Movado Group, Inc. Announces 37% Increase in Reported Operating Profit in Fiscal 2006; Adjusted Operating Profit Up 28%

~ FY06 Reported Net Income Increases Slightly ~

~ FY06 Adjusted Net Income Increases 28% ~

PARAMUS, N.J., April 6 /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced results for the fourth quarter and fiscal year ended January 31, 2006.

    Fourth Quarter Fiscal 2006
    -- Net sales were $126.1 million compared to $120.0 million last year.
    -- Comparable store sales at the Company's Movado boutiques increased
       14.4% versus a 2.9% increase in the year-ago period.
    -- Gross margin improved 160 basis points to 61.3% compared to 59.7% last
       year.
    -- Operating profit was $14.6 million compared to $8.6 million in the
       fourth quarter of fiscal 2005 and included a one-time benefit of
       $0.8 million from a reversal of a previously recorded liability.
       Year-ago operating profit included a $2.0 million non-cash impairment
       charge related to the Movado boutique in Soho, New York City.  Adjusted
       operating profit increased 29.7% to $13.8 million in fiscal 2006 from
       $10.7 million in fiscal 2005.  (See attached table for reconciliation
       of GAAP to non-GAAP measures.)
    -- Income tax expense was $10.4 million and included a $7.5 million charge
       related to $148.5 million of foreign earnings repatriated under the
       American Jobs Creation Act.  Income tax expense of $0.4 million
       recorded in the fourth quarter of fiscal 2005 included $1.9 million of
       non-recurring favorable tax benefits, including a retroactive favorable
       tax ruling and the tax benefit associated with the previously mentioned
       impairment charge.
    -- On a reported basis, net income and earnings per diluted share were
       $3.0 million and $0.11, respectively, versus net income of $7.2 million
       and earnings per diluted share of $0.28 in the year-ago period.
    -- Adjusted net income increased 35.0% to $9.9 million in fiscal 2006 from
       $7.3 million in fiscal 2005, and adjusted earnings per diluted share
       increased 35.7% to $0.38 in fiscal 2006 from $0.28 in fiscal 2005.

    Fiscal 2006 Results
    -- Net sales increased 12.4% to $470.9 million versus $419.0 million last
       year.
    -- Comparable store sales increased 8.5% at the Company's Movado boutiques
       versus an 11.2% increase last year.
    -- Gross margin improved 110 basis points to 60.8% compared to 59.7% last
       year.
    -- Operating profit increased to $48.0 million from $35.1 million in
       fiscal 2005 and included a one-time benefit of $0.5 million from a
       reversal of a previously recorded liability.  Year-ago results include
       the previously mentioned impairment charge recorded in the fourth
       quarter of fiscal 2005.  Adjusted operating profit increased 28.1% to
       $47.5 million in fiscal 2006 from $37.1 million in fiscal 2005.
    -- Other income of $1.0 million includes two unusual items recorded in the
       third quarter of fiscal 2006: 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.  Other income of $1.4 million recorded in fiscal 2005
       includes a one-time gain associated with a legal settlement the Company
       reached with Swiss Army Brands.
    -- Income tax expense for fiscal 2006 was $18.3 million and includes the
       previously mentioned charge associated with $148.5 million of foreign
       earnings repatriated under the American Jobs Creation Act.  Income tax
       expense of $6.8 million recorded in fiscal 2005 includes the
       aforementioned non-recurring tax benefits recorded in the fourth
       quarter of last year.
    -- On a reported basis, net income and earnings per diluted share were
       $26.6 million and $1.02, respectively, versus net income of
       $26.3 million and earnings per diluted share of $1.03 reported in
       fiscal 2005.
    -- Fiscal 2006 adjusted net income increased 27.7% to $32.7 million in
       2006 from $25.6 million in fiscal 2005, and adjusted earnings per
       diluted share increased 25.0% to $1.25 in fiscal 2006 from $1.00 in
       fiscal 2005.

Efraim Grinberg, President and Chief Executive Officer, stated, "Fiscal 2006 was an excellent year for Movado Group. Over the past several years we have delivered a consistent track record of growth by remaining true to our strategies. As demonstrated brand builders, we continue to support our portfolio -- Movado, Ebel, Concord, ESQ, Coach and Tommy Hilfiger -- with strongly differentiated and innovative products, bold advertising and marketing campaigns, and a commitment to our retail partners. We have built a strong presence at retail with our growing Movado boutique business, which continues to post strong results and adds immeasurable brand equity. We have also selectively aligned ourselves with world-class brands and we are excited to launch HUGO BOSS and Juicy Couture watches this year and LACOSTE watches in 2007. These factors, coupled with a relentless focus on the fundamentals of our business, have enabled our company to deliver strong sales, margins, profits and cash flow."

Rick Cote, Executive Vice President and Chief Operating Officer, stated, "We achieved solid results in fiscal 2006, while maintaining a strategy of strong and consistent investment in our business. In fiscal 2007, we are well positioned for continued growth as we expand our existing businesses, prepare for and launch our new businesses, and focus on further improving our financial metrics."

Mr. Grinberg concluded, "Fiscal 2007 marks the 125th anniversary of the Movado brand. Throughout the year we will celebrate Movado's history and incorporate its rich heritage in our products, our marketing and through special events. New initiatives are in place across all of our brands and the exciting products we recently introduced at the Basel Watch Fair were met with great reception."

Movado Group anticipates fiscal 2007 earnings per share to range between $1.35 and $1.39, including 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 management compensation plan from options toward restricted stock. Fiscal 2007 net sales are projected to grow between 9% and 11% from fiscal 2006.

The Company's management will host a conference call today, April 6, 2006 at 10:00 a.m. Eastern Time to discuss its fourth quarter and year-end financial results. A live broadcast of the call will be available on the Company's website: http://www.movadogroup.com. This call will be archived online within one hour of the completion of the conference call.

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 presents adjusted operating profit, which is operating profit excluding the benefit of a reversal of a previously recorded liability incurred in the fourth quarter of fiscal 2006 and the impairment charge incurred in the fourth quarter of fiscal 2005 associated with the Company's Movado Boutique in Soho. Management excludes the recorded liability adjustment from adjusted operating profit because it is an out-of-period adjustment which the Company believes does not relate to current year results. The Company excludes the impairment charge because it was not a recurring charge and was non-cash. Management believes that presenting adjusted operating profit is useful to investors because the exclusion of the non-recurring, non-cash impairment charge and the recorded liability adjustment enhances the comparability of fiscal 2005 operating results with fiscal 2006 operating results and gives a better indication of the growth in the Company's operating performance that occurred between the periods compared.

Adjusted net income is calculated by excluding certain non-operational items from net income, such as repatriation taxes, the favorable effect of a tax ruling, the favorable effect of a litigation settlement and currency losses. In addition, the Company excludes the impairment charge and the benefit from a reversal of a previously recorded liability discussed above and the gain on sale of a building from its adjusted net income because they are unusual items. Management believes that presenting adjusted net income (and adjusted net income per share) is useful to investors because the exclusion of non-operational and unusual items provides investors with additional information regarding the Company's operating results and performance because changes in the Company's operations may be masked by those unusual items. Presentation of adjusted net income provides investors with another measure with which to compare the Company's 2006 operating results versus its 2005 operating results.

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," "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)
                                 (Unaudited)

                                   Three Months Ended    Twelve Months Ended
                                       January 31,           January 31,
                                    2006         2005      2006        2005

    Net sales                     $126,123     $119,968  $470,941    $418,966

    Cost of sales                   48,800       48,324   184,621     168,818

    Gross profit                    77,323       71,644   286,320     250,148

    Selling, general and
     administrative expenses        62,720       63,007   238,283     215,072

    Operating profit                14,603        8,637    48,037      35,076

    Other income/(expense)              --           --     1,008       1,444
    Interest expense                 1,208        1,050     4,109       3,430

    Income before income taxes      13,395        7,587    44,936      33,090

    Income tax                      10,434          407    18,319       6,783

    Net income                      $2,961       $7,180   $26,617     $26,307

    Net income per diluted share     $0.11        $0.28     $1.02       $1.03
    Shares used in per share
     computation                    26,263       25,828    26,180      25,583



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

                                   Three Months Ended    Twelve Months Ended
                                        January 31,           January 31,
                                     2006         2005      2006        2005

    Operating Profit (GAAP)        $14,603       $8,637   $48,037     $35,076
    Previously Recorded Liability
     Adjustment (1)                   (771)          --      (507)         --
    Impairment Charge (2)               --        2,025        --       2,025
    Adjusted Operating Profit
     (Non-GAAP)                    $13,832      $10,662   $47,530     $37,101


                                    Three Months Ended    Twelve Months Ended
                                        January 31,            January 31,
                                     2006         2005      2006        2005

    Net Income (GAAP)               $2,961       $7,180   $26,617     $26,307
    Previously Recorded Liability
     Adjustment (1)                   (603)          --      (396)         --
    Impairment Charge (2)               --        1,251        --       1,251
    Repatriation Taxes (3)           7,506           --     7,506          --
    Gain on Sale of Building (4)        --           --    (2,057)         --
    Effect of Tax Ruling (5)            --       (1,126)       --      (1,126)
    Currency Loss (6)                   --           --     1,002          --
    Litigation Settlement (7)           --           --        --        (842)
    Adjusted Net Income             $9,864       $7,305   $32,672     $25,590

    Number of shares outstanding    26,263       25,828    26,180      25,583
    Adjusted Net Income per share
     (Non-GAAP)                      $0.38        $0.28     $1.25       $1.00


    (1) One-time benefit recorded for reversal of a previously recorded
        liability.
    (2) Non-cash impairment charge related to the Movado boutique in Soho,
        New York City.
    (3) Tax expense associated with the repatriated foreign earnings under the
        American Jobs Creation Act of 2004.
    (4) Gain of sale on building acquired with Ebel.
    (5) Retroactive favorable tax ruling.
    (6) Loss on discontinued foreign currency hedge derivatives.
    (7) One-time gain associated with a legal settlement reached with Swiss
        Army Brands.



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

                                             January 31, January 31,
                                                 2006       2005
    ASSETS

       Cash and cash equivalents               $123,625   $63,782
       Trade receivables, net                   109,852   104,685
       Inventories                              198,582   185,609
       Other                                     28,989    32,630
           Total current assets                 461,048   386,706

       Property, plant and equipment, net        52,168    52,510
       Other assets                              36,676    37,858
                                               $549,892  $477,074

    LIABILITIES AND SHAREHOLDERS' EQUITY

       Loans payable to banks                        $0        $0
       Current portion of long-term debt          5,000         0
       Accounts payable                          35,529    38,488
       Accrued liabilities                       43,065    39,743
       Deferred and current taxes payable         8,227     5,250
           Total current liabilities             91,821    83,481

       Long-term debt                           104,955    45,000
       Deferred and non-current income taxes     11,947    14,827
       Other liabilities                         19,491    17,209
       Shareholders' equity                     321,678   316,557
                                               $549,892  $477,074

SOURCE Movado Group, Inc.

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

"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.