Movado Group, Inc. (NYSE:MOV) Q4 2018 Earnings Conference Call Transcript

Mar 29, 2018 • 09:00 am ET

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Movado Group, Inc. (NYSE:MOV) Q4 2018 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] We'll go first to Oliver Chen with Cowen and Company.

Analyst
Oliver Chen

Hi.

Executive
Rachel Schacter

Good morning, Oliver.

Analyst
Oliver Chen

Very nice quarter. Good morning.

Executive
Efraim Grinberg

Thank you.

Analyst
Oliver Chen

So 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 of plus 40% to 50%? And then what's your vision for where that will reach as a percentage of total over time? And then it's related to your digital center of excellence, Efraim, what are -- 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?

Executive
Efraim Grinberg

So multiple questions. I don't know if we'll reach that growth rate. We are expecting growth this year in our Movado.com web site, and I would expect it to continue to grow. But I don't think 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 web site, and as importantly, our wholesale customers online, and a lot of our initiatives with our partners, whether they be our licensing partners or our 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 and 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'd be department stores, specialty stores, dedicated web sites as well. So we're really pleased with the direction we're heading in that arena as well.

Analyst
Oliver Chen

Okay. And Sallie, on the gross margin guidance for flat, 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? Thank you.

Executive
Sallie DeMarsilis

Yes. So I am 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 listed 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 tied into margin by quarter or any other cadence.

Executive
Efraim Grinberg

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, so.

Analyst
Oliver Chen

Okay. And Efraim and Sallie, what are your latest thoughts on your retail partners as you look ahead to the year -- the year ahead? It's been a dynamic sector in terms of how your retail partners