72573--3/30/2007--MOVADO_GROUP

related topics

{customer, product, revenue}

{condition, economic, financial}

{operation, international, foreign}

{stock, price, operating}

{product, market, service}

{competitive, industry, competition}

{capital, credit, financial}

{gas, price, oil}

{personnel, key, retain}

{property, intellectual, protect}

{acquisition, growth, future}

The Company faces intense competition in the worldwide watch industry. Maintaining favorable brand recognition is essential to the success of the Company, and failure to do so could materially and adversely affect the Company s results of operations. If the Company is unable to respond to changes in consumer demands and fashion trends in a timely manner, sales and profitability could be adversely affected. If the Company misjudges the demand for its products, high inventory levels could adversely affect future operating results and profitability. An increase in product returns could negatively impact the Company s operating results and profitability. The Company s business relies on the use of independent parties to manufacture its products. Any loss of an independent manufacturer, or the Company s inability to deliver quality goods in a timely manner, could have an adverse effect on customer relations, brand image, net sales and results of operations. If the Company loses any of its license agreements, there may be significant loss of revenues and a negative effect on business Changes in the sales mix of the Company s products could impact gross profit margins. The Company s business is seasonal, with sales traditionally greater during certain holiday seasons, so events and circumstances that adversely affect holiday consumer spending will have a disproportionately adverse effect on the Company s results of operations. If the economy faces a recessionary period, purchases of the Company products may be adversely affected. Sales in the Company s retail stores are dependent upon customer foot traffic. If the Company is unable to successfully implement its growth strategies or manage its growing business, its future operating results could suffer. The loss or infringement of the Company s trademarks could have an adverse effect on future results of operations. Pricing fluctuations of commodities could adversely affect the Company s ability to produce product at favorable prices. The Company s business is subject to foreign currency exchange rate risk. The Grinberg family owns a majority of the voting power of the Company s stock. The Company s stock price could fluctuate and possibly decline due to changes in revenue, operating results and cash flow. If the Company were to lose its relationship with any of its key customers or distributors or any of such customers or distributors were to experience financial difficulties, there may be a significant loss of revenue and operating results. The Company s wholesale business could be negatively affected by changes of ownership and consolidation in the retail industry. If the Company were to lose key members of management or be unable to attract and retain the talent required for the business, operating results could suffer. If the Company were unable to maintain existing space or to lease new space for its retail stores in prime mall locations or be unable to complete construction on a timely basis, the Company s ability to achieve profitable results in the retail business could be adversely affected. If the Company could not secure financing and credit with favorable terms, the Company could suffer high borrowing costs which could impact financial results. A significant portion of the Company s business is conducted outside of the United States. Many factors affecting business activities outside the United States could adversely impact this business.

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72573--3/30/2007--MOVADO_GROUP_INC