Movado Group, Inc. Announces Second Quarter and Six-Month Results

~ Q2 Includes Charge Associated with Previously Announced Expense Reduction Plan ~
~ Company Reiterates Full Year Guidance ~


PARAMUS, N.J., Sept. 4 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced second quarter and six-month results for the period ended July 31, 2008. For the second quarter, adjusted diluted earnings per share were $0.39 compared with $0.45 in fiscal 2008 (see attached table for reconciliation of GAAP to non-GAAP measures). On a GAAP basis, diluted earnings per share were $0.32 and included a $2.2 million pre-tax charge related to the Company's previously announced expense reduction plan.

Second Quarter Fiscal 2009

-- Net sales in the second quarter of fiscal 2009 were $129.7 million. Fiscal 2008 net sales of $139.5 million included $8.3 million of excess discontinued product. Excluding the sales of discontinued product, net sales decreased 1.1%.

-- Gross profit was $83.9 million, or 64.7% of sales, compared to $83.3 million, or 59.8% of sales last year. Excluding excess discontinued product sales in the second quarter of fiscal 2008, year-ago adjusted gross profit was $83.4 million, or 63.6% of sales. On a comparable basis, gross margin in the second quarter of fiscal 2009 expanded 110 basis points.

-- Operating profit was $11.1 million and included a $2.2 million charge related to the implementation of the Company's expense reduction plan. Excluding this charge, adjusted operating profit was $13.3 million versus $16.3 million in the year-ago period.

-- Income tax expense of $2.7 million reflects a 24.6% tax rate in the second quarter compared to income tax expense of $4.1 million, or a 24.9% tax rate, recorded last year.

-- Net income in the quarter was $8.1 million. Excluding the after-tax effect of the aforementioned charge, adjusted net income was $9.8 million compared to net income of $12.3 million in the prior year period.

First Half Fiscal 2009

-- Net sales were $231.0 million. Year-ago net sales of $240.8 million included $11.0 million of excess discontinued product. Excluding the sales of discontinued product, net sales increased 0.5%.

-- Gross profit was $148.9 million, or 64.5% of sales, compared to $145.0 million, or 60.2% of sales last year. Excluding excess discontinued product sales in the year-ago period, adjusted gross profit was $145.4 million, or 63.3% of sales. On a comparable basis, gross margin in the first half of fiscal 2009 expanded 120 basis points.

-- Operating profit was $12.8 million. Excluding the aforementioned charge recorded in the second quarter of fiscal 2009, adjusted operating profit was $14.9 million versus $19.1 million in the year-ago period.

-- Income tax expense of $3.2 million reflects a 25.4% tax rate for the year-to-date period compared to income tax expense of $4.8 million, or a 24.2% tax rate, recorded last year.

-- Net income was $9.4 million. Excluding the after-tax effect of the charge recorded in the second quarter of fiscal 2009, adjusted net income was $11.0 million, or $0.42 per diluted share, compared to net income of $14.7 million, or $0.54 per diluted share, in the prior year period.

Efraim Grinberg, President and Chief Executive Officer, commented, "While our second quarter results reflect the continued challenging macroeconomic environment, the decisive actions we've taken to reduce expenses and improve productivity are designed to position our company to emerge quickly and even stronger than before, as the economy recovers. At the same time, we continue to gain market share with a combination of strong product innovation and a powerful presence at the point-of-sale, along with consistent marketing support and advertising investment across our spectrum of brands."

Mr. Grinberg continued, "Our business is well positioned as we enter the second half of the year and we remain on track to achieve our financial objectives and strategic initiatives. The importance of branding is paramount in today's consumer spending environment and we will continue to strongly support and differentiate each of our brands with exciting new product introductions and bold new image-building advertising campaigns."

Rick Cote, Executive Vice President and Chief Operating Officer, stated, "As previously announced on August 7, 2008, we have initiated an expense reduction plan to streamline operations, reduce expenses, and improve efficiencies across the Company's global organization. Our expense reduction plan is targeted to generate $25 million in annualized savings, or 8% of the Company's operating expenses, with $6 million of these savings expected to be realized in the current fiscal year. These actions, together with continued gross margin improvement, will enable us to achieve our mid-teen operating margin objective on an accelerated basis. Importantly, our balance sheet remains strong and we will continue to leverage our solid financial flexibility to invest in the future growth of our business."

Excluding the charge and cost savings associated with Movado Group's previously announced expense reduction plan, and recognizing the limited visibility on the economic environment, the Company is maintaining its fiscal 2009 diluted earnings per share guidance of approximately $1.65 to $1.72, based on a projected tax rate of 24%. In fiscal 2008, the Company reported adjusted diluted earnings per share of $1.71, which excluded a net realized tax benefit and an accrual for product returns recorded in the fourth quarter.

Upon completion of a one million share repurchase program in April of fiscal 2009, Movado Group initiated a new repurchase program during the first quarter of fiscal 2009 to buyback up to one million additional shares of its common stock. To-date, with both programs, the Company has repurchased a total of 1.9 million shares at a total cost of $38.9 million.

The Company's management will host a conference call today, September 4, 2008 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, sources, and distributes Movado, Ebel, Concord, ESQ, Coach, Tommy Hilfiger, HUGO BOSS, Juicy Couture and Lacoste watches worldwide, and operates Movado boutiques and company stores in the United States.

In this release, the Company presents certain adjusted financial measures that are not calculated according to generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures are designed to complement the GAAP financial information presented in this release because management believes they present information regarding the Company that management believes is useful to investors. The non-GAAP financial measures presented should not be considered in isolation from or as a substitute for the comparable GAAP financial measure.

The Company is presenting net sales excluding excess discontinued product sales (and gross profit excluding such sales) because the Company believes that it is useful to investors to eliminate the effect of these unusual sales in order to improve the comparability of the Company's results for the periods presented. Adjusted gross margin is based on net sales excluding excess discontinued product sales, which did not contribute to gross profit in any of the periods presented.

The Company is presenting adjusted operating profit, which is operating profit excluding the effect of a pre-tax charge associated with the Company's expense reduction program, and adjusted net income, which is net income excluding the after-tax effect of such charge. The company is presenting adjusted operating profit and adjusted net income because it believes that it is useful to investors to eliminate the effect of such a non-recurring charge, in order to improve the comparability of the periods presented and to better show trends in the Company's results of operations for the periods presented.

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, trends, 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, reduced discretionary spending by consumers due to the recent tightening of credit, 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 Income
                      (in thousands, except per share data)
                                   (Unaudited)

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

                                         2008      2007      2008      2007

    Net sales                          $129,689  $139,467  $231,042  $240,830

    Cost of sales                        45,786    56,121    82,119    95,832

    Gross profit                         83,903    83,346   148,923   144,998

    Selling, general and
     administrative expenses             72,763    67,009   136,170   125,889

    Operating profit                     11,140    16,337    12,753    19,109

    Interest expense                       (794)     (872)   (1,500)   (1,751)
    Interest income                         523     1,062     1,480     2,309

    Income before income taxes and
     minority interests                  10,869    16,527    12,733    19,667

    Provision for income tax              2,669     4,117     3,236     4,764
    Minority interests                       64       146       112       239

    Net income                           $8,136   $12,264    $9,385   $14,664

    Net income per diluted share          $0.32     $0.45     $0.36     $0.54
    Number of shares outstanding         25,384    27,272    26,033    27,259



                                MOVADO GROUP, INC.
                              Reconciliation tables
                      (in thousands, except per share data)
                                   (Unaudited)

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

                                       2008        2007     2008        2007

    Operating profit (GAAP)          $11,140     $16,337  $12,753     $19,109
    Severance related expenses (1)     2,192           -    2,192           -
    Adjusted operating profit
     (non-GAAP)                      $13,332     $16,337  $14,945     $19,109


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

                                       2008        2007     2008        2007

    Net income (GAAP)                 $8,136     $12,264   $9,385     $14,664
    Severance related expenses (1)     1,644           -    1,644           -
    Adjusted net income (Non-GAAP)    $9,780     $12,264  $11,029     $14,664

    Number of shares outstanding      25,384      27,272   26,033      27,259
    Adjusted net income per share
     (non-GAAP)                        $0.39       $0.45    $0.42       $0.54


    (1) Charges related to the implementation of the Company's expense
        reduction plan.



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

                                             July 31,   January 31,  July 31,
                                               2008        2008        2007
    ASSETS


       Cash and cash equivalents              $84,503    $169,551    $112,456
       Trade receivables, net                  96,372      94,328     100,611
       Inventories                            238,736     205,129     215,557
       Other current assets                    48,352      50,317      37,443
           Total current assets               467,963     519,325     466,067

       Property, plant and equipment, net      71,472      68,513      61,040
       Deferred income taxes                   20,223      20,024      27,863
       Other non-current assets                38,404      38,354      37,417
           Total assets                      $598,062    $646,216    $592,387


    LIABILITIES AND EQUITY

       Current portion of long-term debt      $10,000     $10,000      $5,000
       Accounts payable                        21,331      38,397      30,708
       Accrued liabilities                     43,543      42,770      38,037
       Deferred and current taxes payable         568       8,526       5,717
           Total current liabilities           75,442      99,693      79,462

       Long-term debt                          49,776      50,895      62,475
       Deferred and non-current income
        taxes                                   6,577       6,363      32,181
       Other liabilities                       24,306      24,205      24,384
       Minority Interests                       1,977       1,865       1,467
       Shareholders' equity                   439,984     463,195     392,418
           Total liabilities and equity      $598,062    $646,216    $592,387

SOURCE Movado Group, Inc.

CONTACT: Investor Relations, Suzanne Rosenberg, Vice President,
Corporate Communications, Movado Group, Inc., +1-201-267-8000; Leigh Parrish,
or Melissa Merrill, both of Financial Dynamics, +1-212-850-5600/
Web site: http://www.movadogroupinc.com
(MOV)

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Movado Group Inc's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.