Movado Group Inc (MOV) 2015 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Movado Group, Inc.

third-quarter FY15 earnings call.

(Operator Instructions)

As a reminder, ladies and gentlemen, this conference is being recorded and may not be reproduced in whole or in part without permission from the Company.

I would now like to introduce Mrs.

Rachel Schacter of ICR.

Please go ahead, ma'am.

Thank you.

Good morning, everyone.

With me on the call is Efraim Grinberg, Chairman and Chief Executive Officer; Rick Cote, Vice Chairman and Chief Operating Officer; and Sallie DeMarsilis, Chief Financial Officer.

Before we get started I would like to remind you of the Company's Safe Harbor Language, which I'm sure you're all familiar with.

The statements contained in this conference call which are not historical facts 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 or presentation of the most directly comparable GAAP financial measure to this non-GAAP financial measure will be provided a supplemental financial information in our press release.

Now I would like to turn the call over to Rick Cot, Vice Chairman and Chief Operating Officer of Movado Group.

Thanks, Rachel.

Good morning, everyone.

Our third-quarter results were in line with our updated guidance we issued on November 14, 2014.

Softer than expected sales reflected inventory tightening at Retail, slowing growth, category growth, and the performance of Lacoste, Scuderia Ferrari and our Movado brand Internationally being below our plan.

At the same time our decision to continue to make the right long-term investments behind our brands and our organization investments focused on future growth tempered our operating profit.

Importantly, we believe the majority of these headwinds are temporary as we expect inventory levels to normalize, improve performance from Lacoste and our Movado brand Internationally and continued growth from Scuderia Ferrari.

Our largest brand, Movado, continues to perform well in the United States and continues to have significant International growth opportunities for the future.

Our largest license brands, Coach, HUGO BOSS and Tommy Hilfiger, continue to drive growth.

As we begin the fourth quarter, we believe we are well-positioned to capitalize on the holiday season with our powerful portfolio of brands, strong innovation and high impact advertising.

Let me now address the results for our third quarter and nine months.

In the third quarter, sales decreased less than 1% to $188.6 million.

Operating income was $33.3 million, a slight decrease from prior years' $34.1 million.

Earnings per share came in at $0.87 as compared to earnings per share of $0.89 in the prior period.

For the FY15 nine-month period, our sales grew 3.4% to $453.1 million from prior years' $438 million.

Operating income increased to $61.4 million, a slight increase from prior years' $61.1 million.

Our reported $61.4 million for the nine months is the highest level of operating profit ever recorded by the Company.

For the nine months, earnings per share came in at $1.63 as compared to adjusted earnings per share of $1.61 in the prior period.

Our balance sheet remains strong with a net cash position of $158 million, after repurchasing $23.6 million of our stock under our stock repurchase program since March 2013.

Our equity position remains at over $470 million.

We are pleased to announce that our Board of Directors has approved an increase in our share buyback program to $100 million.

And a quarterly dividend of $0.10 per share as per this morning's press releases.

Let me now briefly discuss some global trends.

From a global perspective, growth in the watch category has slowed from the past few years' rapid pace of growth.

From an economic perspective, this year has certainly shown some unusual trends and inconsistencies.

We expect the China, Hong Kong, Turkey, Thailand and Argentina markets will continue with economic challenges.

The North American and European watch market growth has slowed with growth at or lower than the overall economic growth.

This is evidenced by the United States watch category growth for the $300 to $3000 price category growing only 1% for the past 12-month and 9-month periods.

From a brand perspective, we continue to experience above average sell through performance across our retail partners.

Our largest brands Movado, Coach, HUGO BOSS and Tommy Hilfiger continue to outperform the watch category in their largest markets, North American, Europe and South America.

We continue to invest in and expand our personnel around the world focused on global growth opportunities.

In the wearable device arena, we recently hired our wearable device general manager and have further developed strategic alliances that will position us to potentially launch product consistent with our luxury product branding philosophy.

Let me provide some more specific brand highlights along with some brand plans for the holiday season.

In Movado, product segmentation and our strategy to offer compelling product at key price points continues to help drive our growth.

The Movado holiday campaign comes alive with diamonds and all that glitters for women and sporting styles for men.

For women we are featuring our Cerena, Sapphire and Bold Diamond collections.

And for men, our Carbon Fiber Gravity, Sapphire Synergy chronograph, Series 800 and Movado sport collections.

We kicked off the holiday season with high impact multi page advertising.

In November, issues of leading lifestyle and fashion magazines along with full-page ads in New York Times and New York Post.

Starting November 30, we will launch our new TV commercials on top national cable networks and additional TV commercials in our top markets, which will continue through most of December.

Our Retail partner initiatives include key positioning in holiday catalogs, direct mail and high impact store visuals.

We continue to use digital and social media to reach new consumers and keep are enthusiastic fan base up-to-date with the world of Movado.

Great product along with a focused omnichannel marketing program continues to help drive our strong Movado Brand sales performance.

For EBEL and Concord, our objectives remain consistent.

Focus on key markets, realize value and improve productivity.

In EBEL, we have launched a new Wave product which started to ship in the third quarter.

In Concord we continue to focus on the Middle East market with our strong performing Saratoga family and the second half launch of the Mariner family.

Growth in our license brands division is being led by innovative product designs at key price points that continue to resonate with consumers.

In Coach, our product features the Coach color palettes of rich gemstone use and blackout, reflecting the new brand evolution and celebrating iconic design details.

Our Coach holiday marketing initiatives are focused on key global markets with a blend of print advertising, retail or in store and catalog positioning, digital and social media initiatives.

Repositioning Coach within the fashion watch category has driven strong growth.

Tommy Hilfiger keeps in step with key trends while maintaining a unique branded perspective using the Tommy Hilfiger iconic design elements.

Key featured holiday product attributes include brown leather straps, mesh bracelets and rubber silicon components.

Tommy marketing initiatives include key global market print advertising, mall takeovers, key outdoor advertising along with digital and social media programs.

And a first ever television advertising campaign in Brazil.

For HUGO BOSS Black, our key holiday products are the Driver Sport, Ultra Slim and Navigator families.

And for HUGO BOSS Orange, the New York and Sao Paulo families.

The key marketing initiatives for HUGO BOSS include airport advertising, outdoor billboard and strong in-store merchandising and visuals.

For Lacoste, our key holiday products include the new Lacoste.

12.12 family of watches, that match Lacoste's iconic polo shirt colors, and the Borneo and Victoria collections.

New product along with creative packaging such as the grab and go tennis tube will help drive this holiday's performance.

In Juicy Couture we will focus on the color diamond trend in gold plating and stainless steel.

In Scuderia Ferrari, our key global performance include the sport inspired Aero Evo, the heritage inspired D50, limited editions such as the Italian Made collection and rubber silicon color infused product.

Focus tailored marketing initiatives exist for every brand, highlighting our product and brand features in a complete omnichannel marketing program.

Our outlet Retail division remains an important contributor to our business from both a sales and profitability perspective.

The greater emphasis we have placed on branding and customer service at our existing stores has helped fuel sales conversion and profitability.

Our sales for the quarter were up 6.8% and for the nine months 8.7% driven by select new store openings and excellent product offering.

At the end of the quarter we operated 38 stores including 3 new stores already opened in FY15.

As we look to the next few years we see the watch category continuing to grow at a slower pace than the overall economic growth, partially due to the accelerated levels of growth realized over the past few years.

We believe we are well positioned to continue driving retail sell through at a pace greater than the watch category, as we have for quite a few years.

Considering the expected watch category growth we would expect to grow sales in the mid single-digit levels which is lower than our 10% strategic growth plans.

We will provide future years guidance during our fourth-quarter conference call.

We are also excited to have Ricardo Quintero, President of Movado Group, Inc., aboard who will help us tremendously with our brand building initiatives and drive global growth.

Ricardo has already proved to be a great addition to our team and will join us on our year-end conference call.

In summary, we believe we are taking the corrective actions to ensure that the Company will return to growing both ourselves and profits next year returning to a path of sustainable profitable growth.

Let me now to the call over to Sallie.

Thank you, Rick, and good morning, everyone.

Today I will present our financial results for the third quarter and the first nine months of FY15.

I will begin my remarks with a review of our operating results followed by the balance sheet and close with guidance.

Before I review the quarter and the year in total, I would like to point out the special items included in our results for FY14.

Please refer to our press release for a description of these items as well as the table of GAAP and non-GAAP measures.

During the first quarter of FY14, we recorded a $1.5 million, or $0.04 per diluted share, pretax gain from the sale of a building in Switzerland.

In a second quarter of FY14 we recorded a $1 million tax benefit, or $0.04 per diluted share one time item.

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

For the third quarter, our reported sales decreased 0.6% to $188.6 million.

In constant dollars, sales rose 0.1%.

Our US sales declined by 0.2% driven by the wholesale brand category.

And our International sales declined by 1.1% compared to last year with a decrease in luxury brand sales partially offset by growth in our licensed brands.

Sales in our Wholesale segment where $172.8 million, or 1.2% below sales of $174.9 million for the same period of last year.

In constant currency, Wholesale segment sales declined 0.5%.

By geography, our US Wholesale business decreased 1.3% to $91.3 million compared to $92.5 million last year.

Our International Wholesale business decreased 1.1% to $81.5 million compared to $82.5 million in the prior year.

Sales from the Company's Retail business were up 6.8%.

At the end of the period we operated 38 outlet stores.

Gross profit was $99.8 million, or 53% of sales, compared to $101.3 million, or 53.4% in the third quarter of last year.

The decrease in gross margin percent was driven by a shift in channel and product mix and foreign currency exchange rates partially offset by a reduction of certain fixed costs.

Operating expenses were $66.5 million, a decrease of 1% year-over-year.

The decrease was primarily the result of the following.

A $5.5 million decrease in the accrual for performance-based compensation, offset by a $2 million increase in compensation and benefits in support of our brand building and growth initiatives.

A $1 million increase in other selling expenses and $800,000 increase in marketing expense.

And a $600,000 impact of unfavorable foreign currency exchange rates.

Operating income was $33.3 million, or 17.7% of sales, compared to $34.1 million, or 18% of sales in the year-ago period.

Income tax expense was $10.9 million and our effective tax rate was 32.7% in the third quarter of FY15 compared to income tax expense of $10.6 million, or a 31.1% effective tax rate last year.

Net income in the third quarter was $22.2 million, or $0.87 per diluted share, versus net income of $23 million, or $0.89 per diluted share in the year-ago period.

Looking at the nine-month period ended October 31, 2014, sales were $453.1 million, an increase of 3.4% from FY14.

On a constant dollar basis, sales increased 3%.

Gross profit was $242.6 million, or 53.5% of sales, as compared to $236 million, or 53.9% of sales last year.

Operating income was $61.4 million compared to $61.1 million in FY14.

As a reminder, during the first quarter of last year a building was sold for a pretax gain of $1.5 million, or $0.04 per diluted share.

And as mentioned earlier, the tax provisions for the second quarter of last fiscal year was favorably impacted by a $1 million, or $0.04 per diluted share one-time item.

Net income was $41.7 million, or $1.63 per diluted share, as compared to adjusted net income of $41.6 million, or $1.61 per diluted share in the year-ago period.

Now turning to our balance sheet.

Cash at the quarter end was $157.9 million as compared to $163.1 million last year.

We continue to have no debt outstanding.

Accounts receivable increased $8.6 million, or 7.2%, to $128.6 million.

This increase was primarily due to the timing of sales.

Inventory increased $3.9 million, or 2.2%, to $182.7 million at quarter end.

On a constant dollar basis, inventory increased by 5.2%.

Capital expenditures for the nine-month period were $7.5 million and depreciation and amortization expense was $9.2 million combined.

We now project capital expenditures of approximately $12 million for FY15 which includes projects in the ordinary course of business such as facilities improvements, shop in shops, computer hardware and software.

Now I would like to discuss our updated guidance for the current fiscal year as issued on November 14, 2014.

And let me note that we continue to assume moderate global economic growth and we are assuming no significant fluctuations in foreign currency exchange rates.

For 2015, we anticipate our sales will increase 1% to 2% to a range of $585 million to $590 million.

Gross margin rate is expected to be approximately 53% primarily due to the mix of business.

And as Rick mentioned, we will continue to strategically invest in our brand building and growth initiatives that are expected to drive our business in FY16 and longer term.

Operating income is projected to be the range of $68 million to $70 million.

Our estimated effective tax rate for the current fiscal year is expected to be 31% as a result of the mix of global pretax results.

And net income is planned to be in the range of $46.2 million to $47.5 million.

We expect diluted earnings per share in FY15 will be in the range of $1.80 to $1.85.

The guidance we have provided assumes no unusual items for FY15.

As mentioned in our press release, we expect to report a $3 million one-time pretax charge related to operating savings initiatives in either the fourth quarter of FY15 or early in FY16.

This charge is excluded from the guidance just provided.

Now I would like to turn the call over to Efraim.

Thank you, Sallie.

Our third-quarter results were in line with our updated guidance, though they were below the initial plan we laid out at the beginning of the year.

We have a great portfolio of brands and have made some very important investments over the past several years which we believe will help drive improved sales and profitability for the future.

Our Movado brand remains one of the most powerful watch brands in the United States and has tremendous growth opportunities Internationally.

Our licensed brand portfolio consists of iconic brands that have helped drive double-digit growth over the past several years.

In the emerging arena of wearables, we are exploring the melding of technology and design that are true to the identities of our brands.

We continue to strategically invest in support of our brands and talent base to capitalize on the significant opportunities for growth we see ahead.

We have plans in place to drive our growth Internationally in Latin America, Asia and Europe and through innovation to broaden our reach to meet more of the lifestyle needs of our consumers.

And while we have tempered our outlook for the current year, we remain optimistic about our prospects during the holiday season with a terrific line up of styles and marketing to fuel sales.

We look forward to updating our plans with you at our year-end conference call.

We would now like to open the call up to questions.

(Operator Instructions)

Rick Patel, Stephens Inc.

Sorry if I missed this, but can you talk about your marketing dollars for holiday and spring -- just curious if there's any big changes in spend versus the prior year?

And in terms of communicating -- your messaging to customers -- do you feel like you're talking to the consumer through the right channel -- just curious if we should expect any changes on that front over the next year?

I think -- this is Rick -- first of all, yes, the spend, as we have for each year, does increase.

So, obviously, the fourth quarter is by far our biggest spend period for our marketing dollars.

As I tried to outline in my script, we have a lot of activity taking place as -- this holiday season, as we do with every holiday season.

We think that we made all the right adjustments to really focus into our consumer and reach them where we believe they look at the marketing, whether it's on TV or print, whether it's in social, the digital, doing a lot of outdoor billboard as well, a lot of catalog focus for the holiday season.

So, yes, we do increase our spend, and yes, we do adjust our marketing features to make sure that we reach the consumer that we want to reach.

And as you think about your outlook for mid-single-digit sales growth, can you touch upon how much of this will be driven by distribution versus organic growth?

And then also comment on pricing -- just curious how that's changed given the performance of the Movado brand versus the license ones, and if there's any opportunity to take pricing higher, down the road?

Well, I think, first of all, we look at -- our philosophy has been with the strategic planning continues that we will be outperforming the watch category growth.

So, we see that as being much more in that flattish to low single-digit -- low-single digits and, therefore, our mid-single digits continues to outperform that.

That will be -- historically has been driven very much by volume.

Pricing has not been a major factor from a standpoint of we really have provided excellent price value proposition to the consumer.

As we look forward and as we see the watch category growth being at a much lower level, we certainly will be looking at pricing as one of the components.

But we do see volume as being a critical component to our growth propositions, but pricing certainly will come into play next year and probably over the next couple of years.

Great, and then one last one, if I may: a question about the Movado brand performance in the UK.

I know it's still relatively new in that market.

Are you still seeing good sell-through there, and perhaps can you touch upon any new markets that you might enter with the Movado brand in Europe as we think about the next few quarters?

So, we have seen sell-through growth there, although not up to what we would like, and our overall plan, but we continue to invest in the marketplace, and are optimistic about the potential for Movado international growth basically across the Middle East, Europe, Asia -- Europe, the UK, and also reaching the travel and consumer.

And that's one of the reasons I think you will see, with Ricardo on board, that we will focus a great deal on the international marketplace.

And we're glad to have him on board.

And as Rick mentioned in his comments, he will join us for our fourth-quarter conference call, and give a little bit of color on our opportunities around the world.

Thanks, everyone, all the best this holiday.

Ed Yruma, KeyBanc Capital Markets.

First, on the wholesale front, historically when you've seen these periods of watch industry slowdown, do you see the wholesale channel either repositioning case lines to non-watch areas?

Do you see increased competition for specific slotting?

And then, I know you don't provide markdown dollars, but in this environment, are there changes or requests that the wholesale channel may have, in order to move product?

So, we don't anticipate there being any reallocation of space.

Our brands are still driving very good growth at retail.

And I think, as Rick mentioned, we're very pleased with that growth.

I think, overall, retail as a whole has been somewhat challenging, and so retailers are being cautious with their inventory purchases.

And in a brand like Movado, which has a -- it's a longer term and a core aspect to the brand, retailers are able to manage their purchases.

What was your second part of your question?

The market has been promotional for several years.

We are not promotional, and one of the things that we take very seriously is the integrity of our brands.

And one of the things that we focused on making sure that we continue to make sure that we support them with advertising and marketing, and not through promotional aspects.

Got it, and a follow-up, if I may.

I noticed you increased your share repurchase authorization.

Could you just quickly update us on the percentage of cash that's in the US that's available for share repo versus international?

And would you consider repatriating some cash to do share buybacks?

I'll start with where our cash is.

So, you are correct, there is a -- the majority of our cash is overseas; it was between 15% and 20% of our cash in the US that is currently available for things like share repurchases or dividends.

One last thing just to keep in mind: We do have a revolving credit facility with our bank.

So, we always do have availability to borrow at very low interest rates, if necessary, here in the US.

Got it, and one final follow-up, if I may.

In terms of pricing architecture, I noticed you mentioned in the last question, but as you think about the Movado brand, and then, in tandem, Movado Bold, is the weakness more pronounced in specific price bands, and how comfortable are you overall with the pricing architecture of the Movado brand?

Thank you.

I think, number one, we're very pleased with our pricing architecture and the structure that we have.

No, we're not seeing any issues with any of our product offerings on the price proposition that we have there.

Obviously, when we look at the potential for pricing down the road, we do look at ourselves versus competition, and making sure that we continue to provide excellent price value for our consumers.

So, we think we've done a great job over the last number of years of really getting our product well aligned from a price point, having very interesting price ranges for our consumers out there.

And we will make sure that we keep that proper balance as we go forward.

Thanks, best of luck for holiday.

Jeremy Hamblin, Dougherty & Company.

Wanted to -- just have a follow-up on the buyback.

Has the Company, since the pre-announcement on November 14 -- has the Company been any more aggressive then you have been the rest of the year in terms of utilizing the currently authorized share plan -- buyback plan that you have in place?

Jeremy, we have an automatic purchase plan in place that is allowed to trade even during closed periods, and that is what was operating currently from the pre-announcement until now.

So, it's been on the regular volume of our repurchases that we've had in place for -- throughout this entire quarter.

We will now look at it going forward, now that this has been approved, as to what the appropriate purchase level would be with the stock price and with the open authorization.

And then, a follow-up to your comment on the revolving line of credit: Is it something that you would potentially do, in looking at this new buyback plan or the increase in authorization to $100 million, that you would utilize a revolver in terms to -- in the sense to repurchase shares more aggressively moving forward?

Or would you be willing to borrow at all, in doing that?

I think the rates are very attractive right now, and we have a supportive bank group and a current deal that does allow us to borrow with a lot of flexibility.

So, yes, that would absolutely be something we would look to.

And then, wanted to come back to the ESQ for Movado reallocation of display space.

In terms of the commentary about it not fully materializing, what do you think has happened with that, in terms of -- is there any concern that the Company is not getting as much shelf space allocated as you had hoped for?

I'm hoping that you can maybe just elaborate on why it hasn't materialized in the way that you had anticipated?

We definitely took over the space, and we still have the space, and the space is performing extremely well.

And in fact, for retail, it is performing even better than we anticipated.

I think we expected that there would be a higher sell-in component throughout the year, based on that, then what we currently saw and are seeing.

But as we've said numerous times, Movado continues to perform extremely well in the United States at our largest points of sale; and where we've reallocated this space, it's even driving greater growth.

But I think we had anticipated higher sell-in behind that effort.

And so, we are maintaining the space, and we've seen both the growth in our core component to Movado, and very good growth in our Bold component to Movado as well.

As a follow-up to that, it's now been three quarters or so that there seems to be this mismatch between sell-through and sell-in to your customers.

How long can that dynamic last before there's just no inventory at your channel partners on the retail side of things?

(multiple speakers)

The response to that is: We believe that that will be at a more normalized level by the end of this year.

We would have expected inventory growth levels, particularly with the Movado ESQ plans that we had in place.

That inventory growth component did not materialize.

I think for a multitude of reasons, part of that being our retail partners being quite aggressive in managing their own inventory for a multitude of reasons.

We believe that we -- the levels of inventory that we have out there are appropriate to be able to sustain the level of growth that we have.

And we certainly see that, as our plans go forward, that our sell-in should certainly be equal to our sell-through, even though the sell-through has been much higher than the sell-in for the last number of quarters.

And just to clarify, because your guidance for Q4 -- actually you're right, it factors in an acceleration or negative -- or deceleration I should say, in Q4 versus the previous quarters.

So, in terms of the comment that it's going to normalize by the end of the quarter, that's -- you're really thinking in terms of Q1 next year?

Yes, it's the end of the year; sorry, I said -- so, certainly the end of year, which would be in the first -- when we look at next year, our next fiscal year, we would see our sell-in equaling our sell-through.

We believe the inventory adjustments that have taken place will occur by the end of this year -- have been occurring and will be completed by the end of this year.

And we don't see a reason for us trying to aggressively grow that level of inventory.

Thank you for taking my questions.

Mike Richardson, Sidoti.

A couple of quick follow-ups from some of the things -- questions that people had asked before.

With regard to the buyback, is the plan to execute that -- the entire amount of the authorization?

What we have is the original ending period was January 31 of 2016, and even though we've increased it from $50 million to $100 million, we kept that same end date.

So, yes, the rationale for buying, originally, was to offset equity dilution that was taking place with grants; obviously, that will be on a more accelerated basis now.

Okay, thanks.

And then, Rick, in your prepared remarks, you mentioned you expect overall mid-single-digit top-line growth going forward.

I'm just wondering how that might break out in terms of owned brand versus licensed brands?

I think we'll have that level of detail more when we have our fourth-quarter conference call.

Again, we continue to perform well in all of our businesses and brands.

Licensed brands continue very strong; Movado very strong.

There are pockets, whether it be Movado International and/or Lacoste where obviously we have levels of improvement.

But we'll give more clarity of that at the -- on our fourth-quarter conference call.

Okay, great.

And with the introduction of Ferrari, especially in southern Europe, has that opened any additional doors for any of the other brands?

One of the things is: We have very strong distribution for all of our brands globally, and obviously as we added a new brand like Scuderia Ferrari, we look at our traditional markets, and sit there and make the assumption that we can expand into most of those doors.

So, we have been doing that.

We will continue doing that, but I also think Scuderia Ferrari offers us an opportunity of having perhaps a very different balance than we have with a HUGO BOSS or a Tommy Hilfiger between traditional retail, as well as some of what I'll call the sporting shop retail distribution.

So, I think we're -- our [goal this year] is having more of a balance of that, and focusing on that arena which we haven't.

But we will continue to expand doors in the traditional retail; probably will not get to the same level as a HUGO BOSS, as a Ferrari, but we may have the same number of doors distribution but in some different channels as well.

Okay, and then just the last one for me: Has there been any loss of shelf space with your retail partners?

From an overall standpoint, absolutely not.

If anything, we continue to expand in pretty much across all of our brands and businesses.

So, again, very powerful brands that are performing; so, brands that are very much desired by retail partners because we're leading growth above the watch category overall growth.

Okay, great.

Thank you, guys, and best of luck for holiday.

Kristine Koerber, Barrington Research Associates.

I have a couple of questions.

First, looking at the overall watch category and the slowdown that's being experienced -- you indicated that most of that may be due to high growth rates over the last couple years.

Are you sure you're not seeing any change in consumer taste or anything else -- maybe consumers are waiting for a smart-watch launch or whatever it may be?

We don't think you're seeing consumer taste change; we're still happy with the momentum of our brands at retail.

We have just seen the category overall growth slow, and it has grown very strongly over the past several years, especially in the United States.

We would expect, in a few years, to return to that growth, especially as we continue with innovation.

We think wearables will add interest to the category, not take away interest for the category.

So, I think that there -- a lot of opportunities ahead for us as we choose to be able to play in the wearable space, as well as opportunities globally and internationally.

And you have seen some economic issues internationally, and I think, as Rick mentioned, in China and Turkey, Argentina, and some of those should moderate in the future as well.

Okay, and then, as a follow-on to the wearables or the smart watch, you mentioned that you hired a new General Manager.

Can you give us some color on his background and your timing on the wearables category -- where you stand with a product launch at this point?

Well, from an overall standpoint, as I mentioned in the last conference call as well, in the second quarter, that is certainly an area that we are spending time and attention, and looking and exploring options there.

But we continue to expand the strategic alliance opportunities that we have with partners out there.

When we're done, we certainly -- when and if we decide to launch, we would certainly launch it from a luxury branding philosophy standpoint.

So, for us, it is not a tech -- purely a technology opportunity, as opposed to a lifestyle and a very important branding opportunity for us.

So, we continue to focus in those strategic alliances.

We continue to move forward, bringing people aboard, helping us with that from a standpoint of helping us with those alliances, managing some of the opportunities there, as well as, as we contemplate business plans as we move forward.

So, we are going down the path that gives us the opportunity to be able to do something, but when we're done, we will only do it from a very strong branding perspective.

So, there are no timelines that we're willing to commit to at this point in time with a launch or anything, but we certainly are spending time in activity in that arena to understand what we can do, and to certainly be able to do it, if we do, in a point-of-difference perspective.

And the new General Manager you brought on board -- what is his background?

Background is in the technology arena on the West Coast.

So, certainly brings an additional set of competencies to us as an Organization, knowing a bit more from a technology standpoint, knowing a bit more on the marketing from a technology standpoint, the consumer rationale [et al].

And obviously, being in the same locale where a lot of these technology partners live and play.

Okay, and then lastly, on Ferrari, I know you slowed the door growth to tailor the product to certain regions.

How should we think about door growth going forward?

You were targeting 1,000 doors at year end; I think you're around 350 or so.

When do you expect to get that 1,000 doors at this point?

I think we'll provide a little bit more clarity on that on our fourth-quarter conference call, but our game plan was to basically open about 1,000 doors per year for the next couple of years, with the first year being around 2,500.

We will certainly look at that, and as I said, I'm not so sure we'll have a dramatic change in that.

It may be more the mix of the type of retail that we have there.

But I'd be able to give you better clarity on that as we formalize our plans at the end of the year.

Okay, great.

Thank you very much.

Oliver Chen, Cowen and Company.

Thanks for the details.

Regarding the marketplace, are there big distinctions between the fashion category versus fine, and if you had any comments there?

And then, on your detail on the core international Movado brand, what would you say are the big opportunities?

Is it more about the backdrop and the sell-in versus product innovation that needs to take place there as you look to improving the performance?

We've seen strong sell-through across our license brand portfolio, with the exception of the brands that Rick mentioned.

So, Lacoste is one that -- where we're seeing a weaker sell-through, but we expect that to begin to turn around as we implement new product and marketing strategies in that brand.

And across the Movado brand, we've had strong -- very strong sell-throughs in the United States.

Movado, for us, is a large opportunity internationally.

We believe having Ricardo on board will help a great deal with that.

And really it's -- for us, it's on the marketing and brand-building front on the international front.

So, Movado has a huge brand awareness, very large market share in the US, and we need to increase the awareness and marketing levels internationally, but in a very focused approach.

So, that is what we are building our plans on, for the future.

But we'll give you more highlight around that at our Q4 conference call.

Okay, and Efraim, on Lacoste, the Goa was pretty popular in the past.

So, what's the quick take on the repositioning happening there?

Are you going to have to change your pricing structure?

Not at all, in terms of pricing.

We're very positive on the new Lacoste 12.12, as are our retailers, and we've seen a good initial consumer reaction to the product as well.

It is priced similarly to the Goa.

And every brand, at some point, goes through different levels of maturity and issues, and they -- great brands have great staying power, and generally rebound.

So, we're not concerned with that from a long-term perspective.

Okay.

And our final question is: What are your thoughts on the positive catalyst for a reacceleration of the watch industry growth?

What are the positive points in terms of you seeing that happen as an idea?

Thanks.

Well, we think that the wearable space will add some excitement to the category.

There's a lot of research that shows that people who today are not wearing watches will now become interested in watches.

And then, some will move on into conventional and innovative new products from brands with a great heritage like ours.

So, I think that's an opportunity that will drive an interest in the space.

And I think great product innovation.

So, as we continue to drive innovation in product, that always drives consumer interest.

Thank you, best regards for holiday.

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

I would like to thank all of you for joining us today, and asking some very good questions.

We would like to wish everyone a great Thanksgiving and a happy holiday season.

So, thank you again for joining us today.

And this concludes today's conference; thank you for your participation.