Financial Data and Key Metrics Changes - Sales grew by 3% to $161.8 million compared to $157 million last year, with adjusted operating profit more than doubling to $7 million from $2.6 million despite a $2.2 million impact from U.S. tariff expenses [5][18] - Gross profit as a percentage of sales was 54.1% compared to 54.3% in the same quarter last year, primarily driven by increased tariffs and unfavorable foreign exchange [19][20] - Net income for the second quarter was $5.3 million or $0.23 per diluted share, compared to $3.5 million or $0.15 per diluted share in the prior year [21] Business Line Data and Key Metrics Changes - The company's licensed brands grew by 9.5% on a reported basis, or 6.5% on a constant currency basis, while owned brands experienced a 5.6% sales decline [7][13] - Movado brand saw a return to growth in wholesale distribution, with a 6% growth in its own e-commerce site [10][11] - The outlet stores segment grew by 2.4% for the quarter, indicating positive trends in that channel [9] Market Data and Key Metrics Changes - U.S. net sales declined by 1.6%, while international net sales increased by 6.9%, or 3.9% on a constant currency basis, with strong performances in Europe, Latin America, and India [8][19] - The Middle East market is currently being rebuilt, which has impacted overall performance [8] Company Strategy and Development Direction - The company is focused on returning to growth and profitability, expecting approximately $10 million in annualized savings from actions taken to reduce operating expenses [7][16] - Strategic pricing actions to offset tariff impacts became effective on July 1, indicating a proactive approach to managing costs [8] - The company is optimistic about the resurgence in the fashion watch market and is committed to driving profitability while maintaining a strong balance sheet [16] Management's Comments on Operating Environment and Future Outlook - Management expressed hope for a reduction in tariff rates between the U.S. and Switzerland and is closely monitoring the situation [6][16] - The company is not providing a fiscal 2026 outlook due to ongoing uncertainty regarding tariffs and the broader retail environment [26] Other Important Information - The company has a strong balance sheet with over $180 million in cash and no debt [6] - Inventory at the end of the quarter was up 15.5% year-over-year, with a significant portion related to Swiss-made watches [25] Q&A Session Summary Question: Insights on mini watches and consumer habits - Management noted a trend towards smaller watches, particularly among young women, driven by social media and layering with jewelry, representing a significant opportunity [28][29] Question: Performance during Prime Day - The company observed strong performance in its digital business during Prime Day events, particularly in Europe, indicating a positive trend across its brand portfolio [30] Question: Inventory increase due to tariffs - Management explained that inventory was rebuilt to manage tariff impacts, with expectations to align inventory levels by year-end [31][34] Question: Restructuring charges and future visibility - Management indicated that restructuring charges are predominantly done, with expectations for a significant reduction in future expenses [38]

Core Insights - Clarus Corporation continues to execute its strategic initiatives aimed at long-term profitable growth despite facing challenges in the outdoor market [3][17] - The company has appointed Tripp Wyckoff as the new Managing Director of the Adventure segment, promoting from within to leverage his extensive industry experience [13][15] - Clarus has entered into an agreement to divest the PIEPS Snow Safety Brand for €7.8 million, aligning with its strategy to simplify the business [16] Financial Performance - For Q1 2025, total sales were $60.4 million, a decrease of 13% from $69.3 million in Q1 2024 [4][10] - The Outdoor segment saw a sales decline of 6% to $44.3 million, while the Adventure segment experienced a more significant drop of 28% to $16.1 million [4][5] - Gross margin for Q1 2025 was 34.4%, down from 35.9% in the same quarter last year, primarily due to lower volumes and an unfavorable product mix [6][10] Operational Highlights - Selling, general, and administrative expenses decreased to $26.6 million from $28.2 million year-over-year, attributed to lower wages and marketing costs [7] - The loss from continuing operations was $5.2 million, or $(0.14) per diluted share, an improvement from a loss of $6.5 million, or $(0.17) per diluted share, in the prior year [8][10] - Adjusted EBITDA from continuing operations was $(0.8) million, with an adjusted EBITDA margin of (1.3)%, compared to $2.0 million and a margin of 2.9% in Q1 2024 [11][10] Strategic Initiatives - The company is focusing on product simplification and SKU rationalization, which has impacted sales but is expected to enhance profitability in the long term [5][3] - Investments in innovation are anticipated to drive new product introductions in the second half of 2025, despite current challenges in the Adventure segment [3][5] - The decision to withdraw full-year guidance reflects the unpredictable macroeconomic environment and its potential impact on consumer demand [17]