Good morning everyone and welcome to the Movado Group Fiscal Third Quarter 2019 Earnings conference call. As a reminder, today’s cal is being recorded and may 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, 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 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’d like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Rachel. I would like to welcome you to Movado Group’s third quarter conference call. I will first walk through the highlights of our third quarter results and share with you some of our product and marketing plans for the holiday season, as well as an update on our acquisition of MVMT, which we just completed on October 1. Sallie will then review our financial results in greater detail and we will open up the call to your questions. We are pleased with our third quarter and year to date results and the progress we are making against our strategic initiatives, including our digital center of excellence. For the third quarter, sales grew by 9.6% to $208.9 million and adjusted operating income rose to $35.7 million, up $2.1 million from $33.6 million last year. Our adjusted earnings per share grew by 13.5% to $1.18 per share. Year to date, sales grew by 14.7% to $480.2 million and adjusted operating income grew by 20.4% to $59.2 million. We continue to maintain a strong balance sheet with $142.7 million in cash despite the acquisition of MVMT, which was partially funded by a $50 million borrowing on our amended bank agreement at a current interest rate of 1%. We continue to make excellent progress on our strategic initiatives and are pleased with our positioning as we begin the important holiday selling season. For the quarter, our domestic watch and accessory brands business grew by 11.5%. Excluding one month of MVMT sales, our domestic watch and accessories brands posted a 7.3% sales increase for the quarter with strong growth in Tommy Hilfiger and Coach. We are very pleased with these results which demonstrate that the strategies that we have been working on in our domestic businesses are delivering the desired results. On the…

Thank you Efraim, and good morning everyone. For today’s call, I will begin with a review of our third quarter financial results and balance sheet and then discuss our outlook. Before I begin, I would like to point out the special items included in our results for fiscal 2019 and fiscal 2018. Our press release also describes these items and includes a table of GAAP and non-GAAP measures. Movado Group acquired the MVMT brand on October 1, 2018. Included in the year-to-date consolidated results for fiscal 2019 was $11.9 million of pre-tax charges primarily connected with the integration and acquisition, $10.9 million of which was recorded in the third quarter. Approximately $140,000 of the $10.9 million impacted gross margin and the remainder impacted operating expenses. After tax, the third quarter charge equates to $8.1 million or $0.34 per diluted share. Our GAAP results for the third quarter and year-to-date period of fiscal 2019 include a tax benefit of $7.6 million or $0.32 per diluted share related to a change in the estimated impact of the 2007 Tax Act as well as certain discrete foreign tax items. Movado Group acquired Olivia Burton on July 3, 2017. Included in the results for the first nine months of fiscal 2019 was $2.2 million of non-cash amortization of the acquired intangible assets, of which approximately $700,000 was in the third quarter. After tax, the year-to-date charge related to the acquisition equates to $1.8 million or $0.08 per diluted share. Included in the year-to-date consolidated results for fiscal 2018 was $5.9 million of pre-tax charges primarily connected to the acquisition, of which $1.4 million was recorded in the third quarter. After tax, the charge related to the Olivia Burton acquisition equates to $5.5 million or $0.24 per diluted share for the year-to-date period last year.…

[Operator instructions] Our first question, we’ll hear from Oliver Chen with Cowen & Company.

Hi, thank you. Good morning, nice quarter. Our question is about the U.S. wholesale segment. What are your thoughts on how that performed, and also, are we in a phase where this can be sustainably positive or do you expect volatility or different kinds of planning on the U.S. wholesale side? Another question was just related to MVMT and Olivia Burton. How are you thinking about shared services versus responsibilities at each brand? Would love your thoughts on the evolution of that framework as you continue to make interesting M&A purchases. Thank you.

Sure, thank you, Oliver. On the first part of the question, we are seeing growth especially in our fashion watch category, our .licensed brands in the U.S., but off of a lower base, so we still believe that that is going to continue and we have a lot of exciting product and marketing, particularly in our Coach and Tommy Hilfiger brands, as well as in Lacoste and Hugo Boss, so I think that those represent a nice opportunity in the U.S. Movado continues to hold the largest market share within the $300 to $3,000 price category and we believe that there certainly are increased opportunities, especially on the digital front as it relates to Movado, and we’re seeing that. With regards to the second question, we believe that the opportunity for us to be able to leverage our infrastructure, especially on the MVMT acquisition, is significant but will take a lot of work, so as I said in my comments, we would expect to start beginning to reap some of those benefits in the second half of next year. We still are completely running both Olivia Burton from London in its Shoreditch headquarters, which we’ve actually expanded since we’ve acquired the company, and MVMT will continue to be run in Los Angeles by its founders and its management team. We’ve been very, very impressed with the team that they have built over the last several years and are excited to have them on board, just like we were really excited to have the Olivia Burton team on board as well.

Thank you. On the U.S. wholesale side, how are you feeling about inventories relative to sales? The gross margin line in terms of the product mix, what’s happening with the Movado brand and how should we expect the gross margin to trend? Will that continue to be a headwind with product and channel mix? I’d love your thoughts on how we should model that.

I think the mix issue was probably marginal at best, so it’s still a very small percentage that we’re talking about in terms of gross margin. Our gross margin for the year is up, I believe 100 basis points, so we’re pleased with that. We also had some currency headwinds in the third quarter, which in the first half of the year we had currency benefit. On the Movado side, I think there are some channel issues, and we’ve talked about those in the past, as mall-based retailers are not performing at the same level that they had been; but we believe that the digital opportunities are significant and those actually are significantly accretive to gross margin.

Okay, and lastly, could you speak to us about the watch industry? As we look at our longer term models, how are you feeling about industry growth and what’s sustainable? You had a really nice organic like-for-like number this quarter. On a long term basis, what should be realistic for top line growth, and also, can you leverage SG&A? Would love any thoughts there, thank you.

We have made two significant investments for our future, those being Olivia Burton and MVMT, so we believe in the category and we believe that to engage with younger consumers is really important to the future, so through those two acquisitions we’re able to do that and able to benefit then into our other brands as well from the learnings. I think that on the expense side, we will be able to ultimately leverage expense infrastructure, but that, as I said earlier, will take some time as we are able to combine some logistics and supply chain and fulfillment capabilities, but that doesn’t happen overnight. MVMT does have a higher marketing investment than we do traditionally, but we believe that we’ll be able to leverage that as well down the road.

Thank you. Happy holidays.

Okay, thank you.

Thanks Oliver, you too.

At this time, there are no further questions. I would like to turn the call back over to management for any additional or closing remarks.

Okay, I’d like to thank you all for participating on our call today and wish everybody a happy holiday over the next few weeks. Thank you very much.

That will conclude today’s call. We thank you for your participation.