing a weaker sell-through but we expect that to began to turn around as we implement new product and marketing strategies in that brand. And across the Movado brand we have had strong, very strong sell-throughs in the United States. Movado for us is a large opportunity internationally. We believe having Ricardo onboard will help a great deal with that. And really for us it's on the marketing and brand building front on the international front. So Movado has a huge brand awareness. Very large market share in the U.S. And we need to increase the awareness and marketing levels internationally but in a very focused approach. So that is what we are building our plans on for the future. But we will give you more highlight around that at our Q4 conference call.

Okay. And Efraim, on LACOSTE, the Goa was pretty popular in the past. So, what's the quick take on the repositioning happening there? Are you going to have to change your pricing structure?

Not at all in terms of pricing. We are very positive on the new LACOSTE 1212 as are our retailers. And we have seen a good initial consumer reaction to the product as well. It is priced similarly to the Goa. And every brand at some point go through different levels of maturity and issues and great brands have great staying power and generally rebound. So we are not concerned with that from a long-term perspective.

Okay. And my final question is, just what are your thoughts on the positive catalyst for a reacceleration of the watch industry growth? Like what are the positive points in terms of you seeing that happen as an idea? Thanks.

Well, we think that the wearables space will add some excitement to the category. There is a lot of research that shows that people who today are not wearing watches will now become interested in watches. And then some will move on into conventional and innovative new products from brands with great heritage like ours. So I think that’s an opportunity that will drive interest in this space, and I think great product innovation. So we continue to drive innovation in a product that always drives consumer interest.

And this concludes our question-and-answer session and I would now like to turn the conference back over to management for any additional or closing remarks.

Okay. I would like to thank all of you for joining us today and asking some very good questions. We would like to wish everyone a great Thanksgiving and a happy holiday season. So thank you again for joining us today.