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

~ Second Quarter Adjusted Diluted Earnings Per Share of $0.06 and $0.02 on a GAAP Basis ~ ~ Company Remains on Track to Reach Annualized Cost Savings Goal ~


PARAMUS, N.J., Sept. 3  /PRNewswire-FirstCall/ -- Movado Group, Inc. (NYSE: MOV), today announced second quarter and six-month results for the period ended July 31, 2009. For the second quarter, adjusted diluted earnings per share were $0.06 compared to $0.39 in fiscal 2009 (see attached table for reconciliation of GAAP to non-GAAP measures). On a GAAP basis, diluted earnings per share were $0.02 and included a $1.3 million pre-tax charge in interest expense related to the refinancing and repayment of the Company's former credit and note agreements.

  Second Quarter Fiscal 2010
  --  Net sales in the second quarter of fiscal 2010 were $89.7 million
      compared to $129.7 million.
  --  Gross profit was $52.7 million, or 58.7% of sales, compared to $83.2
      million, or 64.1% of sales last year.
  --  Operating expenses decreased $22.5 million, or 31.2%, to $49.5 million
      versus $72.0 million last year.
  --  Operating profit was $3.1 million compared to $11.1 million in the
      year-ago period.

  --  Net income in the quarter was $0.5 million. Excluding the after-tax
      effect of the aforementioned charge, adjusted net income was $1.4
      million compared to adjusted net income of $9.8 million in the prior
      year period, which excludes a charge related to the Company's expense
      reduction plan.

  First Half Fiscal 2010
  --  Net sales in the first six months of fiscal 2010 were $157.3 million
      compared to $231.0 million.
  --  Gross profit was $89.7 million, or 57.0% of sales, compared to $147.5
      million, or 63.8% of sales last year.
  --  Operating expenses decreased $37.1 million, or 27.5%, to $97.7 million
      versus $134.8 million last year.
  --  Operating loss was $8.0 million compared to operating income of $12.8
      million in the year-ago period.

  --  Net loss was $8.4 million compared to net income of $9.4 million in
      the year-ago period. Excluding the effect of the charge recorded in
      the second quarter of fiscal 2010, adjusted net loss was $7.6 million,
      or $0.31 per diluted share, compared to adjusted net income of $11.0
      million, or $0.42 per diluted share, which excludes a charge related
      to the Company's expense reduction plan.



Efraim Grinberg, President and Chief Executive Officer, stated, "We are pleased with our results during the quarter and our ability to return to profitability earlier than anticipated. We maintained our disciplined approach to managing our business, while continuing to offer compelling marketing and advertising campaigns that differentiate our brands in the marketplace. As consumers continue to be conservative with their spending, we remain focused on delivering value in each of our brands, from the high end of the luxury market to the more affordable fashion watch category. We have a strong portfolio of brands and a well-diversified global business which, combined with our improved productivity, will enable us to emerge even stronger as the economy improves."

Rick Cote, Executive Vice President and Chief Operating Officer, stated, "The aggressive actions we took last year to enhance our operational efficiencies are continuing to translate into tangible improvement in our financial results. Through continued execution of our expense management program, we remain on track to reach our goal of annualized cost savings of between $50 to $60 million, most of which we expect to realize in the current fiscal year. Additionally, we are continuing to focus on cash flow as well as reducing inventory levels to align with current sales trends. We remain confident in our ability to return to being free cash flow positive this year."

Fiscal 2010 Guidance

Movado Group reiterated today that it estimates fiscal 2010 fully diluted earnings per share to be approximately $0.50, including the one-time charge recorded in the second quarter, compared to fully diluted earnings per share of $0.09 recorded in fiscal 2009.  This guidance continues to be predicated on an improvement in sales trends during the second half of fiscal 2010, as retailers purchase inventory in preparation for the holiday season, resulting in an expected high single-digit sales decline for the full year.

The Company's management will host a conference call today, September 3rd at 10:00 a.m. Eastern Time.  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.

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 and management believes they present information regarding the Company that 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 operating income excluding severance related expense and presenting net income excluding severance related expenses and refinancing related expenses because the Company believes that it is useful to investors to eliminate the effect of these unusual items in order to improve the comparability of the Company's results 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, 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: actual or perceived weakness in the U.S. and global economy and fluctuations in consumer spending and disposable income, the Company's ability to successfully implement the new Movado brand strategy, the ability of the new Movado brand strategy to improve the Company's net sales, profitability and other results of operations, 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 Income
                 (in thousands, except per share data)
                              (Unaudited)

                                Three Months Ended   Six Months Ended
                                     July 31,            July 31,
                                  2009      2008      2009      2008
                                  ----      ----      ----      ----

  Net sales                    $89,701  $129,689  $157,276  $231,042

  Cost of sales                 37,037    46,527    67,589    83,539
                                ------    ------    ------    ------

  Gross profit                  52,664    83,162    89,687   147,503

  Selling, general and
   administrative expenses      49,547    72,022    97,689   134,750
                                ------    ------    ------   -------

  Operating income / (loss)      3,117    11,140    (8,002)   12,753

  Interest expense              (2,301)     (794)   (2,846)   (1,500)
  Interest income                  149       523       200     1,480
                                   ---       ---       ---     -----

  Income / (loss) before
   income taxes and
   noncontrolling interests        965    10,869   (10,648)   12,733

  Provision for / (benefit
   from) income taxes              481     2,669    (2,222)    3,236
  (Loss) / income attributed
   to noncontrolling interest      (44)       64         6       112
                                   ---        --         -       ---

  Net income / (loss)             $528    $8,136   $(8,432)   $9,385
                                  ====    ======   =======    ======

  Net income / (loss) per
   diluted share                 $0.02     $0.32    $(0.34)    $0.36
  Number of shares outstanding  24,744    25,384    24,485    26,033




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

                                   Three Months      Six Months
                                       Ended            Ended
                                      July 31,         July 31,
                                    2009    2008    2009     2008
                                    ----    ----    ----     ----

  Operating income / (loss)
   (GAAP)                         $3,117 $11,140 ($8,002) $12,753
  Severance related expenses (1)       -   2,192       -    2,192
                                       -   -----       -    -----
  Adjusted operating income /
   (loss) (non-GAAP)              $3,117 $13,332 ($8,002) $14,945
                                  ====== ======= =======  =======


                                   Three Months      Six Months
                                       Ended           Ended
                                      July 31,        July, 31
                                    2009    2008    2009     2008
                                    ----    ----    ----     ----

  Net income / (loss) (GAAP)        $528  $8,136 ($8,432)  $9,385
  Refinancing expenses and
   fees (2)                          839       -     839        -
  Severance related expenses (1)       -   1,644       -    1,644
                                       -   -----       -    -----
  Adjusted net income /
   (loss) (non-GAAP)              $1,367  $9,780 ($7,593) $11,029
                                  ======  ====== =======  =======

  Adjusted net income /
   (loss) per share (non-GAAP)     $0.06   $0.39  $(0.31)   $0.42
  Number of shares outstanding    24,744  25,384  24,485   26,033

  (1)  Charges related to the implementation of the Company's expense
       reduction plans.
  (2)  Expenses and fees associated with the refinancing and repayment of
       the Company's former credit and note agreements which included a
       non-cash pre-tax charge of $0.2 million related to the accelerated
       recognition of deferred financing costs and a pre-tax charge of $1.1
       million for fees due to the former lenders.  Both charges were
       recorded in Interest Expense on the Consolidated Statements of
       Income.




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

                                          July 31,   January 31, July 31,
                                            2009        2009      2008
                                            ----        ----      ----
  ASSETS
  ------


    Cash and cash equivalents              $47,474     $86,621  $84,503
    Trade receivables, net                  76,689      76,710   96,372
    Inventories                            248,187     228,884  238,736
    Other current assets                    41,560      47,863   48,352
                                            ------      ------   ------
        Total current assets               413,910     440,078  467,963
                                           -------     -------  -------

    Property, plant and equipment, net      60,920      66,749   71,472
    Deferred income taxes                   27,020      23,449   20,223
    Other non-current assets                24,502      33,714   38,404
                                            ------      ------   ------
        Total assets                      $526,352    $563,990 $598,062
                                          ========    ======== ========

  LIABILITIES AND EQUITY
  ----------------------


    Loan payable to banks                       $-     $40,000       $-
    Current portion of long-term debt            -      25,000   10,000
    Accounts payable                        13,607      20,794   21,331
    Accrued liabilities                     38,445      47,686   43,543
    Deferred and current income taxes
     payable                                 3,463         430      568
                                             -----         ---      ---
        Total current liabilities           55,515     133,910   75,442
                                            ------     -------   ------

    Long-term debt                          40,000           -   49,776
    Deferred and non-current income
     taxes payable                             810       6,856    6,577
    Other non-current liabilities           20,190      22,459   24,306
    Noncontrolling interest                  1,700       1,506    1,960
    Shareholders' equity                   408,137     399,259  440,001
                                           -------     -------  -------
        Total liabilities and equity      $526,352    $563,990 $598,062
                                          ========    ======== ========


DATASOURCE: Movado Group, Inc.



CONTACT:  Leigh Parrish or Stephanie Rich, both of Financial Dynamics for

Movado Group, Inc., [phone]



Web Site:  http://www.movadogroup.com/ 

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