MOVADO GROUP, INC. of the Company’s business and, therefore, their impact is far less than that of the selling seasons in  North America. During fiscal 2000, the Company completed the sale of both the Piaget and Corum distribution businesses and substantially all the assets associated with these businesses. Prior to the sale, the Company had been the exclusive distributor of these brands in North America. The Company completed the sale of its Piaget  business to VLG in February 1999 and sold its Corum business to Corum Switzerland in January 2000. The disposition of these brands negatively impacted sales in fiscal 2000. Retail Sales . The Company’s retail operations consist of 23 outlet stores located throughout the U.S. and seven full-priced Movado Boutiques. The Company does not have any overseas retail operations. The significant factors that influence annual sales volumes in the Company’s retail operations are similar to those that influence domestic wholesale operations. In addition, many of the Company’s outlet stores are located near vacation destinations, and therefore, the seasonality of these stores is driven by the peak tourist season associated with these locations. Gross Margins . The Company’s overall gross margins are primarily affected by four major factors: sales mix, product pricing strategy, manufacturing costs and the U.S. dollar/Swiss franc exchange rate.  Gross margins vary among the brands included in the Company’s portfolio and also among watch models within each brand. Luxury and premium retail price point models generally earn lower gross margins than more popular moderate price models. Gross margins in the Company’s outlet business are lower than those of the wholesale business since the outlets primarily sell seconds and discontinued models that generally command lower retail prices. Gross margins in the full priced Movado Boutiques exceed those of the wholesale business since the Company earns full channel margins from manufacture to point of sale in this business. All of the Company’s brands compete with a number of other brands on the basis of not only styling but also wholesale and retail price. The Company’s ability to improve margins through price increases is, therefore, to some extent, constrained by competitors’ actions. In addition, the Company’s wholesale operation  periodically engages in liquidation sales of discontinued models at reduced prices. The level of these sales in a particular period can also have a significant impact on the Company’s gross margins. Manufacturing costs of the Company’s brands consist primarily of component costs, internal and  subcontractor assembly costs and unit overhead costs associated with the Company’s supply chain operations in the U.S., Switzerland and the Far East. The Company seeks to control and reduce component and subcon- tractor labor costs through a combination of negotiations with existing suppliers and alternative sourcing.  The Company’s supply chain operations consist of logistics management of assembly operations and product sourcing in Switzerland and the Far East and minor assembly in the U.S. The Company has historically  controlled the level of overhead costs and maintained flexibility in its cost structure by outsourcing a significant portion of its component and assembly requirements and expects to extend this strategy over the near term. Since a substantial amount of the Company’s product costs are incurred in Swiss francs, fluctuations in the U.S. dollar/Swiss franc exchange rate can impact the Company’s production costs and, therefore, its gross 30