Q1 2026 Movado Group Inc Earnings Call
Good day, everybody and welcome Kim if I the first quarter of fiscal year 2026 earnings call. As a reminder, today's call is being recorded and may not be reproduced in full or in part without permission from the company at this time I would like to turn the conference over to Allison Malkin of ICR. Please go ahead.
Operator: Good day, everybody, and welcome to Movado first quarter and fiscal year 2020. As a reminder, today's call is being recorded and may not be reproduced in full or in part without permission.
Allison Malkin: At this time I would like to turn the conference over to Allison Malkin of ICR, please go ahead.
Speaker Change: Everyone with me on the call, our SRM Greenberg, Chairman and Chief Executive Officer, and Sallie be Marcellus Executive Vice President and Chief operating Officer, and Chief Financial Officer before we get started I would like to remind you of the company's safe Harbor language, which I'm sure you're all familiar with this.
Allison Malkin: on the call are Efraim Grinberg, Chairman and Chief Executive Officer, and Sallie DeMarsilis, Executive Vice President and Chief Operating Officer and Chief Financial Officer. Before we get started, I would like to remind you of the company's safe harbor language, which I'm 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 risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release.
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 risks 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 a presentation of the most directly comparable GAAP financial measure to this non-GAAP financial measure will be provided as supplemental.
If any non-GAAP financial measure is used on this call, a 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.
Affirm Greenberg: Financial information in our press release now I would like to turn the call over to affirm Greenberg, Chairman and Chief Executive Officer of Novato Group.
Efraim Grinberg: Now, I would like to turn the call over to Efraim Grinberg, Chairman and Chief Executive Officer of Movado Group. Thank you, Al. Good morning and welcome to Movado Group's first quarter earnings call.
Speaker Change: Thank you Allison.
Affirm Greenberg: Good morning, and welcome to Nevada group's first quarter earnings call.
Efraim Grinberg: I am joined today by Sallie DeMarsilis, our Executive Vice President and CFO. I will first review our first quarter results and our progress against our strategic initiatives.
Affirm Greenberg: I am joined today by Sally the Marsalis, our executive Vice President and CFO.
Speaker Change: I will first review, our first quarter results and our progress against our strategic initiatives. Sally will then review our financial results in greater detail.
Efraim Grinberg: Sallie will then review our financial results in greater detail.
Efraim Grinberg: We would then be glad to take questions. We are pleased by our performance in the first quarter, especially as it involved navigating through an increasingly uncertain global economic environment. For the quarter, we delivered sales of $131.8 million versus $134.4 million last year, down 1.9% or 1% on a constant currency basis. Our adjusted operating income for the first quarter of fiscal 2026 was $870,000 versus operating income of $2.1 million last year. We made good progress on reducing our operating expenses through our cost savings initiatives, although some of the benefits were offset by unrealized losses due to significant currency fluctuations.
Speaker Change: We would then be glad to take questions.
Speaker Change: We are pleased by our performance in the first quarter, especially as it involves navigating through an increasingly uncertain global economic environment.
Speaker Change: For the quarter, we delivered sales of $131 8 million versus $134 $4 million last year down one, 9% or 1% on a constant currency basis.
Speaker Change: Our adjusted operating income for the first quarter of fiscal 2026 was $870000 versus operating income of $2 $1 million.
Speaker Change: Last year.
Speaker Change: We made good progress on reducing our operating expenses through our cost savings initiatives. Although some of the benefits were offset by unrealized losses due to significant currency fluctuations.
Speaker Change: Our adjusted earnings per share for the quarter were eight.
Efraim Grinberg: Our adjusted earnings per share for the quarter were $0.08, down slightly from $0.09 last year on a lower tax rate. We ended the quarter with $203 million in cash and no debt.
Speaker Change: Down slightly from nine last year on a lower tax rate.
Speaker Change: We ended the quarter with $203 million in cash and no debt we.
Efraim Grinberg: We are pleased that our board approved a dividend of $0.35 per share for the first quarter. Despite an uncertain retail environment, we continue to execute on our strategic priorities, introducing product innovation and delivering compelling value for our consumers worldwide. For the first quarter, our U.S. sales were down 1.6 percent, while international sales were down 2.2 percent, or 0.7 percent on a constant currency basis. We continue to make meaningful progress on our Movado brand refresh, even as we navigate a challenged retail environment. We're particularly pleased with the recent introduction of our new mini bangle collections and the bold mini quest, which have received a strong consumer response.
Speaker Change: We are pleased that our board approved a dividend of 35 cents.
Speaker Change: Per share for the first quarter.
Despite an uncertain retail environment, we continue to execute on our strategic priorities, introducing product innovation and delivering compelling value for our consumers worldwide.
Speaker Change: For the first quarter, our U S sales were down one 6%, while international sales were down two 2% or 7% on a constant currency basis.
Speaker Change: We continue to make meaningful progress on our novato brand refresh even as we navigate a challenged retail environment.
Speaker Change: We're particularly pleased with the recent introduction of our new mini Bangle collection and the bold many quest, which have received a strong consumer response.
Efraim Grinberg: These new styles, opening at $750 and $595, respectively, are helping to elevate the brand positioning and broaden our reach. Additionally, the amplification of our partnership with Movado brand ambassador and NBA star Tyrese Halliburton, who is currently making a standout playoff run, has further enhanced our visibility. We have been utilizing social media campaigns, leveraging both influencers and dynamic content across Instagram and TikTok, to connect with our target consumers and strengthen engagement with more to come this year. In our licensed brands, we have seen particularly strong growth, with sales improving by high single digits. Coach continues to connect with Gen Z and Millennials, particularly through our SAMI and CAS collections.
Speaker Change: These new styles opening at $750 and $595, respectively are helping to elevate the brand positioning and broaden our reach.
Additionally, the amplification of our partnership with Novato brand Ambassador and NBA stars Iris Halliburton, who is currently making a standout playoff run has further enhanced our visibility we have been utilizing social media campaigns, leveraging both influencers and dynamic content.
Speaker Change: Across Instagram and Tic toc to connect with our target consumers and strengthen engagement with more to come this year.
Speaker Change: And our license brands, we have seen particularly strong growth with sales improving by highest think high single digits.
Speaker Change: <unk> continues to connect with Gen Z and millennials, particularly through our Sammy and cash collections are chartered chronograph collection is expanding the penetration of our men's offerings.
Efraim Grinberg: Our Charter Chronograph collection is expanding the penetration of our men's offerings. In Hugo Boss, we continue to drive improving performance with the success of the Sky Traveler family for him and the Lucy collection for her, while continuing to grow our Boss jewelry business. Lacoste continues to grow with the continued success of LC33, the Lacoste Boston family, and our best-selling Metropole bracelet from our jewelry collection. In Calvin Klein, we're focusing on driving our women's business with our iconic Pulse collection and the newly launched Meridian family, a new mini rectangular shaped watch. We're also seeing a strong response to our new elongated drop collection in CK Jewelry.
In Hugo Boss, we continue to drive improving performance with the success of the Sky traveler family for him and the Lucy collection for her while continuing to grow our boss jewelry business.
Lacoste continues to grow with the continued success of <unk> 33, the Lacoste, Boston family and our best selling Metropole bracelet from our jewelry collection.
Speaker Change: And Calvin Klein, we're focusing on driving our women's business with our iconic pulse collection and the newly launched Meridian family, a new mini rectangular shaped watch.
We're also seeing a strong response to our new elongated dropped collection and CK jewelry.
And Tommy Hilfiger, we have seen success in our scale it and watch product families led by the Baker watch, while our bank chronograph and iconic Tommy Hilfiger colors is also performing well.
Efraim Grinberg: In Tommy Hilfiger, we have seen success in our Skeleton Watch product families, led by the Baker Watch, while our Bank Chronograph, an iconic Tommy Hilfiger colors, is also performing well. And for women, we have seen a strong response to the new TS SquareWatch, and we'll be expanding introductions throughout the year. In Olivia Burton, we have seen strong trends in the U.S. and the U.K., with consumers responding to our shape cases, like our iconic Grosvenor, now available in a mini-execution, and our Grove family. For the quarter, we saw an improved trend in our outlet division, with sales only down 1.7 percent, and that improvement has continued into the second quarter, with trends improving throughout the month of May.
Speaker Change: And for women, we have seen a strong response to the new Tia square watch and will it be expanding introductions throughout the year.
Speaker Change: And Olivia Burton, we have seen strong trends in the U S and the UK with consumers responding to our shape cases like our iconic Grosvenor now available in many execution and our grow family.
Speaker Change: For the quarter, we saw an improved trend in our outlet division with sales only down one 7% and that improvement has continued into the second quarter with trends improving throughout the month of May.
Speaker Change: As we.
Efraim Grinberg: As we progress through the current quarter and position ourselves for the second half, we are seeing some positive signs while continuing to navigate a retail and economic environment affected by tariff-related uncertainties. At the current temporary U.S. tariff rates, we believe we can partially mitigate the associated cost increases through available levers, including selective price increases. However, we recognize that the current tariff rates are subject to change based upon pending trade negotiations and legal challenges. Given the global uncertainty, we are focused on managing the controllables and operating with a high level of flexibility and agility while staying focused on delivering innovation, quality, and value for our consumers.
Greg through the current quarter and position ourselves for the second half we are seeing some positive signs while continuing to navigate a retail and economic environment affected by tariff related uncertainties at the current temporary U S. Tariff rates. We believe we can partially mitigate the associated.
Speaker Change: Cost increases through available levers, including selective price increases however.
Speaker Change: However, we recognize that the current tariff rates are subject to change based upon tending pending trade negotiations and legal challenges.
Speaker Change: Given the global uncertainty, we are focused on managing the controllable and operating with a high level of flexibility and agility, while staying focused on delivering innovation quality and value for our consumers.
Efraim Grinberg: Due to the macroeconomic and tariff-related uncertainty, we are not providing Outlook at this time. Still, we see resilience in the category, with young consumers embracing trend-forward watches and jewelry. Across our portfolio, we have seen strong momentum in women's watch collections and men's jewelry offerings, both of which are helping to drive engagement and growth.
Speaker Change: Due to the macroeconomic and tariff related uncertainty we are not providing outlook at this time still we see resilience in the category with young consumers embracing trend forward watches and jewelry.
Speaker Change: Across our portfolio, we have seen strong momentum in women's watch collections and men's jewelry offerings, both of which are helping to drive engagement and growth.
Sallie DeMarsilis: I would now like to turn the call over to Sallie to walk you through the financials in greater detail. We would then be glad to answer any of the questions you might have.
Speaker Change: I would now like to turn the call over to Sallie to walk you through the financials in greater detail. We will then be glad to answer any questions you might have.
Sallie Marcellus: Thank you Ed and good morning, everyone.
Sallie DeMarsilis: Thank you, Efraim, and good morning, everyone. For today's call, I will review our financial results for the first quarter of fiscal 2026. My comments today will focus on adjusted results. Please refer to the description of the special item included in our results for the first quarter of fiscal 2026 in our press release issued earlier today, which also includes a reconciliation table of GAAP and non-GAAP measures. Overall, we are pleased with our performance for the first quarter of fiscal 2026, although results continue to be negatively impacted by an uncertain economic environment. Despite net sales being down low single digits year-over-year, we continued to make good progress on our strategic initiative and maintained an extremely strong balance.
Sallie Marcellus: For today's call I will review our financial results for the first quarter of fiscal 2026.
Speaker Change: My comments today will focus on adjusted results. Please refer to the description of the special items included in our results for the first quarter of fiscal 2026 in our press release issued earlier today, which also includes a reconciliation table of GAAP and non-GAAP measures.
Speaker Change: Overall, we are pleased with our performance for the first quarter of fiscal 2026, although results continued to be negatively impacted by an uncertain economic environment.
Speaker Change: Net sales being down low single digits year over year, we continued to make good progress on our strategic initiatives and maintained an extremely strong balance sheet.
Speaker Change: Turning to a review of the quarter.
Sallie DeMarsilis: Turning to a review of the quarter. Sales were $131.8 million as compared to $134.4 million last year. a decrease of 1.9 percent. In constant dollars, the decrease in sales was 1 percent. Net sales decreased across owned brands and, to a lesser extent, company stores, partially offset by an increase in licensed brands. By geography, U.S. net sales decreased 1.6% as compared to the first quarter of last year. International net sales decreased 2.2 percent and on a constant currency basis international net sales decreased 0.7 percent. First profit as a percent of sales was 54.1% compared to 54.3% in the first quarter of last year.
Speaker Change: Sales of our $131 $8 million as compared to $134 $4 million last year.
Speaker Change: A decrease of one 9% in.
Speaker Change: In constant dollars the decrease in sales was 1%.
Speaker Change: Net sales decreased across owned brands and to a lesser extent company stores, partially offset by an increase in licensed brands.
Speaker Change: By geography U S. Net sales decreased one 6% as compared to the first quarter of last year.
Speaker Change: International net sales decreased two 2% and.
Speaker Change: And on a constant currency basis international net sales decreased 7%.
Speaker Change: Gross profit as a percent of sales was 54, 1% compared to 54, 3% in the first quarter of last year.
Sallie DeMarsilis: The year-over-year decrease in the gross margin rate was primarily driven by a negative impact of fluctuations in foreign currency exchange rates, increased shipping costs, and the deleverage of certain fixed costs over lower sales. This was mostly offset by favorable channel and product mix. Operating expenses were $70.5 million as compared to $70.8 million for the same period of last year. During the quarter, we made progress on our cost savings initiatives, such as reducing our investment and marketing expenditures and payroll-related costs. These savings, however, were partially offset by unrealized currency losses resulting from highly volatile exchange rates towards the end of the quarter impacting our outstanding intercompany balances and an increase in performance-based compensation.
Speaker Change: Year over year decrease in the gross margin rate was primarily driven by a negative impact of fluctuations in foreign currency exchange rate increased shipping costs and the deleverage of certain fixed costs over lower sales.
Speaker Change: This was mostly offset by favorable channel and product mix.
Speaker Change: Operating expenses were $70 5 million as compared to $70 8 million for the same period of last year.
Speaker Change: During the quarter, we made progress on our cost savings initiatives, such as reducing our investment in marketing expenditures and payroll related costs.
Speaker Change: These savings however were partially offset by unrealized currency losses, resulting from highly volatile exchange rates towards the end of the quarter impacting our outstanding intercompany balances.
Speaker Change: And an increase in performance based compensation.
Sallie DeMarsilis: Operating income decreased to $0.9 million as compared to $2.1 million in the first quarter of fiscal 2025. We recorded approximately $1.6 million of other non-operating income in the first quarter of fiscal 2026, which was primarily comprised of interest earned on our global cash position, as compared to $2.1 million during the same period of last year. We recorded income tax expense of $0.8 million in the first quarter of fiscal 2026 as compared to $2 million in the first quarter of fiscal 2025. Net income in the first quarter was $1.9 million or $0.08 for diluted share as compared to $2 million or $0.09 for diluted share in the year-ago period.
Speaker Change: Operating income decreased to <unk> $9 million as compared to $2 $1 million in the first quarter of fiscal 2025.
Speaker Change: We recorded approximately $1 6 million of other nonoperating income in the first quarter of fiscal 2026, which was primarily comprised of interest earned on our global cash position as compared to $2 $1 million. During the same period of last year.
Speaker Change: We recorded income tax expense of $8 million in the first quarter of fiscal 2026 as compared.
Speaker Change: Third to $2 million in the first quarter of fiscal 2025.
Speaker Change: Net income in the first quarter was $1 9 million or <unk> <unk> per diluted share as compared to $2 million or <unk> per diluted share in the year ago period.
Speaker Change: Now turning to our balance sheet.
Sallie DeMarsilis: Now turning to our balance sheet. Cash at the end of the first quarter was $203.1 million as compared to $225.4 million at the same period of last year. Accounts receivable was $87.3 million, as compared to $81 million for the same period of last year, due to timing and mix of business. Inventory at the end of the quarter was up $24.1 million from the same period of last year due to the timing of receipts. In the first three months of fiscal 2026, capital expenditures were $1.5 million. We did not repurchase shares under our $50 million share repurchase program during the quarter.
Speaker Change: Cash at the end of the first quarter was $203 $1 million as compared to $225 4 million at the same period of last year.
Speaker Change: Accounts receivable was $87 $3 million as.
Speaker Change: There to $81 million for the same period of last year due to the timing and mix of business.
Speaker Change: Inventory at the end of the quarter was up $24 1 million from the same period of last year due to the timing of receipts.
Speaker Change: In the first three months of fiscal 2026 capital expenditures were $1 $5 million.
Speaker Change: Did not repurchase shares under our $50 million share repurchase program during the quarter.
Speaker Change: As a global company with over 40% of our net sales in the U S. We continue to closely monitor the changing tariff landscape and evaluate various strategies to mitigate and pending cost increases for U S imports.
Sallie DeMarsilis: As a global company with over 40% of our net sales in the U.S., we continue to closely monitor the changing tariff landscape and evaluate various strategies to mitigate impending cost increases for U.S. imports. Although we remain focused on maintaining the quality and value consumers expect, we will be implementing select price increases while actively engaging with our supply chain partners and customers to respond effectively.
Speaker Change: Although we remain focused on maintaining the quality and value consumers expect we will be implementing select price increases while actively engaging with our supply chain partners and customers to respond effectively.
Speaker Change: Given the current macroeconomic environment and the ongoing uncertainty of the impact of tariffs on our business. The company has elected to not provide fiscal 2026 outlook at this time.
Sallie DeMarsilis: Given the current macroeconomic environment and the ongoing uncertainty of the impact of tariffs on our business, the company has elected to not provide fiscal 2026 outlook at this time.
Speaker Change: I would now like to open the call up for questions.
Sallie DeMarsilis: I would now like to open the call up for questions. Thank you.
Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad.
Operator: If you would like to ask a question, please press star 1 on your telephone. This information tone will indicate your line is in the question. press star 2 if you would like to remove your question from the queue.
Speaker Change: <unk> tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before pressing the star Ts one moment, while we poll for questions.
Operator: Sallie DeMarsilis, Michael Legg, Cody McAlester, Efraim Grinberg, Movado Group Inc.
Speaker Change: Our first question is from Matt of course, and with BW S. Financial. Please proceed.
Hamed Khorsand: Our first question is from Hamed Khorsand with BWS Financial. Hi, good morning. Just firstly, if we could just talk about the sales momentum. Could you provide a little bit more insight to the momentum you were talking about last quarter and the trends you're seeing now, and how that isn't really showing up in the actual numbers you're reporting and what's driving it? Well, I think, you know, and I think we've been clear that the sales vary by market and by brand, and we're seeing pockets of growth and then pockets of more challenged marketplaces. So, I think overall, given the uncertainty in the marketplace and the retail environment, I think we're satisfied right now with where our sales are, but we're focused on improving the trends over the balance of the year.
Matt: Hi, good morning.
Speaker Change: Firstly, if we could just talk about <unk>.
Speaker Change: <unk> momentum.
Speaker Change: Could you provide a little bit more insight as to the momentum you were talking about last quarter and the trends Youre seeing now.
Speaker Change: That isn't really showing up in the actual numbers youre reporting and what's driving that.
Speaker Change: Well I think I think.
Speaker Change: Think we've been.
Speaker Change: Clear that.
Speaker Change: The sales are varied by market and by brand and we're seeing pockets of growth.
Speaker Change: And then pockets of more challenged.
Speaker Change: Marketplaces, So I think overall given the.
Speaker Change: The uncertainty in the marketplace and the retail environment I think we're satisfied right now with where our sales are but we're focused on improving.
Speaker Change: The trends over over the balance of the year.
Efraim Grinberg: And, you know, the uncertainties that have been injected into the marketplace over the last several months certainly have taken some toll on consumers, especially in the United States and Europe. I guess what I'm trying to get to is, like, you implemented this marketing strategy last year to increase sales momentum, and it seemed like things were going great. Does tariffs have that much of an impact on the consumer as far as your markets are concerned? Well, I think that we never expected the journey that we implemented to be a short-term strategy, but a longer term. And I think we're seeing a lot of interest from consumers in newness, in innovation, in smaller watches.
Speaker Change: And.
Speaker Change: The uncertainties that have been.
Speaker Change: Injected into the marketplace over.
Speaker Change: The last several months certainly have taken some toll on consumers, especially in the United States and in Europe.
Speaker Change: I guess, what I'm trying to get to like.
Speaker Change: You implemented this marketing strategy last year to increase sales momentum.
Speaker Change: Hum.
Speaker Change: It seemed like things were going great as tariffs that much of a impact to the consumer as far as your markets are concerned.
Speaker Change: I think I think that we never expected Uh huh.
Speaker Change: The <unk>.
Speaker Change: Jeremy that we implemented to be.
Speaker Change: Short term strategy, but our longer longer term and I think we're seeing a lot of interest from consumers in newness and innovation in new and smaller watches were seeing a renewed interest from younger consumers. So I think those are those are positive things I think the challenges are.
Efraim Grinberg: We're seeing a renewed interest from younger consumers. So I think those are positive things. I think the challenges are that discretionary purchases are challenged and value still continues to be really important. So we are focused on delivering value for our consumers. And I would say that this journey that we're on from brand building perspective, that doesn't happen overnight. And what we are doing this year is rationalizing our expense infrastructure to deliver better financial performance over the year. That was going to be my segue there.
Speaker Change: That discretionary purchases are challenged.
Speaker Change: And value still continues to be really important. So we are focused on delivering value.
Speaker Change: Or are consumers.
Speaker Change: And.
Speaker Change: I would say that the journey that we're on from a.
Speaker Change: Brand building perspective that doesn't happen overnight.
Speaker Change: And what we are doing this year is rationalizing our expense infrastructure.
Speaker Change: To deliver better financial performance over over the year.
Speaker Change: Yeah.
Speaker Change: That was that was gonna be my segue there.
Speaker Change: When when will there be.
Efraim Grinberg: When will there be a... I think the benefit that we have is that we obviously have a very strong balance sheet and a really strong cash position. We've built inventory over the quarter. I would expect that to come down by the end of the year, which produces more cash. We're also very focused and always have been on delivering strong operating cash flow. I would think that as we go towards the second half of the year, we'll see improved operating cash flow, and that should ultimately continue to strengthen our balance sheet. I think the more difficult part right now is that it's difficult to predict the current economic environment.
Speaker Change: Winding up between earned.
Speaker Change: Earnings per share in the cash dividend.
Speaker Change: Things are still lagging the dividend right now.
Speaker Change: I think the benefit that we have is that we obviously have a very strong balance sheet and really strong cash position, we built the inventory over the quarter I would expect.
Speaker Change: You know that that to come down by the end of the year, which produces more cash where.
Speaker Change: Also in very focused and always have been on delivering strong operating cash flow.
Speaker Change: I would think that as we.
Speaker Change: Go towards the second half of the year, we will see improved operating cash flow and that should.
Speaker Change: Ultimately.
Speaker Change: Continue to strengthen our balance sheet.
Speaker Change: I think the more difficult part right now is that it's difficult to predict.
Speaker Change: The current economic environment, we saw last night.
Efraim Grinberg: We saw last night that the current tariffs were ruled illegal by a trade court, which is a federal court. That in itself, although that's probably a positive from a business perspective, if it holds, that creates even more uncertainty.
Speaker Change: Even.
Speaker Change: The current towers will rule the legal bye bye.
Speaker Change: Trade court.
Speaker Change: Which is a federal court.
Speaker Change: So that in itself, although thats, probably a positive from a business perspective.
Speaker Change: If it holds.
Speaker Change: That creates even more uncertainty.
Speaker Change: Okay, and then lastly.
Efraim Grinberg: Okay, and then lastly, you were talking about this unrealized loss in the foreign exchange. Will that be realized as a loss, or will that eventually be? Yes, so what resulted that resulted from a sharp decline really in the value of the US dollar at the end of the quarter due to, you know, headlines that hit you know, really out of the out of the out of Washington. So it was unrealized. It will be you know, we will make sure that we mitigate that risk going forward and take advantage of any other maybe offsetting increases in future quarters.
Speaker Change: You were talking about this unrealized.
Speaker Change: Loss from the foreign exchange it will that be realizes a loss or will that eventually be.
Speaker Change: Neutralized in some way.
Speaker Change: Yes. It would result in that resulted from sharp decline really in the value of the U S. Dollar at the end of the quarter due to headlines that hit.
Speaker Change: You know really out of the house.
Speaker Change: Out of Washington, So it was unrealized.
Speaker Change: Unrealized it will be we will make sure that we mitigate.
Speaker Change: To mitigate that risk going forward and take advantage of any other maybe offsetting increases in future quarters.
Efraim Grinberg: So it will only be realized when paid, basically. It's because we are such a multinational company and have currency situations and interactions between all of our. entities around the globe.
Speaker Change: So it will only be realized when paid basically it's because we have such a multinational company and half currency situations and interactions between all of our <unk>.
Speaker Change: Entities around the globe.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: That will conclude our question and answer session I would like to turn the conference back over to <unk> for closing remarks.
Operator: That will conclude our question and answer session.
Efraim Grinberg: I would like to turn the conference back over to Efraim for a close. Thank you all for participating with us today, and we look forward to talking with you after our second quarter. Thank you again. Thank you.
Speaker Change: Thank you all are for participating with us today, and we look forward to talking with you.
Speaker Change: After our second quarter. Thank you again.
Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Operator: This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.
Speaker Change: Okay.