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Movado Group, Inc. Announces Second Quarter Results

~ Gross Margin Expands to 62% ~

~ Operating Profit Increases 14.6% from LY ~

PARAMUS, N.J., Sept. 7 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced second quarter results for the period ended July 31, 2006.

    Second Quarter Fiscal 2007
    *  Net sales increased 9.8% to $126.6 million from $115.3 million last
       year.
    *  Comparable store sales increased 9.3% at the Company's Movado boutiques
       versus a 2.3% increase in the year-ago period.
    *  Gross margin improved 130 basis points to 62.0% compared to 60.7% last
       year.
    *  Operating profit increased 14.6% to $14.1 million, or 11.1% of sales,
       versus $12.3 million, or 10.7% of sales in the year-ago period.
    *  Net interest expense was $0.3 million versus $0.9 million last year:
       *  Interest expense for the quarter was the same as the year-ago
          period, $0.9 million, with average borrowings in the quarter of
          $99.3 million at an average borrowing rate of 3.7%.
       *  Interest income for the quarter was $0.6 million due to short term
          investments of cash-on-hand resulting from the repatriation of
          foreign earnings under the American Jobs Creation Act.
    *  Income tax expense of $2.4 million reflects a 17.5% tax rate in the
       second quarter compared to income tax expense of $2.9 million, or a
       25.0% tax rate, recorded last year.  The favorable tax rate benefited
       second quarter diluted earnings per share by $0.04 and reflects the
       continued utilization of a Swiss net operating loss carryforward (NOL)
       acquired with the Ebel brand in fiscal 2005.  The Company anticipates
       maintaining the 17.5% tax rate for the balance of fiscal 2007.
    *  Net income increased to $11.3 million, or $0.43 per diluted share,
       compared to net income of $8.6 million, or $0.33 per diluted share, in
       the prior year period.

    First Half Fiscal 2007
    *  Net sales increased 10.5% to $224.3 million from $203.1 million last
       year.
    *  Comparable store sales increased 7.0% at the Company's Movado boutiques
       versus a 2.7% comparable store sales gain in the year-ago period.
    *  Gross margin was 61.6% compared to 60.5% last year.
    *  Operating profit was $17.5 million versus $14.4 million in the year-ago
       period.
    *  Net interest expense was $0.4 million versus $1.7 million last year:
       *  Interest expense for the first half of fiscal 2007 was $1.9 million
          compared to $1.8 million in the year-ago period. Average borrowings
          for the year-to-date period were $102.8 million at an average
          borrowing rate of 3.6%.
       *  Interest income for the first half of fiscal 2007 was $1.5 million
          due to short term investments of cash-on-hand resulting from the
          repatriation of foreign earnings under the American Jobs Creation
          Act.
    *  Net income was $14.2 million, or $0.54 per diluted share, compared to
       net income of $9.5 million, or $0.37 per diluted share, in the prior
       year period.

Efraim Grinberg, President and Chief Executive Officer, commented, "We are very pleased with our performance for the first half of this year. Our strong results reflect the continued customer appeal of our diverse portfolio of brands, including the growing prominence of Ebel around the world, the introduction of our new Hugo Boss watch collection, and the very successful launch and delivery of Series 800, a bold new sport collection from Movado. Looking ahead to the fall season, we are excited about the multitude of powerful marketing programs we have in place to support each of our brands."

Rick Cote, Executive Vice President and Chief Operating Officer, stated, "Improving our financial returns -- namely operating margin -- remains a top priority for our company. We are encouraged by the continued momentum we experienced in the second quarter with solid expansion achieved in both our gross margin and operating margin results."

Movado Group continues to project fiscal 2007 diluted earnings per share to range between $1.53 and $1.58. This guidance includes an approximate $0.08 per diluted share expense associated with the adoption of FASB 123R and the shift in the composition of the Company's equity-based compensation plan from options toward restricted stock.

The Company's management will host a conference call today, September 7, 2006 at 10:00 a.m. Eastern Time to discuss its second quarter financial results. A live broadcast of the call will be available on the Company's website: www.movadogroup.com. 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. The Company plans to launch Juicy Couture watches in the fall of 2006 and LACOSTE watches in the spring of 2007.

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," "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 fashion and retail industry, import restrictions, competition, seasonality, commodity price and exchange rate fluctuations, changes in local or global economic conditions, 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)
                                   (Unaudited)

                                    Three Months Ended     Six Months Ended
                                         July 31,              July 31,

                                      2006      2005      2006         2005

    Net sales                       $126,588  $115,326  $224,332     $203,082

    Cost of sales                     48,076    45,340    86,230       80,258

    Gross profit                      78,512    69,986   138,102      122,824

    Selling, general and
     administrative expenses          64,438    57,701   120,594      108,400

    Operating profit                  14,074    12,285    17,508       14,424

    Interest expense                    (919)     (926)   (1,862)      (1,804)
    Interest income                      616        42     1,507          111
    Minority interest                    (15)        -        64            -

    Income before income taxes        13,756    11,401    17,217       12,731

    Income tax                         2,407     2,850     3,013        3,183

    Net income                       $11,349    $8,551   $14,204       $9,548

    Net income per diluted share       $0.43     $0.33     $0.54        $0.37
    Shares used in per share
     computation                      26,584    26,126    26,506       26,074



                               MOVADO GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                   (Unaudited)

                                            July 31,  January 31,   July 31,
                                              2006        2006        2005
    ASSETS


       Cash and cash equivalents             $78,126    $123,625     $50,323
       Trade receivables, net                128,416     109,852     108,775
       Inventories                           215,461     198,582     203,047
       Other                                  34,712      26,596      33,392
           Total current assets              456,715     458,655     395,537

       Property, plant and equipment, net     51,931      52,168      52,687
       Other assets                           40,464      39,069      38,519
                                            $549,110    $549,892    $486,743

    LIABILITIES AND SHAREHOLDERS' EQUITY


       Loans payable to banks                     $0          $0     $37,500
       Current portion of long-term debt       5,000       5,000           -
       Accounts payable                       40,266      35,529      35,283
       Accrued liabilities                    31,990      43,065      41,129
       Deferred and current taxes payable      2,550       8,227       4,756
           Total current liabilities          79,806      91,821     118,668

       Long-term debt                         91,978     104,955      45,000
       Deferred and non-current income taxes  13,278      11,947       9,031
       Other liabilities                      20,112      19,491      17,363
       Minority interest                         245           -           -
       Shareholders' equity                  343,691     321,678     296,681
                                            $549,110    $549,892    $486,743

SOURCE Movado Group, Inc.

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