Good day everyone, and welcome to Movado Group, Incorporated Second Quarter Fiscal Year 2025 Earnings Conference Call. As a reminder, today’s call is being recorded and may not be reproduced in full or in part without permission from the company. At this time, I would like to turn the conference over to Allison Malkin with ICR. Please go ahead.

Good morning everyone. With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; and Sallie DeMarsilis, Executive Vice President and Chief Operating Officer and 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 would like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

Thank you, Allison. Good morning, and thank you for joining us today. I am pleased to share our second quarter performance as we make progress advancing our strategy in a challenging consumer spending environment. We improved our sales trends from the first – to the second quarter, reporting virtually flat net sales on a constant dollar basis to last year. Our operating profit declined to $3 million, driven by increased marketing investments that are expected to accelerate sales growth in the future. We maintained a healthy gross margin with the rate declining versus the second quarter last year due to the overall mix of our business. Our balance sheet remains strong with $198 million in cash and no debt. Inventory increased from the beginning of the fiscal year to support our sales expectations for the second half of the year. Across geographies, our retail partners placed orders cautiously, especially in Europe and the U.S., where customers are maintaining lower levels of inventory in a challenging consumer spending environment. Despite this, we were pleased to see a favorable response to our increased marketing investment. We saw increased interest across our brands, with unit volume in our licensed brands increasing by 10%, buoyed by our marketing efforts and the reintroduction of certain price points that we had previously vacated across our brands. In our Movado brand sales grew by 1.4% with growth in the direct-to-consumer channel, including a 21% increase in Movado.com, mostly offset by a 6% decline in our wholesale channel. While we are pleased that we have improved our retail trends overall, we recognize that the global operating environment remains challenging for retail and the watch category in particular, with a heightened level of uncertainty and we believe this will have an impact on our second half results and are…

Thank you, Efraim, and good morning everyone. For today’s call, I will review our financial results for the second quarter and year-to-date period of fiscal 2025 and then I will provide an update on our outlook for the year. Net sales in the second quarter improved sequentially from the first quarter as our marketing and product initiatives gained traction. Overall, our top-line performance was slightly below the second quarter of fiscal 2024 with net sales being down 0.7% and profitability impacted by our increased marketing investments. While we continue to operate in a dynamic global environment, we are pleased with the progress we are making on our initiatives and believe that our efforts have positioned us well for the future. Turning to a review of the quarter. Sales were $159.3 million as compared to $160.4 million last year, a decrease of 0.7% in constant dollars, the decrease in net sales was 0.3%. Net sales decreased across owned brands and company stores, partially offset by an increase in net sales in licensed brands. By geography, U.S. net sales decreased 0.3% as compared to the second quarter of last year. International net sales decreased 0.9%, on a constant currency basis, international net sales decreased 0.3%. Gross profit as a percent of sales was 54.2% compared to 55.7% in the second quarter of last year. The decrease in gross margin rate as compared to the same period of last year was primarily driven by unfavorable channel and product mix. Operating expenses were $83.3 million as compared to $79.6 million for the same period of last year. The increase was driven by an increase investment in marketing, partially offset by a decrease in performance-based compensation. Operating income decreased to $3 million as compared to $9.6 million in the second quarter of fiscal 2024. We…

Thank you. [Operator Instructions] Our first question is from Michael Legg with The Benchmark Company. Please proceed.

Thanks. Good morning.

Good morning.

You mentioned coming out of this period with your increased market share, market share growth. Can you talk what you’re seeing from the competition today from a pricing perspective, from a viability perspective, and anything from a geographic perspective also? Thanks.

Sure. So I think what we’re seeing is the watch category overall, from luxury down to accessible, has become challenging. What occurred initially, probably in the fashion watch category, has now spread a little bit to the luxury category as well, and you’re seeing those numbers particularly come out of Switzerland. I think what we’re also seeing is that we have executed pretty well in the fashion watch category and so we’ve seen gains there. While other of our competitors within the fashion watch category are challenged. But as we all know, European markets are challenged. The U.S. economy and employment is beginning to show some signs of stress. So there are a number of different factors involved. And then we’ve seen good growth in markets like Latin America, Mexico, India, developing markets, where, as you read, the economic numbers have improved. And I think our strategies have worked. They’ve just not worked to the extent that we would have liked them to. We’re really excited about the Movado campaign that we launched yesterday. The positive reviews and coverage. I urge all of you to go on our website or to look up some of the articles that have been written about our ad campaign. It’s gotten very, very strong reviews and we’re really excited about the prospects that this campaign will yield for the Movado brand overall.

Okay. Great. And then just on – you mentioned the media campaign in India there. Can you talk about, I assume that the media campaign is global. Just comment on that. And then second, on the India opportunity, can you just expand a little bit on the opportunity there?

Sure. The Movado campaign is predominantly in North America. We will run the campaign in India as well, and some of it will spread to China and other markets. But Movado is for us about 90% domestic. And although I do believe that this campaign will present international opportunities in the future, as well as our product assortment and innovation. So that campaign is mostly based in the United States. And we’ll run throughout the fall, really launching this month on digital platforms as well as outdoor. And then we’ll add in TV and other media into the important holiday season.

Okay, great. And then just on jewelry. I didn’t hear anything on jewelry. Is that something kind of taking a backseat to the consumer returns or how’s jewelry doing?

The jewelry is actually outperforming watches, in our fashion brands and seems to be doing very well. Our innovation has been good and we think that, that still continues to present a big opportunity for the company as we grow that business particularly strong in markets like Europe and Mexico and markets like that. So we’re excited about that opportunity. And then we will reset our Movado jewelry assortment beginning next year that we’re really excited about as well.

Okay. And then a couple of financials on the guidance. I assume that does not factor any interest rate cuts into it. It’s just more of a steady state with the consumer. Can you give us a little insight into that?

I mean, I think, my personal opinion is that the interest rates increases and have occurred over a several year period. I would imagine that the declines will happen in a similar fashion. Unless things get economically, the numbers get significantly worse. And I don’t think that has an immediate impact on consumers. That takes a little longer to have an impact on consumers, just as rate hikes do. So I think that there will certainly be a benefit as rates begin to come down, but it doesn’t happen immediately from a retail perspective.

And then just last question. Your stock buyback has 16.8 million left. You use it to offset any dilution from issued shares. What would it take for you to be more aggressive in the share buyback? At what level of stock?

I don’t really think it’s about a level. I think it’s about a level of confidence in the environment versus just our own execution and performance. And quite frankly, I think we have to, we will, I know, do a better job on executing and managing our investments as we begin to look at next year. We’re not, we have no need to – we will curtail some this fall, but we are not touching our Movado campaign, believe that strongly in the importance of that and the benefit to the brand. So we start opportunities to invest in our business, but obviously the value of the shares we believe is represent a good value. So we will certainly look at that as the year progresses and as we see the market begin to evolve.

Great. Thank you.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Efraim Grinberg for closing remarks.

Thank you all for joining us today. And as I said, we look forward to improving our operating performance as we begin to look into next year. And I encourage all of you to please visit the Movado.com website and you will get to really see what we have done. It’s the first time that we completely integrate a campaign at the level that we’ve done it here. And as I said, it’s gotten really, really positive review from marketing media as well as a number of different editorials in the marketplace. Thank you again for joining us today.

Thank you. This will conclude today’s conference. You may disconnect at this time and thank you for your participation.