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Edited Transcript of MOV earnings conference call or presentation 29-Mar-18 1:00pm GMT

Q4 2018 Movado Group Inc Earnings Call

Paramus Mar 29, 2018 (Thomson StreetEvents) -- Edited Transcript of Movado Group Inc earnings conference call or presentation Thursday, March 29, 2018 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Efraim Grinberg

Movado Group, Inc. - Chairman and CEO

* Rachel Schacter

ICR, LLC - SVP

* Sallie A. DeMarsilis

Movado Group, Inc. - CFO and Principal Accounting Officer

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Conference Call Participants

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* Frank Anthony Camma

Sidoti & Company, LLC - Analyst

* Matthew Gregory Degulis

KeyBanc Capital Markets Inc., Research Division - Associate

* Oliver Chen

Cowen and Company, LLC, Research Division - MD & Senior Equity Research Analyst

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the Movado Group Fiscal Fourth Quarter 2018 Earnings 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.

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Rachel Schacter, ICR, LLC - SVP [2]

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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 would like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [3]

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Good morning, and welcome to Movado Group's fourth quarter conference call. I will first share with you some of the highlights of our quarter and then Sallie will review our financial performance for the year. After that, we'd be glad to answer your questions.

Fiscal 2018 was an important year for Movado Group, where we gained market share, returned to growth on both the top and bottom line, completed an important and exciting acquisition with the purchase of the Olivia Burton brand and began to make significant progress in transforming ourselves into a consumer-driven, omni-channel organization. We finished the year with a very strong fourth quarter that was reflective of the progress that we made.

For the fourth quarter, our sales grew by 14.1% to $149.2 million and our adjusted operating profit almost doubled to $14.4 million. For the year, our revenues grew by 2.8% to $568 million. Adjusted operating profit increased by 14% to $63.6 million. Our adjusted earnings per share were $0.52 for the quarter and $2 for the year.

Following the enactment of the Tax Cuts and Jobs Act, we have now provided for the tax impact on overseas earnings. The cash portion of the charge equals $28.2 million and is payable over 8 years. Due to our positive results and the ability under the new tax law to repatriate overseas earnings without further U.S. tax consequences, we have made the decision to increase our quarterly dividend to $0.20.

We will also move forward with an ongoing tax rate that is expected to be lower given tax reform. Sallie will spend some time discussing the 2017 Tax Act in her comments.

Now I'd like to share with you some of the highlights on the results of our brands from fiscal 2018 and some of our initiatives for this year.

As previously announced with our third quarter results, we have made the decision to no longer attend the Baselworld trade fair. Savings from this decision are being reinvested in a more personal venue to communicate and showcase our products to our wholesale customers and in consumer-facing initiatives to help drive growth in a quickly evolving marketplace, including the establishment of a digital center of excellence to expand Movado Group's digital resources.

To this end, I've just returned from our first Movado Group summit that was held in Davos, Switzerland. And it was attended by our many of our distributors, licensing partners and wholesale customers from around the world. At Davos, we previewed our growth strategies for the coming year for our brands as well as our new product introductions with our customers in a more intimate and personal setting. We also featured an excellent speaker on the evolving social media landscape, and a digital panel with a high level of engagement from our customers.

Turning to sales of our largest brand, Movado. While our Movado sales were down mid-single digits for the quarter, as certain of our wholesale channels in the United States remained challenging, the brand performed well at retail, recording double-digit sell-through increases across our department store and specialty store channels for the holiday season. We also saw a -- we also continued to see strong performance driven by our digital initiatives and product newness. Highlights of some of the strong performers for the holiday season were our Museum Bauhaus collection, introduced to honor the 70th anniversary of our iconic Museum dial design, our Bold men's bracelet watches and Movado Connect, our first Google powered smartwatch. For the quarter and the year, we saw our movado.com sales grow by 53% and 47%, respectively. While still a relatively modest portion of our overall sales, we are encouraged by this strong performance.

Our mall-based chain store channel in the U.S. remained challenging, as the leading retailers in this arena continue to adapt to a more digitally focused environment.

This spring, we are looking forward to increasing our engagement digitally with consumers. A few years ago, we announced the establishment -- a few weeks ago, we announced the establishment of a digital center of excellence, and the appointment of a Chief Digital Officer for the company as well as a Vice President of Social Media. These 2 key hires reflect the emphasis that we are planning on e-commerce and digital communications. We expect our Movado brand and entire portfolio to benefit from our increased focus on our digital platform, as our omni-channel business remains a priority for us as well as our wholesale business partners around the world.

For the year, we saw strong growth of our Movado brand in China, and we'll continue to make investments in developing our team in that region to develop the necessary competencies to grow China into an important business for Movado.

Turning to our spring product plans, we are launching our new Movado Museum Classic, where we were pleased with a very strong response from our retail partners in Davos, when we previewed this collection. Last fall, we introduced our new Movado advertising campaign with the tagline, "Don't let numbers define you," and we're excited to evolve it this spring, in print, outdoor and into digital venues.

Although the U.S. remained challenging for the fashion watch category, and thus our licensed brand category, we were pleased with the performance of our licensed brand division internationally and are looking forward to continuing this strong momentum this year.

We continue to see growth in the U.K., our largest international market, despite a challenging fashion watch market and saw accelerated growth in Germany and France, 2 markets that represent significant opportunities for the company.

We also returned to growth in Brazil, our largest market in Latin America. During the fourth quarter, we established a subsidiary in Mexico, that we believe represents a significant opportunity for us. Our licensed brand also continued to perform well in the Middle East, an important region for Movado Group overall. We saw an increased interest in our Tommy Hilfiger watches with younger consumers as the brand has become more relevant to this customer. We partnered with Tommy Hilfiger's brand ambassador Gigi Hadid, both in social media and in-store to create a great deal of excitement and increase sell-through for Tommy Hilfiger Watches. This spring, we're looking forward to launching our Gigi watch in blue and our Decker watch for men, inspired by Tommy Hilfiger's new Formula One sponsorship that will help drive continued growth for our Tommy Hilfiger brand.

In HUGO BOSS, we saw a very strong growth in Europe and an increasing opportunity in women's watches. We believe there's a significant opportunity to grow both our American and China businesses for HUGO BOSS. A strong performer for BOSS, was the Grand Prix collection and this spring, we're introducing a new generation of this collection.

Collectively with the HUGO BOSS brand, we have driven a very strong response and engagement for HUGO BOSS watches on social media. This year, we will also introduce a new collection under HUGO BOSS', HUGO brand, designed to reach a younger consumer. HUGO is more modern in design and casual in feel at a more accessible price point and represents a significant opportunity for the company.

In Coach, we are seeing a renewed opportunity, both in the U.S. and internationally for the brand. With overall increased visibility of the Coach brand, we have received an excellent response from our retailers to our new [Peri] watches for women and Charles watches for men. And for our new [Aster] Collection, with a signature C dial, that we previewed with our customers at Davos.

In Lacoste, where the brand has implemented a strategy focused on a strong presence in sportswear, we have seen a growing demand for our watches, especially in Europe. After a very strong response to our Lacoste Kids Watches, during the holiday season, where most of our retail partners sold out, we're excited to expand that collection this spring.

In Scuderia Ferrari, our focus has been targeting the racing fan. We will renew our emphasis on the Ferrari lifestyle customer this year, and we are launching a beautiful new collection called Aspire.

Our Rebecca Minkoff distribution remains extremely limited by design, and we're excited to introduce our new studded MESH collection at Nordstrom.

We could not be happier with how our Olivia Burton acquisition has performed, and see a great opportunity for continued innovation and growth on a global basis.

We have seen a very high level of engagement that the brand receives, both in digital platforms and brick-and-mortar stores, particularly in the United Kingdom, where it was founded, and in the United States, where it was launched about 18 months ago.

We're seeing a great potential for continuing to build a very selective distribution, while at the same time increasing the penetration of oliviaburton.com on a global basis. Olivia Burton is truly a brand that can relate to women across different age segments and across various lifestyle categories. We believe there is a significant potential to develop the jewelry segment, which was launched at the end of 2016, in a very limited way.

This summer, we'll open the first Olivia Burton boutique in the iconic Covent Garden in London.

Looking at our retail business, we were extremely pleased with the performance of our Movado company stores during the quarter, which confirms the desirability of our brands and products. We had positive comps of 6.4% for the fourth quarter and 5.9% for the full year. Most importantly, we also saw strong margins in our retail division. The strong momentum has continued into the first quarter.

Overall, we are pleased with our performance in fiscal 2018, as we made significant progress on executing our strategic plan of reducing operating expenses while making important investments in transforming the company in a quickly evolving retail environment.

This year, we're expecting to return to growth in North America, while continuing to grow in our international markets, which we have reflected in our guidance. While the retail environment and the watch category remain volatile, we have built a solid foundation to drive growth in both revenue and profits in the coming year.

I would now like to turn the call over to Sallie.

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Sallie A. DeMarsilis, Movado Group, Inc. - CFO and Principal Accounting Officer [4]

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Thank you, Efraim, and good morning, everyone. For today's call, I will first review our financial results, and then discuss our outlook for fiscal 2019.

Before I begin, I would like to point out the special items included in our fourth quarter and full year results for fiscal 2018 and the full year results for fiscal 2017. Please refer to our press release for a description of these items as well as a table of GAAP and non-GAAP measures. Our GAAP tax provisions for fiscal 2018, included charges recorded in the fourth quarter totaling $45 million, or $1.95 per diluted share. This is related to the enactment of the Tax Cuts and Jobs Act. This charge includes $28.2 million for the one-time tax on unremitted foreign earnings; $8.3 million for the impact of the reduction in the U.S. tax rate to 21% on our deferred tax assets; and $8.5 million related to deferred withholding and state income taxes. The $28.2 million will be repaid in installments over 8 years.

As you are aware, Movado Group acquired Olivia Burton on July 3, 2017. Included in the year-to-date consolidated results for fiscal 2018 was $6.8 million of pretax charges, primarily connected to the acquisition, of which $900,000 was recorded in the fourth quarter. After-tax, the charge related to the acquisition equates to $6.2 million or $0.27 per diluted share for the year.

Our GAAP results for fiscal 2018 include a $13.6 million pretax charge, which equates to $10.5 million after-tax or $0.45 per diluted share in connection with our cost-savings initiative. Approximately $150,000 of this pretax charge was in the fourth quarter.

Fiscal year 2017 GAAP results included charge recorded in the third quarter of $1.3 million, which equates to $900,000 after-tax or $0.03 per diluted share for an impairment of a long-term investment in a privately held company. Fiscal year 2017 GAAP results also include a $1.8 million pretax charge, which equates to $1.1 million after-tax or $0.05 per diluted share, in connection with the vesting of stock awards and certain other compensation in the first quarter related to the announcement of our former COO's retirement.

The balance of my remarks will exclude the special items just discussed.

For the fourth quarter of fiscal 2018, sales increased 14.1% to $149.2 million. In constant dollars, sales increased 10.2%. We saw increased sales across each of our categories, owned brands, licensed brands, retail. The fourth quarter results for fiscal 2018 include the addition of Olivia Burton. This brand is performing in line with the company's expectations. In constant dollars, total sales increased 20.1% internationally and increased 1% in the U.S.

Wholesale segment sales were $121.6 million, increasing 13.4% from $107.2 million in last year's fourth quarter.

In constant dollars, Wholesale segment sales increased 8.8%. By geography, U.S. Wholesale sales decreased 7.5% to $40.7 million compared to $44 million last year. International wholesale sales increased 28% to $80.9 million compared to $63.2 million in the prior year, an increase of 20.1% in constant dollars. Sales were strongest in Europe, the Middle East and Asia.

The company's Retail business was a positive contributor, with sales up 17% from last year. At the end of the period, we operated 40 outlet locations.

Gross profit was $78.6 million or 52.7% of sales compared to $64.7 million or 49.5% in the fourth quarter of last year. The 320 basis point increase in gross margin was primarily driven by the favorable change in foreign currency exchange rates, the favorable impact of channel and product mix and leverage on fixed costs.

Operating expenses were $64.2 million, an increase of 12.1% year-over-year. The increase was primarily the result of the following: a $5.8 million increase in performance-based compensation and payroll related expenses; a $1.7 million increase in other expenses; and an increase of $1 million resulting from the unfavorable impact of foreign currency exchange rates. These were partially offset by a $1.5 million decrease in marketing expense.

Strong sales growth and expansion in gross profit more than offset the increased operating expenses, leading to a better-than-expected operating income in the fourth quarter. To this end, operating income was $14.4 million or 9.6% of sales compared to $7.4 million or 5.7% of sales in the same year-ago period.

Income tax expense was $2.1 million compared to income tax expense of $1.9 million in the same period of last year. The effective tax rate for the fourth quarter of 15.1% was lower than expected, primarily due to changes in jurisdictional earnings.

Net income in the fourth quarter was $12 million or $0.52 per diluted share versus net income of $5.2 million or $0.22 per diluted share in the fourth quarter of fiscal 2017.

Looking at the results for the full year ended January 31, 2018, sales were $568 million, an increase of 2.8% from fiscal 2017. In constant dollars, sales increased 2.2%. Sales increased in both our licensed brand and retail category and were slightly down in our owned-brand category. U.S. sales decreased 12%, International sales increased 19.9% and on a constant dollar basis, International sales increased 18.7%.

Gross profit was $300.2 million or 52.9% of sales as compared to $294.8 million or 53.3% of sales last year. Operating income was $63.6 million or 11.2% of sales compared to $55.8 million or 10.1% of sales in fiscal 2017.

Income tax expense was $16.1 million compared to an income tax expense of $17.4 million for last year. And our effective tax rate was 25.7% for fiscal 2018 compared to a 31.9% effective tax rate last year.

Net income was $46.5 million compared to net income of $37.1 million in the prior year. Diluted earnings per share increased to $2 per share in the current fiscal year compared to $1.59 per share last year.

Now turning to our balance sheet. Cash at year-end was $214.8 million as compared to $256.3 million last year. In the second quarter of fiscal 2018, we used cash held outside of the U.S. for the acquisition of Olivia Burton. At the end of January 2018, we had $25 million outstanding on our revolver, down $5 million from a year ago. By the end of February 2018, we had repaid the remaining $25 million outstanding.

Accounts receivable were up $16.3 million as compared to the same period of last year, primarily due to the increase in sales. And while sales were up $18.4 million or 14.1% for the quarter, combined with the Olivia Burton acquisition, inventory decreased by $1.5 million as compared to the same period of last year.

Year-to-date, we repurchased approximately $3.6 million of stock under our share repurchase program, primarily to offset the dilution from stock awards.

Capital expenditures for the year were $5.8 million and depreciation and amortization expense was $13.5 million. This included $1.7 million related to the amortization of acquired intangible assets of Olivia Burton.

I will now discuss our outlook for fiscal 2019. Our outlook assumes currency rates consistent with recent level. Our results may be materially affected by many factors such as changes in global economic risk and customer (inaudible), fluctuations in foreign currency exchange rates and various other clauses referenced in our 10-K filing.

As Efraim mentioned, we have a solid foundation on which we plan to drive growth in revenue and profit for the year ahead. In light of the foregoing for fiscal 2019, we anticipate our sales will be in a range of approximately $605 million to $615 million.

We expect our gross margin percent to be flat to slightly improved from fiscal 2018. Our outlook estimates gross margin to be approximately 53% for the full fiscal year.

We have a track record of disciplined control of our operating expenses. We are reinvesting resources into the Movado Group Summit and the establishment of the digital center of excellence as well as making investments in our international teams to support our growth. And with that, operating income is projected to be in a range of approximately $68 million to $71 million. Based on the lower U.S. corporate tax rate, coupled with our jurisdictional earnings, the company anticipates a 25% effective tax rate. And net income is expected to be in a range of approximately $50.5 million to $52.8 million. We expect diluted earnings per share in fiscal 2019 to be in a range of approximately $2.15 to $2.25.

Capital expenditures for fiscal 2019 are estimated to be approximately $12 million. The outlook we have provided assumes no unusual items for fiscal 2019, and excludes the noncash amortization of acquired intangible assets related to the Olivia Burton brand.

I'd now like to open the call up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We'll go first to Oliver Chen with Cowen and Company.

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Oliver Chen, Cowen and Company, LLC, Research Division - MD & Senior Equity Research Analyst [2]

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My question was about -- the movado.com has been very impressive. What are your thoughts on the year ahead in terms of the pace of growth? Will it continue at that elevated rate, the plus 40% to 50%? And then what's your vision for where that will reach as a percentage of total over time? And that -- it's related to your digital center of excellence, Efraim, what are you -- what's your hypothesis for some of the key priorities and conclusions as that seems quite innovative and you're also very engaged in thinking about the right marketing models for the future?

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [3]

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So multiple questions. I don't know if we'll reach that growth rate. We are expecting growth this year in our movado.com website, and I would expect it to continue to grow. But I don't think at that accelerated level. Still nice growth, double-digit growth would be our expectations for that. I think on the digital center of excellence is really -- we're building the capability on a global basis to be able to support our subsidiaries, our website and as importantly, our Wholesale customers online, and a lot of our initiatives with our partners, whether they be our licensing partners or are -- or are Wholesale customers that moved into a digital format. And so, we felt we needed to really build that infrastructure to be able to support our company on a global basis. So a good -- a meaningful part of our business today is done online with our Wholesale customers as well. So people who have adapted to the omni-channel platform, whether they be department stores, specialty stores, dedicated websites as well. So we're really pleased with the direction we're heading in that arena as well.

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Oliver Chen, Cowen and Company, LLC, Research Division - MD & Senior Equity Research Analyst [4]

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Okay. And Sallie, on the gross margin guidance for flat to slightly improved, what's underlying how we should model that for the year ahead? And how is the performance of the Movado brand in the year ahead going to impact gross margins? What should we know about that?

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Sallie A. DeMarsilis, Movado Group, Inc. - CFO and Principal Accounting Officer [5]

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Yes, so I'm not really calling out anything unusual related to that, but if you noticed in the fourth quarter, I did call out that currency was a factor that lifted our gross margin in the fourth quarter, and then I mentioned that -- we're keeping currency flat throughout next year. So that was one of the major underlying pieces. So I can't give you any more -- insight into margin by quarter or any other cadence.

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [6]

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And I would add that we believe that Movado will stabilize and begin to grow again as well as Olivia Burton is accretive to our gross margin.

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Oliver Chen, Cowen and Company, LLC, Research Division - MD & Senior Equity Research Analyst [7]

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Okay. And Efraim and Sallie, what are your latest thoughts on your retail partners as you look ahead to the year ahead? It's been a dynamic sector in terms of how your retail partners have managed inventory, and the economy and performance has gotten better there. And related to that question, is just the performance of the Movado brand and the Retail versus the Wholesale channel. Would love your thoughts on what happened there? And what will happen going forward?

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [8]

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Well, I think you're seeing -- the U.S. was more challenged last year from a retail perspective, bouncing back late in the year versus international retailers. So I think that's one thing that's skewing the overall result. I think you had a significant focus in U.S. retailers on inventory management and resetting of the -- of inventory levels as well as still certain -- and as I mentioned in my comments, certain channels, particularly chain -- mall-based chain retailers have not moved as quickly to an omni-channel platform as specialty stores and department stores. So I think you will see that again, you'll see improvements in that arena this year. You'll begin to see that, but we've seen very good results in our department stores and specialty store channels in the U.S., we continue to see very strong growth at retail in last year in our fashion watch brands, particularly in Europe and Latin America. So I think you saw last year, really a year of stabilization for retail and now people kind of addressing the new realities and the new environment and the new paradigm of retail omni-channel, websites, moving forward.

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Operator [9]

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We'll go next to Edward Yruma with KeyBanc Capital Markets.

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Matthew Gregory Degulis, KeyBanc Capital Markets Inc., Research Division - Associate [10]

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This is Matt on for Ed. So I guess, building on Oliver's question a bit. So we're wondering about how the Wholesale calendar shift is affecting orders? Are they, I guess ordering more times in the year? Or is it deep -- like now that the channel is stabilizing somewhat, are they deeper orders? I guess, just any update on the cadence there would be great?

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [11]

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Well, I think over the last number of years, retailers have moved closer -- much closer to ordering to the season, ordering more frequently, replenishment models. All of those things pretty much on a global basis. So I think maintaining as little inventory for themselves as possible to be able to produce the business. So that is not a -- really a more recent dynamic, but one that's been evolving over time.

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Matthew Gregory Degulis, KeyBanc Capital Markets Inc., Research Division - Associate [12]

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Okay. And -- so I know you said that you saw accelerated growth in the U.K., France and Germany this quarter, and Europe has really outperformed the U.S. for a couple of years now. So I guess, do you see any catalyst on the horizon that will bring the U.S. and European growth rates more in trend? Or is it more just a fashion shift or inventory control in the channel? And I guess, what are the puts and takes of gross margin given that the U.S. is usually a higher margin?

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [13]

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As I said earlier, we expect to return to growth in the U.S. this year and part of it is that we've great reaction to our products across our brands. And believe we have the plans in place to be able to grow the U.S. again. And I think the U.S. had grown very quickly over the previous years, and has been a little bit in a cyclical downturn in retail. I think you saw that again begin to bounce back in the fourth quarter for retailers overall. So -- and I think we would expect that, that trend will continue. But we still expect to grow in Europe as well.

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Sallie A. DeMarsilis, Movado Group, Inc. - CFO and Principal Accounting Officer [14]

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And Matt, your question on the gross margin was, it's not necessarily U.S. versus International, it's more of which brands. And as we talked about, our licensed brands, obviously, the royalty goes through gross margin and our -- the brands we own don't. So things like Olivia Burton and Movado would have a stronger gross margin. So it's all in the mix of what brand -- what composition they are to total.

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Operator [15]

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And we'll go next to Frank Camma with Sidoti.

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Frank Anthony Camma, Sidoti & Company, LLC - Analyst [16]

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Could you talk a little bit -- first of all, I'm sorry if I missed this, but did you break out the Olivia Burton revenue for the quarter?

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [17]

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We have not. Like any of our brands, we don't break out specific brand revenues. It did meet our plans as we'd announced at the beginning of the year when we first acquired the brand. So it's pretty much on target for us, and we've been really excited by the acquisition.

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Frank Anthony Camma, Sidoti & Company, LLC - Analyst [18]

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Okay. Stepping back for a second though on the -- because a lot has changed since you announced the restructuring, right? You bought Olivia Burton, you're now making some investments. Can you just kind of give us a recap of where you were initially as far as the total savings? How much you've achieved? And what your guidance is implying there on the further savings? Or has the view kind of changed because now obviously, you've gotten sales growth and you've gotten Olivia Burton, you got these digital initiatives. Can you just kind of give us an update on that maybe?

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Sallie A. DeMarsilis, Movado Group, Inc. - CFO and Principal Accounting Officer [19]

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Frank, I'll jump in and I'm sure Efraim will add some and you are right, we had a lot of initiatives kind of going at once. So our cost saving initiatives which started this time last year, when we announced it. Those have been fully implemented, we did pull out the right amount of dollars out of our infrastructure. We did realize all of those savings. So that was throughout this year, fiscal 2018. And later in this year, we talked about not going to Basel and that would be savings for '19, although we mentioned that those savings are going to be reinvested in things like the small summit that we did, that was more intimate, like adding the digital center of excellence. And kind of reinvesting those savings in. So our outlook kind of has all of that mixed in, the slimming down, if you will, of our infrastructure last year as well as the new investments we have this year to support our growth.

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Frank Anthony Camma, Sidoti & Company, LLC - Analyst [20]

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And Basel's really a Q1 event, correct?

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Sallie A. DeMarsilis, Movado Group, Inc. - CFO and Principal Accounting Officer [21]

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Historically, the event happened in Q1 but the expense was throughout the year. And that's for -- that was for fiscal '19. Yes, our summit on the other hand would be a first quarter event and it's obviously, a different scale than what Basel was.

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Frank Anthony Camma, Sidoti & Company, LLC - Analyst [22]

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Okay. And then I guess, the last question is just on balance sheet. You mentioned this, that the inventory decreased, I would have expected an increase given what's going on. Was there anything in there as far as timing that kind of brought that down or is this just better inventory management? What's driving that, given what's going on with your sales level, new brands, et cetera?

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [23]

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So I'll answer that. It's just really our teams did a fabulous job in managing their inventory levels throughout the year on a constant currency basis there was actually an even bigger drop than the low single-digit drop that we had. So they just did a really, really good job in managing the level. There was not any one-off events or anything like that in that.

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Frank Anthony Camma, Sidoti & Company, LLC - Analyst [24]

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Okay. And there's no major input costs that we need to look out for here? I mean, granted you're giving us guidance here on gross margin, so I am assuming not. But is there anything we need to be aware of given what's going on just sort of globally?

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [25]

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Not really. Obviously, we're not aware, we're not including any type of tariffs or anything like that. We don't believe that they would affect our business, but though they possibly could, okay? Since -- we have one more question?

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Operator [26]

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We have no other questions at this time.

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Efraim Grinberg, Movado Group, Inc. - Chairman and CEO [27]

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Okay. If -- since we have no more questions, I'd just like to thank everybody for being on the call today. And we look forward to speaking to everybody at the -- for our first quarter conference call, and wish everybody a nice holiday this weekend. Okay, thank you very much.

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Operator [28]

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And that does conclude today's call. We thank you for your participation. You may now disconnect.

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    When the media and investors turn negative on stocks but the “smart money” is bullish, it’s a good time to think about buying. After all, exactly what is the smart money, and how do you know? Lately, several fund managers who pass this test have been pounding the table on Chinese internet names.

  • Microsoft fired the guy overseeing its NFL partnership for allegedly scalping company Super Bowl tickets and trying to fake $1.4 million in invoices (MSFT)
    Finance
    Business Insider

    Microsoft fired the guy overseeing its NFL partnership for allegedly scalping company Super Bowl tickets and trying to fake $1.4 million in invoices (MSFT)

    A federal grand jury has indicted Microsoft's former director of Sports Marketing and Alliances for allegedly trying to create fake invoices for up to $1.4 million, according to the DOJ. The indictment alleges that Jeff Tran tried to route fake invoices through two Microsoft vendors and that he scalped Super Bowl tickets Microsoft acquired through its Surface tablet partnership with the NFL.

  • Qualcomm (QCOM) Stock Moves -1.44%: What You Should Know
    Finance
    Zacks

    Qualcomm (QCOM) Stock Moves -1.44%: What You Should Know

    This has lagged the Computer and Technology sector's loss of 3.96% and the S&P 500's loss of 2.61% in that time. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.53 billion, down 6.27% from the year-ago period. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

  • Goldman Sachs Adds Nvidia To 'Conviction Buy' List
    Business
    Yahoo Finance Video

    Goldman Sachs Adds Nvidia To 'Conviction Buy' List

    Goldman Sachs analyst Toshiya Hari reiterated his 'Buy' rating for Nvidia and added the chip-maker to Goldman’s 'Conviction Buy' list.

  • Provocateur Stormy Daniels Takes an Unexpected Turn in the National Spotlight
    News
    Time

    Provocateur Stormy Daniels Takes an Unexpected Turn in the National Spotlight

    To understand what it means to be famous like Stormy Daniels, for the reasons she is famous, spend time with her in a public space. On Oct. 15, a California judge threw out the defamation case she filed against Donald Trump. Over the past year, Daniels, 39, has become the Zelig of White House scandals.

  • Delta uniforms recognized for design, despite some employee complaints
    Finance
    American City Business Journals

    Delta uniforms recognized for design, despite some employee complaints

    As part of a multi-billion dollar companywide makeover, Delta Air Lines rolled out bold 'Passport Plum" uniforms for tens of thousands of flight attendants that received great fanfare, but also some negative reviews. Despite reports of possible symptomatic reactions to the new outfits and complaints about the apron's heaviness, the Atlanta-based airline and designer Zac Posen have been recognized in the fashion and beauty space. Ashton Kang, a spokeswoman for Delta Air Lines Inc. (NYSE: DAL), said the airline surveyed flight attendants and gate agents before the uniforms rolled out in May, and 85 percent felt positive or neutral about the new design.

  • Here's everyone who has dropped out of Saudi Arabia's 'Davos of the Middle East'
    Finance
    Yahoo Finance

    Here's everyone who has dropped out of Saudi Arabia's 'Davos of the Middle East'

    U.S. Treasury Secretary Steven Mnuchin tweeted Thursday that he will not be attending the Future Investment Initiative in Saudi Arabia next week. The news comes after prominent members of the world’s business community have been dropping out of Saudi

  • 7 Stocks Warren Buffett Can’t Stop Buying
    Finance
    InvestorPlace

    7 Stocks Warren Buffett Can’t Stop Buying

    Sometimes identifying the best stocks to buy can be difficult, but you could do a lot worse than checking out the stocks selected by one of the world’s savviest hedge fund managers — Warren Buffett. Buffett’s stock picks are a popular source for investors, and for good reason. The billionaire Buffett is many things: He’s among the world’s most successful fund managers, a legendary philanthropist and owns more than 60 companies.

  • Markets think the midterms could be as big as the presidential election
    Finance
    Yahoo Finance

    Markets think the midterms could be as big as the presidential election

    The midterm elections are less than three weeks away. According to strategists at Barclays, the options market is pricing in a 1.6% swing on election night, a modest swing given the recent volatility we’ve seen in the stock market.

  • Confirmed: Disney to open new resort at former River Country
    Finance
    American City Business Journals

    Confirmed: Disney to open new resort at former River Country

    A rumored resort at Walt Disney World finally has been confirmed and is slated to be open in Orlando by 2022. Disney today announced a new 900-room, yet-to-be-named resort on the former site of the River Country water park on Bay Lake. A Disney release describes the property as "nature-inspired" and will be themed to complement its natural surroundings.

  • Prince Harry Has Spoken Publicly About the Royal Baby for the First Time
    News
    Time

    Prince Harry Has Spoken Publicly About the Royal Baby for the First Time

    After Prince Harry and Meghan Markle touched down in Sydney, Australia, to kick off their royal tour, Harry spoke publicly about Markle’s pregnancy for the first time. “We’re both absolutely delighted to be here, and really impressed to see you serving beer and tea at an afternoon in true Aussie style,” Harry said, drawing warm laughs with his remarks at a reception at the Admiralty House in Sydney Monday. Prince Harry, the Duke of Sussex, says he and Duchess Meghan "genuinely couldn't think of a better place to announce the upcoming baby, be it a boy or a girl," on the first day of the couple's 16-day tour of Australia, Fiji, Tonga and New Zealand.

  • Employee Accused of Urinating on Production Line at Food Processing Facility
    Business
    WTKR - Norfolk

    Employee Accused of Urinating on Production Line at Food Processing Facility

    Smithfield Foods, Inc. said in a statement Tuesday that it disposed of more than 50,000 pounds of product after reports of an employee urinating at his station at the company’s processing facility in Virginia.

  • Finding a Cure for Kinder Morgan’s Frustration
    Business
    Bloomberg

    Finding a Cure for Kinder Morgan’s Frustration

    Rising profits – Ebitda was up 6 percent, year over year – and that Canadian pipeline sale have helped address Kinder Morgan’s biggest problem, its crushing debt. Thankfully, it provided a strong signal on Wednesday evening that it would.

  • Aurora Cannabis stock leads sector higher after news it will start trading on NYSE next week
    News
    MarketWatch

    Aurora Cannabis stock leads sector higher after news it will start trading on NYSE next week

    Canadian marijuana company Aurora Cannabis Inc.’s shares rose about 4% Thursday after it said shares have been approved for trading on the New York Stock Exchange starting October 23. The stock (CA:ACB)(CA:ACB) which is currently trading on the over-the-counter market, will trade under the ticker symbol “ACB”. The shares are also traded on the Toronto Stock Exchange.

  • Ford Motor Company Earnings: What to Watch For
    Business
    Motley Fool

    Ford Motor Company Earnings: What to Watch For

    Ford Motor Company (NYSE: F) will report its third-quarter earnings results after the markets close on Oct. 24. Wall Street analysts polled by Thomson Reuters expect Ford to report earnings of $0.30 per share, on average, down from $0.43 in the third quarter of 2017. Ford's F-Series pickups continue to sell well and generate good profits, thanks to high-margin versions like this F-150 Limited.

  • Finance
    CNBC

    China's stock market is getting pummeled and history shows that is bad news for US markets

    U.S. stocks are lower about 70 percent of the time in periods when there are big drops of 10 percent or more in Shanghai stocks, according to analytics firm Kensho. The main U.S. indexes lose about 5 percent when Shanghai stocks fall 10 percent or more in a 30-day period. Big blue chips, like Goldman and Caterpillar are among the losers, but copper and oil also fall hard when Shanghai sees a big decline.

  • There’s a Huge Flaw in Valuing AMD Stock Like Amazon or Netflix
    Finance
    InvestorPlace

    There’s a Huge Flaw in Valuing AMD Stock Like Amazon or Netflix

    This year has been an undeniably good one for Advanced Micro Devices (NASDAQ:AMD) shareholders. The AMD stock price is up 165% year-to-date, and seems to be dealing with recent headwinds relatively well. Although the turnaround is real, the market’s valuation of AMD stock has been exceedingly generous.

  • The same question that can chart a path to early retirement is the one Warren Buffett used to build Berkshire Hathaway into a powerhouse
    Business
    Business Insider

    The same question that can chart a path to early retirement is the one Warren Buffett used to build Berkshire Hathaway into a powerhouse

    Inversion is a mental model that involves flipping your outlook to prevent the opposite of what you want to happen from happening. Warren Buffett and his business partner Charlie Munger employed inversion as a business strategy to build Berkshire Hathaway into a powerhouse. In a recent podcast with Brandon of the Mad Fientist, who retired early at 34, productivity expert James Clear said the same strategy Buffett used can help set someone on the path for early retirement.

  • Finance
    Investopedia

    Berkshire Is Undervalued, Says JPMorgan

    Berkshire Hathaway Inc.'s ( BRK.B) Class B shares are cheap if you apply the same metrics that its CEO Warren Buffett does to value companies, according to JPMorgan. In a research note, reported on by CNBC, analyst Sarah DeWitt said Berkshire, a company that investors have historically struggled to value properly because of its many moving parts, suddenly appears to be attractively priced when factoring in all the profits made by the stocks held in its $200 billion equity portfolio into its earnings. “Look-through earnings” take into account current period earnings that show up in financial statements, together with other sources of earnings expected in the long run. This method is used by Buffett as a way to appreciate that companies sometimes retain earnings after paying dividends and later invest them at a higher rate of return.

  • Kinder Morgan Beats Q3 Earnings Estimates, Improves Leverage
    Finance
    Market Realist

    Kinder Morgan Beats Q3 Earnings Estimates, Improves Leverage

    Kinder Morgan Beats Q3 Earnings Estimates, Improves Leverage Kinder Morgan’s third-quarter results Kinder Morgan (KMI) announced its third-quarter results on October 17 after the markets closed. The company announced an adjusted EPS of $0.21—up ~40%

  • Caterpillar (CAT) to Report Q3 Earnings: What's in the Offing?
    Business
    Zacks

    Caterpillar (CAT) to Report Q3 Earnings: What's in the Offing?

    Caterpillar Inc. CAT is slated to report third-quarter 2018 results on Oct 23 before the opening bell. Both the top and bottom line also beat the Zacks Consensus Estimate. Consequently, investors are keen to know whether Caterpillar will be able to maintain the momentum in the third quarter of 2018 as well.

  • Is Tilray a Better Marijuana Stock to Buy Than Aurora Cannabis?
    Business
    Motley Fool

    Is Tilray a Better Marijuana Stock to Buy Than Aurora Cannabis?

    Marijuana users are cheering the legalization of marijuana for recreational use in Canada, but it's not just pot advocates who are excited. Investors are also upbeat because the recreational market for marijuana represents a massive opportunity for sales growth for leading Canadian cannabis companies, including Tilray Inc. (NASDAQ: TLRY) and Aurora Cannabis (NASDAQOTH: ACBFF). Medical marijuana has been legal in Canada for years, and while medical marijuana sales total in the hundreds of millions of dollars annually, the potential market opportunity associated with recreational use is significantly bigger.

  • Alibaba (BABA) Dips More Than Broader Markets: What You Should Know
    Finance
    Zacks

    Alibaba (BABA) Dips More Than Broader Markets: What You Should Know

    Investors will be hoping for strength from BABA as it approaches its next earnings release, which is expected to be November 2, 2018. On that day, BABA is projected to report earnings of $1.16 per share, which would represent a year-over-year decline of 10.08%. Investors should also note any recent changes to analyst estimates for BABA.