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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------

FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the Quarterly Period Ended October 31, 2003

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-22378

MOVADO GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)



New York 13-2595932
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)

650 From Road, Paramus, New Jersey 07652
(Address of Principal Executive Offices) (Zip Code)


(201) 267-8000
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for that past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [X] No [
]

The number of shares outstanding of the registrant's common stock and class
A common stock as of December 8, 2003 were 8,709,858 and 3,400,906,
respectively.

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MOVADO GROUP, INC.

Index to Quarterly Report on Form 10-Q
October 31, 2003



Page
----

Part I Financial Information (Unaudited)

Item 1. Consolidated Balance Sheets at October 31, 2003,
January 31, 2003 and October 31, 2002 3

Consolidated Statements of Income for the three months
and nine months ended October 31, 2003 and 2002 4

Consolidated Statements of Cash Flows for the nine
months ended October 31, 2003 and 2002 5

Notes to Consolidated Financial Statements 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11

Item 3. Quantitative and Qualitative Disclosure about
Market Risks 17

Item 4. Controls and Procedures 18

Part II Other Information

Item 1. Legal Proceedings 19

Item 4. Submission of Matters to a Vote of Security Holders 19

Item 6. Exhibits and Reports on Form 8-K 19

Signature 20



2

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)



October 31, January 31, October 31,
2003 2003 2002
---------- ---------- ----------

ASSETS

Current assets:
Cash and cash equivalents $ 60,957 $ 38,365 $ 36,930
Trade receivables, net 120,706 94,438 124,295
Inventories, net 123,074 111,736 113,215
Other 21,957 36,646 24,477
--------- --------- ---------
Total current assets 326,694 281,185 298,917

Property, plant and equipment, net 40,744 39,939 39,749
Other 27,436 24,030 24,011
--------- --------- ---------
Total assets $ 394,874 $ 345,154 $ 362,677
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Loans payable to banks $ 22,000 $ -- $ 31,000
Current portion of long-term debt 5,000 -- 5,000
Accounts payable 22,115 22,712 25,953
Accrued liabilities 31,084 22,735 25,473
Current taxes payable 12,680 11,467 11,048
Deferred taxes payable 5,188 4,851 4,336
--------- --------- ---------
Total current liabilities 98,067 61,765 102,810

Long-term debt 30,000 35,000 35,000
Deferred and non-current income taxes 2,406 4,229 2,890
Other liabilities 10,518 7,948 7,598
--------- --------- ---------
Total liabilities 140,991 108,942 148,298
--------- --------- ---------

Shareholders' equity:
Preferred Stock, $0.01 par value,
5,000,000 shares authorized; no shares issued -- -- --
Common Stock, $0.01 par value,
20,000,000 shares authorized; 10,428,308, 10,057,367 and
10,027,366 shares issued and outstanding, respectively 104 101 100
Class A Common Stock, $0.01 par value,
10,000,000 shares authorized; 3,400,906, 3,401,820 and
3,428,277 shares issued and outstanding, respectively 34 34 34
Capital in excess of par value 77,638 72,145 71,543
Retained earnings 187,164 172,287 170,471
Accumulated other comprehensive income (loss) 21,113 19,386 (163)
Treasury Stock, 1,726,631, 1,547,156 and 1,539,761
shares, respectively, at cost (32,170) (27,741) (27,606)
--------- --------- ---------
Total shareholders' equity 253,883 236,212 214,379
--------- --------- ---------
Total liabilities and shareholders' equity $ 394,874 $ 345,154 $ 362,677
========= ========= =========


See Notes to Consolidated Financial Statements


3

MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)



Three Months Ended October 31, Nine Months Ended October 31,
------------------------------ -----------------------------
2003 2002 2003 2002
-------- -------- -------- --------

Net sales $100,767 $ 91,023 $237,482 $220,538

Cost of sales 39,428 35,248 92,464 85,211
-------- -------- -------- --------
Gross profit 61,339 55,775 145,018 135,327
Selling, general and administrative 46,584 42,510 119,478 112,126
-------- -------- -------- --------

Operating income 14,755 13,265 25,540 23,201
Net interest expense 764 1,031 2,372 3,045
-------- -------- -------- --------

Income before income taxes 13,991 12,234 23,168 20,156
Provision for income taxes 3,917 3,426 6,487 5,644
-------- -------- -------- --------

Net income $ 10,074 $ 8,808 $ 16,681 $ 14,512
======== ======== ======== ========

Earnings per share:
Basic $ 0.83 $ 0.74 $ 1.39 $ 1.23
======== ======== ======== ========
Diluted $ 0.80 $ 0.73 $ 1.33 $ 1.19
======== ======== ======== ========

Weighted average shares outstanding:
Basic 12,097 11,874 12,015 11,821
======== ======== ======== ========
Diluted 12,629 12,127 12,504 12,167
======== ======== ======== ========



See Notes to Consolidated Financial Statements




4


MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)




Nine Months Ended October 31,
2003 2002
-------- --------

Cash flows from operating activities:
Net income $ 16,681 $ 14,512
Adjustments to reconcile net income to net cash
provided by/ (used in) operating activities:
Depreciation and amortization 7,074 6,319
Deferred income taxes 175 (365)
Provision for losses on accounts receivable 1,129 1,287
Provision for losses on inventory 500 680
Changes in assets and liabilities:
Trade receivables (26,509) (32,187)
Inventories (10,490) (9,576)
Other current assets 11,712 14,803
Accounts payable (817) 649
Accrued liabilities 8,551 (494)
Current taxes payable 1,224 2,108
Other non-current assets (3,710) 535
Other non-current liabilities 2,576 (986)
-------- --------
Net cash provided by/ (used in) operating activities 8,096 (2,715)
-------- --------

Cash flows from investing activities:
Capital expenditures (7,295) (5,321)
Trademarks (536) (393)
-------- --------
Net cash used in investing activities (7,831) (5,714)
-------- --------

Cash flows from financing activities:
Net proceeds from bank borrowings 22,000 24,500
Stock options exercised & other 1,791 2,215
Dividends paid (1,804) (1,066)
Purchase of treasury stock (727) --
-------- --------
Net cash provided by financing activities 21,260 25,649
-------- --------

Effect of exchange rate changes on cash and cash equivalents 1,067 2,739
-------- --------

Net increase in cash and cash equivalents 22,592 19,959

Cash and cash equivalents at beginning of period 38,365 16,971
-------- --------

Cash and cash equivalents at end of period $ 60,957 $ 36,930
======== ========



See Notes to Consolidated Financial Statements


5

MOVADO GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
by Movado Group, Inc. (the "Company") in a manner consistent with that used in
the preparation of the financial statements included in the Company's fiscal
2003 Annual Report filed on Form 10-K. In the opinion of management, the
accompanying financial statements reflect all adjustments, consisting of only
normal and recurring adjustments, necessary for a fair presentation of the
financial position and results of operations for the periods presented. These
consolidated financial statements should be read in conjunction with the
aforementioned annual report. Operating results for the interim periods
presented are not necessarily indicative of the results that may be expected for
the full year.

NOTE 1 - RECLASSIFICATION

Certain reclassifications were made to prior years' financial statement amounts
and related note disclosures to conform to the fiscal 2004 presentation.

NOTE 2 - STOCK OPTION PLAN

The Company applies Accounting Principles Board Opinion No. 25 and related
Interpretations in accounting for its stock option plans. No compensation cost
has been recognized for any stock options granted under the Company's stock
option plans because the quoted market price of the Common Stock at the grant
date was not in excess of the amount an employee must pay to acquire the Common
Stock. Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," issued by the Financial Accounting Standards
Board ("FASB"), prescribes a method to record compensation cost for stock-based
employee compensation plans at fair value. The Company utilizes the
Black-Scholes option-pricing model for determining the fair value of the
stock-based compensation. Pro forma disclosures as if the Company had adopted
the recognition requirements under SFAS No. 123 for the three months and nine
months ended October 31, 2003 and 2002, respectively, are presented below.


6



Three Months Ended Nine Months Ended
October 31, October 31,
-------------------------- --------------------------
(In thousands, except per share data) 2003 2002 2003 2002
---------- ---------- ---------- ----------

Net income as reported: $ 10,074 $ 8,808 $ 16,681 $ 14,512
Fair value based compensation
expense, net of taxes 1,167 914 2,706 2,679
---------- ---------- ---------- ----------
Pro forma net income $ 8,907 $ 7,894 $ 13,975 $ 11,833
========== ========== ========== ==========

Basic earnings per share:
As reported $ 0.83 $ 0.74 $ 1.39 $ 1.23
Pro forma under SFAS No. 123 $ 0.74 $ 0.66 $ 1.16 $ 1.00

Diluted earnings per share:
As reported $ 0.80 $ 0.73 $ 1.33 $ 1.19
Pro forma under SFAS No. 123 $ 0.71 $ 0.65 $ 1.12 $ 0.97




NOTE 3 - COMPREHENSIVE INCOME

The components of comprehensive income for the three months and nine months
ended October 31, 2003 and 2002 are as follows (in thousands):



Three Months Ended Nine Months Ended
October 31, October 31,
2003 2002 2003 2002
-------- -------- -------- --------

Net income $ 10,074 $ 8,808 $ 16,681 $ 14,512

Net unrealized gain (loss) on
investments, net of tax 56 (20) 202 (91)
Effective portion of unrealized (loss)
income on hedging contracts, net of
tax (821) (3,732) (2,954) 2,692
Foreign currency translation
adjustment 4,912 1,631 4,479 20,522
-------- -------- -------- --------
Total comprehensive income $ 14,221 $ 6,687 $ 18,408 $ 37,635
======== ======== ======== ========




NOTE 4 - SEGMENT INFORMATION

The Company conducts its business primarily in three operating segments:
Wholesale, Retail and Other. The Company's Wholesale segment includes the
designing, manufacturing and distribution of quality watches. The

7

Retail segment includes the Movado Boutiques and outlet stores. The Other
segment includes the Company's service center operations and shipping revenue.

The Company divides its business into two major geographic segments: Domestic,
which includes the results of the Company's North American, Caribbean and Tommy
Hilfiger South American operations, and International, which includes the
results of all other Company operations. The Company's International operations
are principally conducted in Europe, the Middle East and Asia. The Company's
International assets are substantially located in Europe.

Operating Segment Data for the Three Months Ended October 31, 2003 and 2002 (in
thousands):



Net Sales Operating Income (Loss)
---------------------- -----------------------
2003 2002 2003 2002
-------- -------- -------- --------

Wholesale $ 85,717 $ 76,229 $ 16,788 $ 14,503
Retail 12,890 12,575 (1,433) (272)
Other 2,160 2,219 (600) (966)
-------- -------- -------- --------
Consolidated total $100,767 $ 91,023 $ 14,755 $ 13,265
======== ======== ======== ========




Operating Segment Data for the Nine Months Ended October 31, 2003 and 2002 (in
thousands):



Net Sales Operating Income (Loss)
---------------------- -----------------------
2003 2002 2003 2002
-------- -------- -------- --------

Wholesale $193,855 $179,390 $ 31,319 $ 27,516
Retail 37,456 34,990 (3,643) (1,458)
Other 6,171 6,158 (2,136) (2,857)
-------- -------- -------- --------
Consolidated total $237,482 $220,538 $ 25,540 $ 23,201
======== ======== ======== ========




Geographic Segment Data for the Three Months Ended October 31, 2003 and 2002 (in
thousands):



Net Sales Operating Income
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------

Domestic (1) $ 87,558 $ 79,589 $ 5,703 $ 5,946
International (1) 13,209 11,434 9,052 7,319
-------- -------- -------- --------
Consolidated total $100,767 $ 91,023 $ 14,755 $ 13,265
======== ======== ======== ========



8


Geographic Segment Data for the Nine Months Ended October 31, 2003 and 2002 (in
thousands):



Net Sales Operating Income
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------

Domestic (2) $206,657 $191,183 $ 7,150 $ 7,284
International (2) 30,825 29,355 18,390 15,917
-------- -------- -------- --------
Consolidated total $237,482 $220,538 $ 25,540 $ 23,201
======== ======== ======== ========



(1) The domestic and international net sales are net of intercompany sales of
$61.2 million and $55.0 million for the three months ended October 31, 2003 and
October 31, 2002, respectively.

(2) The domestic and international net sales are net of intercompany sales of
$156.0 million and $136.3 million for the nine months ended October 31, 2003 and
October 31, 2002, respectively.

NOTE 5 - EXECUTIVE RETIREMENT PLAN

The Company has a number of employee benefit plans covering substantially all
employees. Certain eligible executives of the Company have elected to defer a
portion of their compensation on a pre-tax basis under a defined contribution,
supplemental executive retirement plan (SERP) sponsored by the Company. The SERP
was adopted effective June 1, 1995, and provides eligible executives with
supplemental pension benefits in addition to amounts received under the
Company's other retirement plans. The Company makes a matching contribution
which vests equally over five years. The obligations under the SERP are included
in other liabilities and amounted to approximately $7.8 million, $5.4 million
and $5.1 million at October 31, 2003, January 31, 2003 and October 31, 2002,
respectively. The underlying SERP assets amounted to $8.4 million, $5.8 million
and $5.5 million at October 31, 2003, January 31, 2003 and October 31, 2002,
respectively and are included in other long-term assets.

NOTE 6 - INVENTORIES

Inventories consist of the following (in thousands):



October 31, January 31, October 31,
2003 2003 2002
----------- ----------- -----------

Finished goods $ 81,660 $ 73,148 $ 73,876
Component parts 40,476 40,649 41,399
Work-in-process 4,628 2,262 3,133
--------- --------- ---------
126,764 116,059 118,408
Less: inventories reserve (3,690) (4,323) (5,193)
--------- --------- ---------
$ 123,074 $ 111,736 $ 113,215
========= ========= =========


9


NOTE 7 - EARNINGS PER SHARE

The Company presents net income per share on a basic and diluted basis. Basic
earnings per share is computed using weighted-average shares outstanding during
the period. Diluted earnings per share is computed using the weighted-average
number of shares outstanding adjusted for dilutive common stock equivalents.

The weighted-average number of shares outstanding for basic earnings per share
were 12,097,000 and 11,874,000 for the three months ended October 31, 2003 and
2002, respectively. For diluted earnings per share, these amounts were increased
by 532,000 and 253,000 for the three months ended October 31, 2003 and 2002,
respectively, due to potentially dilutive common stock equivalents issuable
under the Company's stock option plans and restricted stock grants.

The weighted-average number of shares outstanding for basic earnings per share
were 12,015,000 and 11,821,000 for the nine months ended October 31, 2003 and
2002, respectively. For diluted earnings per share, these amounts were increased
by 489,000 and 346,000 for the nine months ended October 31, 2003 and 2002,
respectively, due to potentially dilutive common stock equivalents issuable
under the Company's stock option plans and restricted stock grants.

NOTE 8 - RECENTLY ISSUED ACCOUNTING STANDARDS

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. In particular, SFAS No. 149 clarifies under what circumstances a
contract with an initial net investment meets the characteristic of a derivative
and when a derivative contains a financing component that warrants special
reporting in the statement of cash flows. SFAS No. 149 is generally effective
for contracts entered into or modified after June 30, 2003. The adoption of SFAS
No. 149 did not have a significant impact on the Company's consolidated
financial position, results of operations or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity." SFAS No. 150
requires certain financial instruments that embody obligations of the issuer and
have characteristics of both liabilities and equity to be classified as
liabilities (or an asset in some circumstances). SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. SFAS No. 150 is not applicable to the Company and therefore does not
have an impact on the Company's consolidated financial position, results of
operations or cash flows.

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities." This interpretation of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," addresses
consolidation of variable interest entities ("VIE's"). FIN 46 requires certain
variable interest entities to be consolidated by the primary beneficiary if the
entity does not effectively disperse risks among the parties involved. The
provisions of FIN 46 are effective for the first interim period ending after
December 15, 2003 for those variable interests held prior to February 1, 2003.
The adoption of FIN 46 is not expected to have an impact on the Company's
consolidated financial position, results of operations or cash flows.
10

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Forward-looking Statements

Statements included in this Form 10-Q, as well as statements in future filings
by the Company with the Securities and Exchange Commission ("SEC"), in the
Company's press releases and oral statements made by or with the approval of an
authorized executive officer of the Company, which are not historical in nature,
are intended to be, and are hereby identified as, "forward-looking statements"
for purposes of the safe harbor provided by the Private Securities Litigation
Reform Act of 1995. These statements are based on current expectations,
estimates, forecasts and projections about the Company, its future performance,
the industry in which the Company operates and management's assumptions. Words
such as "expects," "anticipates," "targets," "goals," "projects," "intends,"
"plans," "believes," "seeks," "estimates," "may," "will," "should" and
variations of such words and similar expressions are also intended to identify
such forward-looking statements. The Company cautions readers that
forward-looking statements include, without limitation, those relating to the
Company's future business prospects, projected operating or financial results,
revenues, working capital, liquidity, capital needs, plans for future
operations, expectations regarding capital expenditures and operating expenses,
effective tax rates, margins, interest costs, and income as well as assumptions
relating to the foregoing. Forward-looking statements are subject to certain
risks and uncertainties, some of which cannot be predicted or quantified. Actual
results and future events could differ materially from those indicated in the
forward-looking statements, due to several important factors herein identified,
among others, and other risks and factors identified from time to time in the
Company's reports filed with the SEC including, without limitation, the
following: general economic and business conditions which may impact disposable
income of consumers in the United States and the other significant markets where
the Company's products are sold, changes in consumer preferences and popularity
of particular designs, new product development and introduction, competitive
products and pricing, seasonality, availability of alternative sources of supply
in the case of the loss of any significant supplier, the loss of significant
customers, the Company's dependence on key employees and officers, the
continuation of licensing arrangements with third parties, ability to secure and
protect trademarks, patents and other intellectual property rights, ability to
lease new stores on suitable terms in desired markets and to complete
construction on a timely basis, continued availability to the Company of
financing and credit on favorable terms, business disruptions, disease, general
risks associated with doing business outside the United States including,
without limitation, import duties, tariffs, quotas, political and economic
stability, and success of hedging strategies with respect to currency exchange
rate fluctuations. The Company does not intend, and undertakes no obligation, to
update the forward-looking statements in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

There has been no material change in the Company's Critical Accounting Policies
and Estimates, as disclosed in its Annual Report on Form 10-K for the fiscal
year ended January 31, 2003.



11

Results of operations for the three months ended October 31, 2003 as compared to
the three months ended October 31, 2002.

Net Sales: Comparative net sales by business segment were as follows (in
thousands):




Three Months Ended
October 31,
---------------------------
2003 2002
-------- --------

Wholesale:
Domestic $ 72,880 $ 65,052
International 12,837 11,177
Retail 12,890 12,575
Other 2,160 2,219
-------- --------

Net Sales $100,767 $ 91,023
======== ========



Net sales increased by $9.7 million or 10.7% for the three months ended October
31, 2003 as compared to the three months ended October 31, 2002. Sales in the
wholesale segment increased 12.4% to $85.7 million versus $76.2 million in the
prior year. The domestic wholesale business was $7.8 million or 12.0% above
prior year sales of $65.1 million. Increases over prior year were recorded in
all brands. Tommy Hilfiger and Coach were up double digits, Movado and Concord
were up high single digits and ESQ showed modest growth. Positive retailer
response to new model introductions was a key contributor to brand growth.

Sales in the international wholesale business were $1.7 million or 14.9% above
prior year. Sales increases were recorded in Tommy Hilfiger due to retail growth
in existing markets as well as expansions into new markets in Europe and Asia.
In Coach, strong sales in Japan and in the duty free business contributed to a
40% year over year improvement. Concord sales were above prior year sales by low
single digits while Movado sales declined due to a continued general sluggish
economy in Europe and South America and a general decline in European tourism.

Sales in the retail segment rose 2.5% to $12.9 million. The increase was driven
by a 19.2% comparable store sales increase in the Movado Boutiques. In addition,
sales increases were recorded in the Movado Boutiques as a result of the new
stores opened in Dadeland and Aventura in South Florida, Chestnut Hill in
Massachusetts and Woodfield in Illinois. The outlet business was 5.6% below last
year for the quarter due to reduced level of traffic.

Sales in the other segment, which represents service and shipping revenue, were
relatively flat at $2.2 million.

Gross Profit. The gross profit for the three months ended October 31, 2003 was
$61.3 million or 60.9% of net sales as compared to $55.8 million or 61.3% of net
sales for the three months ended October 31, 2002. The increase in gross profit
of $5.6 million is the result of the higher sales volume. The decrease in the
gross profit as a percentage of sales is the result of product mix and the
weaker U.S. dollar.

Selling, General and Administrative. Selling, general and administrative
expenses for the three months ended October 31, 2003 were $46.6 million or 46.2%
of net sales as compared to $42.5 million or 46.7% of net sales

12

for the three months ended October 31, 2002. The increase reflects planned
investments in sales support and advertising to drive the customer and marketing
initiatives, increased costs in the retail segment, primarily the result of
opening four new Movado Boutiques, the unfavorable impact of the weak U.S.
dollar on translating Swiss and Canadian costs and planned higher compensation
costs.

Interest Expense. Net interest expense for the three months ended October 31,
2003 declined by 25.9% to $0.8 million as compared to $1.0 million for the three
months ended October 31, 2002. The decrease is due to significantly reduced
average borrowings for the quarter. The average debt for the quarter decreased
34.9% from prior year to $48.7 million, reflecting the favorable results of cash
flow and working capital management.

Income Taxes. The Company recorded a tax expense of $3.9 million for the three
months ended October 31, 2003 as compared to a tax expense of $3.4 million for
the three months ended October 31, 2002. Taxes were recorded at a 28.0% rate for
both of the fiscal 2004 and fiscal 2003 periods.


Results of operations for the nine months ended October 31, 2003 as compared to
the nine months ended October 31, 2002.

Net Sales: Comparative net sales by business segment were as follows (in
thousands):




Nine Months Ended
October 31,
---------------------------
2003 2002
-------- --------

Wholesale:
Domestic $164,000 $150,884
International 29,855 28,506
Retail 37,456 34,990
Other 6,171 6,158
-------- --------

Net Sales $237,482 $220,538
======== ========



Net sales increased by $16.9 million or 7.7% for the nine months ended October
31, 2003 as compared to the nine months ended October 31, 2002. Sales in the
wholesale segment increased 8.1% to $193.9 million versus $179.4 million in the
prior year. With sales of $164.0 million, the domestic wholesale business was
$13.1 million or 8.7 % above prior year sales of $150.9 million. The increase
was driven by higher sales in Movado as a result of continued development in the
chain and department store distribution channel and strong new product
introductions, in addition to higher sales in Coach, reflecting the strength of
the Coach brand and improved product offerings.

Sales in the international wholesale business were $1.3 million or 4.7% above
prior year. Sales increases were recorded in Coach with strong sales in Asia and
in Tommy Hilfiger due to the new market expansions in Europe and Asia. These
increases were somewhat offset by sales reductions in Concord and Movado
primarily due to the adverse economic conditions in Europe and Latin America.


13

For the nine months ended October 31, 2003, sales in the retail segment rose
7.0% to $37.5 million. The increase was driven by a 23.6% comparable store sales
increase in the Movado Boutiques. In addition, sales increases were recorded in
the Movado Boutiques as a result of the new stores opened in Dadeland and
Aventura in South Florida, Chestnut Hill in Massachusetts and Woodfield in
Illinois. The outlet business was 1.9% below last year for the nine months.

Sales in the other segment, which represents service and shipping revenue, were
flat year on year.

Gross Profit. The gross profit for the nine months ended October 31, 2003 was
$145.0 million or 61.1% of net sales as compared to $135.3 million or 61.4% of
net sales for the nine months ended October 31, 2002. The increase in gross
profit of $9.7 million is the result of the higher sales volume. The decrease in
the gross profit as a percentage of sales is the result of product mix and the
weaker U.S. dollar.

Selling, General and Administrative. Selling, general and administrative
expenses for the nine months ended October 31, 2003 were $119.5 million or 50.3%
of net sales as compared to $112.1 million or 50.8% of net sales for the nine
months ended October 31, 2002. Increased expenses were a result of planned
investments in sales support and advertising to drive customer and marketing
initiatives, increased costs in the retail segment primarily the result of
opening four new Movado Boutiques, the weak U.S. dollar and the translation
effect of the Swiss and Canadian costs and planned higher compensation costs.

Interest Expense. Net interest expense for the nine months ended October 31,
2003 declined by 22.1% to $2.4 million as compared to $3.0 million for the nine
months ended October 31, 2002. The decrease is due to significantly reduced
average borrowings. The average debt decreased 28.6% from prior year to $49.7
million, reflecting the favorable results of cash flow and working capital
management.

Income Taxes. The Company recorded a tax expense of $6.5 million for the nine
months ended October 31, 2003 as compared to a tax expense of $5.6 million for
the nine months ended October 31, 2002. Taxes were recorded at a 28.0% rate for
both of the fiscal 2004 and fiscal 2003 periods.


LIQUIDITY AND FINANCIAL POSITION

Cash provided by operating activities amounted to $8.1 million for the nine
months ended October 31, 2003 and cash used in operating activities amounted to
$2.7 million for the nine months ended October 31, 2002. The increase in cash
provided by operating activities for the comparative nine months ended October
31, 2003 and 2002 is primarily due to the increase in net income, improved
receivable collections and increases in accrued advertising and accrued
compensation costs.

Cash used in investing activities amounted to $7.8 million and $5.7 million for
the nine months ended October 31, 2003 and 2002, respectively, and was primarily
for capital expenditures. For the nine months ended October 31, 2003, capital
expenditures were mainly for the build out of the new Movado Boutiques,
maintenance and enhancements to existing retail stores and normal ongoing
systems hardware and software investments. Expenditures for the nine months
ended October 31, 2002 relate primarily to normal ongoing systems hardware and
software investments and construction of the trade show booth used at the Basel
Watch and Jewelry Fair.

Cash provided by financing activities amounted to $21.3 million and $25.6
million for the nine months ended October 31, 2003 and 2002, respectively, and
was the result of seasonal short-term bank borrowings. In fiscal 2004, the
Company's seasonal borrowings decreased due to improved cash flows from
operations.


14

At October 31, 2003, the Company had two series of Senior Notes outstanding.
Senior Notes due January 31, 2005, with a remaining principal amount due of
$10.0 million, were originally issued in a private placement completed in fiscal
1994. These notes have required annual principal payments of $5.0 million since
January 1998 and bear interest of 6.56% per annum. During fiscal 1999, the
Company issued $25.0 million of Series A Senior Notes under a Note Purchase and
Private Shelf Agreement dated November 30, 1998. These notes bear interest of
6.90% per annum, mature on October 30, 2010 and are subject to annual repayments
of $5.0 million commencing October 31, 2006.

On March 21, 2001, the Company entered into a new Note Purchase and Private
Shelf Agreement, which allows for the issuance for up to three years after the
date thereof of senior promissory notes in the aggregate principal amount of up
to $40.0 million with maturities up to 12 years from their original date of
issuance. As of October 31, 2003, no such notes were issued.

On June 17, 2003, the Company completed the renewal of its revolving credit line
with its bank group. The agreement provides for a three year $75.0 million
unsecured revolving line of credit. The line of credit expires on June 17, 2006.
The credit facility allows for certain Swiss subsidiaries to borrow in local
currency under the line. In addition, the Company has $16.5 million in
uncommitted working capital lines with its bank group which includes a $1.5
million sub-limit for letters of credit. At October 31, 2003, the Company had
$22.0 million of outstanding borrowings under its bank lines as compared to
$31.0 million at October 31, 2002. In addition, one bank in the domestic bank
group issued five irrevocable standby letters of credit for retail and operating
facility leases to various landlords and Canadian payroll to the Royal Bank of
Canada totaling $0.6 million with expiration dates through June 30, 2004.

A Swiss subsidiary of the Company maintains unsecured lines of credit with an
unspecified length of time with a Swiss bank. Available credit under these lines
totaled 8.8 million Swiss francs, with dollar equivalents of approximately $6.6
million and $6.0 million at October 31, 2003 and 2002, respectively, of which a
maximum of $5.0 million may be drawn under the terms of the Company's revolving
credit line with its bank group. As of October 31, 2003, the Swiss bank has
guaranteed the Company's Swiss subsidiary's obligations to certain Swiss third
parties in the amount of approximately 0.9 million Swiss francs. As of October
31, 2003, there are no borrowings against these lines.

Under a series of share repurchase authorizations approved by the Board of
Directors, the Company has maintained a discretionary share buy-back program.
There were no purchases during fiscal 2003 under the repurchase program and
there have been no repurchases for the nine months ended October 31, 2003.

During the nine months ended October 31, 2003, treasury shares increased by
179,475 as the result of cashless exercises of stock options for 248,023 shares
of stock.

The Company paid dividends per share of $0.03 for the first quarter and $0.06
for the second and third quarters, or approximately $1.8 million for the nine
months ended October 31, 2003, and $0.03 per share per quarter, or approximately
$1.1 million for the nine months ended October 31, 2002.

Cash and cash equivalents at October 31, 2003 amounted to $61.0 million compared
to $36.9 million at October 31, 2002. The increase in cash relates to the
Company's continued profitability, management of working capital, translation of
Swiss entities' cash balances and the favorable impact of the Company's hedging
program.



15

RECENTLY ISSUED ACCOUNTING STANDARDS

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. In particular, SFAS No. 149 clarifies under what circumstances a
contract with an initial net investment meets the characteristic of a derivative
and when a derivative contains a financing component that warrants special
reporting in the statement of cash flows. SFAS No. 149 is generally effective
for contracts entered into or modified after June 30, 2003. The adoption of SFAS
No. 149 did not have a significant impact on the Company's consolidated
financial position, results of operations or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity." SFAS No. 150
requires certain financial instruments that embody obligations of the issuer and
have characteristics of both liabilities and equity to be classified as
liabilities (or an asset in some circumstances). SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. SFAS No. 150 is not applicable to the Company and therefore does not
have an impact on the Company's consolidated financial position, results of
operations or cash flows.

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities." This interpretation of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," addresses
consolidation of variable interest entities ("VIE's"). FIN 46 requires certain
variable interest entities to be consolidated by the primary beneficiary if the
entity does not effectively disperse risks among the parties involved. The
provisions of FIN 46 are effective for the first interim period ending after
December 15, 2003 for those variable interests held prior to February 1, 2003.
The adoption of FIN 46 is not expected to have an impact on the Company's
consolidated financial position, results of operations or cash flows.
16

Item 3. Quantitative and Qualitative Disclosure about Market Risks

Foreign Currency and Commodity Price Risks

The majority of the Company's purchases are denominated in Swiss francs. The
Company reduces its exposure to the Swiss franc exchange rate risk through a
hedging program. Under the hedging program, the Company purchases various
derivatives, predominantly forward and option contracts. Changes in derivative
fair values will either be recognized in earnings as offsets to the changes in
fair value of related hedged assets, liabilities and firm commitments or, for
forecasted transactions, deferred and recorded as a component of other
shareholders' equity until the hedged transactions occur and are recognized in
earnings. The ineffective portion of a hedging derivative's change in fair value
will be immediately recognized in earnings. If the Company did not engage in a
hedging program, any change in the Swiss franc currency rate would have an equal
effect on the entities' cost of sales. The Company purchases gold for the
production of certain watches. The Company purchases gold derivatives under its
hedging program and treats the changes in fair value on these derivatives in the
same manner as the changes in fair value in its Swiss franc derivatives.

The Company also hedges its Swiss franc denominated investment in its
wholly-owned Swiss subsidiaries using purchase options under certain
limitations. These hedges are treated as net investment hedges under SFAS No.
133. Under SFAS No. 133, the change in fair value of these instruments is
recognized in accumulated other comprehensive income to offset the change in the
value of the net investment being hedged.

The following presents fair value and maturities of the Company's foreign
currency derivatives outstanding as of October 31, 2003 (in millions):



October 31, 2003
Fair Value Maturities
---------- ----------

Forward exchange contracts $0.3 2003 - 2004
Purchased foreign currency options 2.0 2005 - 2006
----
$2.3
====


The Company's international business accounts for 13.0% of the Company's sales.
The international operations are denominated in local currency and fluctuations
in these currency rates may have an impact on the Company's sales, cost of
sales, operating expenses and net income. During the nine months ended October
31, 2003 and 2002, there was no material effect to the results of operations due
to foreign currency rate fluctuations. There can be no assurance that this trend
will continue.

Interest Rate Risk

As of October 31, 2003, the Company had $22.0 million in short-term bank debt
obligations with variable interest rates based on LIBOR plus an applicable loan
spread. The Company does not hedge these interest rate risks. The Company also
has $35.0 million Senior Note debt bearing fixed interest rates per annum. The
difference between the market based interest rates at October 31, 2003 and the
fixed rates were unfavorable.


17


Item 4. Controls and Procedures

The Company's management, under the supervision and with the participation of
the Chief Executive Officer and Chief Financial Officer, conducted an evaluation
of the effectiveness of the Company's disclosure controls and procedures (as
defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures were effective as of the
end of the period covered by this report. There have been no significant changes
in the Company's internal control over financial reporting that occurred during
the quarter ended October 31, 2003 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.

It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the systems are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there is
only reasonable assurance that the Company's controls will succeed in achieving
these stated goals under all future conditions.




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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

31.1 Certification of the Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of the Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Principal Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Principal Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

The Company furnished a report on Form 8-K (Item 12) on
September 5, 2003 for a press release, dated September 4,
2003, announcing financial results for the quarter ended July
31, 2003.




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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

MOVADO GROUP, INC.
(Registrant)

Dated: December 15, 2003 By: /s/ Eugene J. Karpovich
-----------------------------
Eugene J. Karpovich
Senior Vice President and
Chief Financial Officer
(Chief Financial Officer and
Principal Accounting Officer)
(Duly Authorized Officer)




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