Movado Group Inc (MOV) Q4 2019 Earnings Conference Call Transcript
Movado Group Inc (NYSE: MOV)Q4 2019 Earnings Conference CallMarch 28, 2019, 9:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, everyone, and welcome to the Movado Group Fiscal Fourth Quarter 2019 Earnings Conference 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 Ms. Rachel Schacter of ICR. Please go ahead, ma'am.
Rachel Schacter -- Vice President
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'd like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group.
Efraim Grinberg -- Chairman & Chief Executive Officer
Thank you, Rachel. Good morning, and welcome to Movado Group's year-end conference call. I will share with you the highlights for the quarter and the year, as well as outline our strategic vision and plans for fiscal 2020. And then Sallie will walk you through our financial results in greater detail, as well as our outlook for the coming year. We would then be glad to answer your questions.
In a challenging global retail marketplace, particularly during the holiday season, we were very pleased to deliver such a strong quarter and end to our fiscal year. Our sales for the quarter grew by 33.6%, excluding the recent acquisition of MVMT, and grew by 10.3%, excluding MVMT. Confirming that our strategic vision of driving innovation, expanding our digital footprint, and focusing on our brands and regions, is enabling us to gain market share around the world. Adjusted operating profit for the quarter increased 38.5% to $19.9 million, and adjusted EPS increased to $0.67 from $0.52 in the prior year period.
For the year, our sales grew by 19.7% to $679.6 million. Our adjusted operating profit grew to $79.2 million, a 24% increase over last year, and our adjusted earnings per share for the year were $2.67 versus $2 last year.
At the beginning of the year, we said we expected to return our U.S. wholesale business to grow. And in fiscal 2019, our U.S. wholesale revenue grew 2.9% without the addition of MVMT. We're also very pleased to have ended of the year with over $189 million in cash, despite having made the important acquisitions of Olivia Burton in fiscal 2018 and MVMT in fiscal 2019.
Now, I'd like to share with you some of the highlights in our brands, as well as some of our plans for the coming year. In fiscal 2019, our Movado brand grew for both the quarter and the year. While traffic remained challenging, e-commerce performance was stronger. Our new product introductions in Movado including our Museum Classic on mesh and our new BOLD Evolution resonated with our retail customers. Our Museum 47 a limited series collection available in various colorways in 40 millimeters and 35 millimeters help propel our movado.com business to over 50% growth for the quarter.
For our Movado brand, we've put together a strong set of marketing plans to help drive continued growth including a spring television campaign featuring our Bold Evolution collection for both men and women and a continued digital campaign to help drive demand and support for our retailers in our movado.com website. In fiscal 2020, we will continue to focus on driving accelerated growth on movado.com.
In Smart Watches, we are excited to introduce Movado Connect 2.0 coming this fall, which will now be available in two sizes, 40 millimeters and 42 millimeters. For the first time, we will have a smaller size available for women. We previewed the collection with some of our key customers during our second Annual Movado Group Summit in Davos, Switzerland, and received a strong reaction in Movado Connect 2.0. Our new smart watch will be supported by the Google Wear OS platform and features the Qualcomm 3100 chip.
While our smart watches are all about design, they will feature a great deal of upgraded functionality, including for the first time heart rate capability. We're also excited about our e-commerce initiatives in China, where we have invested in our digital capabilities and believe there is a significant opportunity with both Tmall and online marketplace specifically for Chinese consumers, and jp.com, China's largest online retailer.
While, there has been discussion about the challenges in the fashion watch market, we saw strong performance of our global licensed brands division. Partnering with strong brands, driving product innovation, and increase the effective global marketing programs drove double-digit growth in this part of our business, both for the quarter and the year, with especially strong performances during the holiday selling season in the U.S., Latin America and Europe.
In Tommy Hilfiger, we drove record sales with very strong marketing initiatives featuring our best sellers, Ari for her, and Decker for him. The Tommy Hilfiger brand has a global reach, and we had strong performances in North and South America, Europe and the Middle East. In the fall, we started testing a new Tommy Hilfiger shop-in-shop with significant built-in technology that truly symbolizes the new omni-channel marketplace. Having proven to be very successful in driving incremental sell-through, we will expand this enhancement at important points of sale throughout the world.
In COACH, we had a strong fourth quarter, driven by new products led by our new part keybar (ph), and a continued strong performance from our Perry and Charles collections. Our marketing programs for the fall season were successful in driving growth during the holiday. For this spring, we are focused on continued innovation in Perry and Charles and an exciting new men's offering for the second half of the year.
In Hugo Boss, we continue to drive a very strong position as one of the leading brands in the men's fashion watch arena, and with an increasing presence in the women's category. We also reach record sales for Hugo Boss watches in fiscal 2019. Products like Trophy and Grand Prix Retro help drive sales in our global retail partners. We ran a very impactful billboard campaign in New York, LA and Mexico City, as well as key cities in Europe. In the fourth quarter, we saw successes from our new Hugo collection.
In Lacoste, we continue the momentum, growing double digits with very strong sell-through of our Lacoste 12.12 collection, which is designed to complement the iconic Lacoste polo shirts. During the holiday season, we're also very successful with our Lacoste kids watches. Our new Lacoste product introductions for this coming spring were very well received by our retail partners at Davos.
We had strong sales growth in Olivia Burton driven by our performance in Asia. We launched Olivia Burton in China earlier in the year and we are excited about our e-commerce results and the growing brand awareness. Olivia Burton was awarded a power award as one of the best launches of the year on Tmall. In addition, this was the first Christmas that our Olivia Burton flagship boutique was opened in Covent Garden and it performed very well. We also launched a boutique in Osaka, Japan with our local partner. Over the last year, Olivia Burton has made great strides in the jewelry front, and we believe that it is a significant opportunity for the future.
For fiscal 2020, we are focusing on continuing to expand our positioning in key Asian markets like Singapore, Korea, Japan, and China, and building increased brand awareness in the U.S. and Latin America.
We acquired MVMT in October of this past year. Since the acquisition, our teams have been focused on integrating our systems, expanding our global e-commerce capabilities, and integrating MVMT in our very strong supply chain. We would expect a great deal of progress to be made during the first half of the year, and to begin realizing some of these synergies during the third and fourth quarters. While MVMT has grown into one of the biggest e-commerce watch brands targeted at young consumers with a very strong social media following, we believe that it can become a leading brand in both e-commerce and wholesale distribution on a global basis.
We have a strong global distribution network both in the United States and abroad, and our customers have been very enthusiastic about launching MVMT into the omni-channel marketplace. While MVMT was built as a predominantly digital player, we believe that for the brand to reach the next level in its development, it needs to have an omni-channel presence. We will also begin to invest in powerful marketing programs to support the wholesale roll-out and build additional brand awareness with strong presence in the U.S. during the second half of the year. This is being developed by a very strong creative team at MVMT's headquarters in Los Angeles, with great products at affordable prices, including watches, sunglasses, and jewelries and an engaged community of loyal followers. We believe that MVMT has great potential for adding sales and profit growth to Movado Group, and we are focused on executing and investing against our long-term vision.
In our outlet store division, we continue to drive increased profitability with strong gross margins. While traffic remain challenging, we continue to drive increased conversion rates. For the year, we increased sales by 10.3% with comps of 2.3%. For the quarter, our sales were up 1.6% with comps down 3.5%, reflecting lower store traffic and strong sales for the prior holiday season.
Last year, we announced the launch of our Digital Center of Excellence. We embarked on this project in an effort to build robust digital platform to help drive growth across our brands and our global footprint. Over the last year, we have made great strides in building this group, and today have assembled a strong set of competencies across various important disciplines, including e-commerce, digital marketing, data sciences and CRM.
We believe this group will add incremental value to Movado Group as we build and grow our digital presence. With our Movado Brand, we have already added great value with an exceptional second half performance of movado.com. This spring, we will further enhance our e-commerce platform with an upgrade to the latest Salesforce.com solution for e-commerce. We're excited to roll out this mobile-first solution to further enhance our consumer experience for Movado and Olivia Burton.
During the fourth quarter, we entered into a joint venture with our longtime partner in Spain to distribute all of our brands. We believe this closer collaboration will help accelerate future growth in the Spanish market.
We're working diligently to execute on our vision to be a leading omni-channel player in the category. We have made a great deal of progress over the last year and we're excited to continue to drive growth and gain market share this coming year.
As Sallie will discuss our outlook embeds both sales and profit growth. However, we will also continue to invest in our most important opportunities that we believe will provide for a strong foundation for future growth. We are operating in a challenging and -- in challenging and quickly evolving global retail landscape, and we believe that we are making the right choices that can and will continue to deliver strong results.
Before turning the call over to Sallie, I would like to acknowledge that one of our longtime board members, Margaret Hayes Adame recently passed away. As a respected retail executive, Margaret was a great contributor to our board and will be greatly missed.
Now, I would like to turn the call over to Sallie.
Sallie DeMarsilis -- Chief Financial Officer
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 2020.
Before I begin, I would like to point out the special items included in our fourth quarter and full year results for fiscal 2019 and fiscal 2018. Our press release also describe these items and include the table of GAAP and non GAAP measures.
Movado Group acquired MVMT on October 1, 2018. Included in the consolidated results for fiscal 2019 was $14.4 million of pre-tax charges primarily connected with the integration and acquisition, $2.4 million of which was recorded in the fourth quarter. After-tax, the fourth quarter charge equates to $2.5 million or $0.10 per diluted share.
Included in the consolidated results for fiscal 2019 were tax benefits of $12 million or $0.51 per diluted share, related to finalizing our accounting for the impact of the 2017 Tax Act, as well as certain discrete foreign tax items; $4.4 million or $0.18 per diluted share was recorded in the fourth quarter. Our GAAP results for the fourth quarter and fiscal 2018, included a charge of $45 million or $1.95 per diluted share, due to the estimated impact of the enactment of the 2017 Tax Act last year.
Movado Group acquired Olivia Burton on July 3, 2017. Included in the results for fiscal 2019 was $2.9 million of non-cash amortization of the acquired intangible assets, of which approximately $700,000 was in the fourth quarter. After tax the year-to-date charge related to the acquisition equates to $2.4 million, or $0.10 per diluted share.
Included in the consolidated results for fiscal 2018 was $6.8 million of pre-tax charges primarily connected to this acquisition, of which $900,000 was recorded in the fourth quarter. After tax, the charge related to the Olivia Burton acquisition equates to $6.2 million, or $0.27 per diluted share for the year-to-date period last year.
Our GAAP results for fiscal 2018 included a $13.6 million pre-tax charge, which equates to $10.5 million after tax or $0.45 cents per diluted share in connection with our cost savings initiative. Approximately $150,000 of this pre-tax charge was in the fourth quarter of fiscal 2018. In the fourth quarter of fiscal 2019, a small reduction to this charge of $300,000 was recorded.
The balance of my remarks will exclude the special items just discussed. As a reminder, as of October 31, 2018, the Company's two operating segments wholesale and retail are now referred to as watch and accessories brands and company stores. The company stores segment comprises our retail outlet locations, and our watch and accessories brand segment comprises the rest of our business, including all the wholesale distribution, as well as direct-to-consumer sales channel other than our retail outlet location.
Now turning to our results. For the fourth quarter of fiscal 2019, sales were $199.4 million, a $50.2 million or 33.6% increase from the fourth quarter of fiscal 2018. The fiscal 2019 results include the addition of MVMT for the quarter. Excluding the impact of MVMT, sales grew 10.3% over last year. The increase in overall sales was driven by strength across our owned and licensed brands, as well as growth in our company stores. To this end, sales were up 55.7% in the United States, and in constant dollar increased 18.2% internationally. Excluding MVMT, sales increased 7.8% in the U.S., and increased 12.5% internationally.
Sales in our watch and accessories brand segment were $171.3 million as compared to sales of $121.6 million for the same period of last year. Excluding the impact of movement, sales grew 12.3% over last year. In constant dollars, these sales increased 43.1% driven by a sales increase in both are licensed brand and owned brand categories.
By geography, the U.S. watch and accessories brand business increased 93.7% to $78.8 million compared to $40.7 million last year. Excluding the impact of MVMT, sales grew 13.2% over last year. This increase was driven by both our licensed and owned brands.
The International watch and accessories brand business increased 14.3% to $92.5 million, compared to $80.9 million in the prior year. In constant dollars, international sales increased 17.6% with our strongest sales growth being in Europe and Asia. Excluding the impact of MVMT, sales grew 11.9% over last year.
For the quarter, the Company's retail business was up 1.6% from last year. At the end of the quarter, we operated 44 outlet locations, including one Canadian store as compared to 40 locations last year. Gross profit was $111.1 million, or 55.7% of sales, compared to $78.6 million, or 52.7% in the fourth quarter of last year. The 300 basis point increase in gross margin was primarily driven by the favorable impact of channel and product mix and leverage on fixed costs. These were partially offset by the unfavorable change in foreign currency exchange rates. Contributing to the uplift in channel and product mix was the inclusion of MVMT and our largest e-commerce sales quarter of the year.
Operating expenses were $91.1 million, an increase of 41.9% year-over-year. This increase was predominantly driven by $17.9 million increase in marketing investment to appropriately support our business initiatives and brand awareness across our portfolio, including our newest brands, MVMT. Additionally, there was a $3.5 million increase in payroll and performance based compensation.
Strong sales growth and expansion in gross profit more than offset the increased operating expenses, leading to better-than-expected operating income for the fourth quarter. To this end, operating income was $19.9 million, or 10% of sales, compared to $14.4 million or 9.7% of sales in the same year ago period.
Income tax expense was $3.9 million, compared to $2.1 million in the same period of last year. Net income in the fourth quarter was $15.9 million, or $0.67 per diluted share versus net income of $12 million, or $0.52 per diluted share in the fourth quarter of fiscal 2018.
Looking at the results for the full year ended January 31, 2019, we saw positive performances across key metrics with increased sales, expansion in gross profit margins and significant growth in earnings per share. We reached record sales and record operating profit with or without the inclusion of MVMT in our results.
Sales were $679.6 million, an increase of 19.7% from fiscal 2018. Excluding the impact of MVMT, sales grew 12.7% over last year. In constant dollar, sales increased 18.9%. Sales increased in our owned brands, licensed brands and retail categories organically, as well as, with the inclusion of MVMT. Total U.S. sales increased 18.3%. Total international sales increased 20.8%. And on a constant dollar basis, international sales increased 19.4%.
Gross profit was $369.9 million or 54.4% of sales as compared to $300.2 million or 52.9% of sales last year. The increase in gross margin percent for the year-to-date period was primarily driven by the favorable impact of channel and product mix and leverage on certain fixed costs. Once again MVMT contributed to the uplift in channel and product mix for the full year results, to a smaller extent than in the fourth quarter.
Operating income was $79.2 million, or 11.7% of sales compared to $63.6 million or 11.2% of sales in fiscal 2018. Income tax expense was $15.6 million compared to $16.1 million for last year. And our effective tax rate was 19.9% for fiscal 2019 compared to a 25.7% effective tax rate last year.
Net income was $63.1 million, compared to net income of $46.5 million in the prior year. Diluted earnings per share increased to $2.67 per share in the current fiscal year compared to $2 per share last year.
Now turning to our balance sheet. Cash at the end of the year was $189.9 million as compared to $214.8 million last year. During the third quarter, we acquired MVMT using cash on hand. At the end of the third quarter, we had borrowed the equivalent of approximately $50 million on a revolver, as we have favorably amended and extended our global facility and are currently paying a 1% interest rate on these borrowed funds in Switzerland.
Inventory at the end of the quarter was $165.3 million, a $13.6 million or 9% increase from the prior year, predominantly due to the inventory acquired from MVMT.
During fiscal 2019, we repurchased approximately $7.4 million of stock under our share repurchase program, primarily to offset the potential of dilution from stock awards. Capital expenditures for the year were $10.6 million. Depreciation and amortization expense was $14.2 million, which included $3.9 million related to the amortization of acquired intangible assets of MVMT and Olivia Burton.
I will now discuss our outlook for fiscal 2020. Our outlook assumes currency rates consistent with recent levels. Our results may be materially affected by many factors, such as changes in global economic risk and customer spending, fluctuations in foreign currency exchange rates and various other factors referenced in our 10-K filing. As Efraim mentioned, we have a solid foundation on which we plan to drive growth in revenue and profits for the year ahead.
In light of the foregoing for fiscal 2020, we anticipate our sales will be in a range of approximately $750 million to $765 million. We expect our gross margin percentage to be flat or slightly improved from fiscal 2019. As for operating expenses, we have a track record of disciplined control over our spending. We will however invest to support our top line growth with initiatives to continue to build brand awareness and consumer demand across our portfolio.
Operating income is projected to be in a range of approximately $82 million to $85 million. Based on our jurisdictional earnings, we anticipate a 21% effective tax rate, and net income is expected to be in a range of approximately $64 million to $66.4 million. We expect diluted earnings per share in fiscal 2020 to be in a range of approximately $2.70 to $2.80.
Capital expenditures for fiscal 2020 are estimated to be approximately $15 million and include amounts to support improvements in our e-commerce sites. The outlook we have provided assumes no unusual items for fiscal 2020 and excludes the amortization of acquired intangible assets related to Olivia Burton, as well as purchase accounting adjustments related to MVMT. In total, these are estimated to approximate $9 million.
I would now like to open the call up for questions.
Questions and Answers:
Operator
Thank you. (Operator Instructions) We'll now take our first question from Oliver Chen from Cowen & Co. Please go ahead. Your line is open.
Oliver Chen -- Cowen & Company -- Analyst
Hi. Thank you. Good morning. We are curious about your views on the U.S. wholesale channel, and how you see that trending in the year ahead, and your thoughts on inventory control within that channel? Also, as you look across globally, there's a number of macro risk. If you could speak to your thoughts about UK, France and how the Chinese consumer is behaving as it reflects on your business, that would be helpful as well? Thank you.
Efraim Grinberg -- Chairman & Chief Executive Officer
Okay. Thank you, Oliver. Well, let me start with -- there's obviously risk in the U.S. today, and you're seeing that in economic numbers, and people believe that there's going to be a slow down in traffic patterns to stores. So we've taken -- taking that into account in our own forecasts, and when there is risk, people are obviously inventory conscious, inventories are in good shape. But we've outperformed the market, and our intention is to aggressively stand behind our brands to continue to outperform the market and invest in them. So that's from a U.S. perspective.
Europe has seemed for us to be -- we've taken a lot of market share and our growth in Europe has continued even in a challenging environment. So, I believe in the watch category and in the fashion watch category, we were one of the bright spots for our retail partners in Europe. And China for us is still a very small environment. So again, we have opportunity there to gain share despite what goes on in the market.
Oliver Chen -- Cowen & Company -- Analyst
And on the smart watch innovation and the announcements you're making, what is your approach to thinking about how big or incremental this should be as a percentage of total, and how you inventory into these -- into this group of watches just to both mitigate risk but also pursue the right level of innovation?
Efraim Grinberg -- Chairman & Chief Executive Officer
So, we're excited about our smart watches, they'll come for the second half of the year. What we have found in smart watches is that they do extremely well for the first and second season, and then get a little more challenging afterwards as you need to bring more innovation into the marketplace. So we're doing that. And we believe we're inventory -- inventorying it properly and standing behind a strong marketing program in the second half of the year to support that with our retailers.
Oliver Chen -- Cowen & Company -- Analyst
The Olivia Burton, Tmall word was also very impressive. What are your thoughts for the Olivia Burton geographic breakout over time and other learnings there that help you with balancing your portfolio as well?
Efraim Grinberg -- Chairman & Chief Executive Officer
I think we found that the Asian market overall has been very, very receptive to Olivia Burton and help drive some healthy growth. But still it's one of the most -- Olivia Burton is one of the most significant fashion watch brands in the UK, and growing its presence in Europe, and this year, we're focused on really beginning to build brand awareness in the U.S. and driving growth in the U.S., behind Olivia Burton as well.
Oliver Chen -- Cowen & Company -- Analyst
Thank you. A solid result. Best regards.
Efraim Grinberg -- Chairman & Chief Executive Officer
Thank you.
Operator
Thank you. We'll now take our next question from Frank Camma from Sidoti. Please go ahead. Your line is open.'
Frank Camma -- Sidoti & Company -- Analyst
Good morning, guys. Thanks for taking the questions. First, I'd like to start with just a guidance. Can you just remind us with MVMT, the seasonality of that because I know it's different than your base business and how that's reflected in your guidance.
Sallie DeMarsilis -- Chief Financial Officer
Correct. So, I'm going to start with that, and I'm sure Efraim will go in. So, MVMT is a very seasonal business right now with our e-commerce where the -- and we mentioned this as we were purchasing them, they are very active in the back half of the year, the last three to four months during the holiday selling season. So that will impact the seasonality, and of course, that will be anniversaried next year in the back half of the year with the timing of when we acquired them this year.
Frank Camma -- Sidoti & Company -- Analyst
Okay. So, yes...
Efraim Grinberg -- Chairman & Chief Executive Officer
And then I think...
Frank Camma -- Sidoti & Company -- Analyst
So, go ahead. I'm sorry.
Efraim Grinberg -- Chairman & Chief Executive Officer
Okay. In that light, we will make investments behind MVMT and all of our businesses in the first half and I would think that a substantial part of our earnings growth for the year will come during the second half of the year.
Frank Camma -- Sidoti & Company -- Analyst
Okay. That's what I was getting at. And -- of MVMT's business today versus maybe as you look at longer term, could you talk about just sort of what mix is watches versus accessories, because I know that's sort of an important part of their business, correct, or at least your strategy?
Efraim Grinberg -- Chairman & Chief Executive Officer
So, they've had a really -- a very nice sunglass business, and they've also recently had a very nice business in eyeglasses to be used on screen. So for gamers and computers called everscroll, and it is one of our best selling items today online, as well as the launch of jewelry last year. So we believe that it has a big opportunity as the lifestyle brand on a global basis. And overall, we think that jewelry can have a significant opportunity for the Company in the future. We've had now very good growth in Tommy Hilfiger jewelry. We launched Olivia Burton jewelry, right when the Company was acquired, and that's done very well. And so we think there's some significant opportunities on the jewelry front across our brand portfolio.
Frank Camma -- Sidoti & Company -- Analyst
Okay. So you do have the rights or the ability to perhaps extend those licenses beyond...
Efraim Grinberg -- Chairman & Chief Executive Officer
Well, some of that -- some of that...
Frank Camma -- Sidoti & Company -- Analyst
For some of them. Yes.
Efraim Grinberg -- Chairman & Chief Executive Officer
Right. We are -- currently we will launch Hugo Boss jewelry in the second half of the year, and we will begin testing Movado jewelry as well on our website.
Frank Camma -- Sidoti & Company -- Analyst
Okay. And then just staying on the guidance for a second. If you look at the high end, at least maybe I did -- if I did the math, right, given that you're keeping your gross margins roughly flat. So you're -- that would imply a decent bit of spending or increase in the operating, which I think you explained, but so is that mostly on, I don't want to put words in your mouth, but on the digital side, would you say that increase in spending? Or can you just give us a little bit more flavor into that build up of investment?
Efraim Grinberg -- Chairman & Chief Executive Officer
Sure. It's a combination of digital spending, which remember, we didn't have MVMT during the first half of the year. So there's a significant investment anniversarying with they do. But also, we've begun to use television as an outdoor as well as influencer campaign to -- as the effective vehicles to reach consumers. So we will invest behind that. And as you can see, we're adding a Movado television campaign in the spring to our fall campaign. We're excited about that. But those do take investments.
Frank Camma -- Sidoti & Company -- Analyst
Okay. My last question just on your balance sheet. I mean, it looks like you keep pretty -- at least, continue to keep pretty tight controls on your own inventory. But can you specifically talk about the inventory of your U.S. retail partners and how they're -- they may be stacked right now?
Efraim Grinberg -- Chairman & Chief Executive Officer
So, our retailers have -- their inventories are in a healthy position and they have done a very good job of keeping their inventories in a healthy place, and they adjust them periodically as the market adjusts.
Frank Camma -- Sidoti & Company -- Analyst
Okay, great. That's all from me. Thank you.
Sallie DeMarsilis -- Chief Financial Officer
Thanks, Frank.
Efraim Grinberg -- Chairman & Chief Executive Officer
Thank you.
Operator
Thank you. I would now like to close the call, turn it back to management for closing remarks.
Efraim Grinberg -- Chairman & Chief Executive Officer
Okay. Thank you very much everybody for participating today, and as you can tell, we're excited about the upcoming year and the progress that the Company has made on its strategic initiatives. And we continue to focus to execute on our goals and look forward to talking to you on our first quarter conference call. Thank you.
Operator
Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.
Duration: 36 minutes
Call participants:
Rachel Schacter -- Vice President
Efraim Grinberg -- Chairman & Chief Executive Officer
Sallie DeMarsilis -- Chief Financial Officer
Oliver Chen -- Cowen & Company -- Analyst
Frank Camma -- Sidoti & Company -- Analyst
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