MOVADO GROUP, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward Looking Statements Certain statements included in this annual report, including those in the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations and on Form 10-K, as well as statements in future filings by the Company with the Securities and Exchange Commission (“SEC”), in the Company’s press releases and oral statements made by or with the approval of an authorized executive officer of the Company, which are not historical in nature, are intended to be, and are hereby identified as, “forward looking  statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934. The Company cautions readers that forward looking statements include, without limitation, those relating to the Company’s future business prospects, revenues, working capital, liquidity, capital needs, plans for future operations, 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, changes in consumer preferences and popularity of particular designs, new product development and introduction, competitive products and pricing, seasonality, availability of alternative sources of supply in the case of the loss of any significant supplier, the loss of significant customers, the Company’s dependence on key officers, the continuation of licensing arrangements with third parties, ability to secure and protect  trademarks, patents and other intellectual property rights, ability to lease new stores on suitable terms in desired markets and to complete construction on a timely basis, continued availability to the Company of financing and credit on favorable terms, business disruptions, general risks associated with doing business  outside the United States including, without limitations, import duties, tariffs, quotas, political and economic stability, and success of hedging strategies with respect tocurrency exchange rate fluctuations. Wholesale Sales . Among the more significant factors that influence annual sales are general economic  conditions in the Company’s domestic and international markets, new product introductions, the level and effectiveness of advertising and marketing expenditures, and product pricing decisions.  Approximately 19% of the Company’s total sales are from international markets and therefore reported sales are affected by foreign exchange rates. Significant portions of the Company’s international sales are billed in Swiss francs and translated to U.S. dollars at an average exchange rate for financial reporting purposes. The Company’s business is very seasonal. There are two major selling seasons in the Company’s domestic markets: the Spring season, which includes school graduations and several holidays, and, most importantly, the Christmas and holiday season. Major selling seasons in certain international markets center around  significant local holidays that occur in late Winter or early Spring. These markets are a less significant portion General 29