Financial Data and Key Metrics Changes - In 2025, net sales totaled $1 billion, with a gross margin expansion of 380 basis points to 55.9% and a reduction in SG&A by over $100 million, resulting in a positive adjusted operating income of $11 million, an improvement of $48 million year-over-year [5][25][30] - Q4 net sales were $274 million, reflecting a decline of 20%, impacted by store closures [25] - Full year gross margin for 2025 was 55.9%, representing 380 basis points of expansion versus 2024, despite challenges from minimum royalty guarantee shortfalls [26] Business Line Data and Key Metrics Changes - The wholesale traditional watch business grew by 2% globally for the full year in 2025, driven by core brands like Michael Kors, Emporio Armani Exchange, and Diesel [7] - The company successfully established a full price selling model, improving profitability in both wholesale and direct-to-consumer channels [6] Market Data and Key Metrics Changes - The company is focusing on priority markets, particularly the U.S. and India, where it has seen strong growth and momentum [19] - India is highlighted as a significant strategic market, being the fastest growing large economy, with strong category leadership and growth across all channels [19] Company Strategy and Development Direction - The company is evolving its strategic pillars to focus on returning to profitable growth, optimizing the operating model, and building shareholder value [9][22] - Plans for 2026 include fueling innovation through design and technology, reviving key product lines, and enhancing consumer engagement through culturally relevant collaborations [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround strategy, noting that the company is well-positioned to leverage its foundational assets and is experiencing strong momentum across markets [8][9] - The company anticipates a return to top-line growth in the fourth quarter of 2026, supported by a robust pipeline of innovation and improved consumer engagement [23][35] Other Important Information - The company ended 2025 with $96 million in cash and cash equivalents and a significant reduction in inventory levels, down 15% from the previous year [31] - Management acknowledged the current geopolitical climate and its potential impact on operations, particularly in the Middle East [24] Q&A Session Summary Question: What were the drivers of gross margin in the quarter, and what gives you confidence the improvements are sustainable? - Management highlighted the shift to a full price selling model and improved relationships with partners as key drivers of gross margin improvements, with confidence in sustainability due to renegotiated minimum guarantees for 2026 [38][40] Question: What gives you confidence you'll be able to achieve a return to growth in the fourth quarter of 2026? - Management emphasized the transformation over the last 18 months, strong consumer relationships, and a robust product pipeline as factors supporting confidence in achieving growth [41][42] Question: What more can you do to improve the cost structure? - Management indicated ongoing evaluations for continuous improvement, focusing on operational efficiencies and leveraging technology for better performance [43][45] Question: Can you elaborate on deepening consumer engagement? - Management noted that while marketing spend may decrease, the focus will be on optimizing existing marketing efforts and enhancing product storytelling to drive engagement [50][54] Question: How do you view the sequencing of your strategic pillars? - Management clarified that the pillars are interdependent, with a flywheel effect expected as improvements in one area support growth in others [55][57] Question: How has the conversation with wholesale partners evolved? - Management reported positive feedback from wholesale partners, noting improved relationships and increased interest in product offerings due to the company's consistent performance [61][62]