Total net sales increased 8.7% to $320.8 million in fiscal 2001 from $295.1 million in the prior year. Domestic sales increased 9.5% to $260.6 million from $237.9 million in fiscal 2000. Domestic sales were led by double digit growth in the Movado brand and high single digit growth in the ESQ brand. International sales of the Company’s core brands increased 6.2% led by the continuing international rollout of the Coach watch brand in the Far East, which resulted in a doubling of Coach watch international sales in fiscal 2001 and double digit growth in the Concord brand. 

Other net domestic sales, which includes the Company’s outlet stores, Movado Boutiques and after sales service business, increased 16% over the prior year. This growth was primarily attributable to comparable store sales gains in the Movado Boutiques of approximately 27% and new store openings in the Company’s outlet stores and Movado Boutiques, offset by a decrease in after sales service revenues as a result of the sale of the Piaget and Corum businesses. Comparable store sales in the Company’s outlet stores were relatively flat. 

Total net sales increased 6.2% for the year ended January 31, 2000. Sales from ongoing operations, excluding the disposed Piaget and Corum distribution businesses, increased 13.4% to $295.8 million from $260.9 million in the prior year. Domestic sales of the Company’s core Concord, Movado, ESQ and Coach brands increased 10.8%. All of the Company’s core brands experienced high single or low double digit percentage growth rates in the domestic market. International sales of the Company’s core brands increased 10.3% led by the continuing international rollout of the Coach watch brand in the Far East, which resulted in a near doubling of Coach watch international sales in fiscal 2000. International sales of the Concord brand also increased approximately 10%. 

Other net sales, which includes the Company’s outlet stores, Movado Boutiques and after sales service business, increased 22% over the prior year. This growth was primarily attributable to double digit comparable store sales gains in both the outlets and the Boutiques and new store openings in both of these retail venues, offset by a decrease in after sales service revenues as a result of the sale of the Piaget business. 

Gross Margins . The gross margin for fiscal 2001 was 61.5% as compared to 57.1% for fiscal 2000. Gross margin increases reflect the improvements the Company initiated in fiscal 2001. These improvements included the improved availability of core range products, higher margins on new model introductions, reduction of product acquisition costs mainly due to the strength of the U.S. dollar against the Swiss franc and significant reduction of liquidation sales. The gross margin increase is also due to one time charges of $5.0 million made in fiscal 2000 to write down non core component inventories and the $2.3 million book to physical inventory adjustment during fiscal 2000. During fiscal 2001, there were no one time charges reflected in gross margin. 

The Company’s gross margin decreased from 59.8% in fiscal 1999 to 57.1% in fiscal 2000 due to the one- time charge of $5.0 million to write down non-core component inventories and $2.3 million book to physical inventory adjustments. The decrease was also attributed to a higher level of liquidation sales in fiscal 2000 due to the unavailability of higher margin core range products. 

