## Developing New Businesses 

Movado Group has a very strong history of successfully introducing new, profitable brands that generate incremental sales. We are well positioned to continue that trend with the launch of our Tommy Hilfiger watch brand and the expansion of our Movado Boutique concept. We expect these businesses to provide incremental, profitable growth for many years to come. 

The launch of Tommy Hilfiger watches opens up an entirely new segment of business for the Company. The inclusion of this prestigious label into Movado Group’s portfolio of brands marks the Company’s first foray into the rapidly growing “fashion” category of the watch industry. Designed to complement the various lifestyles of Tommy Hilfiger’s core consumer, the collection will include American classic, sport, casual and dress watches priced between $55 and $195 at retail. The Tommy Hilfiger line has received an excellent reception from retailers, with shipments to stores across the United States begun in late March 2001. 

This past year also has been dedicated to developing the next evolution of the Movado Boutique store design which will showcase expanded, exclusive Movado jewelry collections and a new collection of tabletop/home accessories. Beginning with the two prestigious mall stores we recently opened in the Town Center at Boca Raton, Florida and in Riverside Square, Hackensack, New Jersey, all of our new Movado Boutiques will feature this new store design devel- oped in conjunction with a world-renowned retail store designer. Our new boutiques, each approximately 2,000- square feet, will reflect the Movado image of sophistication, elegance, and uniqueness. All of our boutiques feature our 

expanded product assortment of designs exclusive to Movado, including a new collection of tabletop/home accessories and gift-worthy items at attractive price points. We are pleased with the progress we are making in executing our Movado Boutique expansion strategy, as we continue to selectively open boutiques in high profile shopping destinations supported by strong demographics. In this regard, we are also very excited about our flagship boutique in SoHo, New York City’s trendy and premiere shopping destination, which will open in Fall 2001, and our new store in Pennsylvania’s King of Prussia mall which will open in Summer 2001. 

## Productivity Improvements 

In addition to focusing on growing sales through our existing portfolio of brands and our new businesses, we are also strategically focused on improving productivity through- out the Company. We have made major strides this past year to position our Company to reap productivity improvements for many years to come. 

One major productivity improvement recently completed was the relocation of our U.S. distribution operations. We committed to this initiative in May 2000 with the signing of a lease for a 100,000-square foot distribution facility in New Jersey. This facility more than doubles our previous distribution capability with no increase in operating costs. We completed the retrofitting of this new space in Fall 2000, and moved our entire distribution operations – people and product – there in early February 2001. The move went without a hitch and we have been up and running since late February 2001. The new distribution center is a great improvement over our prior distribution environment 

