Movado Group (MOV) Q4 2018 Earnings Conference Call Transcript

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Movado Group (NYSE: MOV) Q4 2018 Earnings Conference CallMarch 29, 2018 9:00 a.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to the Movado Group Fiscal Fourth-Quarter 2018 Earnings 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 Rachel Schacter of ICR. Please go ahead.

Rachel Schacter -- ICR Investor Relations

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 am 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 risk 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 our 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 would like to turn the call over to Efraim Grinberg, chairman and chief executive officer of Movado Group.

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Efraim Grinberg -- Chairman and Chief Executive Officer

Good morning and welcome to Movado Group's fourth-quarter conference call. I will first share with you some of the highlights of our quarter and then Sallie will review our financial performance for the year. After that, we'd be glad to answer your questions. Fiscal 2018 was an important year for Movado Group, where we gained market share, returned to growth on both the top and bottom line, completed an important and exciting acquisition with the purchase of the Olivia Burton brand, and began to make significant progress in transforming ourselves into a consumer-driven omnichannel organization.

We finished the year with a very strong fourth quarter that was reflective of the progress that we made.For the fourth quarter, our sales grew by 14.1% to $149.2 million and adjusted operating profit almost doubled to $14.4 million. For the year, our revenues grew by 2.8% to $568 million. Adjusted operating profit increased by 14% to $63.6 million. Our adjusted earnings per share were $0.52 for the quarter and $2 in the year.

Following the enactment of the Tax Cuts and Jobs Act, we have now provided for the tax impact on overseas earnings. The cash portion of the charge equals $28.2 million and is payable over eight years. Due to our positive result and the ability under the new tax law to repatriate overseas earnings without further U.S. tax consequences, we have made the decision to increase our quarterly dividend to $0.20.

We also moved forward with an ongoing tax rate that is expected to be lower given tax reform. Sallie will spend some time discussing the 2017 tax act in her comments.Now, I'd like to share with you some of the highlights on the results of our brands from fiscal 2018 and some of our initiatives for this year. As previously announced with our third-quarter results, we have made the decision to no longer attend the Basel World Trade Fair. Savings from this decision are being reinvested in a more personal venue to communicate and showcase our product to our wholesale customers and in consumer-facing initiatives to help drive growth in a quickly evolving marketplace, including the establishment of a digital center of excellence to expand Movado Group's digital resources.

To this end, I've just returned from our first Movado Group summit that was held in Davos, Switzerland, and it was attended by many of our distributors, licensing partners, and wholesale customers from around the world. At Davos, we previewed our growth strategies for the coming year for our brand, as well as our new product introductions, with our customers in a more intimate and personal setting. We also featured an excellent speaker on the evolving social media landscape and a digital panel with a high level of engagement from our customers.Turning to sales of our largest brand, Movado. While our Movado sales were down mid-single digits for the quarter, as certain of our wholesale channels in the United States remain challenging, the brand performed well at retail, recording double-digit sell-through increases across our department-store and specialty-store channels for the holiday season.

We also continue to see strong performance, driven by our digital initiatives and product units. Highlights of some of the strong performers for the holiday season were our Museum Bauhaus collection introduced to honor the 70th anniversary of our iconic Museum dial design, our bold men's bracelet watches, and Movado Connect, our first Google-powered smartwatch.For the quarter and the year, we saw our Movado.com sales grow by 53% and 47% respectively. While still a relatively modest portion of our overall sales, we are encouraged by this strong performance. Our mall-based chain store in the U.S.

remained challenging as the leading retailers in this arena continue to adapt to a more digitally focused environment. This spring, we are looking forward to increasing our engagement digitally with consumers. A few weeks ago, we announced the establishment of a digital center of excellence and the appointment of a chief digital officer for the company, as well as a vice president of social media. These two key hires reflect the emphasis that we are planning on e-commerce and digital communication.

We expect our Movado brand and entire portfolio to benefit from our increased focus on our digital platform, as our omnichannel business remains a priority for us as well as our wholesale business partners around the world. For the year we saw strong growth of our Movado brand in China and we'll continue to make investments in developing our team in that region to develop the necessary competencies to grow China into an important business for Movado.Turning to our spring product plan, we are launching our new Movado Museum Classic where we were pleased with a very strong response from our retail partners in Davos when we previewed this collection. Last fall, we introduced our new Movado advertising campaign with the tag line "Don't Let Numbers Define You" and we're excited to evolve it with this spring in print, outdoor, and into digital venues.Although the U.S. remains challenging for the fashion-watch category and thus our licensed-brand category, we were pleased with the performance of our licensed-brand division internationally and are looking forward to continuing this strong momentum this year.

We continue to see growth in the U.K., our largest international market, despite a challenging fashion-watch market and saw accelerated growth in Germany and France, two markets that represent significant opportunities for the company.We also returned to growth in Brazil, our largest market in Latin America. During the fourth quarter, we established a subsidiary in Mexico that we believe represents a significant opportunity for us. Our licensed brand also continues to perform well in the Middle East, an important region for Movado Group overall. We saw an increased interest in our Tommy Hilfiger watches with younger consumers as the brand has become more relevant to this customer.

We partnered with Tommy Hilfiger's brand ambassador, Gigi Hadid, both in social media and in-store to create a great deal of excitement and increase sell-through for Tommy Hilfiger watches. This spring, we are looking forward to launching our Gigi watch in blue and our Deco watch for men, inspired by Tommy Hilfiger's new Formula One sponsorship that will help drive continued growth for our Tommy Hilfiger brand.In Hugo Boss, we saw very strong growth in Europe and increasing opportunity in women's watches. We believe there is a significant opportunity to grow both our American and China businesses for Hugo Boss. A strong performer for Boss was the Grand Pre collection, and this spring we're introducing a new generation of this collection.

Collectively, with the Hugo Boss brand, we have driven a very strong response and engagement for Hugo Boss watches on social media. This year, we will also introduce a new collection under Hugo Boss's Hugo brand, designed to reach a younger consumer. Hugo is more modern in design and casual in feel at a more accessible price point and represents a significant opportunity for the company.In Coach, we're seeing a renewed opportunity both in the U.S. and internationally for the brand.

With overall increased visibility of the Coach brand, we have received an excellent response from our retailers to our new Peri watches for women and Charles watches for men and for our new Aster collection, with a signature C dial that we previewed with our customers at Davos.In Lacoste, where the brand has implemented a strategy focused on a strong presence in sportswear, we have seen a growing demand for our watches, especially in Europe. After a very strong response to our Lacoste kids watches during the holiday season where most of our retail partners sold out, we're excited to expand that collection this spring. In Scuderia Ferrari, our focus has been targeting the racing fan. We will renew our emphasis on the Ferrari lifestyle customer this year and we are launching a beautiful new collection called Aspire.Our Rebecca Minkoff distribution remains extremely limited by design and we are excited to introduce our new studded-mesh collection at Nordstrom.

We could not be happier with how our Olivia Burton acquisition has performed and see a great opportunity for continued innovation and growth on a global basis. We have seen a very high level of engagement that the brand receives both in digital platforms and brick-and-mortar stores, particularly in the United Kingdom where it was founded, and in the United States, where it was launched about 18 months ago.We're seeing a great potential for continuing to build a very selective distribution while at the same time increasing the penetration of OliviaBurton.com on a global basis. Olivia Burton is truly a brand that can relate to women across different age segments and across various lifestyle categories. We believe there is a significant potential to develop the jewelry segment, which was launched at the end of 2016 in a very limited way.

This summer we'll open the first Olivia Burton boutique in the iconic Covent Garden in London.Looking at our retail business, we were extremely pleased with the performance of our Movado company stores during the quarter, which confirms the desirability of our brand and products. We had positive comps of 6.4% for the fourth quarter and 5.9% for the full year. Most importantly, we also saw strong margins in our retail division. The strong momentum has continued into the first quarter.

Overall, we are pleased with our performance in fiscal 2018 as we made significant progress on executing our strategic plan of reducing operating expenses while making important investments in transforming the company in a quickly evolving retail environment.This year, we are expecting to return to growth in North America while continuing to grow in our international markets, which we have reflected in our guidance. While the retail environment and the watch category remain volatile, we have built a solid foundation to drive growth in both revenue and profits in the coming year.I would now 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 2019. Before I begin, I would like to point out the special items included in our fourth-quarter and full-year results for fiscal 2018 and the full-year results for fiscal 2017. Please refer to our press release for a description of these items as well as the table of GAAP and non-GAAP measures.Our GAAP tax provision for fiscal 2018 included charges recorded in the fourth quarter, totaling $45 million, or $1.95 per diluted share.

This is related to the enactment of the Tax Cuts and Jobs Act. This charge includes $28.2 million for the one-time tax on unremitted foreign earnings, $8.3 million for the impact of the reduction in the U.S. tax rate to 21% on our deferred-tax assets, and $8.5 million related to deferred withholding and state income taxes. The $28.2 million will be repaid in installment over eight years.As you are aware, Movado Group acquired Olivia Burton on July 03, 2017.

Included in the year-to-date consolidated results for fiscal 2018 was $6.8 million of pre-tax charges, primarily connected to the acquisition, of which $900,000 was recorded in the fourth quarter. After tax, the charges related to the acquisition equates to $6.2 million, or $0.27 per diluted share for the year.Our GAAP results for fiscal 2018 include a $13.6 million pre-tax charge, which equates to $10.5 million after tax, or $0.45 per diluted share, in connection with our cost-savings initiatives. Approximately $150,000 of this pre-tax charge was in the fourth quarter. Fiscal year 2017 GAAP results include a charge recorded in the third quarter of $1.3 million, which equates to $900,000 after tax, or $0.03 per diluted share, for an impairment of a long-term investment in a privately held company.

Fiscal year 2017 GAAP results also include a $1.8 million pre-tax charge, which equates to $1.1 million after tax, or $0.05 per diluted share, in connection with the vesting of stock award and certain other compensation in the first quarter related to the announcement of our former COO's retirement.The balance of my remarks will exclude the special items just discussed. For the fourth quarter of fiscal 2018, sales increased 14.1% to $149.2 million. In constant dollars, sales increased 10.2%. We saw increased sales across each of our categories -- owned brands, licensed brands, and retail.

The fourth-quarter results for fiscal 2018 include the addition of Olivia Burton. This brand is performing in line with the company's expectations.In constant dollars, total sales increased 20.1% internationally and increased 1% in the U.S. Wholesale segment sales were $121.6 million, increasing 13.4% from $107.2 million in last year's fourth quarter. In constant dollars, wholesale segment sales increased 8.8%.

By geography, U.S. wholesale sales decreased 7.5% to $40.7 million, compared to $44 million last year. International wholesale sales increased 28% to $80.9 million, compared to $63.2 million in the prior year, an increase of 20.1% in constant dollars. Sales were strongest in Europe, the Middle East, and Asia.

The company's retail business was a positive contributor with sales up 17% from last year. At the end of the period, we operated 40 outlet locations.Gross profit was $78.6 million, or 52.7%, compared to $64.7 million, or 49.5%, in the fourth quarter of last year. The 320-basis-point increase in gross margin was primarily driven by the favorable change in foreign-currency-exchange rate, the favorable impact of channel and product mix, and leverage on fixed cost. Operating expenses were $64.2 million, an increase of 12.1% year over year.

The increase was primarily the result of the following: a $5.8 million increase in performance-based compensation and payroll-related expenses, a $1.7 million increase in other expense, and an increase of $1 million resulting from the unfavorable impact of foreign-currency-exchange rates. These were partially offset by a $1.5 million decrease in marketing expense.Strong sales growth and expansion in gross profit more than offset the increased operating expense, leading to a better-than-expected operating income in the fourth quarter. To this end, operating income was $14.4 million, or 9.6% of sales, compared to $7.4 million, or 5.7% of sales, in the same year-ago period. Income tax expense was $2.1 million, compared to income tax expense of $1.9 million in the same period of last year.

The effective tax rate for the fourth quarter of 15.1% was lower than expected, primarily due to changes in jurisdictional earnings.Net income in the fourth quarter was $12 million, or $0.52 per diluted share, versus net income of $5.2 million, or $0.22 per diluted share, in the fourth quarter of fiscal 2017. Looking at the results for the full year ended January 31, 2018, sales were $568 million, an increase of 2.8% from fiscal 2017. In constant dollars, sales increased 2.2%. Sales increased in both our licensed-brand and retail category and were slightly down in our owned-brand category.

U.S. sales decreased 12%, international sales increased 19.9%, and on a constant-dollar basis, international sales increased 18.7%.Gross profit was $300.2 million, or 52.9% of sales, as compared to $294.8 million, or 53.3% of sales, last year. Operating income was $63.6 million, or 11.2% of sales, compared to $55.8 million, or 10.1% of sales, in fiscal 2017. Income tax expense was $16.1 million, compared to an income tax expense of $17.4 million for last year.

And our effective tax rate was 25.7% for fiscal 2018, compared to 31.9% effective tax rate last year. Net income was $46.5 million, compared to net income of $37.1 million in the prior year. Diluted earnings per share increased to $2 per share in the current fiscal year, compared to $1.59 per share last year.Now turning to our balance sheet. Cash at year-end was $214.8 million, as compared to $256.3 million last year.

In the second quarter of fiscal 2018, we used cash held outside of the U.S. for the acquisition of Olivia Burton. At the end of January 2018, we had $25 million outstanding on our revolver, down $5 million from a year ago. By the end of February 2018, we repaid the remaining $25 million outstanding.

Accounts receivable were up $16.3 million as compared to the same period of last year, primarily due to the increase in sales. And while sales were up $18.4 million, or 14.1%, for the quarter combined with the Olivia Burton acquisition, inventory decreased by $1.5 million as compared to the same period of last year.Year to date, we repurchased approximately $3.6 million of stock under our share-repurchase program, primarily to offset the dilution from stock awards. Capital expenditures for the year were $5.8 million and depreciation and amortization expense was $13.5 million. This included $1.7 million related to the amortization of acquired intangible assets of Olivia Burton.I will now discuss our outlook for fiscal 2019.

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 causes referenced in our 10-K filling. As Efraim mentioned, we have a solid foundation on which we plan to drive growth in revenue and profit for the year ahead.In light of the foregoing for fiscal 2019, we anticipate our sales will be in a range of approximately $605 million to $615 million. We expect our gross-margin percent to be flat to slightly improved from fiscal 2018, our outlook estimates gross margin to be approximately 53% for the full fiscal year.

We have a track record of disciplined control of our operating expenses. We are reinvesting resources into the Movado Group Summit and the establishment of the digital center of excellence, as well as making investments in our international teams to support our growth. And with that, operating income is projected to be in a range of approximately $68 million to $71 million.Based on the lower U.S. corporate tax rate, coupled with our jurisdictional earnings, the company anticipates a 25% effective tax rate.

And net income is expected to be in a range of approximately $50.5 million to $62.8 million. We expect diluted earnings per share in fiscal 2019 to be in a range of approximately $2.15 to $2.25. Capital expenditures for fiscal 2019 are estimated to be approximately $12 million. The outlook we have provided assumes no unusual items for fiscal 2019 and excludes the non-cash amortization of acquired intangible assets related to the Olivia Burton brand.I'd now like to open the call up for questions.

Questions and Answers:

Operator

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

Oliver Chen -- Cowen & Company -- Managing Director

Good morning. My question was about Movado.com, it's 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 a percentage of total over time? And then it's related to your digital center of excellence. Efraim, 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 model for the future?

Efraim Grinberg -- Chairman and Chief Executive Officer

So, multiple questions. I don't know if we'll reach that growth rate. We are expecting growth this year in our Movado.com website 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. The digital center of excellence is really, we're building the capability on a global basis to be able to support our subsidiaries, our website, 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, have 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 omnichannel platform, whether they be department stores, specialty stores, dedicated website as well. So we're really pleased with the direction we're heading in that arena as well.

Oliver Chen -- Cowen & Company -- Managing Director

OK, Sallie, on the gross-margin guidance for flat to 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.

Sallie DeMarsilis -- Chief Financial Officer

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 lifted 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 the quarter or any other cadence.

Efraim Grinberg -- Chairman and Chief Executive Officer

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.

Oliver Chen -- Cowen & Company -- Managing Director

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 have managed inventory, and the economy and performance has gotten better there. And related to that question is, is the performance of the Movado brand and the retail versus the wholesale channel -- would love your thoughts on what happened there and what will happen going forward? Thank you.

Efraim Grinberg -- Chairman and Chief Executive Officer

Well, I think the U.S. was more challenged last year from a retail perspective, bouncing back late in the year versus international retailers. So I think that's one thing that's skewing the overall results. I think you had a significant focus in U.S.

retailers on inventory management and resetting of inventory levels, as well as [Inaudible] can. And as I mentioned in my comments certain channels, particularly chain, mall-based [Inaudible] retailers have not moved as quickly to an omnichannel platform as specialty stores and department stores.So I think you will see that again, you'll see improvements in that arena this year, you'll begin to see that. But we've seen very good results in our department-store and specialty-store channels in the U.S. We continue to see very strong growth at retail in last year in our fashion watch brands, particularly in Europe and Latin America.

So I think you saw last year really a year of stabilization for retail and now people addressing the new realities and the new environment and the new paradigm of retail omnichannel Website moving forward.

Oliver Chen -- Cowen & Company -- Managing Director

Thank you. Very helpful. Best regards,

Operator

We'll go next to Edward Yruma with KeyBanc Capital Markets.

Matt -- KeyBanc Capital Markets -- Analyst

Hi. Thanks for taking our questions. This is Matt, on for Ed. So I guess building on Oliver's question a bit.

So we're wondering about how the wholesale calendar shift is affecting orders, I guess ordering more times in the year or is it now that the channel's stabilizing somewhat, are they deeper orders? I guess just any update on the cadence there would be great. Thanks.

Efraim Grinberg -- Chairman and Chief Executive Officer

Well, I think over the last number of years retailers have moved much closer to ordering to the season, ordering more frequently, replenishment models, all of those things pretty much on a global basis. So I think maintaining as little inventory for themselves as possible to be able to produce the business. So that is not a really more recent dynamic, but one that's been evolving over time.

Matt -- KeyBanc Capital Markets -- Analyst

OK. So I know you said that you saw accelerated growth in the UK, France, and Germany this quarter, and Europe has really outperformed the U.S. for a couple of years now. So I guess do you see any catalyst on the horizon that will bring the U.S.

and European growth rates more in trend or is it more just a fashion shift or inventory control in the channel? And I guess what are the puts and takes of gross margin given that the U.S. is higher margin?

Efraim Grinberg -- Chairman and Chief Executive Officer

As I said earlier, we expect to return to growth in the U.S this year, and part of it is that we've had a great reaction to our products across our brand. And I believe we have the plans in place to be able to grow the U.S. again. And I think the U.S.

had grown very quickly over the previous years, and it's been a little bit in the cyclical downturn in retail. I think you saw that again begin to bounce back in the fourth quarter for retailers overall. And I think we would expect that that trend will continue but we still expect to grow in European as well.

Sallie DeMarsilis -- Chief Financial Officer

And Matt, your question on gross margin was, it's not necessarily U.S. versus international, it's more of which brands. And as we talked about our licensed brands, obviously the royalty goes through, gross margin in the brands we own don't. So things like Olivia Burton and Movado would have a stronger gross margin.

So it's all in the mix of what brand will compose of what composition they are to the total.

Matt -- KeyBanc Capital Markets -- Analyst

Great. That's it from me. Thank you.

Operator

And we'll go next to Frank Camma with Sidoti.

Frank Camma -- Sidoti & Company -- Analyst

Hi, guys. It's Frank Camma. Could you talk a little bit, first of all, but did you break out the Olivia Burton revenue for the quarter?

Efraim Grinberg -- Chairman and Chief Executive Officer

We have not. And like any of our brands, we don't break out specific brand revenues. It did meet our plans as we've announced at the beginning of the year when we first acquired the brand. So it's pretty much on target for us and we've been really excited by the acquisition.

Frank Camma -- Sidoti & Company -- Analyst

Stepping back for a second, though, because a lot has changed since you announced the restructuring, for Olivia Burton you're now making some investments. Can you just give us a recap of where you were initially as far as the total savings, how much you've achieved? And what your guidance is implying there on the further savings? Or has the view changed, because now obviously you've got sales growth and you've got Olivia Burton and you've got the digital initiatives? Can you just give us an update on that maybe?

Sallie DeMarsilis -- Chief Financial Officer

So I'll jump in and I am sure Efraim will add some. And you're right. We had a lot of initiatives going at once. So our cost-savings initiatives, which started this time last year when we announced, those have been fully implemented.

We did pull out the right amount of dollars out of our infrastructure. We did realize all of those savings. So that was throughout this year, fiscal 2018. And later in this year, we talked about not going to Basel and that would be saved for '19.

Although we mentioned those savings are going to be reinvested in things like the small summit that we did that was more intimate, it was like adding the digital center of excellence and reinvesting those savings in. So our outlook has all of that mixed in. The slowing down if you will of our infrastructure last year as well as the new investments we have this year to support our growth.

Frank Camma -- Sidoti & Company -- Analyst

And Basel is really a Q1 event, correct?

Sallie DeMarsilis -- Chief Financial Officer

Historically the event happened in Q1, but the expense was throughout the year and that was for fiscal '19. Our summit, on the other hand, would be the first-quarter event and it's obviously different scale and what that was.

Frank Camma -- Sidoti & Company -- Analyst

And then I guess the last question is on balance sheet. You mentioned this, that the inventory decreased. I would have an increase given what's going on. Was there anything in there as far as timing that brought that down or is it just better inventory management? What's driving that given what's going on with sales level, new brands, etc.?

Efraim Grinberg -- Chairman and Chief Executive Officer

It's just really our teams did a fabulous job in managing their inventory levels throughout the year. On a constant-currency basis, there is actually a even bigger drop than the low-single-digit drop that we had. So they just did a really, really good job in managing the level, there was not any one-off events or anything like that in that.

Frank Camma -- Sidoti & Company -- Analyst

OK, and there's no major input costs that we need to look at for here? I mean, granted you're giving us guidance in your gross margins, so I'm assuming not. But is there anything we need to be aware of given what's going on just globally?

Efraim Grinberg -- Chairman and Chief Executive Officer

Not really. Obviously, we're not including any type of tariffs or anything like that. We don't believe that they would affect our business, but they possibly could.

Frank Camma -- Sidoti & Company -- Analyst

OK, great. Thanks, guys.

Operator

We have no other questions at this time.

Efraim Grinberg -- Chairman and Chief Executive Officer

OK. Since we have no more questions, I'd just like to thank everybody for being on the call today and we look forward to speaking to everybody for our first-quarter conference call and wish everybody a nice holiday this weekend. OK. Thank you very much.

Operator

And that concludes today's call. We thank you for your participation. You may now disconnect.

Duration: 34 minutes

Call Participants:

Rachel Schacter -- ICR Investor Relations

Efraim Grinberg -- Chairman and Chief Executive Officer

Sallie DeMarsilis -- Chief Financial Officer

Oliver Chen -- Cowen & Company -- Managing Director

Matt -- KeyBanc Capital Markets -- Analyst

Frank Camma -- Sidoti & Company -- Analyst

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