Movado Group, Inc. (MOV) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Movado Group, Inc. Annual Shareholder Meeting 2020. I would now like to hand the floor over to Efraim Grinberg, CEO and Chairman of the Board. Mr. Grinberg, the floor is yours.

Good morning, and welcome to the Movado Group, Inc. 2020 Annual Shareholders' Meeting. As explained in our June 9 announcement, today's meeting is being held in a virtual-only format due to the public health impact of the coronavirus pandemic and to prioritize the health and well-being of meeting participants. I am Efraim Grinberg, CEO and Chairman of the Board and Chairman of today's meeting, which I will now call to order. We will first dispense with the formal requirements of the meeting and then briefly discuss the state of the company before answering any questions you may have. Please save your general questions until the Q&A session following the formal portion of the meeting. [Operator Instructions] Our Corporate Secretary, Mitch Sussis, will read your questions aloud at the appropriate time during these proceedings. Notice of this meeting was properly given on May 12 and June 9, 2020, to all shareholders of record of the close of business on April 30, 2020, as confirmed by Broadridge Financial Solutions, Inc., the proxy solicitor for today's meeting. Mr. Thomas Ferrari of American Election Services, LLC, is present this morning and will act as the Inspector of Election. He has duly executed an oath of office, which will be attached as an exhibit to the minutes of this meeting. Mr. Ferrari, would you please report the total number of shares represented and entitled to vote at this meeting?

Mr. Chairman, as of the record date of April 30, 2020, there were outstanding 16,520,133 shares of the company's common stock and 6,608,548 shares of the company's Class A common stock. At this meeting, there are present, in person or represented by proxies, shareholders holding a total of 22,251,442 combined shares of common stock and Class A common stock. This total represents in excess of a majority of the total voting power of all shares issued, outstanding and entitled to vote and is sufficient for a quorum and for transacting the business of this meeting.

A certified report of the elections will be attached as an exhibit to the minutes of this meeting, and a certified list of shareholders entitled to vote at this meeting will be kept open by Mr. Sussis during this meeting and is subject to inspection by any shareholder. As stated in the notice of meeting and proxy statement, the following 3 proposals will be considered and acted upon today: first, the election of 7 persons as directors of the company; second, the ratification of the appointment of PricewaterhouseCoopers LLP as the company's independent accountants for fiscal 2021; and third, the adoption of on an advisory basis of a resolution approving the compensation of the named executive officers as provided in the proxy statement. Regarding the first proposal, the following persons have been nominated for reelection as directors: Peter Bridgman, Alex Grinberg, Efraim Grinberg, Alan Howard, Richard Isserman, Ann Kirschner and Steve Sadove. All of the nominees are in attendance at this meeting. However, before proceeding with the voting for their reelection, I would like to recognize current directors, Rick Coté, Nat Leventhal and Maurice Reznik, all of whom are retiring from the Board today. Messrs. Coté, Leventhal and Reznik have all made valuable contributions to the company. And on behalf of all shareholders, I would like to thank them for their many years of dedicated service. It is now time to vote on the reelection of the 7 nominees recommended by the Board. The polls are now open for voting. If you have already submitted your vote in advance of this meeting, there is no need to vote at this meeting, unless you wish to change your vote. If you have not already submitted your vote or wish to change your vote, you can do so now by following the instructions on the meeting website. [Voting]

The next order of business is the proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent accountants for the company for its fiscal year ending January 31, 2021. If you have already submitted your vote in advance of this meeting, there is no need to vote again. If you have not already voted or wish to change your vote, you can do so now by following the instructions on the meeting website. [Voting]

The next item is to approve on an advisory basis the compensation of the company's named executive officers as disclosed in the compensation discussion and analysis, the summary compensation table and the related compensation tables, notes and narrative in the proxy statement for today's meeting. If you have already submitted your vote in advance of the meeting, there is no need to vote again. If you have not already submitted your vote or wish to change your vote, you can do so now by following the instructions on the meeting website. [Voting]

I now declare the polls closed. Mr. Ferrari, has the tabulation been completed?

Yes, Mr. Chairman. Based on a preliminary tabulation, we have determined that the 7 nominees for election to the Board of Directors each received at least 78,525,424 votes, representing more than a plurality and voting power of the shares cast. Ratification of the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for the year ending January 31, 2021, has been approved by 80,705,677 votes, representing more than a majority of the votes represented at this meeting. And the compensation of the company's named executive officers, as disclosed in the proxy statement, has been approved by 78,546,864 votes, representing more than a majority of the votes represented at this meeting.

Thank you. The report of the inspectors of elections will be filed with the records of this meeting. In addition, a report on the Form 8-K will be filed with the Securities and Exchange Committee (sic) [ Securities and Exchange Commission ] by next Wednesday, disclosing the precise final vote count. The formal portion of this meeting is now concluded. In a few minutes, we will answer any questions submitted on the meeting website, www.virtualshareholdersmeeting.com/MOV2020. [Operator Instructions] While you submit your questions, let me take a few minutes to make a few remarks. We are in unprecedented times. Operating in an environment where our business, like most consumer businesses around the world, have been greatly curtailed by the COVID-19 pandemic. It looks like we will continue to deal with the effects of COVID-19 for the foreseeable future. Our thoughts go out to all of those who have lost family members due to the virus. In addition, over the last month in the United States, we have witnessed several horrendous steps caused by systemic racism that has persisted in our country for centuries. While progress has been made, it is obvious that not enough has been done to combat racism on a domestic and global basis. While in the past, it may have been acceptable for companies not to take a public position on societal inequities, today, it is no longer acceptable. Our employees and our customers expect us to take a position. As a company, we have always valued diversity and inclusion. However, we view recent events as a call to action. During these times, we have reached out to our consumers through social media efforts to let them know where we stand and to provide educational links on racism and improved policing. We have also made donations to the NAACP, Equal Justice Initiative and Campaign Zero to support these initiatives. We have had numerous handed and thoughtful discussions with our employees and our leadership team dedicated to the topics of racism and unconscious bias, and we will continue to drive increased diversity and inclusion across our company. Now I'd like to talk to you about how we are operating in the current business climate. COVID-19 has had a dramatic effect on our business, and we talked about that during our first quarter conference call and earnings release. Despite all of the uncertainty in the world, the fragile retail marketplace and the challenging economic realities, I am optimistic about our prospects for the future. Our leadership team has done an excellent job of reacting quickly to business closures in an uncertain environment. We have strengthened our balance sheet and minimized expenses. We have slowed down the purchase of inventory and limited capital expenditures, and we have focused on efforts on our growing e-commerce business. As global retail around the world has begun to reopen, we have seen some optimistic signs, beginning with our e-commerce sales in China and our brick-and-mortar stores in that country showing improving trends. Retail businesses in Europe are reopening, with Germany leading the way. Most of our North American outlet stores are now open, and early results were better than we expected. Most outlet centers are outdoor venues, and they may have an advantage versus indoor centers until COVID-19 is eradicated. Many experts have expressed the opinion that the current pandemic has accelerated numerous trends in retail business and especially e-commerce. And changes that were planned to take years to occur are happening at a much faster pace, especially the acceleration of the growth of e-commerce and we are seeing the result. To better align our management structure to the changing environment, we were pleased to announce the promotions of Behzad Soltani to Commercial President and Chief Technology Officer and Sallie DeMarsilis to Chief Operating Officer and Chief Financial Officer. These seasoned leaders will help position our company for the future, along with an experienced global leadership team. With the great brands that we have under the Movado Group umbrella, we are intently focused on the consumer and delivering them the fabulous watches and jewelry that they expect from us wherever they choose to shop, whether on our own website, in our stores, through our wholesale partners or on our partners' websites. Lastly, I would like to take a moment to again thank the outgoing members of our Board of Directors. Nat Leventhal, Maurice Reznik and Rick Coté for the leadership and great counsel that they have provided to Movado Group throughout the duration of their terms. I would now like to open up the meeting to any questions. Mr. Sussis, have any questions been submitted on the website?

No, Mr. Chairman. There have been no questions submitted.

There being no other business, this meeting is now adjourned. I'd like to thank you all again for attending.

Thank you, ladies and gentlemen. This does conclude today's meeting. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.