MOV
#I think we are looking at for it to be somewhat neutral overall to the Company's bottom line this year and so we will make investments against the category.
And we believe that longer term it will have a definite ---+ presents a definite opportunity for the Company.
You're getting a tremendous amount of interest brought into the category overall and people who may have been ---+ consumers who may have been getting out of the watch market are now developing an interest in the watch category.
And I think that's an overall positive for the category, especially long-term.
I would think you're looking at end of third quarter, beginning of fourth quarter.
We expect to launch our first wearable into the Movado brand before the holiday season.
So ---+ and that would be our expectation right now.
I think it's a little early for us to probably say that publicly.
I would think we'll have more information in that later in the year and as we publicly announce what we're doing in that segment.
So the UK is one of the markets where we are seeing traction.
Movado is doing well.
HUGO BOSS, as I mentioned, is really a great success story.
Other places in Europe where we're starting to see some sparks of business building, which we're very happy, for example, Spain.
Spain has been a market that for a very long time has been a difficult one.
We're starting to see some very strong results on some of our licensed brands in Spain.
Germany continues to do well and we see accelerated growth on a couple of our licensed brands, as well as some of our Ebel business in Germany, we're seeing very strong sell-through from our new Wave introduction.
And it's very interesting because there's been a shift in the traveling corridors of Chinese consumers.
We saw the decline here in the US.
We're seeing a pickup in Europe.
And also if you think about the Middle East region, we're seeing a pickup in Middle Eastern consumers also in Europe.
We're seeing that in Switzerland and particularly in Germany.
So one of the things we're being very mindful is how do we capture this traveling consumer with a product that is relevant to them in the locations that they are traveling.
So we.
ve been able to make some shifts in that regard and I think we're seeing the results.
For us, the most immediate opportunity is we have a lot of runway ahead of our current portfolio.
And that is our number-one priority.
These are part of our Company and we have an obligation to fully exploit these powerful licensed brands around the globe.
So that's our number-one priority at this point.
Sure you haven't seen that much of a fluctuation in the Swiss franc.
It's over year on year.
And if you look at it, I think, Sally, it's 200 basis points in the quarter of gross margin fluctuation is just currency.
And you have to remember that we implemented most of our price increases very late in the quarter, so they had virtually no impact on the first quarter.
And I think the second and third quarter will be more indicative of our year-end gross margins.
And we do, as I said in my comments, expect them to improve, predominately due to our price increases.
We had not taken price increases in a number of years.
And I think we said that in our last conference call, so this is the first time we've taken a significant price ---+ really a price increase at all, in five, six years.
We had made a strategic decision, prior to that, to absorb cost increases.
And due to the extreme volatility of currency in the fourth quarter of last year, decided that strategically the best thing for the Company was to implement a price increase and we believe it was the right decision.
We will see the benefit of that in the second half of the year.
Well, as we discussed in our previous call, we were very, very mindful and strategic on how we implemented these increases.
And one of the key things was we did not vacate key price points that are important gates for consumers.
So prices like $495, $995.
These price points we protected.
What is very interesting is, in our research, pricing is not the number-one driver of the decision for a watch.
Actually design and style, brand, quality, these are the number ---+ the more important attributes in making a decision for a watch purchase.
And these are areas where we feel very strong with all our brands in our watch offerings.
So obviously there is a risk, but we believe the benefits are greater and some of the things we asked around the globe ---+ many consumers don't remember how much they paid for a watch or if you ask them how much it is, they may actually think the price is higher.
So this is a very ---+ it's not an exact science.
And I think, again, the strong brand, strong quality, strong design ---+ those are the key motivators for the purchase.
Thank you.
I'd like to thank all of you for participating with us today and wish you all an excellent summer.
Again, thank you very much, and we look forward to talking to you after our next quarter's earnings.
