Good day, everyone and welcome to the Movado Group’s Fiscal Fourth Quarter 2016 Earnings Conference Call. As a reminder, today’s call is being recorded and may not be reproduced in whole or in part without permission from the company. At this time, I would like to turn the conference over to Rachel Schacter of ICR. Please go ahead.

Thank you. Good morning, everyone. With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; Ricardo Quintero, President; and Sallie DeMarsilis, Chief Financial Officer. Also in the room is Rick Coté, Vice Chairman and Chief Operating Officer who will join us for questions and answers. Before we get started, I would like to remind you of the company’s Safe Harbor language, which I am sure you are 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, our 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.

Thank you, Rachel and thank you for joining us on today’s conference call. We are very pleased with our fiscal 2016 performance. Despite the extremely challenging retail environment, slowing growth in the watch category and strong currency headwinds, we are able to deliver a solid year with sales growth to $594.9 million and adjusted operating income growing by 3.7% to $74.1 million. We generated $74.6 million of operating cash flow and ended the year with a record $228.2 million in cash. Fiscal 2016 marks the third year in a row that Movado Group has delivered adjusted operating income in excess of $70 million despite the increased level of volatility in the marketplace. We are very proud of the strong execution by our teams around the world. We have built a solid global infrastructure and have continued to drive the growth of our brands. As a company, we remain focused on driving innovation across our brand portfolio, which was truly exemplified by the extremely successful launch of the Movado Edge Collection introduced late last year. As a leadership team, we are focused on driving long-term value for our shareholders, customers and employees. We are pleased that our Board has authorized both an 18% increase in our quarterly dividend as well as a new $50 million share repurchase authorization. While we expect the environment to remain challenging in fiscal 2017, we remain optimistic about our opportunities longer term. We have decided that during this period, we will continue to invest in marketing, brand building programs and our connected watch initiatives. We believe that these investments, along with continued product innovation, will position us extremely well for sustainable profitable growth in the coming years. With this in mind, we are planning for sales of $585 million to $600 million and diluted earnings per share of $1.85 to $2. Before I turn the call over to Ricardo, who will highlight some of our brand performances and initiatives, I would like to acknowledge Rick Coté, who has announced that he will be retiring in June. Rick has been an extremely valuable partner and colleague and in helping to lead the growth of the company since he joined us in 2000. We are fortunate that Rick will continue to serve on our Board of Directors, where he will provide tremendous counsel and strategic advice. I would now like to turn the call over to Ricardo.

Thank you, Efraim and good morning. We are pleased with our fourth quarter and our full year fiscal ‘16 results as they demonstrate strong execution of our strategic approach to growing our business in capturing the full potential of our brand portfolio. In the fourth quarter, net sales were $143.3 million, up 10.1% on a constant currency basis and up 7% on a reported basis and adjusted operating income at $12.9 million, up 29.6% on a constant currency basis. We delivered solid international growth, with net sales increasing 16.4% on a constant currency basis and up 9.6% on a reported basis. And U.S. wholesale was up 6.8% both on a constant currency and reported basis. For fiscal ‘16 full year results, we are well within our guidance, with net sales at $594.9 million, up 5.5% on a constant currency basis and up 1.4% on a reported basis and adjusted operating income at $74.1 million growing by 18.1% on a constant currency basis. As discussed previously on our third quarter call, we are living in a booga [ph] environment that is accelerating in terms of volatility, uncertainty, complexity and ambiguity. This environment has affected the global retail landscape, has accelerated shifts in consumer purchasing patterns and has made it much harder to grow. At Movado Group, we have taken a proactive approach to navigate in this environment, leveraging our strengths and focusing on superior execution of our strategies, centric on the consumer to create compelling innovation. We believe the great product always wins if it is desirable, relevant and at a competitive value. So, while the short term is difficult, we are confident in our stated strategy and we will continue to invest to build our brands and our people to deliver sustainable profitable growth in an industry that continues to…

Thank you, Ricardo and good morning everyone. For today’s call, I will first review our income statement and balance sheet and then discuss our outlook for fiscal 2017. Before I review the quarter and the year in total, I would like to point the special items included in our fourth quarter and full year results for fiscal 2016. Please refer to our press release for a description of these items as well as a table of GAAP to non-GAAP measures. Our fiscal 2016 results include a $4 million pretax charge, which equates to a $3.9 million after tax or $0.16 per diluted share in connection with our operating efficiency initiatives and other items. $1.3 million or $0.06 per diluted share of this charge was in the fourth quarter and the remainder was in the first quarter. The balance of my remarks will exclude the special items just discussed. For the fourth quarter of fiscal 2016, our sales increased 7% to $143.3 million. In constant dollars, sales increased 10.1% as currency unfavorably impacted our sales by $4.1 million. While all sales categories experienced positive sales growth as compared to last year, our largest dollar growth was in our luxury brand category, followed by our licensed brand category. Sales increased 4.1% in the U.S. and in constant dollar increased 16.4% internationally. Sales in our Wholesale segment were $121.2 million or 8.3% of our sales of $111.9 million for the same period of last year. In constant dollars, sales in our Wholesale segment increased 12%. By geography our U.S. wholesale business increased 6.8% to $54.5 million compared to $51 million last year. Our international wholesale business increased 9.6% to $66.8 million compared to $60.9 million in the prior year. Sales from the company’s retail business for the fourth quarter were up 0.3% from…

Thank you. [Operator Instructions] And we will go first to Oliver Chen with Cowen and Company.

Thank you. Congrats on a great end in a tough environment. And Rick, we will miss you as well. It’s been great working with you and looking forward to staying in touch. We had a question regarding sell-in and sell-out. The sell-throughs for several quarters have been outpacing your sell-ins. So, will this dynamic kind of mitigate over time in terms of what’s happening in the wholesale channel? And then also on the international side, this is a different question, but are there trends you could discern between the Mainland Chinese customer versus the tourist Chinese customer and how has the Chinese customer impacting your portfolio overall in terms of which products or would you characterize some areas as being softer related to that cautious view? Thanks.

Okay. Oliver, thank you. And I will take the first part of that question and then hand the part on China over to Ricardo. We have continued to see an intense focus by retailers on inventory. And as environment continues to be challenging and we expect it to continue to be challenging, especially through the first half of the year, we expect that focus to continue both within the watch category and especially, I think in the fashion watch category, but I think overall, retailers, especially department stores are focusing on their inventory levels. Rick Coté: Yes, and thank you, Oliver. As far as the Chinese consumers are concerned, we are seeing a pickup in the travel retail quarter. So, we have actually done a number of initiatives on in-flight and we are in the process of doing more airport presentations. But I will tell you, brands like Ferrari are doing extremely well in the traveling quarter. We have introduced new products that are attractive to this consumer that’s traveling, buying, if you will, a souvenir they go back and they do the gifting. So, we have been seeing traveling Chinese consumers in Europe and seeing a pickup on some of these offerings. Also on our luxury portfolio, Movado also performing very well with this traveling consumer, which we are very happy with, because as we stated before, our business within Mainland China is tough, but we did some initiatives on the travel retail side that are starting to get some traction. So, we are very encouraged by that.

Okay. And as from your connected watch initiatives, I have been impressed with the product we have looked at has been innovative and well thought out in terms of consumer and design. As for investors and clients, where do you think the connected watch should go as a percentage of your portfolio over time? Do you have any thoughts on the magnitude of the size of that and potentially timing? I know it’s very early on this technology.

Sure. So, I wouldn’t be able to answer as what percentage it could be, but I do believe this is a quickly evolving category. But again, it’s a category that’s going to get better as it goes on and technology and battery life and functionality improved to allow us to do what we do best, which is design beautiful product around this technology. So, I will see you – I believe that you will see that intensify in the third and fourth quarter from our perspective, but really you are going to start seeing some really interesting things beginning next year. And we are very encouraged by our ability to be able to play in that environment and believe that down the road connected product will play a significant part in our business, but again continuing to do what we do best, which is design beautifully branded product for the consumer with increased functionality.

Okay. Best regards. Thanks a lot.

Thank you.

We will go next to Ed Yruma with KeyBanc Capital Markets.

Hi, thanks very much for taking my question. I guess just a follow-up to Oliver’s question on sell-in versus sell-through, are there particular brands that are weak? You mentioned some weakness in fashion watch at least in sell-through. Is that maybe where some of the weakness is? And if you could also kind of help us understand how you characterize inventory in the channel today? Thanks.

Well, I will start with the beginning of that and I will then also turn it off to Ricardo to add to that. I think the fashion watch category is particularly challenged in the U.S. in the department store channel. And that’s an overall category phenomenon. So, I don’t think it’s really – in our case, actually with particular brands, in fact, some of our brands, we are very pleased with their results and beginning to grow market share. Also significant for our fashion watch business is the Brazilian market, which we have very good results in last year. But given the political and economic environment, we know that those results will not be repeated this year and you read about that in the newspaper everyday. On the inventory, Ricardo, would you like to add something?

Yes. I mean, mostly, if you break it down by channels, the department store channel is probably the most challenged, but when you look at some of the change – some of the destination locations, we are seeing that the consumer is – the traffic is there and we are seeing that in a much healthier place. And then you have of course the online phenomenon, where you are seeing a lot of acceleration. So, I think it’s a combination of the three, but mostly you are seeing in department stores the biggest inventory.

Got it. And two other quick follow-ups, I guess, first, how much have you baked through your fiscal ‘17 numbers for both Edge and for Connected? And then finally, what makes you confident that performance in the business should improve in the back half? Thank you.

So, to answer both of your questions and you are a little breaking up, but I think I got it, we really believe still that our connected efforts will play a small role, but a little stronger role in our business in Q3 and Q4 as we begin to deliver product into our licensed brands that we are very excited about in collaboration with HP. And there are several things that give us a little – I wouldn’t say confidence going into the second half, but a little more optimism about the second half. And that’s what we have a number of new product initiatives that we are really excited about in the second half of the year. And quite frankly, I think in the first half of the year, retailers we will focus more on their inventory metrics and in the second half of the year, when consumers – when the major holidays come along, purchasing patterns should improve and retailers then focused on also driving sales in addition to inventory optimization.

Great. Thanks so lot. And thanks very much Rick.

We will go next to Jeremy Hamblin with Dougherty & Company.

Good morning. Thanks for taking my question. I wanted to just get a little more granular on the first half of the year guidance and I think what I caught was you are expecting sales down mid single-digits for the first half of the year and then I think operating income to be down as well, but I don’t think you have provided a level on that. In terms of where that split is coming from, it sounds like there is a few areas of weakness, the U.S. department store channel, but also clearly international, whether it’s Brazil, Middle East or China, can you just breakdown for us how much of that kind of that down mid single-digit is coming from the U.S. business versus how much of that is being contributed from these international locales that are struggling?

I would say that the main part of that would come down from the U.S. and the Brazilian markets. We are seeing the rest of our international business a bit more stable from that perspective. Is that right, Ricardo?

Yes.

Okay. Thanks. And then is it – and I am sorry, did you have any ability to give additional color on the magnitude of operating income being down on a year-over-year basis in the first half, I mean are we thinking similar to that down, mid single-digit or just down slightly, any additional color would be great?

Right. No, unfortunately we didn’t provide color. But as you know, the first half of our year has fallen in the back half, so when sales go down it does impact the bottom line more significantly as we need to cover our operating expenses and other initiatives that we talked about.

Okay, great. And then I wanted to come back to the Edge series and it sounds like you are very pleased with the launch of that and I think the feedback has been very strong, can you put some metrics behind how the launch of this and I realize it’s only in 150 doors, so it’s still early, but how did the launch of this compare to when you did Bold several years ago?

It’s very similar in terms of the momentum that it generated and at even a more aspirational level. So we are really pleased with it. We have also have gotten some consumer research back on the type of consumer that’s buying Edge and we are seeing a young affluent consumer purchasing this product. So we believe it has a lot of potential. We have a lot of innovation and extension coming into that also in the second half of the year in Edge. We showed that those products to our customers in Basel have got a very positive reaction as well.

Okay, great. And then one last one, in terms of the buyback plans, you did quite a bit less in the fourth quarter than you had done in other quarters, but you did re-up or add $50 million here, is this now going to be a little more opportunistic, how should we be thinking about the buyback and recognizing the timeframe is a little bit longer than the last one, which was really a 12-month program?

So I will take part of that and some perhaps, Efraim will come and jump in a little afterwards. We did take advantage of our stock price in the past 12 months or so and we were very aggressive, I would say in the market buying back shares. We thought that was a very good investment for us. We are very bullish on our business. So that plan was larger and did have a shorter expiration date kind of by design. The new plan is really more in line with what our prior year’s plans have been, which is really to offset dilution. So at this point, it’s the $50 million program and an 18-month life.

And we obviously have a very strong cash position in the company and I think that also allows us tremendous flexibility and opportunity as we enter or as we operate in a volatile time. And we can continue to invest in and grow our business from many perspectives. So we did also announce today that we increased our dividend 18%. So we are pleased to return funds to shareholders also in that manner as well.

Right. And just a follow-up to that – to the question on funding the buyback, you used loan payables or loan to finance that, since you have so much of your cash overseas, would we expect that to be – the way that you would pay down that share buyback again, I mean you did pay back $5 million I think during the fourth quarter, but is that how you would fund the buyback going forward is potential using a little more borrowings to do that?

I think in our current model, where we are looking more to offset dilution, our U.S. cash flow would be adequate to buyback the shares.

Understood. Thanks for taking my questions, best of luck.

Thank you.

We will go next to Frank Camma with Sidoti.

Good morning guys.

Hi Frank.

Good morning.

A couple of quick questions, can you just talk a little bit about the smart watches and your license portfolio specifically, just are there any specific brands that you find that may be more appealing for that technology?

Well, we actually got very good reaction across our brand portfolio in Basel from our customers that we previewed our connected watches to. So it’s really in every single brand and they have done very brand appropriately. If they do not appear to be smart watches, if you didn’t know it and they look – a Tommy Hilfiger looks like a Tommy Hilfiger watch and a HUGO BOSS watch looks like a HUGO BOSS watch. We are currently working on the apps that we will coordinate with these products and we are excited about that effort as well and one that we are putting investments in as well.

Great. And I am sorry if I missed this, but does your guidance include projected buybacks or exclude projected buybacks?

Our guidance reflects the buybacks that we have already done this year in fiscal ‘16, as well as our normal repurchases, which should be more of an offset to dilution for fiscal ‘17%. There is nothing unusual or we would have rolled it out.

Okay, alright. And just last thing is on your CapEx, I think you said $12 million, which obviously seems a little bit of your historical trend, I was just wondering, if there is – is that sort of some of those investments that you mentioned?

No, most of the CapEx would be related to infrastructure type things like replacing servers, refreshing our stores, shop in shops, things like that, not necessarily anything related to our wearables or our other initiatives that we are talking about.

Okay. So it’s just sort of a timing, because it is a little bit above where you would typically spend as a timing issue on refreshing the stores?

Well, even this year, quite honestly, Frank, I know you are somewhat new to the picture. It was low this year, lower than our historical patterns. A lot of that really was us looking at our Chinese business and slowing down some of the shop in shops we built there as a result of our refocus on priority doors and owning our own concessions and things like that in that market.

Okay, great. Thanks. That’s all I have right now.

Thank you.

And with no further questions in the queue, I would like to turn the call back over to management for any additional or closing remarks.

I would like to really ask, I know that I would like Rick to actually say a few words and then I will come on and conclude the call. Rick Coté: Okay. Thanks Efraim. It has certainly been a pleasure working with our long-term investors and market analysts that cover and have covered Movado Group over my 16-year career. We have always worked to be informative and transparent in our disclosures and at many times, been the first in our category to highlight market trends. Movado Group has transformed itself over the years and I believe it is in excellent position with its talented global team of employees, its world class infrastructure and brands to continue delivering new sustainable levels of performance. I look forward to my continued participation in helping Movado achieve its goals in my new role as a non-management member of the Board of Directors. I am also appreciative of the terrific group of global employees that continue to drive excellence and performance with our global customers, consumers and business partners around the world. Our employees and our culture make Movado Group such a terrific and enjoyable place to work. I retire knowing the business is in great hands with Efraim, Ricardo, Sallie and our entire leadership team. Also, a special thanks to Efraim, who has been a terrific partner, mentor and leader for me. Thanks everyone for listening to me for 16 years.

Okay. Well, thank you very much, Rick. And I think that really says it all about how strongly we feel about our company and I would really like to thank Rick for his help over the last 16 years, but as well in helping us plan our succession planning as effectively and seamlessly as we are now ready to do. So, again, thank you all for participating with us today.

Again, that does conclude today’s presentation. We thank you for your participation.