AccessMyLibrary provides FREE access to millions of articles from top publications available through your library.
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: At this time I would like to welcome everyone to Movado Group's conference call. (OPERATOR INSTRUCTIONS). It is now my pleasure to turn the floor over to your host, Suzanne Rosenberg, of Movado. Ma'am, you may begin your conference.
SUZANNE ROSENBERG, INVESTOR RELATIONS, MOVADO GROUP, INC.: Thank you. Good morning, everyone, and thank you for joining us today. With me on the call is Efraim Grinberg, President and Chief Executive Officer, Rick Cote, Chief Operating Officer, and Gene Karpovich, Chief Financial Officer. Also joining us today is Sallie DeMarsilis, who, as you saw in this morning's announcement, will assume the Chief Financial Officer role on March 31.
Before we begin, I would like to note that this conference call contains forward-looking statements, which are made in pursuance to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Factors which could cause actual results to be materially different from any future results expressed or implied are discussed in our filings with the Securities and Exchange Commission. Such forward-looking statements include statements regarding Movado's performance for fiscal 2009 and beyond. We currently expect to update estimates. However, the failure to update this information should not be taken as Movado's acceptance of these estimates on a continuing basis. Movado Group may also choose to discontinue presenting future estimates at any time.
During the course of today's conference call, management may present certain non-GAAP figures. For a reconciliation of these figures, along with information required under SEC Regulation G, please view our earnings press release, which has been posted on our Web site at MovadoGroup.com.
Let me now outline the order of speakers and topics for today's conference call. Efraim will begin with the highlights of our fourth-quarter and full-year performance; Gene will then review the financial details, and Rick will provide you with an update on our operating initiatives along with our financial outlook; we would then be glad to answer any questions you might have.
I would now like to turn the call over to Efraim.
EFRAIM GRINBERG, PRESIDENT AND CEO, MOVADO GROUP, INC.: Thank you, Suzanne, and good morning, everyone. Before I discuss our fiscal 2008 results, I would like to call your attention to the separate press releases issued this morning announcing the appointment of Sallie DeMarsilis as Chief Financial Officer and Principal Accounting Officer, effective March 31. Sallie joined Movado Group earlier this year, and we are very pleased to welcome her into her new role.
Gene Karpovich will give his remarks on the most recent quarter and full year later in the call. We are fortunate that he will remain with the Company for a few years before his planned retirement, which will not only allow for a seamless transition, but will allow our company to continue to benefit from his significant industry experience as he remains an officer of the Company and a senior member of our management team.
Now I would like to turn to today's earnings announcement. We are pleased with our overall performance in fiscal 2008 considering the challenging economic and retail environment in the United States, which really began to manifest itself in December. Despite this, our team delivered a 5% sales increase, a 150 basis point expansion in adjusted gross margin, an 11% increase in adjusted earnings per share, and we generated $84 million in cash flow from operations.
Over the past number of years, we have strategically diversified our company, both from a brand portfolio perspective and in terms of our geographic exposure. Today, 40% of our total revenue is generated by international markets, and nearly 50% of our wholesale watch sales come from markets outside of the US. With our healthy mix of business, we have strongly positioned our company to weather the current environment.
Our international performance exceeded our expectations and partially offset weakness in the US. In fact, total international sales in fiscal 2008 increased a strong 29% over last year, excluding sales of excess discontinued product. This trend came predominantly from the growing prominence of Ebel and the global expansion of our licensed brand portfolio. We also benefited from the strength of foreign currencies in our international operations.
Our luxury brands recorded a low single-digit sales decrease in fiscal 2008, reflecting the solid performance of Ebel, which was more than offset by the repositioning of Concord in advance of our fourth-quarter relaunch. Ebel continues to build global momentum, and the fourth quarter was marked by very important product extensions of the 1911 BTR collection. For women, the Ebel Brasilia collection continues to perform strongly and has become a core pillar of Ebel's collections.
Next week at Basel World, the international watch and jewelry trade fair, Ebel will make a strong statement with women's watches through the introduction of a new Beluga collection. First introduced in 1985, the Beluga has been redesigned in a manner that is fundamentally modern and more upscale than ever before. We will continue to strongly support Ebel with a brand-new advertising campaign featuring Gisele and a product-focused men's campaign building on the brand's image-enhancing Architects of Time signature.
After 18 months of repositioning, Concord formally launched its new identity worldwide in the fourth quarter with one collection, the C1. This collection truly personifies Concord's bold philosophy, aggressive positioning, daring products, and exclusive pricing. The buzz generated by the C1 collection has been tremendous around the world. Deliveries of product began in December. However, we were impacted by industrywide capacity constraints on the manufacturers of mechanical movements and other key components. This has led to the lengthening of leadtimes and some product delivery delays, which has also in turn increased demand from retailers.
At Basel, we will strongly communicate Concord's new positioning to retailers around the world. The brand's niche positioning, with a modern, edgy design philosophy, will be evident in our introduction of the new limited edition C1 Tourbillon Gravity, the first ever tourbillon built outside of the watch case and retailing in excess of $250,000.
Our accessible luxury category experienced a challenging holiday season. This category, comprised of Movado and ESQ, generates nearly 80% of its sales from the US. As a result, it was not altogether surprising that this category was most impacted by the slowdown in the domestic economy.
Movado continues to be the leading brand within its segment of the Swiss watch category and across its distribution. The brand enjoys phenomenal brand recognition; a very strong conversion rate from consumers' consideration of the brand to an actual purchase. Armed with these brand strengths …