Good morning, ladies and gentlemen, and welcome to Movado Group's Fourth Quarter and Full Year Earnings Conference Call. [Operator Instructions] And as a reminder, ladies and gentlemen, this conference is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Ms. Leigh Parrish of FTI Consulting. Please go ahead. S. Parrish: Thank you. Good morning, everyone, and thank you for joining us today. With me on the call today is Efraim Grinberg, Chairman and Chief Executive Officer; Rick Cote, President and Chief Operating Officer; and Sallie DeMarsilis, Chief Financial Officer. Before we begin, I would like to note that this conference call contains forward-looking remarks, which are made pursuant 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 the company's filings with the Securities and Exchange Commission. Such forward-looking statements include statements regarding Movado Group's performance for fiscal 2013. However, the failure to update this information should not be taken as Movado Group's acceptance of these estimates or forward-looking statements on a continuing basis. Movado Group may also choose to discontinue presenting future estimates at any time. Let me now outline the order of speakers for today's conference call. Rick will begin, then turn the call over to Sallie and Efraim will then close. Management would then be glad to take any questions that you might have. And now I'd like to turn the call over to Rick. Richard Coté: Thanks, Leigh. Good morning, everyone, and welcome to our conference call. We are very pleased with the strong financial results we achieved in the fourth quarter and for the full year. Importantly, the strategic fine-tuning of our brands over the past year or so is bearing excellent results, which is demonstrated by the consistently positive sales trends we have delivered over the last 8 quarters. We are also particularly pleased with the significant improvement we have achieved in our profitability even in the face of the challenging environment and rising costs. We believe our top and bottom line performance underscores the strength of our brand portfolio and the traction we are gaining from the strategic plan we began implementing last year. We continue to see broad-based strength across our business, with growth in every brand category. Our business continues to exhibit normalized replenishment patterns, with strong consumer demand and customer sell-through. With that backdrop, let me summarize some of our key accomplishments from the fourth quarter and the full year. First, sales increased a robust 21% for the fourth quarter, with every wholesale category growing more than 20% and each geographic segment also increasing more than 20%. The same holds true for the full year, with sales increasing 23% overall and with every wholesale category and geographic segment again growing more than 20%. Our sales increases for fiscal 2012 were led by strong performance in our largest businesses, Movado and our licensed brands. We are very pleased with our consistently positive results in the recent time frame, as we achieved 4 consecutive quarters of double-digit sales growth during fiscal 2012 and this is on top of positive sales growth each quarter and an overall strong 14% full-year adjusted sales growth in fiscal 2011. Based on the sales momentum and our disciplined expense management, we are also able to maintain adjusted gross margin for the full year despite product cost pressures. Our strong sales performance allowed us to achieve adjusted operating income of $8.6 million in the fourth quarter, an increase of 117% relative to the prior year and adjusted EBITDA of $11.2 million, a 54% increase versus the prior year. For the full year, on an adjusted basis, we more than tripled operating income to $34.3 million and grew adjusted EBITDA by 87% to $45.7 million from $24.5 million in the prior year, exceeding our internal forecast. Similarly to our sustained top-level growth over the last 2 years, we have generated an adjusted operating profit for the last 6 quarters, delivering positive adjusted EBITDA performance and earnings per share. We believe the successful changes we have made to our business structure and the strategies we have put in place have helped drive this performance. We will continue refining our product lines, improving the competitive positioning of each of our brands and introducing more frequent and focused innovation. Importantly, as we drove this top and bottom line growth, we also further reduced our inventory by 10% in fiscal 2012, on top of a 13% decline in the prior year. This represents a 21% decline over the last 2 years while sales grew 34% over the same 2-year period, and our current inventory levels position us to continue supporting healthy sales growth. In addition, our balance sheet remains exceptionally strong as evidenced by our net cash position, which continues to grow. At the end of fiscal 2012, we had a net cash position of $182 million compared to $103 million at the end of fiscal 2011. Free cash flow generation was again strong at $78 million for the full year compared to $33 million the prior year. Our current business plans do not require any debt financing and our equity position remains strong at nearly $400 million. Now let me briefly discuss some global trends and provide some specific brand highlights for the fourth quarter and full year. From a global perspective, the watch category continues to perform well,, and we continue to experience strong watch sell-through performance at our retail partners. In the China market, we are experiencing strong growth driven by continued performance of our Movado brand and our investment behind the initial launch of our licensed brands in the region. As a result, we grew these China businesses 53% for the full year, relative to fiscal 2011. The execution of our Movado brand strategy continues to produce particularly strong results. Globally, Movado sales grew over 30% for the fourth quarter and 29% for the full year as compared to fiscal 2011. Our Movado brand in the United States continues to hold the leading market share position in our key price points of $500 to $1,500 and a strong market position in the $1,500 to $3,000 price point segment. Additionally, Movado continues to outpace the category and increase its market share in total in the $300 to $3,000 price segment and in virtually every category within this segment. All distribution channels are performing well, with double-digit gains in department and chain stores and even greater growth in our broad and specialty channel distribution. Product segmentation in the design of product in specific pillars add an important components of our strategy with the Movado brand. And our classic pillar, the new Museum plastic on a strap at $495 and the bracelet style at $695 have been top performers. In our sport pillar, both the advertised SE Extreme retailing at $2,195 and the new Series 800 chronograph collection offered at price points of $1,295 and $1,495 have been retailing extremely well. The Concerto two-tone in our for-her pillar and the Movado Bold bracelets, metals and metallics in our trend pillar help drive our robust growth. With ESQ Movado, we remain focused on energizing the brand with new product at price point and deductions, as well as door expansions with existing accounts and independent jewelers. The conversion to ESQ Movado is greatly enhancing awareness of the brand and its prestige, which continues to drive improved retail sell-through. Sales in our luxury category increased 20% in the fourth quarter and for the full year as compared to the same periods last year. We remain focused on expanding our positioning for Ebel in the women's category and specifically in the consumer price segment between $2,000 and $5,000. We have designed new leadership product that will be introduced for this year's holiday season to further enhance Ebel's product positioning, similar to what we have done so successfully for the Movado brand with the Bold collection. Our licensed brand division continues to perform extremely well. Our global licensed brand team grew sales in this division by 22% in the fourth quarter and by 28% for the full year versus the same periods last year. And we would note that this is on top of 21% sales growth in fiscal year 2011. Every licensed brand delivered double-digit sales increases on a year-over-year basis for the full year of fiscal 2012. Our licensed brand growth is being driven by innovative product designs at key price points that are resonating well with consumers. Some of the leading product performance for licensed brands were the Coach Boyfriend with expanded material and Rose Gold, the Tommy Hilfiger Kelsey Windsurf and Bayside models, the HUGO BOSS Aviator and slim classic watches, our Pedigree and Boat in bold product offerings in Juicy Couture and the Lacoste Biarritz, Advantage and Goa collections. Our outlet retail division remains an important contributor to our business. The continued renovation of our existing stores with a greater focus on branding has helped fuel increased awareness, sales conversion and improved profitability, after a number of very impressive achievements this past fiscal year that not only yielded exceptionally strong financial performance, but also positioned us well to deliver strong future performance. Reflecting on our continuing momentum, we just returned from the Basel, Switzerland worldwide watch fair and are pleased with the continued strong reception of our customers to our brand-new product introductions and importantly, our product positioning versus the competition. This is another positive indication that we believe positions us well to deliver our expected fiscal year 2013 financial results. In fact, we have started fiscal 2013 off with some very positive announcements. First, we are pleased with the recently announced extension of our HUGO BOSS license agreement to 2018. We have enjoyed a mutually beneficial relationship with HUGO BOSS over the past 8 years and look forward to continuing to work with them to further build their brand. Second, on March 26, we announced an exciting new world class license with Ferrari. And we are confident this will be a mutually rewarding venture. Ferrari is a world-renowned brand and we look forward to collaborating with them to design a unique innovative collection that will drive the company's branded watch sales. The Ferrari collection will be launched at the Basel, Switzerland Annual Watch & Jewelry Fair in spring 2013. Third, we amended our credit agreement with more favorable terms and extended this facility out to 2015. Fourth, we were pleased to have been able to make a $3 million donation to the Movado Group Foundation, utilizing a portion of the approximately $8 million of other unusual items we reported in fiscal 2012. Fifth, reflecting the Board's confidence and the strength and consistency of the business, our ability to invest in growth initiatives and the commitment to building long-term shareholder value, we reinstated our quarterly dividend in fiscal 2012 and today, are pleased to announce the approval of a special cash dividend of $0.50 per share and a 67% increase in our regular quarterly dividend to $0.05 per share. And lastly, but perhaps most importantly, we are particularly pleased to announce our fiscal 2013 guidance, which calls for another strong increase in operating profit of 20%, which we believe the company is well positioned to achieve. In summary, we remain excited that all the initiatives we have diligently been working on have been successful in creating momentum in our business. We also look forward to the exciting plans we have in place for delivering sustainable, profitable growth in fiscal 2013 and beyond. We believe that the breadth and depth of our more focused product offering, supported by continued television advertising, combined with strong print support and a focused digital strategy, will all contribute to strong continued sell-through and ongoing consumer demand. And while we recognize that the environment remains challenging, we are encouraged by the sustained strength we are seeing in our business as our reference to fine-tune the positioning of our brands have firmly taken hold. Now I'd like to get into discussion of financial results and guidance.

Thank you, Rick, and good morning, everyone. I'm pleased to be with you today presenting our financial results for the fourth quarter and full 2012 fiscal year. We'll first cover the operating results followed by the balance sheet. And lastly, I will close with guidance. To begin, I would like to remind you that effective February 1, 2011, the company changed its method of valuing its U.S. inventory to the average cost method from the first in, first out or FIFO method. The comparative consolidated financial statements of the prior year have been adjusted to apply the new accounting method retroactively, and the detail for the adjustment can be found in our Form 10-K. My remarks this morning will reflect this change. I would also like to remind you that the financial results of the Movado boutiques, which were closed in the second quarter of fiscal 2011, are reported as discontinued operations. Lastly, I would like to point out the special items reported in the fourth quarter and 12-month period of fiscal 2012 and the comparable period of the prior year. Please refer to our press release for a description of these items, as well as the table reconciling adjusted results to GAAP. The fourth quarter and fiscal 2012 include the sale of $3 million of mechanical movement and related parts and were not needed for our forecasted production. The impact of this sale in gross margin was an increase of 50 basis points for the fourth quarter and 20 basis points for the full year. Using the proceeds of this sale and other non-recurring items, Movado made a $3 million pre-tax contribution to the Movado Group Foundation. This contribution is recorded in our operating expenses for the fourth quarter and fiscal 2012 results. Gross margins for the fourth quarter and fiscal 2011 include a $24.1 million non-cash pre-tax charge for non-core gold watch and mechanical movement inventory. Operating expenses for the fourth quarter and fiscal 2011 include a $3.1 million or $0.10 per diluted share pre-tax non-cash impairment charge, primarily related to non-current assets. Our GAAP results for fiscal 2011 also include the reversal of a $4.3 million or $0.17 per diluted share retirement liability taken in the third quarter. On a GAAP basis, the tax provision for the fourth quarter and fiscal 2012 includes $10.3 million or $0.41 per diluted share of non-cash tax income related to the reversal of the valuation allowance on certain foreign net deferred tax assets. This valuation was initially recorded in the fourth quarter of fiscal 2011 and in amount of $10.1 million or $0.40 per diluted share. And finally, the tax provision for the fourth quarter and fiscal 2012 also includes a $4.3 million or $0.17 per diluted share settlement with the Swiss federal tax authorities to close several audits through fiscal 2010. The balance of my remarks will exclude the special items just discussed. Sales for the fourth quarter were $119.4 million, up from the same period of the prior year by $18.4 million or 18.2%. On a constant dollar basis, sales increased by 17.3% when compared to the prior-year period. For the 12 months, sales were $455.1 million, up from fiscal 2011 by $82.9 million or 21.7%. On a constant dollar basis, sales increased by 18.4% when compared to the prior-year period. For all periods, the higher sales were due to growth in every brand category. For the fourth quarter, sales in our wholesale segment were $100.9 million or 21.3% above sales of $83.2 million for the same period of last year. For the 12 months, sales in our wholesale segment were $409.8 million or 24.5% above the prior-year sales of $329.1 million. For both the fourth quarter and the 12-month period, sales were above prior year in all categories. For the fourth quarter, the U.S. wholesale business was $42.3 million or 25.5% above sales of $33.7 million for the prior-year period. For the 12 months, the U.S. wholesale business was $179.7 million or 22.3% above the prior-year sales of $147 million. The increase in sales for both periods was driven by higher sales in the accessible luxury and licensed brand categories as compared to the same period of last year. For the fourth quarter, the international wholesale business was $58.5 million or 18.3% above prior-year sales of $49.5 million. For fiscal 2012, the international wholesale business was $230.1 million or 26.3% above the prior-year sales of $182.1 million. For both the fourth quarter and the 12-month period, sales were above prior year in all categories, primarily driven by the licensed brand categories. Sales from the company's retail business increased 3.9% as compared to the prior year fourth quarter. For the 12 months, the company's retail business was up $2.2 million or 4.2% versus fiscal 2011. The increase in sales for both periods were the result of additional stores. Gross profit for the fourth quarter was $63.5 million versus $55.3 million in the fourth quarter of last year. Gross margin for the quarter was 53.2% as compared to 54.8% for the fourth quarter of last year. The decrease in gross margin for the quarter is primarily attributable to fluctuations in foreign currency rates, partially offset by leverage gains on fixed costs due to higher sales. For fiscal 2012, gross profit was $254.1 million versus $207.1 million last year. Gross margin for the 12 months was 54.6% in fiscal 2012 as compared to 54.2% for the prior-year period. The increase in gross margin for the 12-month period is primarily attributable to leverage gained on fixed costs from higher sales as well as the shift in channel and product mix, which were partially offset by unfavorable fluctuations in foreign currency rates. Operating expenses for the fourth quarter were $54.9 million above the prior year by $3.5 million or 6.8%. For the 12 months, operating expenses were $219.8 million above the prior year by $23.5 million or 12%. The increases were primarily the result of the following: a $1.5 million increase for the quarter and an $11.6 million increase for the full fiscal year in compensation and benefits resulting from salary increases, reinstatement of certain benefits such as the 401(k) match and performance-based compensation; a $1.1 million increase for the quarter and a $9.5 million increase for the 12 months due to the translation impact of foreign currency; and a $2.3 million increase in marketing for the 12 months. Operating income for the fourth quarter was $8.6 million compared to $3.9 million in the same period of the prior year. Operating income for the fiscal 2012 was $34.3 million compared to $10.8 million in fiscal 2011. Income tax expense of $2.4 million in the fourth quarter of fiscal 2012 compares to income tax expense of $1.8 million reported in the fourth quarter of the prior year. For fiscal 2012, income tax expense of $6.1 million or 17.9% effective tax rate compares to income tax expense of $3.4 million or a 38% effective tax rate in fiscal 2011. The decrease in the effective tax rate is due to a shift in the mix of global pre-tax financial results, as well as accounting for valuation allowances. Adjusted income from continuing operations in the fourth quarter of fiscal 2012 was $5.9 million or $0.24 per diluted share versus adjusted income from continuing operations of $1.6 million or $0.06 per diluted share in the year-ago period. Adjusted income from continuing operations for fiscal 2012 was $27.2 million or $1.08 per diluted share versus $4.8 million or $0.19 per diluted share in fiscal 2011. EBITDA for the fourth quarter increased to $11.2 million compared to EBITDA of $7.2 million in the fourth quarter of fiscal 2011. EBITDA for fiscal 2012 increased to $45.7 million compared to $24.5 million for the same period last year. Now turning to our balance sheet. Our cash at the end of fiscal 2012 was $182 million versus $103 million at the end of fiscal 2011. We had no debt outstanding. Our cash from continuing operations was $86 million for the full year. A portion of our cash on hand will be used to fund the payment of our quarterly dividend, which we announced today was increased by 67% to $0.05 per share, as well as a special cash dividend of $0.50 per share. Accounts receivable is up 2.5% and inventory is down 10% from the prior-year period, while our sales increased more than 20% year-over-year. Accounts receivable of $61 million at the end of this fiscal year is above the prior-year balance of $60 million. Inventory of $164 million at the end of this year is down from $182 million at the end of the prior-year period. As of the end of fiscal 2012, we had substantially completed our initiatives to recover gold from our excess non-core merchandise. This resulted in an approximate $60 million increase in cash. Additionally, as previously stated, we sold excess movement in fiscal 2012 that were not needed for forecasted production. Capital expenditures for fiscal 2012 totaled $8.2 million. Now I would like to discuss our outlook for the current fiscal year. Let me begin by commenting on our effective tax rate. We are forecasting a 30% effective tax rate for fiscal 2013 versus the adjusted 17.9% effective tax rate for fiscal 2012. If we were to adjust our fiscal 2012 result for a 30% effective tax rate, adjusted net income would have been $23.1 million and diluted earnings per share would have been $0.92. For fiscal 2013, we anticipate our sales will increase approximately 8% to $500 million to $505 million, operating income will increase approximately 20% to $41 million to $42 million. EBITDA will increase approximately 15% to $52.5 million to $53.5 million and net income will increase approximately 20% to $27 million to $28 million. This increase is based upon adjusted fiscal 2012 net income using a 30% effective tax rate, the same effective tax rate for fiscal 2013. Using the same adjusting tax rate, we expect diluted earnings per share in fiscal 2013 will increase approximately 20% to $1.10. And note that this guidance includes an investment in infrastructure for our newest licensed brand, Ferrari, but does not include any corresponding revenue as this new collection will not be introduced until early fiscal 2014. Otherwise, this guidance does not assume any other unusual items. Lastly, I would like to point out that capital expenditures for fiscal 2013 are estimated to be approximately $20 million, which is higher than our fiscal 2012 levels, primarily because of the production of new Basel fair booths and the relocation of our Swiss office and warehouse. I would now like to turn the call over to Efraim.

Thank you, Sallie. I would also like to note how pleased we are with our results for the fourth quarter and the full year. As we reflect on the achievements we accomplished in fiscal 2012, we're particularly gratified to see the strategic plan that we began implementing last year continues to gain traction. With 8 consecutive quarters of sales growth, we believe that we are only beginning to realize the full benefit of these initiatives. As Rick and Sallie mentioned, we have continued to build on our momentum throughout the year, and once again achieved broad-based sales growth across all of our brand categories in the fourth quarter. We're particularly pleased that sell-through of our Movado and licensed brands remained strong, further validating our strategic positioning in the marketplace. Additionally, while our strategic focus on women's watches for Ebel has been gaining traction, we are excited about the 2 new collections that we plan to launch in time for the holidays this year. We believe the new collections, Ebel On [ph] and Ebel X1 [ph], whisper renewed excitement around the Ebel brand. This is just one example of the work we are doing to fine-tune and re-invigorate our product assortments and further strengthen our portfolio of brands. Our strength across geographic regions speaks further to the consistency of our growth. China, which is a key strategic focus for us, continued to perform exceptionally well. And we remain focused on capturing Movado Group's growth opportunities in this important market. We have a long runway of growth ahead of us, and we are excited about the opportunities we see both domestically and in China and other international markets in the future. Overall, we are pleased with the momentum we have built in the business and believe we have the right plans, product and team in place to drive future growth. As our strategic initiatives continue to gain traction, we'll continue to build on our relationships with our retail partners and work to keep our brands fresh and relevant with consumers through ongoing innovation, which is the hallmark of our company. The solid infrastructure that we have in place provides us with a global platform to grow sales, while our healthy balance sheet allows us to reinvest in the business to drive profitable growth and return value to our shareholders. As we look to embark on another exciting year, we remain confident in our brand's strength, our position in the watch category and the strategies we have been implementing to sustain momentum. We would now like to open the call up to questions.

[Operator Instructions] We'll take our first question from Oliver Chen with Citibank.

We had a question related to your guidance. In terms of the net sales algorithm and your commentary on market share, how do you think the category is growing? And does that assume that you'll expand market share? The 8% number potentially seems conservative to us. Also related to your guidance, it looks like the implied gross margin is -- the implied operating margin is somewhere in the 8% range. Could you help us parse out how we should think about that in terms of gross margin versus SG&A leverage?

I'll take the first part of that question on sales and then I'll pass over the operating margin part to Rick. We are looking at a slow growth economy, which is what it's been, and we foresee it continuing to be that. We also think that there are still hurdles to overcome in Europe where there are obviously some financial issues. So I think, in terms of the overall growth of the category and the economy, we're being somewhat conservative in terms of our modeling. For that, we believe that we will continue to gain market share, especially in our Movado brands and in our licensed brands internationally. So with that, I'll turn it over to Rick for the second part of the question about operating profit. Richard Coté: From a standpoint of our operating profit, we're looking at our gross margins basically holding where they've been through this year, continuing to get leverage off of our operating expenses. And part of the reason for the gross margins pretty much holding this year is because of the continued rising costs that are taking place from a China perspective, particularly with people but also from a costing standpoint. And still our position of holding off on having any major price increases, primarily because of the strength of our sales performance and obviously, the consumer is quite focused in on price value proposition and making sure that they're receiving great value for the money. Obviously, having superb brands is a primary driver to that. So we are not looking at accelerating any price increases in the marketplace, and that's why we get to that 8%. Also we call that, with the announcement of Ferrari, we do have infrastructure investments, designing investments that will take place this year without any associated benefits coming from that until the next fiscal year.

Okay. And related to your SG&A on a normalized basis on fourth quarter, it was up between 6% and 7%. Is that kind of the right normalized parameter for us to think about the year-over-year normalized growth in '12? Richard Coté: I think from an expense standpoint, we are looking at a 6% or so growth from a normalized standpoint. So that 5% to 7% type of growth will be taking place, yes. And again, part of that is with increases in marketing investment behind support of our businesses.

And would you -- on a quarterly basis when we're thinking about '12, the sales comparisons to get a little bit easier in the back half? And also related to FX, there could be some Swiss franc relief on a year-over-year basis. Are these trends that we should incorporate when we're thinking about modeling the business? Richard Coté: Well, I would sit there and say that I think your comment of the sales growth should be easier in the second half. I'm not so sure that's the case. I think we had very strong growth each and every quarter this year. I do believe that the business is much more commensurate with consumer purchases taking place in the marketplace. So I expect we should see relatively consistent growth quarter-on-quarter, assuming obviously nothing happens dramatically in the economy.

[Operator Instructions] We'll go to Josh Pachter [ph] with Kenny [ph].

I was just looking back on some notes from 2008, 2009. And I just wondered looking how the results are improving so rapidly, things are looking brighter, how does the inventory in the channel look today? And how is the help of the customer base? I mean, what do we take away from those 2 or 3 really tough years that are making us plan better and be a little more -- cautious is the wrong word, but prepared for another leg-down like we just saw? Richard Coté: A couple of things: number one is we dramatically changed our infrastructure support. So our global limitation of SAP, I think, was an important piece, number one. Number two, if you recall, we really focused in -- particularly in the Movado brand from a standpoint of dramatically curtailing the number of doors and taking some pretty aggressive actions to be able to sit there and further strengthen particularly that brand in our distribution in the U.S. So we went from 4,200 doors approximately to around 2,600 or 2,800 doors. Our focus on new product innovation, the whole concept of pillars, price value, the concept of trend product such as gold coming in and being able to make Movado particularly quite relevant in the specialty channels have all helped re-invigorate the brand and our positioning. From a licensed brand standpoint, we did sign 3 new licenses around 2004, 2005. And obviously, with any new licensed, the early days are a little bit tougher -- or we start off at the beginning and obviously start getting the critical mass in a couple of years. So that critical mass certainly took place during the recession and coming out quite strong in our licensed brand portfolio. From an inventory standpoint in our retail, we focused quite dramatically as you know during the recession of again scaling back doors, making inventory positions quite stronger in each of those channels, curtailing the level of product being offered in secondary type of distributions. And during the recession of the 2009, a quite a few retail doors closed. We have closed a lot of those who perhaps didn't impact us, but also the marketplace in the -- particularly in the U.S. was impacted with all the liquidations that were taking place. So that is all behind us and we believe that our actions allowed us to be a much healthier position with our retail partners in the marketplace. So all of those, I think, have led to the foundation that we have today that we believe well positions us for the future.

And I think, Josh, I'd like to add one thing. I think one of the things that's a testament to the strength of our retailers today and the distribution channel is that we had sales growth of 20% and our receivables were virtually flat. So that shows you that we're really dealing with a very healthy and strong that of [ph] customers.

What do you think the terms are at a normal retailer now of your product?

It varies according to brand and retailer, and so I don't think -- and then it's something that we don't really specifically talk about. We know that it's much improved over the period going into the recession and obviously, in the height of the recession. But it varies dramatically from retailer and brand. Obviously, the fashion segment turns faster than the luxury segment.

But the metrics you're looking at, though, don't indicate in any way that we have a lot of inventory out there. And where are we at destocking of the stuff from...

I think in Rick's comment, he talked about that we've returned to normalized replenishment, which -- we are very focused on replenishing what sells through and really doing it throughout the year versus building inventory at the retail channels. So we are very focused on keeping the right amount of inventory at retail, not more than they need, in fact, hopefully, less than they need. Richard Coté: And those are the comments we talked about going into the recession and during the recession of worked very diligently and again, reducing doors, making significant levels of inventory out of the marketplace. And that positions us to be quite strong coming out of the recession and allowing us to have the performance levels we have today.

Let me ask one other thing and I'll get away. The -- I go on your website all the time to buy gifts for people. What do you know about the customer that decides to buy directly through the website versus searching for a retail partner? How has that changed your strategy on the web? And what kind of transparency or understanding of the customer base is actually coming to you without going to a partner?

It's still a very small part of our business and we do, do business with partners on the web, as well as doing it ourselves. We believe that doing it ourselves is offering this consumer the desires to buy directly from the company online today, which is a growing trend that they have that opportunity. But we're in the very early stages of that business, and one of our investments this year is an increased level of CRM to really learn more about that customer. Throughout our business and I think one of the things that's improved our strategies, as Rick has talked about, fine-tuning our strategies has been getting a higher level of consumer insights into our customer base. So I think that has proven beneficial. I think the web will prove very beneficial for that as well, but still in the very early stages of that process.

A subtle way of telling me to buy more watches on the web, okay.

We'll take our next question from Oliver Chen with Citibank.

I did have a question related to the strategic kind of decision on that attractive special dividend. If you could speak to that a little bit, it would give some greater insight. Also in terms of your view and your perch of the international markets, could you share with us roughly what's your thoughts on -- what you're seeing in Germany and the German consumer? And secondly, if you could speak regarding China and how that may evolve as your business and becoming eventually a bigger material item of mix. And lastly, if you could speak to us a little bit about the Movado Bold and what you're seeing there?

I'll try to hit upon those topics. The first one is that one of obviously, our focus has always been to return value to our shareholders. And this was an opportunity to return incremental value to our shareholders. Still allowing us -- leaving us with a large cash position is very, very strong balance sheet and a lot of flexibility as a company. So that's always been a priority for us to return value in whatever way we can to our shareholders, including growth. Germany, I believe, is one of the more solid European economies. We've seen our business there and it's mostly in the licensed brand front and Ebel performing well. So we see it as somewhat stable. On the China front, we are in the early stages of our China business. In fact, we have a team there now getting a higher level of consumer insight into that market for us really to fine-tune our strategies for the China marketplace. And Bold has been an important part of our Movado brand and more so from really the halo effect it has given the overall brand by increasing the level of innovation, making the product offering extremely fresh and bringing a younger consumer and newer channel of distribution through predominantly our specialty store channel into the mix. As a part of the business, it's not a significant part of the overall business. It's a nice contributor. But we think it's a really exciting part of our business in the way -- and that enables us to communicate with our consumers and with our retailers in a very effective manner.

And parsing out how you're thinking about use of cash, is there -- are there any parameters between organic versus return to shareholders versus potential M&A and kind of going forward, any strategic...

I think we want to maintain a lot of flexibility. So that's what we -- the special dividend allows us again, as I said earlier, to return value to our shareholders at the same time maintain an extremely strong balance sheet and a lot of flexibility. And all of those areas that you mentioned, investing in our business and potential future growth opportunities as well. And you can see that by our recent announcement of the Ferrari license that we are very excited about and believe represents a great growth opportunity for the company for the future.

And a lot of the buzz is related to China and Asia -- about the watch cycle is related to that opportunity there. Is there a certain point in time at which we will notice that, that will be a percentage of mix of Movado that's a bigger chunk?

That's obviously our objective, but to make it a -- a relevant percentage of our overall business, but not a dominant percentage of our own overall business. So we would like to get to a healthy balance. We are now at a very healthy balance between our international and domestic business. And we believe we have opportunities domestically to further grow our licensed brand business and internationally to further grow our core brands, as well, Movado, Ebel and those in China is included in that mix.

I think that strategy amongst your core and licensed is quite attractive. Do you think that your percentage of mix, in terms of license being somewhere in the neighborhood of 40%. Is that going to stay around that mix over time? Are there any intentions to change that? Richard Coté: I think when you look at the mix of business -- I think, as Ephraim said, we have a healthy mix today, 40% being 45% obviously, with having Ferrari on. Obviously, we see lots of growth still in our core brands as well. So I think the mix we have is a pretty good mix. It's going to change 5, 6, 7 point share but that's I call just settling out.

[Operator Instructions] That concludes our question-and-answer session today. I will now turn the call over to management for any closing comments they may have.

I'd like to thank you all for participating today. As you can tell, we are very excited about the results. But most importantly, we are very excited about our prospects for the future. So again, thank you very much for participating with us today.

This concludes today's conference call. Thank you for your participation.