Movado Group, Inc. Reports Record Fourth Quarter and Fiscal 2004 Results

March 12, 2004 at 7:32 AM EST
~ Company Posts 17% Sales Increase in Fourth Quarter ~ ~ Full Year Net Income Increases 14% ~ ~ Cash Flow from Operations Exceeds $50 Million ~

PARAMUS, N.J., Mar 12, 2004 /PRNewswire-FirstCall via COMTEX/ -- Movado Group, Inc. (NYSE: MOV), today announced results for the fourth quarter and fiscal year ended January 31, 2004.

    Fourth Quarter Fiscal 2004
     * Net sales for the quarter were $92.7 million, a 16.6% increase over
       last year, or an increase of 14.6% on a constant dollar basis.
     * Comparable store sales increased 15.1% at the Company's Movado
     * Gross margin was 59.6% compared to 61.4%, primarily resulting from the
       impact of the weak U.S. dollar.
     * Operating profit increased 7.8% to $9.2 million.
     * Net income increased 11.2% to $6.2 million compared to $5.5 million
       last year.
     * Earnings per diluted share increased to $0.49 from $0.46 last year,
       with a 4.3% increase in diluted shares outstanding.

Efraim Grinberg, President and Chief Executive Officer, commented, "Our excellent fourth quarter performance capped a banner year for Movado Group. For both the quarter and the year, we delivered record sales, profits and cash flow. During the fourth quarter, we experienced growth across all of our brands -- Movado, Concord, Coach, ESQ and Tommy Hilfiger -- with year-over- year sales gains recorded, domestically and internationally. Our boutique business also posted strong sales results throughout fiscal 2004 and continues to strengthen the luxury brand image of Movado. In addition to our financial performance in fiscal 2004, we are very excited about the acquisition of premier Swiss luxury watch brand, Ebel, and the future growth potential that lies ahead for our company."

    Fiscal 2004 Results
     * Net sales increased 10.0% to $330.2 million versus net sales of
       $300.1 million last year, or an 8.2% increase on a constant dollar
     * Comparable store sales increased 20.1% at the Company's Movado
     * Gross margin was 60.7% compared to 61.4%, primarily resulting from the
       impact of the weak U.S. dollar.
     * Operating profit increased 9.5% to $34.8 million.
     * Net income increased 13.9% to $22.9 million compared to $20.1 million
       last year.
     * Earnings per diluted share increased 11.5% to $1.84 from $1.65 last
       year, with a 2.0% increase in diluted shares outstanding.
     * Cash flow from operations increased to $51.6 million.

Rick Cote, Executive Vice President and Chief Operating Officer, stated, "Over the past several years, our team has worked diligently to develop an efficient and scalable infrastructure from which to grow our business. The results of these efforts, particularly in the areas of working capital management and operational improvements, are best highlighted by our second consecutive year of record cash flow from operations, which was in excess of $50 million in fiscal 2004. We are encouraged by our progress and we remain focused on our key operating initiatives of driving our growth initiatives and improving our financial strength by continuing to focus on generating strong and consistent cash flow."

As announced on March 1, 2004, the Company completed its acquisition of Swiss luxury watch brand, Ebel. With its distinctive and internationally recognized image, Ebel extends Movado Group's presence within the luxury watch category and international markets. Over the next six months, Ebel will be integrated into Movado Group's worldwide operations. As part of this process, the Company has initiated a restructuring of the Ebel operations in Switzerland.

Mr. Grinberg concluded, "As we enter fiscal 2005, we are well positioned to capitalize on the positive trends we are experiencing across all of our brands. We will continue our relentless focus on delivering newness to the marketplace, while supporting our brands with compelling marketing and advertising programs. We are looking forward to the exciting new product we plan to introduce at the Basel Watch Fair in April."

Prior to including Ebel in its financial results, Movado Group anticipates fiscal year 2005 earnings per share to range between $2.00 to $2.05. After accounting for the Ebel integration into Movado Group, the Company expects earnings per share to range between $1.84 and $1.92 in fiscal 2005.

The Company's management will host a conference call today, March 12, 2004 at 10:00 a.m. Eastern Time to discuss its fourth quarter and year-end financial results. The Company will also provide financial projections for fiscal 2005 and a progress update on the acquisition of Ebel. 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 and Tommy Hilfiger 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 Ebel 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     Twelve Months Ended
                                       January 31,            January 31,
                                    2004        2003       2004         2003

    Net sales                      $92,732     $79,539   $330,214     $300,077

    Cost of sales                   37,444      30,696    129,908      115,907

    Gross profit                    55,288      48,843    200,306      184,170

    Selling, general and
     administrative expenses        46,047      40,268    165,525      152,394

    Operating profit                 9,241       8,575     34,781       31,776

    Interest expense                   672         871      3,044        3,916

    Income before taxes              8,569       7,704     31,737       27,860

    Income tax                       2,399       2,157      8,886        7,801

    Net income                      $6,170      $5,547    $22,851      $20,059

    Net income per share             $0.49       $0.46      $1.84        $1.65

    Shares used in per share
     computation                    12,682      12,157     12,439       12,190

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

                                           January 31, January 31, January 31,
                                               2004        2003        2002

       Cash and cash equivalents             $82,083     $38,365     $16,971
       Trade receivables, net                 88,800      94,438      92,014
       Inventories                           121,678     111,736      98,589
       Other                                  27,932      36,646      19,467
           Total current assets              320,493     281,185     227,041

       Property, plant and equipment, net     42,112      39,939      38,726
       Other assets                           28,451      24,030      24,909
                                            $391,056    $345,154    $290,676


       Loans payable to banks                     $0          $0      $6,500
       Current portion of long-term debt      10,000           0       5,000
       Accounts payable                       23,631      22,712      23,824
       Accrued liabilities                    25,781      22,735      25,417
       Deferred and current taxes payable     18,111      16,318      12,368
           Total current liabilities          77,523      61,765      73,109

           Long-term debt                     25,000      35,000      35,000
           Deferred and non-current
            income taxes                       2,282       4,229       1,513
           Other liabilities                  11,450       7,948       8,584
           Shareholders' equity              274,801     236,212     172,470
                                            $391,056    $345,154    $290,676

SOURCE Movado Group, Inc.

Suzanne Michalek, Director of Corporate Communications of
Movado Group, +1-201-267-8000; or Investors: Melissa Myron, or Press:
Stephanie Sampiere, +1-212-850-5600, both of Financial Dynamics for Movado