Edgar Filing: MOVADO GROUP INC

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 31, 2011

¨	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: 1-16497

MOVADO GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)


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

650 From Road, Ste. 375 Paramus, New Jersey		07652-3556
(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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨		Accelerated filer x		Non-accelerated filer ¨		Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of the registrant’s common stock and class A common stock as of August 25, 2011 were 18,234,362 and 6,633,747, respectively.

MOVADO GROUP, INC.

Index to Quarterly Report on Form 10-Q

July 31, 2011


			Page
Part I	Financial Information (Unaudited)

	Item 1.	Consolidated Balance Sheets at July 31, 2011, January 31, 2011 and July 31, 2010		3

		Consolidated Statements of Operations for the three months and six months ended July 31, 2011 and 2010		4

		Consolidated Statements of Cash Flows for the six months ended July 31, 2011 and 2010		5

		Notes to Consolidated Financial Statements		6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		30

	Item 4.	Controls and Procedures		32

Part II	Other Information

	Item 1.	Legal Proceedings		33

	Item 1A.	Risk Factors		33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		33

	Item 6.	Exhibits		34

Signature				35

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MOVADO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	July 31, 2011			January 31, 2011			July 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	128,781		$	103,016		$	54,326
Trade receivables		69,672			59,768			61,006
Inventories		196,611			181,265			205,787
Other current assets		32,461			30,541			46,679

Total current assets		427,525			374,590			367,798
Property, plant and equipment, net		37,308			38,525			40,521
Deferred income taxes		8,279			8,220			13,436
Other non-current assets		22,861			22,522			24,408

Total assets	$	495,973		$	443,857		$	446,163

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	22,363		$	21,487		$	19,902
Accrued liabilities		43,555			39,734			41,095
Deferred and current income taxes payable		456			1,328			545

Total current liabilities		66,374			62,549			61,542
Long-term debt		—			—			10,000
Deferred and non-current income taxes payable		7,169			6,960			8,013
Other non-current liabilities		18,362			17,869			20,707

Total liabilities		91,905			87,378			100,262

Commitments and contingencies (Note 8)
Equity:
Preferred Stock, $0.01 par value, 5,000,000 shares authorized; no shares issued		—			—			—
Common Stock, $0.01 par value, 100,000,000 shares authorized; 25,990,969, 25,910,838 and 25,251,478 shares issued, respectively		260			259			253
Class A Common Stock, $0.01 par value, 30,000,000 shares authorized; 6,633,747, 6,634,319 and 6,634,319 shares issued and outstanding, respectively		66			66			66
Capital in excess of par value		150,745			149,492			139,229
Retained earnings		226,093			222,685			236,535
Accumulated other comprehensive income		135,985			93,028			69,948
Treasury Stock, 7,757,064, 7,743,676 and 7,176,267 shares, respectively, at cost		(111,539	)		(111,331	)		(102,131	)

Total Movado Group, Inc. shareholders’ equity		401,610			354,199			343,900
Noncontrolling interests		2,458			2,280			2,001

Total equity		404,068			356,479			345,901

Total liabilities and equity	$	495,973		$	443,857		$	446,163

See Notes to Consolidated Financial Statements

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended July 31,						Six Months Ended July 31,
	2011			2010			2011			2010
Continuing operations:
Net sales	$	113,231		$	85,388		$	203,085		$	158,192
Cost of sales		52,285			40,977			93,516			75,282

Gross profit		60,946			44,411			109,569			82,910
Selling, general and administrative		55,932			46,607			102,975			90,249

Operating income / (loss)		5,014			(2,196	)		6,594			(7,339	)
Other Income (Note 12)		747			—			747			—
Interest expense		(315	)		(676	)		(698	)		(1,348	)
Interest income		17			27			46			54

Income / (loss) from continuing operations before income taxes		5,463			(2,845	)		6,689			(8,633	)
Provision for income taxes (Note 9)		875			375			1,590			792

Income / (loss) from continuing operations		4,588			(3,220	)		5,099			(9,425	)
Discontinued operations:
(Loss) from discontinued operations, net of tax (Note 11)		—			(17,703	)		—			(23,675	)

Net income / (loss)		4,588			(20,923	)		5,099			(33,100	)
Less: Income / (loss) attributed to noncontrolling interests		180			(15	)		200			207

Net income / (loss) attributed to Movado Group, Inc.	$	4,408			($20,908	)	$	4,899			($33,307	)

Income / (loss) attributable to Movado Group, Inc.:
Income / (loss) from continuing operations, net of tax	$	4,408			($3,205	)	$	4,899			($9,632	)
(Loss) from discontinued operations, net of tax		—			(17,703	)		—			(23,675	)

Net income / (loss)	$	4,408			($20,908	)	$	4,899			($33,307	)

Basic income / (loss) per share:
Weighted basic average shares outstanding		24,913			24,747			24,894			24,709
Income / (loss) per share from continuing operations attributed to Movado Group, Inc.	$	0.18			($0.13	)	$	0.20			($0.39	)
(Loss) per share from discontinued operations	$	—			($0.72	)	$	—			($0.96	)
Net income / (loss) per share attributed to Movado Group, Inc.	$	0.18			($0.84	)	$	0.20			($1.35	)
Diluted income / (loss) per share:
Weighted diluted average shares outstanding		25,185			24,747			25,140			24,709
Income / (loss) per share from continuing operations attributed to Movado Group, Inc.	$	0.18			($0.13	)	$	0.19			($0.39	)
(Loss) per share from discontinued operations	$	—			($0.72	)	$	—			($0.96	)
Net income / (loss) per share attributed to Movado Group, Inc.	$	0.18			($0.84	)	$	0.19			($1.35	)
Dividends declared per share	$	0.03		$	—		$	0.06		$	—

See Notes to Consolidated Financial Statements

MOVADO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended July 31,
	2011			2010
Cash flows from operating activities:
Net income / (loss)	$	5,099			($33,100	)
Adjustments to reconcile net income / (loss) to net cash provided by / (used in) operating activities:
Loss from discontinued operations		—			23,675
Depreciation and amortization		5,900			7,221
Deferred income taxes		119			(827	)
Stock-based compensation		851			796
Gain on sale of an asset held for sale		(747	)		—
Changes in assets and liabilities:
Trade receivables		(6,988	)		6,144
Inventories		4,561			(5,243	)
Other current assets		4,211			(8,712	)
Accounts payable		(309	)		(2,704	)
Accrued liabilities		429			6,540
Current income taxes payable		(892	)		—
Other non-current assets		(349	)		3,665
Other non-current liabilities		490			659

Net cash provided by / (used in) operating activities from continuing operations		12,375			(1,886	)
Net cash (used in) operating activities from discontinued operations		(20	)		(10,804	)

Net cash provided by / (used in) operating activities		12,355			(12,690	)

Cash flows from investing activities:
Capital expenditures		(3,184	)		(3,165	)
Trademarks		(91	)		(114	)
Proceeds from sale of an asset held for sale		1,165			—

Net cash (used in) investing activities from continuing operations		(2,110	)		(3,279	)
Net cash (used in) investing activities from discontinued operations		—			(100	)

Net cash (used in) investing activities		(2,110	)		(3,379	)

Cash flows from financing activities:
Proceeds from bank borrowings		—			30,000
Repayments of bank borrowings		—			(30,000	)
Stock options exercised and other changes		194			299
Distribution of noncontrolling interest earnings		(127	)		—
Dividends paid		(1,491	)		—

Net cash (used in) / provided by financing activities from continuing operations		(1,424	)		299
Net cash (used in) financing activities from discontinued operations		—			—

Net cash (used in) / provided by financing activities		(1,424	)		299

Effect of exchange rate changes on cash and cash equivalents		16,944			(879	)

Net increase / (decrease) in cash and cash equivalents		25,765			(16,649	)
Cash and cash equivalents at beginning of period		103,016			70,975

Cash and cash equivalents at end of period	$	128,781		$	54,326

See Notes to Consolidated Financial Statements

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 consolidated financial statements included in the Company’s fiscal 2011 Annual Report filed on Form 10-K. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement 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 – RECLASSIFICATIONS

Certain reclassifications were made to prior year’s financial statement amounts and related note disclosures to conform to the fiscal 2012 presentation. In fiscal 2011, certain receivables were reclassified from accounts receivables to other current assets to conform to fiscal 2012 presentation. In addition, certain prior year financial statement amounts have been adjusted to reflect the Company’s change in inventory accounting discussed in Note 5.

NOTE 2 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value into three broad levels as follows:

•

Level 1 - Quoted prices in active markets for identical assets or liabilities.

•

Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

•

Level 3 - Unobservable inputs based on the Company’s assumptions.

The guidance requires the use of observable market data if such data is available without undue cost and effort. The Company’s adoption of the guidance did not result in any changes to the accounting for its financial assets and liabilities. Therefore, the primary impact to the Company upon its adoption of this guidance was to expand its fair value measurement disclosures.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of July 31, 2011 (in thousands):


	Fair Value at July 31, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	$	314	$	—	$	—	$	314
SERP assets - employer		499		—		—		499
SERP assets - employee		15,153		—		—		15,153
Foreign currency derivatives		—		2,978		—		2,978

Total	$	15,966	$	2,978	$	—	$	18,944

Liabilities:
SERP liabilities - employee	$	15,153	$	—	$	—	$	15,153
Commodity derivatives		—		431		—		431

	$	15,153	$	431	$	—	$	15,584

The fair values of the Company’s available-for-sale securities are based on quoted prices. The commodity derivatives are entered into by the Company principally to reduce its exposure to the changing value of gold. Fair values of the Company’s commodity derivatives are calculated based on the quoted market price of gold. The foreign currency derivatives are entered into by the Company principally to reduce its exposure to the Swiss franc exchange rate risk. Fair values of the Company’s foreign currency derivatives are calculated based on quoted foreign exchange rates, quoted interest rates and market volatility factors. The assets related to the Company’s defined contribution supplemental executive retirement plan (“SERP”) consist of both employer (employee unvested) and employee assets which are invested in investment funds with fair values calculated based on quoted market prices. The SERP liability represents the Company’s liability to the employees in the plan for their vested balances.

NOTE 3 – EQUITY AND COMPREHENSIVE INCOME / (LOSS)

The components of equity for the six months ended July 31, 2011 and 2010 are as follows (in thousands):


	Movado Group, Inc. Shareholders’ Equity
	Common Stock		Class A Common Stock		Capital in Excess of Par Value		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income			Noncontrolling Interests			Total
Balance, January 31, 2011	$	259	$	66	$	149,492	$	222,685		($	111,331	)	$	93,028		$	2,280		$	356,479
Net income								4,899									200			5,099
Dividends paid								(1,491	)											(1,491	)
Distribution of noncontrolling interest earnings																	(127	)		(127	)
Stock options exercised, net of tax		1				363					(208	)								156
Stock-based compensation expense						851														851
Supplemental executive retirement plan						39														39
Net unrealized gain on investments, net of tax														29						29
Net change in effective portion of hedging contracts, net of tax														(638	)					(638	)
Foreign currency translation adjustment														43,566			105			43,671

Balance, July 31, 2011	$	260	$	66	$	150,745	$	226,093		($	111,539	)	$	135,985		$	2,458		$	404,068


	Movado Group, Inc. Shareholders’ Equity
	Common Stock		Class A Common Stock		Capital in Excess of Par Value			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income		Noncontrolling Interests			Total
Balance, January 31, 2010	$	251	$	66	$	138,076		$	269,842		($	102,071	)	$	67,390	$	1,884		$	375,438
Net (loss) / income									(33,307	)							207			(33,100	)
Stock options exercised, net of tax		2				361						(60	)							303
Stock-based compensation expense						796														796
Supplemental executive retirement plan						(4	)													(4	)
Net unrealized gain on investments, net of tax															82					82
Net change in effective portion of hedging contracts, net of tax															702					702
Foreign currency translation adjustment															1,774		(90	)		1,684

Balance, July 31, 2010	$	253	$	66	$	139,229		$	236,535		($	102,131	)	$	69,948	$	2,001		$	345,901

The components of comprehensive income / (loss) for the three and six months ended July 31, 2011 and 2010 are as follows (in thousands):


	Three Months Ended July 31,						Six Months Ended July 31,
	2011			2010			2011			2010
Net income / (loss)	$	4,588			($20,923	)	$	5,099			($33,100	)
Net unrealized gain on investments, net of tax		24			24			29			82
Net change in effective portion of hedging contracts, net of tax		(319	)		843			(638	)		702
Foreign currency translation adjustments (1)		26,029			8,303			43,671			1,684

Comprehensive income / (loss)		30,322			(11,753	)		48,161			(30,632	)
Less: Comprehensive income / (loss) attributable to noncontrolling interests		130			(4	)		305			117

Total comprehensive income / (loss) attributable to Movado Group, Inc.	$	30,192			($11,749	)	$	47,856			($30,749	)

(1)	The foreign currency translation adjustments are tax-affected to the extent they relate to non permanent investments in foreign subsidiaries.

NOTE 4 – SEGMENT INFORMATION

The Company follows accounting guidance related to disclosures about segments of an enterprise and related information. This guidance requires disclosure of segment data based on how management makes decisions about allocating resources to segments and measuring their performance.

With the exception of Total Assets and Long-Lived Assets, the Retail segment and United States segment information presented below no longer include amounts related to the Movado boutiques, which were closed during the second quarter of fiscal 2011 and subsequently reported as discontinued operations.

addition to revenue generated from after sales service activities and shipping. The Retail segment includes the Company’s outlet stores and the Movado brand flagship store located at Rockefeller Center in New York City.

The Company divides its business into two major geographic segments: United States operations, and International, which includes the results of all other Company operations. The allocation of geographic revenue is based upon the location of the customer. The Company’s international operations are principally conducted in Europe, Asia, Canada, the Middle East, South America and the Caribbean. The Company’s international assets are substantially located in Switzerland.

Operating Segment Data for the Three Months Ended July 31, 2011 and 2010 (in thousands):


	Net Sales				Operating Income (Loss)
	2011		2010		2011		2010
Wholesale	$	99,321	$	72,040	$	2,730		($4,686	)
Retail		13,910		13,348		2,284		2,490

Consolidated total	$	113,231	$	85,388	$	5,014		($2,196	)

Operating Segment Data for the Six Months Ended July 31, 2011 and 2010 (in thousands):


	Net Sales				Operating Income (Loss)
	2011		2010		2011		2010
Wholesale	$	179,330	$	135,808	$	3,705		($10,359	)
Retail		23,755		22,384		2,889		3,020

Consolidated total	$	203,085	$	158,192	$	6,594		($7,339	)


	Total Assets
	July 31, 2011		January 31, 2011		July 31, 2010
Wholesale	$	475,979	$	422,977	$	426,216
Retail		19,994		20,880		19,947

Consolidated total	$	495,973	$	443,857	$	446,163

Geographic Segment Data for the Three Months Ended July 31, 2011 and 2010 (in thousands):


	Net Sales				Operating Income (Loss)
	2011		2010		2011			2010
United States	$	60,461	$	43,355		($4,784	)		($3,980	)
International		52,770		42,033		9,798			1,784

Consolidated total	$	113,231	$	85,388	$	5,014			($2,196	)

United States and International net sales are net of intercompany sales of $47.9 million and $42.3 million for the three months ended July 31, 2011 and 2010, respectively.

Geographic Segment Data for the Six Months Ended July 31, 2011 and 2010 (in thousands):


	Net Sales				Operating Income (Loss)
	2011		2010		2011			2010
United States	$	105,683	$	82,400		($8,651	)		($10,294	)
International		97,402		75,792		15,245			2,955

Consolidated total	$	203,085	$	158,192	$	6,594			($7,339	)

United States and International net sales are net of intercompany sales of $90.6 million and $85.6 million for the six months ended July 31, 2011 and 2010, respectively.


	Total Assets
	July 31, 2011		January 31, 2011		July 31, 2010
United States	$	185,174	$	185,718	$	200,709
International		310,799		258,139		245,454

Consolidated total	$	495,973	$	443,857	$	446,163


	Long-Lived Assets
	July 31, 2011		January 31, 2011		July 31, 2010
United States	$	29,076	$	30,460	$	30,938
International		8,232		8,065		9,583

Consolidated total	$	37,308	$	38,525	$	40,521

NOTE 5 – INVENTORIES

Effective February 1, 2011, the Company changed its method of valuing its U.S. inventories to the average cost method. In prior years, primarily all U.S. inventories were valued using first-in, first-out (“FIFO”) method. With this change, all of the Company’s inventories are valued using the average cost method. The Company believes that the average cost method of inventory valuation is preferable because (1) it permits the Company to use a single method of accounting for all of the Company’s U.S. and international inventories, (2) the method aligns costing with the Company’s forecasting and procurement decisions, and (3) since a number of the Company’s key competitors use the average cost method, it improves comparability of the Company’s financial statements. The comparative consolidated financial statements of prior periods presented have been adjusted to apply the new accounting method retroactively. The change in accounting principle was applied retroactively as described in the applicable accounting guidance for accounting changes and error corrections.

The following line items within the Consolidated Statements of Operations were affected by the change in accounting policy (in thousands, except for per share data):


	For the Three Months Ended July 31, 2011
	As Computed under FIFO			As Reported under Average Cost			Effect of Change- Increase / (Decrease)
Cost of sales	$	52,209		$	52,285		$	76
Income from continuing operations before income taxes		5,539			5,463			(76	)
Provision for income taxes		875			875			—
Income from continuing operations, net of tax attributed to Movado Group, Inc.		4,484			4,408			(76	)
(Loss) from discontinued operations, net of tax		—			—			—
Net income attributed to Movado Group, Inc.		4,484			4,408			(76	)
Basic income per share:
Income per share from continuing operations attributed to Movado Group, Inc.	$	0.18		$	0.18		$	—
(Loss) per share for discontinued operations	$	—		$	—		$	—
Net income per share attributed to Movado Group, Inc.	$	0.18		$	0.18		$	—
Diluted income per share:
Income per share from continuing operations attributed to Movado Group, Inc.	$	0.18		$	0.18		$	—
(Loss) per share for discontinued operations	$	—		$	—		$	—
Net income per share attributed to Movado Group, Inc.	$	0.18		$	0.18		$	—

	For the Three Months Ended July 31, 2010
	As Computed under FIFO			As Reported under Average Cost			Effect of Change- Increase / (Decrease)
Cost of sales	$	39,823		$	40,977		$	1,154
(Loss) from continuing operations before income taxes		(1,691	)		(2,845	)		(1,154	)
Provision for income taxes		375			375			—
(Loss) from continuing operations, net of tax attributed to Movado Group, Inc.		(2,051	)		(3,205	)		(1,154	)
(Loss) from discontinued operations, net of tax		(17,703	)		(17,703	)		—
Net (loss) attributed to Movado Group, Inc.		(19,754	)		(20,908	)		(1,154	)
Basic (loss) per share:
(Loss) per share from continuing operations attributed to Movado Group, Inc.		($0.08	)		($0.13	)		($0.05	)
(Loss) per share for discontinued operations		($0.72	)		($0.72	)		—
Net (loss) per share attributed to Movado Group, Inc.		($0.80	)		($0.84	)		($0.04	)


Diluted (loss) per share:
(Loss) per share from continuing operations attributed to Movado Group, Inc.		($0.08	)		($0.13	)		($0.05	)
(Loss) per share for discontinued operations		($0.72	)		($0.72	)		—
Net (loss) per share attributed to Movado Group, Inc.		($0.80	)		($0.84	)		($0.04	)

	For the Six Months Ended July 31, 2011
	As Computed under FIFO			As Reported under Average Cost			Effect of Change- Increase / (Decrease)
Cost of sales	$	92,984		$	93,516		$	532
Income from continuing operations before income taxes		7,221			6,689			(532	)
Provision for income taxes		1,590			1,590			—
Income from continuing operations, net of tax attributed to Movado Group, Inc.		5,431			4,899			(532	)
(Loss) from discontinued operations, net of tax		—			—			—
Net income attributed to Movado Group, Inc.		5,431			4,899			(532	)
Basic income per share:
Income per share from continuing operations attributed to Movado Group, Inc.	$	0.22		$	0.20		($	0.02	)
(Loss) per share for discontinued operations	$	—		$	—		$	—
Net income per share attributed to Movado Group, Inc.	$	0.22		$	0.20		($	0.02	)
Diluted income per share:
Income per share from continuing operations attributed to Movado Group, Inc.	$	0.22		$	0.19		($	0.03	)
(Loss) per share for discontinued operations	$	—		$	—		$	—
Net income per share attributed to Movado Group, Inc.	$	0.22		$	0.19		($	0.03	)

	For the Six Months Ended July 31, 2010
	As Computed under FIFO			As Reported under Average Cost			Effect of Change- Increase / (Decrease)
Cost of sales	$	72,440		$	75,282		$	2,842
(Loss) from continuing operations before income taxes		(5,791	)		(8,633	)		(2,842	)
Provision for income taxes		792			792			—
(Loss) from continuing operations, net of tax attributed to Movado Group, Inc.		(6,790	)		(9,632	)		(2,842	)
(Loss) from discontinued operations, net of tax		(23,675	)		(23,675	)		—
Net (loss) attributed to Movado Group, Inc.		(30,465	)		(33,307	)		(2,842	)


Basic (loss) per share:
(Loss) per share from continuing operations attributed to Movado Group, Inc.	($	0.27	)	($	0.39	)	($	0.12	)
(Loss) per share for discontinued operations	($	0.96	)	($	0.96	)		—
Net (loss) per share attributed to Movado Group, Inc.	($	1.23	)	($	1.35	)	($	0.12	)
Diluted (loss) per share:
(Loss) per share from continuing operations attributed to Movado Group, Inc.	($	0.27	)	($	0.39	)	($	0.12	)
(Loss) per share for discontinued operations	($	0.96	)	($	0.96	)		—
Net (loss) per share attributed to Movado Group, Inc.	($	1.23	)	($	1.35	)	($	0.12	)

The following line items within the Consolidated Balance Sheets were affected by the change in accounting policy (in thousands):


	July 31, 2011
	As Computed under FIFO		As Reported under Average Cost		Effect of Change- Increase / (Decrease)
Inventories	$	195,394	$	196,611	$	1,217
Other current assets*		2,502		2,500		(2	)
Deferred income taxes		8,277		8,279		2
Retained earnings		224,876		226,093		1,217

	January 31, 2011
	As Computed under FIFO		As Reported under Average Cost		Effect of Change- Increase / (Decrease)
Inventories	$	179,516	$	181,265	$	1,749
Other current assets*		2,518		2,462		(56	)
Deferred income taxes		8,164		8,220		56
Retained earnings		220,936		222,685		1,749

	July 31, 2010
	As Computed under FIFO		As Reported under Average Cost		Effect of Change- Increase / (Decrease)
Inventories	$	204,643	$	205,787	$	1,144
Other current assets*		3,074		3,010		(64	)
Deferred income taxes		13,372		13,436		64
Retained earnings		235,391		236,535		1,144

*	As it relates to current deferred income taxes.

As a result of the accounting change, retained earnings as of February 1, 2010, increased from $265.9 million, as computed using the FIFO method, to $269.8 million using the average cost method.

There was no impact on net cash provided by operating activities as a result of this change in accounting policy.

Inventories consist of the following (in thousands):


	July 31, 2011		January 31, 2011		July 31, 2010
Finished goods	$	101,543	$	97,007	$	123,408
Component parts		79,995		63,065		60,808
Work-in-process		15,073		21,193		21,571

	$	196,611	$	181,265	$	205,787

NOTE 6 – DEBT AND LINES OF CREDIT

On July 17, 2009, the Company, together with Movado Group Delaware Holdings Corporation, Movado Retail Group, Inc. and Movado LLC, each a wholly owned domestic subsidiary of the Company (together with the Company, the “Borrowers”), entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Bank of America, N.A. and Bank Leumi USA, as lenders, and Bank of America, N.A., as agent (in such capacity, the “Agent”). The parties amended the Loan Agreement by entering into Amendment No. 1 thereto (the “First Amendment”) on April 5, 2011. The Loan Agreement, as amended, provides a $55.0 million asset based senior secured revolving credit facility (the “Facility”), including a $15.0 million letter of credit subfacility. The maturity date of the Facility is July 17, 2012.

Availability under the Facility is determined by reference to a borrowing base which is based on the sum of a percentage of eligible accounts receivable and eligible inventory of the Borrowers. $10.0 million in availability is blocked until the date (the “Block Release Date”) on which the Borrowers have achieved for a four fiscal quarter period a consolidated fixed charge coverage ratio of at least 1.25 to 1.0 and have domestic EBITDA greater than $10.0 million. The availability block must remain in place for at least one year. The amount of the availability block will be reduced by the amount by which the borrowing base exceeds $55.0 million, up to a maximum reduction of $5.0 million. Availability under the Facility may be further reduced by certain reserves established by the Agent in its good faith credit judgment. As of July 31, 2011, total availability under the Facility, giving effect to the availability block, no outstanding borrowings and the letters of credit outstanding under the subfacility, was $48.4 million.

The initial applicable margin for LIBOR rate loans was 4.25% and for base rate loans was 3.25%. After July 17, 2010, the applicable margins decreased or increased by 0.25% per annum from the initial applicable margins depending on whether average availability for the most recently completed fiscal quarter was either greater than $12.5 million, or was $5.0 million or less, respectively. Beginning with the third quarter of fiscal 2011, the applicable margin decreased to 4.00% for LIBOR loans and 3.00% for base rate loans. The First Amendment reduced the applicable margin for both LIBOR rate loans and base rate loans by 1.25%. Accordingly, as of July 31, 2011 and based on current availability, the applicable margins were 2.75% and 1.75% for LIBOR and base rate loans, respectively.

Prior to the Block Release Date, if borrowing availability is less than $10.0 million (which threshold may be reduced to the extent the borrowing base exceeds $55.0 million, up to a maximum $5.0 million reduction), the Borrowers will be subject to a minimum EBITDA covenant. After the Block Release Date, the Borrowers will be subject to a minimum EBITDA covenant if borrowing availability is less than $15.0 million. As of July 31, 2011, the Borrowers were not subject to the minimum EBITDA covenant.

In addition, after the Block Release Date, if borrowing availability is less than $15.0 million, the Borrowers will be subject to a minimum fixed charge coverage ratio.

The Borrowers’ deposit accounts will be subject to cash dominion prior to the Block Release Date if borrowing availability is less than $7.5 million, but such threshold may be reduced to the extent the borrowing base exceeds $55.0 million, up to a maximum $5.0 million reduction. After the Block Release Date, cash dominion will be imposed if borrowing availability is less than $15.0 million. As of July 31, 2011, the Borrowers were not subject to cash dominion nor do the Borrowers expect to be subject to such a requirement in the foreseeable future.

The Loan Agreement, as amended, contains additional affirmative and negative covenants binding on the Borrowers and their subsidiaries that are customary for asset based facilities, including, but not limited to, restrictions and limitations on the incurrence of debt for borrowed money and liens, dispositions of assets, capital expenditures, dividends and other payments in respect of equity interests, the making of loans and equity investments, prepayments of subordinated and certain other debt, mergers, consolidations, liquidations and dissolutions, and transactions with affiliates. As amended, the Loan Agreement permits the Borrowers to pay dividends through July 17, 2012 in an aggregate amount not to exceed (a) $4.0 million during any four fiscal quarters or (b) $5.5 million during the entire period from February 1, 2011 through July 17, 2012, provided that no event of default has occurred and that, for the four fiscal quarter period most recently ended prior to the proposed dividend payment date, the Borrowers have achieved an adjusted consolidated fixed charge coverage ratio of at least 1.25 to 1.0 and have pro forma availability greater than $12.5 million. As of July 31, 2011, the Company believes it was in compliance with these financial covenants and had achieved the requisite adjusted consolidated fixed charge coverage ratio necessary to pay dividends. The Company presently expects that it will be able to pay dividends through the remaining term of the Facility.

The Loan Agreement, as amended, contains events of default that are customary for facilities of this type, including, but not limited to, nonpayment of principal, interest, fees and other amounts when due, failure of any representation or warranty to be true in any material respect when made or deemed made, violation of covenants, cross default, material judgments, material ERISA liability, bankruptcy events, material loss of collateral in excess of insured amounts, asserted or actual revocation or invalidity of the loan documents, change of control and events or circumstances having a material adverse effect. The borrowings under the Facility are joint and several obligations of the Borrowers and also cross-guaranteed by each Borrower. In addition, the Borrowers’ obligations under the Facility are secured by first priority liens, subject to permitted liens, on substantially all of the Borrowers’ U.S. assets (other than certain excluded assets).

A Swiss subsidiary of the Company maintains unsecured lines of credit with an unspecified length of time with a Swiss bank. As of July 31, 2011 and 2010, these lines of credit totaled 10.0 million Swiss francs for both periods, with dollar equivalents of $12.7 million and $9.6 million, respectively. As of July 31, 2011 and 2010, there were no borrowings against these lines. As of July 31, 2011, two European banks have guaranteed obligations to third parties on behalf of two of the Company’s foreign subsidiaries in the amount of $2.1 million in various foreign currencies.

NOTE 7 – EARNINGS PER SHARE

The Company presents net income per share on a basic and diluted basis. Basic earnings per share are computed using weighted-average shares outstanding during the period. Diluted earnings per share are 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 was 24,913,000 and 24,747,000 for the three months ended July 31, 2011 and 2010, respectively. For the three months ended July 31, 2011, the number of shares outstanding for diluted earnings per share was increased by 272,000, due to potentially dilutive common stock equivalents issuable under the Company’s stock compensation plans. For the

three months ended July 31, 2010, the number of shares outstanding for diluted earnings per share was the same as the number outstanding for basic earnings per share because the Company generated a net loss.

For the three months ended July 31, 2011 and July 31, 2010, approximately 560,000 and 788,000 of potentially dilutive common stock equivalents, respectively, were excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

The weighted-average number of shares outstanding for basic earnings per share was 24,894,000 and 24,709,000 for the six months ended July 31, 2011 and 2010, respectively. For the six months ended July 31, 2011, the number of shares outstanding for diluted earnings per share was increased by 246,000, due to potentially dilutive common stock equivalents issuable under the Company’s stock compensation plans. For the six months ended July 31, 2010, the number of shares outstanding for diluted earnings per share was the same as the number outstanding for basic earnings per share because the Company generated a net loss.

For the six months ended July 31, 2011 and July 31, 2010, approximately 629,000 and 839,000 of potentially dilutive common stock equivalents, respectively, were excluded from the computation of dilutive earnings per share because their effect would have been antidilutive.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

As of July 31, 2011, one bank in the domestic bank group had issued five irrevocable standby letters of credit for retail and operating facility leases to various landlords, for the administration of the Movado boutique private-label credit card and Canadian payroll to the Royal Bank of Canada. As of July 31, 2011, the Company had outstanding letters of credit totaling $0.7 million with expiration dates through March 10, 2013.

As of July 31, 2011, two European banks have guaranteed obligations to third parties on behalf of two of the Company’s foreign subsidiaries in the amount of $2.1 million in various foreign currencies.

The Company is involved from time to time in legal claims involving trademarks and other intellectual property, contracts, employee relations and other matters incidental to the Company’s business. Although the outcome of such matters cannot be determined with certainty, the Company’s general counsel and management believe that the final outcome would not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

NOTE 9 – INCOME TAXES

The Company recorded a tax expense of $0.9 million and a tax expense of $0.4 million for the three months ended July 31, 2011 and 2010, respectively. The effective tax rate for the three month period ended July 31, 2011 was 16.0%. The effective tax rate for the three month period ended July 31, 2010 was (13.2%) for continuing operations.

The Company recorded a tax expense of $1.6 million and a tax expense of $0.8 million for the six months ended July 31, 2011 and 2010, respectively. The effective tax rate for the six month period ended July 31, 2011 was 23.8%. The effective tax rate for the six month period ended July 31, 2010 was (9.2%) for continuing operations.

All periods include the effects of changes to the valuation allowances on net deferred tax assets and the application of accounting for income taxes in interim periods.

NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS

The Company accounts for its derivative financial instruments in accordance with guidance which requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial condition and measure those instruments at fair value. A significant portion 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 manages most of its foreign currency exposures on a consolidated basis, which allows it to net certain exposures and take advantage of natural offsets. In the event these exposures do not offset, the Company uses various derivative financial instruments to further reduce the net exposures to currency fluctuations, predominately forward and option contracts. When entered into, the Company designates and documents these derivative instruments as a cash flow hedge of a specific underlying exposure, as well as the risk management objectives and strategies for undertaking the hedge transactions. Changes in the fair value of a derivative that is designated and documented as a cash flow hedge and is highly effective, are recorded in other comprehensive income until the underlying transaction affects earnings, and then are later reclassified into earnings in the same account as the hedged transaction. The Company formally assesses, both at the inception and at each financial quarter thereafter, the effectiveness of the derivative instrument hedging the underlying forecasted cash flow transaction. Any ineffectiveness related to the derivative financial instruments’ change in fair value will be recognized in the period in which the ineffectiveness was calculated.

The Company uses forward exchange contracts to offset its exposure to certain foreign currency receivables and liabilities. These forward contracts are not designated as qualified hedges and, therefore, changes in the fair value of these derivatives are recognized into earnings, thereby offsetting the current earnings effect of the related foreign currency receivables and liabilities.

During the fourth quarter of fiscal year ended January 31, 2011, the Company concluded it would significantly reduce its offering of gold watches, as it relates to non-core gold inventory. The Company decided to melt the non-core gold inventory because the current salvage value of the gold was adequate and could be easily and quickly realized, while significant excessive time, effort and costs would be required to sell the gold watches. As a result, the Company entered into commodity futures contracts to offset its exposure to the fluctuating value of gold. These futures contracts are not designated as qualified hedges and, therefore, changes in the fair value of these derivatives are recognized into earnings, thereby offsetting the earnings effect of fluctuations in the sale price of gold.

All of the Company’s derivative instruments have liquid markets to assess fair value. The Company does not enter into any derivative instruments for trading purposes.

As of July 31, 2011, the Company’s entire net forward contracts hedging portfolio consisted of 24.0 million Swiss francs equivalent with various expiry dates ranging through November 18, 2011.

As of July 31, 2011, the Company’s entire commodity futures contracts hedging portfolio consisted of approximately 4,400 ounces of gold equivalent with various expiry dates ranging through November 30, 2011.

The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for derivatives as of July 31, 2011 and 2010 (in thousands):


	Asset Derivatives					Liability Derivatives
	Balance	2011		2010		Balance	2011		2010
	Sheet	Fair		Fair		Sheet	Fair		Fair
	Location	Value		Value		Location	Value		Value
Derivatives designated as hedging instruments:
Foreign Exchange Contracts	Other Current Assets	$	—	$	1,667	Accrued Liabilities	$	—	$	—
Derivatives not designated as hedging instruments:
Foreign Exchange Contracts	Other Current Assets	$	2,978	$	967	Accrued Liabilities	$	—	$	—
Commodity Future Contracts	Other Current Assets		—		—	Accrued Liabilities		431		—

Total Derivative Instruments		$	2,978	$	2,634		$	431	$	—

As of July 31, 2011, the balance of deferred net gains on derivative financial instruments documented as cash flow hedges included in accumulated other comprehensive income (“AOCI”) was $0.8 million in net losses, net of tax of $1.0 million, compared to $0.5 million in net gains, net of tax of $1.0 million as of July 31, 2010. The Company estimates that a substantial portion of the deferred net gains as of July 31, 2011 will be realized into earnings over the next 12 months as a result of transactions that are expected to occur over that period. The Company’s sell through of inventory purchased in Swiss francs will primarily cause the amount in AOCI to affect cost of goods sold. The maximum length of time the Company hedges its exposure to the fluctuation in future cash flows for forecasted transactions is 24 months. For the three months ended July 31, 2011 and 2010, the Company reclassified from AOCI to earnings $0.3 million of net gains, net of tax of $0 and $0.2 million of net gains, net of tax of $0, respectively. For the six months ended July 31, 2011 and 2010, the Company reclassified from AOCI to earnings $0.6 million of net gains, net of tax of $0 and $0.3 million of net gains, net of tax of $0, respectively.

During the three and six months ended July 31, 2011 and 2010, the Company recorded no charge related to its assessment of the effectiveness of its derivative hedge portfolio because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged. Changes in the contracts’ fair value due to spot-forward differences are excluded from the designated hedge relationship. The Company records these transactions in the cost of sales of the Consolidated Statements of Operations.

NOTE 11 – DISCONTINUED OPERATIONS

The Company closed its Movado boutique division effective the second quarter of fiscal 2011. As a result of that action, the Company is reporting the Movado boutiques’ financial activity as discontinued operations for all periods presented.

The following is a summary of the operating results of the Company’s discontinued operations:


	Three Months Ended July 31, 2010						Six Months Ended July 31, 2010
(In thousands)	Net Sales		Pretax Loss		Net Loss		Net Sales		Pretax Loss		Net Loss
Movado Boutiques	$	8,168	$	17,703	$	17,703	$	14,252	$	23,675	$	23,675

For the three and six months ended July 31, 2010, the Company had no tax provision for its discontinued operations.

As a result of the Movado boutiques’ closing, the Company recorded $20.0 million of expenses primarily for occupancy charges, asset impairments, inventory write-downs and severance. The Company expects that the majority of the remaining liabilities will be paid during fiscal 2012.

A summary rollforward of costs related to the closing of the Movado boutiques is as follows (in thousands):


	Fiscal 2011 charges		Cash payments			Non-cash adjustments			Accrued balance at July 31, 2011
Occupancy charges (1)	$	12,915	($	13,514	)	$	1,284		$	685
Asset impairments		3,432		—			(3,432	)		—
Inventory write-downs		1,892		—			(1,892	)		—
Severance		1,756		(1,749	)		—			7

Total	$	19,995	($	15,263	)		($4,040	)	$	692

(1)	Occupancy charges include expenses for lease buyouts, moving and legal expenses and reductions for the reversal of deferred rent accruals.

NOTE 12 – OTHER INCOME

Other income for the three and six months ended July 31, 2011 consisted of $0.7 million of pre-tax gain on the sale of a building. The Company received cash proceeds from the sale of $1.2 million. The building had been classified as an asset held for sale in other current assets.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Statements in this Quarterly Report on Form 10-Q, including, without limitation, statements under Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as statements in future filings by the Company with the Securities and Exchange Commission, 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, uncertainty regarding such economic and business conditions, trends in consumer debt levels and bad debt write-offs, general uncertainty related to possible terrorist attacks or natural disasters and the impact on consumer spending, 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 or any supplier’s inability to fulfill the company’s orders, the loss of or curtailed sales to significant customers, the Company’s dependence on key employees and officers, the ability to successfully integrate the operations of acquired businesses without disruption to other business activities, the continuation of licensing arrangements with third parties, the ability to secure and protect trademarks, patents and other intellectual property rights, the ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis, the ability of the Company to successfully manage its expenses on a continuing basis, the 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.

These risks and uncertainties, along with the risk factors discussed under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K, should be considered in evaluating any forward-looking statements contained in this Quarterly Report on Form 10-Q or incorporated by reference herein. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are qualified by the cautionary statements in this section. The Company undertakes no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Estimates by their nature are based on judgments and available information. Therefore, actual results could materially differ from those estimates under different assumptions and conditions.

Critical accounting policies are those that are most important to the portrayal of the Company’s financial condition and the results of operations and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s most critical accounting policies have been discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2011.

As of July 31, 2011, except as noted below, there have been no material changes to any of the critical accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2011.

Effective February 1, 2011, the Company changed its method of valuing its U.S. inventories to the average cost method. In prior years, primarily all U.S. inventories were valued using the first-in, first-out (“FIFO”) method. With this change, all of the Company’s inventories are now valued using the average cost method. The Company believes that the average cost method of inventory valuation is preferable because (1) it permits the Company to use a single method of accounting for all of the Company’s U.S. and international inventories, (2) the method aligns costing with the Company’s forecasting and procurement decisions, and (3) since a number of the Company’s key competitors use the average cost method, it improves comparability of the Company’s financial statements. The comparative consolidated financial statements of prior periods presented have been adjusted to apply the new accounting method retroactively. The change in accounting principle was applied retroactively as described in the applicable accounting guidance for accounting changes and error corrections.

Recent Developments

As announced on May 27, 2010, the Company’s subsidiary, Movado Retail Group, Inc., closed its Movado boutique division during the Company’s second quarter ended July 31, 2010. All of the Movado boutiques were located in the United States. The Company incurred a charge of approximately $20.0 million in connection with the closing of the boutiques. This charge was primarily comprised of occupancy charges, asset impairments, inventory write-downs and severance. Beginning in the second quarter of fiscal 2011, the financial results of the boutiques are reported as discontinued operations and presented in a separate section on the face of the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows for all periods presented.

On April 5, 2011, the Company amended its Amended and Restated Loan and Security Agreement, dated July 17, 2009, with Bank of America, N.A. and Bank Leumi USA to modify certain covenants related to the payment of dividends and to reflect more favorable current market rate conditions. As a result of the Company’s strong financial position, the Company’s Board of Directors (the “Board”) decided to reinstate a quarterly cash dividend subject, in each quarter, to the Board’s review of the Company’s financial performance and other factors as determined by the Board. The Company anticipates a total annualized dividend of $0.12 per share of common stock and class A common stock, or approximately $3 million based on the current number of outstanding shares. However, the decision of whether to declare any future cash dividend, including the amount of any such dividend and the establishment of record and payment dates, will be determined, in each quarter, by the Board, in its sole discretion.

Overview

The Company conducts its business primarily in two operating segments: Wholesale and Retail. The Company’s Wholesale segment includes the designing, manufacturing and distribution of quality watches. The Retail segment includes the Company’s outlet stores and the Movado brand flagship store. The Company also operates in two major geographic segments: United States and International. The following discussion of the Retail segment and the United States segment operating results no longer includes amounts related to the Movado boutiques as a result of closing the Movado boutique division during the second quarter of fiscal 2011. The financial results of the Movado boutiques are classified as discontinued operations for all periods presented.

The Company divides its watch business into distinct categories. The luxury category consists of the Ebel^® and Concord^® brands. The accessible luxury category consists of the Movado^® and ESQ^® by Movado brands. The licensed brands category represents brands distributed under license agreements and includes Coach^®, HUGO BOSS^®, Juicy Couture^®, Lacoste^® and Tommy Hilfiger^®.

Results of operations for the three months ended July 31, 2011 as compared to the three months ended July 31, 2010

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


	Three Months Ended July 31,
	2011		2010
Wholesale:
United States	$	46,551	$	30,007
International		52,770		42,033

Total Wholesale		99,321		72,040
Retail		13,910		13,348

Net Sales	$	113,231	$	85,388

Net sales for the three months ended July 31, 2011 were $113.2 million, above prior year by $27.8 million or 32.6%. For the three months ended July 31, 2011, fluctuations in foreign currency exchange rates favorably impacted net sales by $6.1 million when compared to the prior year period.

Net sales for the three months ended July 31, 2011 in the wholesale segment were $99.3 million, above the prior year period by $27.3 million or 37.9%. The increase in wholesale net sales was driven by growth in both the U.S. and the international segments.

Net sales for the three months ended July 31, 2011 in the U.S. wholesale segment were $46.6 million, above the prior year period by $16.5 million or 55.1%, driven by sales increases in both the accessible luxury and licensed brand categories. Net sales in the accessible luxury category were above prior year by $10.3 million or 59.8%, primarily due to strong sell-through in the Company’s distribution channels, resulting from product innovation, such as Movado Bold, and the increased focus and spending on marketing and advertising. Net sales in the licensed brand category were above the prior year period by $6.0 million or 57.3%, primarily due to increased demand driven by innovative product designs at key price points that are resonating well with customers. Net sales in the luxury category were relatively flat year-over-year.

Net sales for the three months ended July 31, 2011 in the international wholesale segment were $52.8 million, above the prior year period by $10.7 million or 25.5%, with increases recorded in all watch brand categories. Net sales in the licensed brands category were above the prior year period by $7.1 million or 30.5%, primarily due to growth in existing markets resulting from higher demand. Net sales in the luxury category were above the prior year period by $2.2 million, or 24.9%, primarily as the result of sales of select non-core gold watch offerings of the category. Net sales in the accessible luxury category were above the prior year period by $0.4 million, or 5.6%, primarily driven by higher sales in China. For the three months ended July 31, 2011, fluctuations in foreign currency exchange rates favorably impacted net sales by $6.1 million when compared to the prior year period.

Net sales for the three months ended July 31, 2011 in the retail segment were $13.9 million, above the prior year period by $0.6 million or 4.2%. The increase in sales was attributable to an increase in the number of stores operated when compared to the prior year. As of July 31, 2011, the Company operated 33 outlet stores and the Movado brand flagship store.

Gross Profit. Gross profit for the three months ended July 31, 2011 was $60.9 million or 53.8% of net sales as compared to $44.4 million or 52.0% of net sales for the three months ended July 31, 2010. The increase in gross profit of $16.5 million was primarily due to higher net sales and, to a lesser extent, the higher gross margin percentage achieved. The gross margin percentage for the three months ended July 31, 2011 was favorably impacted by approximately 220 basis points due to a shift in channel and product mix. The gross margin percentage for the three months ended July 31, 2011 was also favorably impacted by approximately 100 basis points resulting from leverage gained on certain fixed costs due to the increase in sales volume year-over-year. When compared to the prior year period, the gross margin for the three months ended July 31, 2011 was unfavorably impacted by approximately 120 basis points due to fluctuations in foreign currency exchange rates. Additionally, the gross margin for the three months ended July 31, 2011 was unfavorably impacted by approximately 40 basis points resulting from sales in the current period of excess watch movements as part of the Company’s inventory reduction initiative.

Selling, General and Administrative (“SG&A”). SG&A expenses for the three months ended July 31, 2011 were $55.9 million, representing an increase of $9.3 million or 20.0%. The increase in SG&A expense includes higher marketing expense of $2.8 million resulting from expenses associated with the Company’s decision to increase spending in this area to drive sales growth. Additionally, higher compensation and benefit expense of $3.0 million was recorded during the current year period resulting from salary increases, the reinstatement of certain employee benefits and performance-based compensation. The effect of fluctuations in foreign currency exchange rates unfavorably impacted SG&A expenses for the three months ended July 31, 2011 by $3.1 million, of which $2.7 million was the result of increases from the translation of foreign subsidiary results and $0.4 million was the result of higher transactional losses recorded year-over-year related to foreign denominated assets held in weakening currencies.

Wholesale Operating Income / (Loss). Operating income of $2.7 million was recorded in the wholesale segment for the three months ended July 31, 2011, compared to an operating loss of $4.7 million recorded for the three months ended July 31, 2010. The $7.4 million increase in operating income was the net result of an increase in gross profit of $16.1 million, partially offset by an increase in SG&A expenses of $8.7 million. The increase in gross profit of $16.1 million was primarily attributed to higher net sales, and to a lesser extent, a higher gross margin percentage achieved year-over-year. The increase in SG&A expenses of $8.7 million was driven by higher marketing expenses of $2.8 million, higher compensation and benefit expenses of $2.6 million, as well as the unfavorable impact of foreign currency fluctuations of $3.1 million when compared to the prior year period.

Retail Operating Income. Operating income of $2.3 million and $2.5 million was recorded in the retail segment for the three months ended July 31, 2011 and 2010, respectively. The $0.2 million decrease in operating income was the net result of an increase in gross profit of $0.5 million, more than offset by an increase in SG&A expenses of $0.7 million. The increase in gross profit of $0.5 million was primarily attributed to the increase in sales volume year-over-year and, to a lesser extent, a higher gross margin percentage achieved. The increase in SG&A expenses of $0.7 million was primarily due to expenses for stores that were not open in the prior year period.

Other Income. The Company recorded other income of $0.7 million for the three months ended July 31, 2011 resulting from the pre-tax gain on the sale of a building.

Interest Expense. Interest expense for the three months ended July 31, 2011 was $0.3 million which primarily consisted of the amortization of deferred financing costs. Interest expense for the three months ended July 31, 2010 was $0.7 million which primarily consisted of amortization of deferred financing costs, as well as interest on outstanding borrowings under the Company’s credit facility. For the three months ended July 31, 2011, the Company had no outstanding borrowings under its credit facility.

Interest Income. Interest income for both three month periods ended July 31, 2011 and 2010 was immaterial.

Income Taxes. The Company recorded a tax expense of $0.9 million and $0.4 million for the three months ended July 31, 2011 and 2010, respectively. The effective tax rate for the three month period ended July 31, 2011 was 16.0%. The effective tax rate for the three month period ended July 31, 2010 was (13.2%) for continuing operations. The effective tax rates for both periods include changes to valuation allowances on net deferred tax assets and the application of accounting for income taxes in interim periods.

Loss From Discontinued Operations. The Company records the financial results of its Movado boutique division as discontinued operations, which ceased doing business during the quarter ended July 31, 2010. For the three months ended July 31, 2010, the Company recorded a loss from discontinued operations of $17.7 million.

Net Income / (Loss) Attributed to Movado Group, Inc. For the three months ended July 31, 2011, the Company recorded net income of $4.4 million, as compared to a net loss of $20.9 million recorded for the three months ended July 31, 2010.

Results of operations for the six months ended July 31, 2011 as compared to the six months ended July 31, 2010

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


	Six Months Ended July 31,
	2011		2010
Wholesale:
United States	$	81,928	$	60,016
International		97,402		75,792

Total Wholesale		179,330		135,808
Retail		23,755		22,384

Net Sales	$	203,085	$	158,192

Net sales for the six months ended July 31, 2011 were $203.1 million, above prior year by $44.9 million or 28.4%. For the six months ended July 31, 2011, fluctuations in foreign currency exchange rates favorably impacted net sales by $8.3 million when compared to the prior year period.

Net sales for the six months ended July 31, 2011 in the wholesale segment were $179.3 million, above the prior year period by $43.5 million or 32.0%. The increase in wholesale net sales was driven by growth in both the U.S. and the international segments.

Net sales for the six months ended July 31, 2011 in the U.S. wholesale segment were $81.9 million, above the prior year period by $21.9 million or 36.5%, driven by sales increases in both the accessible luxury and licensed brand categories. Net sales in the accessible luxury category were above prior year by $15.3 million or 46.2%, primarily due to strong sell-through in the Company’s distribution channels, resulting from product innovation, such as Movado Bold, and the increased focus and spending on marketing and advertising. Additionally, prior year sales in the accessible luxury category were negatively impacted by the Company’s decision to limit sales to customers the Company believed to have heightened credit risk. Net sales in the licensed brand category were above the prior year period by $7.6 million or 38.1%, primarily due to increased demand driven by innovative product designs at key price points that are resonating well with customers. These sales increases were partially offset by lower net sales in the luxury category of $0.6 million when compared to the prior year period.

Net sales for the six months ended July 31, 2011 in the international wholesale segment were $97.4 million, above the prior year period by $21.6 million or 28.5%, with increases recorded in all watch brand categories. Net sales in the licensed brands category were above the prior year period by $14.0 million or 30.8%, primarily due to growth in existing markets resulting from higher demand. Net sales in the accessible luxury category were above the prior year period by $3.1 million, or 24.6%, primarily driven by higher sales in China. Net sales in the luxury category were above the prior year period by $3.7 million, or 27.6%, primarily as the result of sales of select non-core gold watch offerings of the category. For the six months ended July 31, 2011, fluctuations in foreign currency exchange rates favorably impacted net sales by $8.3 million when compared to the prior year period.

Net sales for the six months ended July 31, 2011 in the retail segment were $23.8 million, above the prior year period by $1.4 million or 6.1%. The increase in sales was attributable to an increase in the number of stores operated when compared to the prior year.

Gross Profit. Gross profit for the six months ended July 31, 2011 was $109.6 million or 54.0% of net sales as compared to $82.9 million or 52.4% of net sales for the six months ended July 31, 2010. The increase in gross profit of $26.7 million was primarily due to higher net sales and, to a lesser extent, the higher gross margin percentage achieved. The gross margin percentage for the six months ended July 31, 2011 was favorably impacted by approximately 110 basis points resulting from leverage gained on certain fixed costs due to the increase in sales volume year-over-year. The gross margin percentage for the six months ended July 31, 2011 was also favorably impacted by approximately 60 basis points due to a shift in channel and product mix. Additionally, the gross margin for the six months ended July 31, 2011 was unfavorably impacted by approximately 20 basis points resulting from sales in the current period of excess watch movements as part of the Company’s inventory reduction initiative.

Selling, General and Administrative (“SG&A”). SG&A expenses for the six months ended July 31, 2011 were $103.0 million, representing an increase of $12.7 million or 14.1%. The increase in SG&A expense includes higher marketing expense of $4.6 million resulting from expenses associated with the Company’s decision to increase spending in this area in an effort to drive sales growth. Additionally, higher compensation and benefit expense of $4.3 million was recorded during the current year period resulting from salary increases, the reinstatement of certain employee benefits and performance-based compensation. The effect of fluctuations in foreign currency exchange rates unfavorably impacted SG&A expenses for the six months ended July 31, 2011 by $3.6 million, of which $4.0 million was the result of increases from the translation of foreign subsidiary results, partially offset by lower transactional losses recorded year-over-year of $0.4 million related to foreign denominated assets held in weakening currencies.

Wholesale Operating Income / (Loss). Operating income of $3.7 million was recorded in the wholesale segment for the six months ended July 31, 2011, compared to an operating loss of $10.4 million recorded for the six months ended July 31, 2010. The $14.1 million increase in operating income was the net result of an increase in gross profit of $25.6 million, partially offset by an increase in SG&A expenses of $11.5 million. The increase in gross profit of $25.6 million was primarily attributed to higher net sales and, to a lesser extent, a higher gross margin percentage achieved year-over-year. The increase in SG&A expenses of $11.5 million was driven by higher marketing expenses of $4.6 million, higher compensation and benefit expenses of $3.7 million, as well as the unfavorable impact of foreign currency fluctuations of $3.6 million when compared to the prior year period.

Retail Operating Income. Operating income of $2.9 million and $3.0 million was recorded in the retail segment for the six months ended July 31, 2011 and 2010, respectively. The $0.1 million decrease in operating income was the net result of an increase in gross profit of $1.1 million, more than offset by an increase in SG&A expenses of $1.2 million. The increase in gross profit of $1.1 million was primarily attributed to the increase in sales volume year-over-year, and to a lesser extent, a higher gross margin percentage achieved. The increase in SG&A expenses of $1.2 million was primarily due to expenses for stores that were not open in the prior year period.

Other Income. The Company recorded other income of $0.7 million for the six months ended July 31, 2011 resulting from the pre-tax gain on the sale of a building.

Interest Expense. Interest expense for the six months ended July 31, 2011 was $0.7 million which primarily consisted of the amortization of deferred financing costs. Interest expense for the six months ended July 31, 2010 was $1.3 million which primarily consisted of amortization of deferred financing costs, as well as interest

on outstanding borrowings under the Company’s credit facility. For the six months ended July 31, 2011, the Company had no outstanding borrowings under its credit facility.

Interest Income. Interest income for both six month periods ended July 31, 2011 and 2010 was immaterial.

Income Taxes. The Company recorded a tax expense of $1.6 million and $0.8 million for the six months ended July 31, 2011 and 2010, respectively. The effective tax rate for the six month period ended July 31, 2011 was 23.8%. The effective tax rate for the six month period ended July 31, 2010 was (9.2%) for continuing operations. The effective tax rates for both periods include changes to valuation allowances on net deferred tax assets and the application of accounting for income taxes in interim periods.

Loss From Discontinued Operations. The Company records the financial results of its Movado boutique division as discontinued operations, which ceased doing business during the quarter ended July 31, 2010. For the six months ended July 31, 2010, the Company recorded a loss from discontinued operations of $23.7 million.

Net Income / (Loss) Attributed to Movado Group, Inc. For the six months ended July 31, 2011, the Company recorded net income of $4.9 million, as compared to a net loss of $33.3 million recorded for the six months ended July 31, 2010.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities was $12.4 million for the six months ended July 31, 2011 compared to cash used of $12.7 million for the six months ended July 31, 2010. Cash provided by operating activities of $12.4 million for the fiscal 2012 period was primarily the result of net income for the period of $5.1 million and favorable non-cash items of $6.1 million. Cash used in operating activities for the fiscal 2011 period was $12.7 million, resulting from cash used in continuing operations of $1.9 million and cash used of $10.8 million attributed to discontinued operations related to the Movado boutiques. The cash used in continuing operating activities of $1.9 million for the fiscal 2011 period was primarily the result of the loss from continuing operations for the period of $9.4 million, partially offset by favorable non-cash items of $7.2 million.

Cash used in investing activities amounted to $2.1 million for the six months ended July 31, 2011 compared to cash used of $3.4 million for the six months ended July 31, 2010. The cash used during both periods consisted of capital expenditures which included integration of computer hardware and software in conjunction with the SAP enterprise resource planning system, as well as spending for tooling and design. For the six months ended July 31, 2011, the cash used in investing activities of $2.1 million also included proceeds from a sale of an asset held for sale of $1.2 million.

Cash used in financing activities amounted to $1.4 million for the six months ended July 31, 2011 compared to cash provided by financing activities of $0.3 million for the six months ended July 31, 2010. Cash used in financing activities for the six months ended July 31, 2011 was primarily to pay dividends. Cash provided by financing activities for the six months ended July 31, 2010 was the result of stock option exercises for the quarter.

On July 17, 2009, the Company, together with Movado Group Delaware Holdings Corporation, Movado Retail Group, Inc. and Movado LLC each a wholly owned domestic subsidiary of the Company (together with the Company, the “Borrowers”), entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Bank of America, N.A. and Bank Leumi USA, as lenders, and Bank of America, N.A., as agent (in such capacity, the “Agent”). The parties amended the Loan Agreement by entering into Amendment No. 1 thereto (the “First Amendment”) on April 5, 2011. The Loan Agreement, as amended, provides a $55.0

million asset based senior secured revolving credit facility (the “Facility”), including a $15.0 million letter of credit subfacility. The maturity date of the Facility is July 17, 2012.

In addition, after the Block Release Date, if borrowing availability is less than $15.0 million, the Borrowers will be subject to a minimum fixed charge coverage ratio.

consolidated fixed charge coverage ratio necessary to pay dividends. The Company presently expects that it will be able to pay dividends through the remaining term of the Facility.

As a result of the Company’s strong financial position, the Board decided to reinstate a quarterly cash dividend subject, in each quarter, to the Board’s review of the Company’s financial performance and other factors as determined by the Board. The Company anticipates a total annualized dividend of $0.12 per share of common stock and class A common stock, or approximately $3 million based on the current number of outstanding shares. In April 2009, considering the economic environment at that time, the Board discontinued the payment of cash dividends in order to retain additional capital.

The Company paid dividends of $0.06 per share or approximately $1.5 million, for the six months ended July 31, 2011. No cash dividend was paid for the six months ended July 31, 2010.

On April 15, 2008, the Board authorized a program to repurchase up to one million shares of the Company’s common stock. Under this authorization, the Company has the option to repurchase shares over time, with the amount and timing of repurchases depending on market conditions and corporate needs. The Company may suspend or discontinue the repurchase of stock at any time. Under this share repurchase program, the Company had repurchased a total of 937,360 shares of common stock in the open market during the first and second quarters of fiscal 2009 at a total cost of approximately $19.5 million or $20.79 average per share. During the six months ended July 31, 2011, the Company did not repurchase shares of common stock under this program.

Cash at July 31, 2011 amounted to $128.8 million compared to $54.3 million at July 31, 2010. The increase in cash is primarily the result of cash provided by operations.

Management believes that the cash on hand in addition to the expected cash flow from operations and the Company’s short-term borrowing capacity will be sufficient to meet its working capital needs for at least the next twelve months.

Off-Balance Sheet Arrangements

The Company does not have off-balance sheet financing or unconsolidated special-purpose entities.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

The Company’s primary market risk exposure relates to foreign currency exchange risk. A significant portion 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 manages most of its foreign currency exposures on a consolidated basis, which allows it to net certain exposures and take advantage of natural offsets. In the event these exposures do not offset, the Company uses various derivative financial instruments to further reduce the net exposures to currency fluctuations, predominately forward and option contracts. When entered into, the Company designates and documents these derivative instruments as a cash flow hedge of a specific underlying exposure, as well as the risk management objectives and strategies for undertaking the hedge transactions. Changes in the fair value of a derivative that is designated and documented as a cash flow hedge and is highly effective, are recorded in other comprehensive income until the underlying transaction affects earnings, and then are later reclassified into earnings in the same account as the hedged transaction. The earnings impact is partially offset by the effects of currency movements on the underlying hedged transactions. If the Company does not engage in a hedging program, any change in the Swiss franc to local currency would have an equal effect on the Company’s cost of sales.

The Company uses forward exchange contracts to offset its exposure to certain foreign currency liabilities. These forward contracts are not designated as qualified hedges and, therefore, changes in the fair value of these derivatives are recognized into earnings, thereby offsetting the current earnings effect of the related foreign currency liabilities.

As of July 31, 2011, the Company’s entire net forward contracts hedging portfolio consisted of 24.0 million Swiss francs equivalent with various expiry dates ranging through November 18, 2011 compared to a portfolio of 58.0 million Swiss francs equivalent for various expiry dates ranging through January 27, 2011 as of July 31, 2010. If the Company were to settle its Swiss franc forward contracts at July 31, 2011, the net result would be a gain of $1.8 million, net of tax of $1.1 million. The Company had no Swiss franc option contracts related to cash flow hedges as of July 31, 2011 and 2010.

The Board authorized the hedging of the Company’s 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 the relevant accounting guidance regarding derivative instruments. As of July 31, 2011 and 2010, the Company did not hold a purchased option hedge portfolio related to net investment hedging.

Commodity Risk

The Company considers its exposure to fluctuations in commodity prices to be primarily related to gold used in the manufacturing of the Company’s watches. Under its hedging program, the Company can purchase various commodity derivative instruments, primarily future contracts. These derivatives are documented as qualified cash flow hedges, and gains and losses on these derivative instruments are first reflected in other comprehensive income, and later reclassified into earnings, partially offset by the effects of gold market price changes on the underlying actual gold purchases. The Company did not hold any future contracts in its gold hedge portfolio related to cash flow hedges as of July 31, 2011 and 2010, thus any changes in the gold price will have an equal effect on the Company’s cost of sales.

As a result, the Company entered into commodity futures contracts to offset its exposure to the fluctuating value of gold. These futures contracts are not designated as qualified hedges and, therefore, changes in the fair value of these derivatives are recognized into earnings, thereby offsetting the earnings effect of fluctuations in the sale price of gold.

As of July 31, 2011, the Company’s commodity futures contracts consisted of approximately 4,400 ounces of gold equivalent with various expiry dates ranging through November 30, 2011 compared to no commodities futures contracts as of July 31, 2010. If the Company were to settle its commodity future contracts at July 31, 2011, the net result would be a loss of $0.3 million, net of tax benefit of $0.1 million.

Debt and Interest Rate Risk

The Company has the capability to have certain debt obligations with variable interest rates, which are based on LIBOR plus a fixed additional interest rate. The Company does not hedge these interest rate risks. As of July 31, 2011, the Company had no outstanding debt. For additional information concerning potential changes to future interest obligations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and the Company’s Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures are effective at that reasonable assurance level. However, it should be noted that a control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that its objectives will be met and may not prevent all errors or instances of fraud.

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures, as such terms are defined in Rule 13a-15(e) under the Securities Exchange Act, as amended. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective at a reasonable assurance level as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the six months ended July 31, 2011, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

The Company is involved in pending legal proceedings and claims in the ordinary course of business. Although the outcome of such matters cannot be determined with certainty, the Company’s general counsel and management believe that the final outcome of currently pending legal proceedings, individually or in the aggregate, would not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Item 1A.

Risk Factors

As of July 31, 2011, there have been no material changes to any of the risk factors previously reported in the Annual Report on Form 10-K for the fiscal year ended January 31, 2011.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

On April 15, 2008, the Board authorized a program to repurchase up to one million shares of the Company’s Common Stock. Under this authorization, the Company has the option to repurchase shares over time, with the amount and timing of repurchases depending on market conditions and corporate needs. The Company may suspend or discontinue the repurchase of stock at any time. Under this share repurchase program, the Company had repurchased a total of 937,360 shares of Common Stock in the open market during the first and second quarters of fiscal year 2009 at a total cost of approximately $19.5 million or $20.79 per share. During the six months ended July 31, 2011, the Company has not repurchased shares of Common Stock under this program.

An aggregate of 13,388 shares have been repurchased during the six months ended July 31, 2011 as a result of the surrender of shares in connection with the vesting of certain restricted stock awards. At the election of an employee, shares having an aggregate value on the vesting date equal to the employee’s withholding tax obligation may be surrendered to the Company.

The following table summarizes information about the Company’s purchases for the three month period ended July 31, 2011 of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934:

Issuer Repurchase of Equity Securities


Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
May 1, 2011 – May 31, 2011		22	$	14.85		—		62,640
June 1, 2011 – June 30, 2011		—	$	—		—		62,640
July 1, 2011 – July 31, 2011		2,065	$	16.86		—		62,640

Total		2,087	$	16.83		—		62,640

Item 6.

Exhibits


10.1		Third Amendment to License Agreement between L.C. Licensing, Inc., Movado Group, Inc. and Swissam Products Limited dated as of June 1, 2011, further amending the License Agreement dated as of November 15, 2005. *

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

101		101.INS XBRL Instance Document**

		101.SCH XBRL Schema Document**

		101.CAL XBRL Calculation Linkbase Document**

		101.LAB XBRL Labels Linkbase Document**

		101. PRE XBRL Presentation Linkbase Document**

		101. DEF XBRL Definition Linkbase Document**

*	Confidential portions of Exhibit 10.1 have been omitted and filed separately with Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

XBRL (Extensible Business Reporting Language) information will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that the Company specifically incorporates it by reference.

SIGNATURE

Pursuant to the requirements of the Securities 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: September 1, 2011	By:	/s/ SALLIE A. DEMARSILIS
		Sallie A. DeMarsilis
		Senior Vice President,
		Chief Financial Officer and
		Principal Accounting Officer

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