Movado Group, Inc. Reports Q3 Net Sales Increase 12%; Operating Profit Grows 19%

December 1, 2005 at 7:32 AM EST

PARAMUS, N.J., Dec. 1 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced third quarter results for the period ended October 31, 2005.

    Third Quarter Fiscal 2006

     * Net sales increased 11.6% to $141.7 million from $127.0 million last

     * Comparable store sales increased 10.6% at the Company's Movado
       boutiques versus a 12.8% gain achieved last year.

     * Gross margin remained strong at 60.8%.

     * Operating profit increased 18.9% to $19.0 million versus $16.0 million
       last year.

     * Other income for the quarter of $1.0 million included two unusual
       items: a gain of $2.6 million generated from the sale of a building
       acquired with Ebel, which more than offset a loss of $1.6 million
       associated with the accounting for foreign currency hedge derivatives.

     * Net income was $14.1 million, or $0.54 per diluted share.  The net
       effect of the aforementioned unusual items benefited net income and
       diluted earnings per share by $0.8 million and $0.03, respectively.
       Net income was $11.3 million, or $0.44 per diluted share, in the
       year-ago period.

    Nine-Month Results

     * Net sales increased 15.3% to $344.8 million from $299.0 million last

     * Comparable store sales increased 5.0% at the Company's Movado boutiques
       versus a 16.7% gain achieved last year.

     * Gross margin was 60.6% compared to 59.7% in the year-ago period.

     * Operating profit increased 26.5% to $33.4 million versus $26.4 million
       last year.

     * Other income for the nine-month period of $1.0 million included the
       aforementioned unusual items recorded in the third quarter of fiscal
       2006.  Other income of $1.4 million recorded in the prior year period
       reflected the one-time gain associated with a legal settlement the
       Company reached with Swiss Army Brands.

     * Net income was $23.7 million, or $0.91 per diluted share, compared to
       $19.1 million, or $0.75 per diluted share, in the prior year period.
       Unusual items recorded in the nine-month period of fiscal 2006 and
       fiscal 2005 benefited diluted earnings per share by $0.03.

Efraim Grinberg, President and Chief Executive Officer, commented, "In a period that presented several challenges including hurricanes and higher energy prices, we are very pleased with our overall results delivered in the third quarter. The power of our portfolio of brands enabled our company to deliver a solid 12% increase in sales and record an even stronger 19% increase in operating profit. Our Movado boutique business also gained momentum in the third quarter, reinforcing our initiatives at retail and reflecting the strength of the Movado brand."

Rick Cote, Executive Vice President and Chief Operating Officer, stated, "Throughout fiscal 2006 we have focused on key areas where we have identified significant growth opportunities that require an increased level of investment, including the accelerated growth of ESQ, and the rebuilding of Ebel. Even as we continue to invest behind our brands and businesses, our balance sheet remains strong and provides us with excellent flexibility to continue executing our strategies."

Mr. Grinberg concluded, "As we head into the important holiday selling season, our brands are distinctly positioned at retail, in print, and on television. With terrific products, innovative advertising campaigns and comprehensive marketing programs, we are delivering a great amount of excitement into the marketplace, which should drive consumer purchases during the important gift-giving season."

On a GAAP basis including unusual items, Movado Group projects fully diluted earnings per share for fiscal 2006 to be in the $1.21 to $1.27 range versus $1.03 earned in fiscal 2005. Included in this guidance is an estimated $0.05 per diluted share expense related to the equity compensation of restricted stock. Excluding the aforementioned unusual items recorded in the third quarter of this year, as well as any potential impact associated with the American Jobs Creation Act (AJCA), the Company continues to project fiscal 2006 diluted earnings per share to be at the upper end of the $1.18 to $1.24 range. To the extent that Movado Group repatriates any international earnings associated with AJCA, the Company would incur a one-time income tax charge. Net sales in fiscal 2006 are now expected to grow approximately 12% from last year.

Movado Group believes that presenting financial projections without unusual items provides a clearer picture of the Company's ongoing business.

The Company's management will host a conference call today, December 1st at 10:00 a.m. Eastern Time. A live broadcast of the call will be available on the Company's website: This call will be archived online within one hour of the completion of the conference call.

Movado Group, Inc. designs, manufactures, and distributes Movado, Ebel, Concord, ESQ, Coach, Tommy Hilfiger and Hugo Boss watches worldwide, and operates Movado boutiques and company stores in the United States.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company has tried, whenever possible, to identify these forward-looking statements using words such as "expects," "anticipates," "believes," "targets," "goals," "projects," "intends," "plans," "seeks," "estimates," "projects," "may," "will," "should" and similar expressions. Similarly, statements in this press release that describe the Company's business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the Company's actual results, performance or achievements and levels of future dividends to differ materially from those expressed in, or implied by, these statements. These risks and uncertainties may include, but are not limited to: the Company's ability to successfully introduce and sell new products, the Company's ability to successfully integrate the operations of newly acquired and/or licensed brands without disruption to its other business activities, changes in consumer demand for the Company's products, risks relating to the retail industry, import restrictions, competition, seasonality and the other factors discussed in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. These statements reflect the Company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated with the passage of time.

                               MOVADO GROUP, INC.
                      Consolidated Statements of Operations
                      (in thousands, except per share data)

                                  Three Months Ended       Nine Months Ended
                                      October 31,            October 31,

                                   2005         2004      2005        2004

    Net sales                    $141,736     $127,023  $344,818    $298,998

    Cost of sales                  55,563       49,882   135,821     120,494

    Gross profit                   86,173       77,141   208,997     178,504

    Selling, general and
     administrative expenses       67,163       61,157   175,563     152,065

    Operating profit               19,010       15,984    33,434      26,439

    Other income/(expense)          1,008            -     1,008       1,444
    Interest expense                1,208          872     2,901       2,380

    Income before income taxes     18,810       15,112    31,541      25,503

    Income tax                      4,702        3,778     7,885       6,376

    Net income                   $ 14,108     $ 11,334  $ 23,656    $ 19,127

    Net income per diluted share $   0.54     $   0.44  $   0.91    $   0.75
    Shares used in per share
     computation                   26,211       25,621    26,123      25,497

                               MOVADO GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                       (in thousands, except per share data)

                                          October 31,  January 31, October 31,
                                              2005        2005        2004

       Cash and cash equivalents            $ 56,064    $ 63,782    $ 35,870
       Trade receivables, net                144,484     102,622     137,861
       Inventories                           211,442     187,890     192,811
       Other                                  31,622      34,515      42,540
           Total current assets              443,612     388,809     409,082

       Property, plant and equipment, net     49,109      50,283      50,105
       Other assets                           35,449      37,858      39,972
                                            $528,170    $476,950    $499,159


       Loans payable to banks               $ 44,000    $      0    $ 16,300
       Current portion of long-term debt           0           0       5,000
       Accounts payable                       42,016      38,488      41,928
       Accrued liabilities                    49,135      39,618      47,237
       Deferred and current taxes payable      7,055       5,250      20,911
           Total current liabilities         142,206      83,356     131,376

       Long-term debt                         45,000      45,000      45,000
       Deferred and non-current
        income taxes                           9,741      14,827       3,291
       Other liabilities                      17,629      17,209      13,281
       Shareholders' equity                  313,594     316,558     306,211
                                            $528,170    $476,950    $499,159

SOURCE Movado Group, Inc.

CONTACT: Investor Relations - Suzanne Michalek, Director of Corporate Communications of Movado Group, +1-201-267-8000;
or Melissa Myron or Rachel Albert, both of Financial Dynamics, +1-212-850-5600, for Movado Group