================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                 For the Quarterly Period Ended October 31, 2006

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                         Commission File Number 1-16497

                               MOVADO GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)


                                                          
                New York                                          13-2595932
      (State of Other Jurisdiction                              (IRS Employer
    of Incorporation or Organization)                        Identification No.)



                                                               
   650 From Road, Paramus, New Jersey                               07652
(Address of Principal Executive Offices)                          (Zip Code)


                                 (201) 267-8000
              (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for that past 90 days. Yes [X] No [ ]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer or a non-accelerated filer. See definition of "accelerated
filer" or "large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

     The number of shares outstanding of the registrant's common stock and class
A common stock as of November 30, 2006 were 19,077,906 and 6,657,159,
respectively.

================================================================================


                                        1




                               MOVADO GROUP, INC.

                     Index to Quarterly Report on Form 10-Q
                                October 31, 2006



                                                                            Page
                                                                            ----
                                                                         
Part I    Financial Information (Unaudited)

          Item 1.  Consolidated Balance Sheets at October 31, 2006,
                   January 31, 2006 and October 31, 2005                     3

                   Consolidated Statements of Income for the three months
                   and nine months ended October 31, 2006 and 2005           4

                   Consolidated Statements of Cash Flows for the nine
                   months ended October 31, 2006 and 2005                    5

                   Notes to Consolidated Financial Statements                6

          Item 2.  Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                      15

          Item 3.  Quantitative and Qualitative Disclosure about Market
                   Risks                                                    25

          Item 4.  Controls and Procedures                                  26

Part II   Other Information

          Item 1A. Risk Factors                                             27

          Item 6.  Exhibits                                                 27

Signature                                                                   28





                         PART I - FINANCIAL INFORMATION
                          Item 1. Financial Statements

                               MOVADO GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)
                                   (Unaudited)



                                                                  October 31,   January 31,   October 31,
                                                                      2006          2006          2005
                                                                  -----------   -----------   -----------
                                                                                     
ASSETS

Current assets:
   Cash and cash equivalents                                       $ 79,908      $123,625      $ 56,064
   Trade receivables, net                                           159,010       106,619       144,975
   Inventories                                                      207,709       198,582       208,943
   Other assets                                                      33,740        26,319        27,603
                                                                   --------      --------      --------
      Total current assets                                          480,367       455,145       437,585

Property, plant and equipment, net                                   53,339        52,168        51,706
Other assets                                                         47,058        39,373        37,846
                                                                   --------      --------      --------
      Total assets                                                 $580,764      $546,686      $527,137
                                                                   ========      ========      ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Loans payable to banks                                          $     --      $     --      $ 44,000
   Current portion of long-term debt                                  5,000         5,000            --
   Accounts payable                                                  35,948        33,120        32,497
   Accrued liabilities                                               52,465        42,268        57,620
   Current taxes payable                                              7,120         7,724         1,721
   Deferred taxes                                                       514           503         5,334
                                                                   --------      --------      --------
      Total current liabilities                                     101,047        88,615       141,172

Long-term debt                                                       82,435       104,955        45,000
Deferred and non-current income taxes                                11,050        11,947         9,741
Other liabilities                                                    21,714        19,491        17,629
                                                                   --------      --------      --------
      Total liabilities                                             216,246       225,008       213,542
                                                                   --------      --------      --------

Commitments and contingencies (Note 8)

Minority interest                                                       244            --            --

Shareholders' equity:
   Preferred Stock, $0.01 par value,
      5,000,000 shares authorized; no shares issued                      --            --            --
   Common Stock, $0.01 par value,
      100,000,000 shares authorized; 23,752,692, 23,215,836 and
      23,178,828 shares issued, respectively                            238           232           232
   Class A Common Stock, $0.01 par value,
      30,000,000 shares authorized; 6,657,159, 6,766,909 and             67            68            68
      6,773,258 shares issued and outstanding, respectively
   Capital in excess of par value                                   115,168       107,965       105,023
   Retained earnings                                                267,996       236,515       234,823
   Accumulated other comprehensive income                            33,291        27,673        24,224
   Treasury Stock, 4,676,117, 4,613,645 and 4,613,645
      shares, respectively, at cost                                 (52,486)      (50,775)      (50,775)
                                                                   --------      --------      --------
      Total shareholders' equity                                    364,274       321,678       313,595
                                                                   --------      --------      --------
      Total liabilities and equity                                 $580,764      $546,686      $527,137
                                                                   ========      ========      ========


                 See Notes to Consolidated Financial Statements


                                       3





                               MOVADO GROUP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share amounts)
                                   (Unaudited)



                                          Three Months Ended    Nine Months Ended
                                             October 31,           October 31,
                                         -------------------   -------------------
                                           2006       2005       2006       2005
                                         --------   --------   --------   --------
                                                              
Net sales                                $166,272   $141,736   $390,604   $344,818
Cost of sales                              68,370     55,563    154,600    135,821
                                         --------   --------   --------   --------

Gross profit                               97,902     86,173    236,004    208,997
Selling, general and administrative        78,123     67,163    198,717    175,563
                                         --------   --------   --------   --------

Operating income                           19,779     19,010     37,287     33,434
Other income, net                             374      1,008        374      1,008
Interest expense                             (987)    (1,292)    (2,849)    (3,090)
Interest income                               753         84      2,260        189
Minority interest                               2         --         66         --
                                         --------   --------   --------   --------

Income before income taxes                 19,921     18,810     37,138     31,541
(Benefit) / Provision for income taxes     (1,964)     4,702      1,049      7,885
                                         --------   --------   --------   --------
Net income                               $ 21,885   $ 14,108   $ 36,089   $ 23,656
                                         ========   ========   ========   ========

Earnings per share:
   Basic                                 $   0.85   $   0.56   $   1.41   $   0.94
                                         ========   ========   ========   ========
   Diluted                               $   0.82   $   0.54   $   1.35   $   0.91
                                         ========   ========   ========   ========

Weighted-average shares outstanding:
   Basic                                   25,758     25,328     25,620     25,209
                                         ========   ========   ========   ========
   Diluted                                 26,799     26,211     26,659     26,123
                                         ========   ========   ========   ========


                 See Notes to Consolidated Financial Statements


                                       4




                               MOVADO GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)



                                                                Nine Months Ended
                                                                   October 31,
                                                               -------------------
                                                                 2006       2005
                                                               --------   --------
                                                                    
Cash flows from operating activities:
   Net income                                                  $ 36,089   $ 23,656
   Adjustments to reconcile net income to net cash used in
      operating activities:
      Depreciation and amortization                              11,945     11,158
      Deferred income taxes                                     (10,342)    (1,860)
      Provision for losses on accounts receivable                 8,876        900
      Provision for losses on inventory                             463        450
      Stock-based compensation                                    2,237        995
      Excess tax benefit from stock-based compensation           (1,471)        --
      Gain on sale of asset held for sale                          (374)    (2,630)
      Loss on hedge derivatives                                      --      1,622
      Minority interest                                             (66)        --
   Changes in assets and liabilities:
      Trade receivables                                         (51,762)   (42,498)
      Inventories                                                (6,402)   (29,643)
      Other current assets                                       (5,066)      (734)
      Accounts payable                                            2,491      4,974
      Accrued liabilities                                        12,012      5,486
      Current taxes payable                                         872      1,721
      Other non-current assets                                   (3,039)    (1,074)
      Other non-current liabilities                               2,219        442
                                                               --------   --------
   Net cash used in operating activities                         (1,318)   (27,035)
                                                               --------   --------

Cash flows from investing activities:
      Capital expenditures                                      (12,305)    (9,970)
      Proceeds from sale of asset held for sale                     686      4,000
      Trademarks                                                   (471)      (533)
                                                               --------   --------
   Net cash used in investing activities                        (12,090)    (6,503)
                                                               --------   --------

Cash flows from financing activities:
      Net (repayments) / proceeds of bank borrowings            (24,158)    44,000
      Stock options exercised and other changes                   1,788        655
      Excess tax benefit from stock-based compensation            1,471         --
      Dividends paid                                             (4,607)    (3,786)
                                                               --------   --------
   Net cash (used in) / provided by financing activities        (25,506)    40,869
                                                               --------   --------

Effect of exchange rate changes on cash and cash equivalents     (4,803)   (15,049)
                                                               --------   --------

Net decrease in cash and cash equivalents                       (43,717)    (7,718)

Cash and cash equivalents at beginning of period                123,625     63,782
                                                               --------   --------

Cash and cash equivalents at end of period                     $ 79,908   $ 56,064
                                                               ========   ========


                 See Notes to Consolidated Financial Statements


                                        5



                               MOVADO GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
by Movado Group, Inc. (the "Company") in a manner consistent with that used in
the preparation of the consolidated financial statements included in the
Company's fiscal 2006 Annual Report filed on Form 10-K. In the opinion of
management, the accompanying consolidated financial statements reflect all
adjustments, consisting of only normal and recurring adjustments, necessary for
a fair statement of the financial position and results of operations for the
periods presented. These consolidated financial statements should be read in
conjunction with the aforementioned Annual Report. Operating results for the
interim periods presented are not necessarily indicative of the results that may
be expected for the full year.

NOTE 1 - RECLASSIFICATIONS

Certain reclassifications were made to prior years' financial statement amounts
and related note disclosures to conform to the fiscal 2007 presentation.

NOTE 2 - STOCK-BASED COMPENSATION

Effective concurrently with the consummation of the Company's public offering in
the fourth quarter of fiscal 1994, the Board of Directors and the shareholders
of the Company approved the adoption of the Movado Group, Inc. 1993 Employee
Stock Option Plan (the "Employee Stock Option Plan") for the benefit of certain
officers, directors and key employees of the Company. The Employee Stock Option
Plan was amended in fiscal 1997 and restated as the Movado Group, Inc. 1996
Stock Incentive Plan (the "Plan"). Under the Plan, as amended and restated as of
April 8, 2004, the Compensation Committee of the Board of Directors, which is
comprised of four of the Company's outside directors, has the authority to grant
incentive stock options and nonqualified stock options to purchase, as well as
stock appreciation rights and stock awards, up to 9,000,000 shares of Common
Stock. Options granted to participants under the Plan generally become
exercisable in equal installments over three or five years and remain
exercisable until the tenth anniversary of the date of grant. The option price
may not be less than the fair market value of the stock at the time the options
are granted.

On February 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 123(R), "Share-Based Payment" ("SFAS No.
123(R)"), electing to use the modified prospective application transition
method, and accordingly, prior period financial statements have not been
restated. Under this method, the fair value of all stock options granted after
adoption and the unvested portion of previously granted awards must be
recognized in the Consolidated Statements of Income. The Company utilizes the
Black-Scholes option-pricing model to calculate the fair value of each option at
the grant date which requires certain assumptions be made. The expected life of
stock option grants is determined using historical data and represents the time
period which the stock option is expected to be outstanding until it is
exercised. The risk free interest rate is the yield on the grant date of U.S.
Treasury constant maturities with a maturity date closest to the expected life
of the stock option. The expected stock price volatility is derived from
historical volatility and calculated based on the estimated term structure of
the stock option grant. The expected dividend yield is


                                        6



calculated using the expected annualized dividend which remains constant during
the expected term of the option.

The weighted-average assumptions used with the Black-Scholes option-pricing
model for the calculation of the fair value of stock option grants during the
nine months ended October 31, 2006 were: expected term of 5.5 years; risk-free
interest rate of 4.97%; expected volatility of 31.78% and dividend yield of
1.26%. The weighted-average grant date fair value of options granted during the
nine months ended October 31, 2006 was $6.46.

Total compensation expense for unvested stock option grants recognized during
the three and nine months ended October 31, 2006 was approximately $0.2 million,
net of a tax benefit of $0.1 million and $0.6 million, net of a tax benefit of
$0.3 million, respectively. Expense related to stock option compensation is
recognized on a straight-line basis over the vesting term. As of October 31,
2006, there was approximately $2.7 million of unrecognized compensation cost
related to unvested stock options. These costs are expected to be recognized
over a weighted-average period of 2.4 years. Total cash received for stock
option exercises during the nine months ended October 31, 2006 amounted to
approximately $2.9 million. Windfall tax benefits realized on these exercises
were approximately $1.1 million.

Prior to February 1, 2006, employee stock options were accounted for under the
intrinsic value method, which measures compensation cost as the excess, if any,
of the quoted market price of the stock at grant date over the amount an
employee must pay to acquire the stock. Accordingly, compensation expense had
not been recognized for stock options granted at or above fair value. Had
compensation expense been determined and recorded based upon the fair value
recognition provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation", net income (in thousands) and net income per share would have
been reduced to pro forma amounts for the three months and nine months ended
October 31, 2005 as follows:



                                        Three Months Ended   Nine Months Ended
(In thousands, except per share data)    October 31, 2005     October 31, 2005
                                        ------------------   -----------------
                                                       
Net income as reported                       $14,108              $23,656
Fair value based compensation
   expense, net of taxes                        (277)              (1,788)
                                             -------              -------
Pro forma net income                         $13,831              $21,868
                                             =======              =======

Basic earnings per share:
   As reported                               $  0.56              $  0.94
   Pro forma under SFAS No. 123              $  0.55              $  0.87

Diluted earnings per share:
   As reported                               $  0.54              $  0.91
   Pro forma under SFAS No. 123              $  0.53              $  0.84


The weighted-average assumptions used with the Black-Scholes option-pricing
model for the calculation of the fair value of stock option grants during the
nine months ended October 31, 2005 were: expected term of 7.0 years; risk-free
interest rate of 3.76%; expected volatility of 46.53% and dividend yield of
1.75%. The weighted-average grant date fair value of options granted during the
nine months ended October 31, 2005 was $8.10.


                                        7



Stock option activity for the nine months ended October 31, 2006 is summarized
as follows:



                    Number of   Weighted-Average
                     Options      Exercise Price
                    ---------   ----------------
                          
January 31, 2006    3,169,613        $12.96
Options granted        21,000        $19.33
Options exercised     (42,564)       $ 8.96
                    ---------        ------
April 30, 2006      3,148,049        $13.06
Options granted        97,000        $18.41
Options exercised    (242,015)       $ 8.33
Options cancelled     (20,000)       $14.32
                    ---------        ------
July 31, 2006       2,983,034        $13.61
Options granted        11,000        $25.99
Options exercised     (43,974)       $12.09
Options cancelled      (1,200)       $ 9.15
                    ---------        ------
October 31, 2006    2,948,860        $13.68
                    =========        ======


The total intrinsic value of stock options exercised for the nine months ended
October 31, 2006 and 2005 was approximately $4.6 million and $6.9 million,
respectively. The total fair value of the stock options vested for the nine
months ended October 31, 2006 and 2005 was approximately $2.1 million and $10.5
million, respectively.

The following table summarizes outstanding and exercisable stock options as of
October 31, 2006:



                                  Weighted-
                                   Average                                      Weighted-
                                  Remaining    Weighted-Average                  Average
    Range of         Number      Contractual       Exercise          Number      Exercise
Exercise Prices   Outstanding   Life (Years)         Price        Exercisable     Price
---------------   -----------   ------------   ----------------   -----------   ---------
                                                                 
 $3.12 -  $6.22      132,340         3.1            $ 4.25           132,340      $ 4.25
 $6.23 -  $9.34      150,898         4.0            $ 7.27           150,898      $ 7.27
 $9.35 - $12.45      748,748         3.1            $10.67           724,948      $10.70
$12.46 - $15.57    1,167,127         4.3            $14.55           877,327      $14.68
$15.58 - $18.68      720,747         6.2            $18.13           379,749      $18.36
$18.69 - $21.80       18,000         9.0            $19.76             2,001      $18.85
$21.81 - $24.91        1,000         9.2            $22.45                 0          --
$24.92 - $28.04       10,000         9.3            $26.34                 0          --
                   ---------         ---            ------         ---------      ------
                   2,948,860         4.3            $13.68         2,267,263      $12.93
                   ---------         ---            ------         ---------      ------


The total intrinsic value of outstanding and exercisable stock options as of
October 31, 2006 was approximately $35.6 million and $29.1 million,
respectively.

Under the 1996 Stock Incentive Plan, the Company has the ability to grant
restricted stock to certain employees. Restricted stock grants generally vest
three to five years from the date of grant. Expense for these grants is


                                       8


recognized on a straight-line basis over the vesting period. The fair value of
restricted stock grants is equal to the closing price of the Company's
publicly-traded common stock on the grant date.

On May 31, 2006, the Compensation Committee of the Board of Directors adopted
the Executive Long Term Incentive Plan (the "LTIP") authorized by section 9 of
the Plan. The LTIP provides for the award of "Performance Share Units" that are
equivalent, one for one, to shares of the Company's common stock and that vest
based on the Company's achievement of its operating margin goal for the fiscal
year ending January 31, 2009. The number of actual shares earned by a
participant is based on the Company's actual performance at the end of the award
period and can range from 0% to 150% of the participant's target award. Total
target awards of 189,500 Performance Share Units were granted by the
Compensation Committee on May 31, 2006 that vest over three and five year
periods.

Total compensation expense for restricted stock grants and for grants of
Performance Share Units under the LTIP (together "restricted stock") recognized
during the three months ended October 31, 2006 and 2005 was approximately $0.3
million, net of a tax benefit of $0.2 million, and $0.2 million, net of a tax
benefit of $0.1 million, respectively. Total compensation expense for restricted
stock grants recognized during the nine months ended October 31, 2006 and 2005
was approximately $0.8 million, net of a tax benefit of $0.5 million, and $0.6
million, net of a tax benefit of $0.4 million, respectively. Prior to February
1, 2006, compensation expense for restricted stock grants was reduced as actual
forfeitures of the awards occurred. SFAS No. 123(R) requires forfeitures to be
estimated at the time of grant in order to estimate the amount of share-based
awards that will ultimately vest and thus, current period compensation expense
has been adjusted for estimated forfeitures based on historical data. As of
October 31, 2006, there was approximately $4.4 million of unrecognized
compensation cost related to unvested restricted stock. These costs are expected
to be recognized over a weighted-average period of 2.8 years.

Restricted stock activity for the nine months ended October 31, 2006 is
summarized as follows:



                                  Weighted-
                    Number of      Average
                    Restricted   Grant Date
                   Stock Units   Fair Value
                   -----------   ----------
                           
January 31, 2006     321,090       $14.39
Units granted         46,400       $20.43
Units vested         (92,390)      $ 9.83
Units forfeited         (220)      $13.27
                     -------       ------
April 30, 2006       274,880       $16.95
Units granted        194,000       $18.20
Units vested          (4,550)      $ 9.98
Units forfeited       (8,410)      $16.64
                     -------       ------
July 31, 2006        455,920       $17.56
Units granted             50       $20.80
Units forfeited         (570)      $18.23
                     -------       ------
October 31, 2006     455,400       $17.56
                     =======       ======


Restricted stock units are exercised simultaneously when they vest and are
issued from the pool of authorized shares. The total intrinsic value of
restricted stock units that vested during the nine months ended October 31, 2006
was approximately $1.9 million. The windfall tax benefits realized on the vested
restricted stock grants for the nine months ended October 31, 2006 were $0.3
million. The weighted-average grant date fair values for restricted stock grants
for the nine months ended October 31, 2006 and 2005 were $18.63 and $17.94,


                                       9



respectively. Outstanding restricted stock units had a total intrinsic value of
approximately $11.7 million as of October 31, 2006.

NOTE 3 - COMPREHENSIVE INCOME (LOSS)

The components of comprehensive income (loss) for the three months and nine
months ended October 31, 2006 and 2005 are as follows (in thousands):



                                              Three Months Ended    Nine Months Ended
                                                 October 31,           October 31,
                                              ------------------   ------------------
                                                2006      2005       2006      2005
                                              -------   --------   -------   --------
                                                                 
Net income                                     $21,885   $14,108   $36,089   $ 23,656
Net unrealized gain (loss) on
   investments, net of tax                          71       (92)       90         62
Effective portion of unrealized (loss) gain
   on hedging contracts, net of tax               (568)    1,393     1,494     (3,734)
Foreign currency translation adjustment (1)     (1,024)      925     4,034    (20,812)
                                               -------   -------   -------   --------
Total comprehensive income (loss)              $20,364   $16,334   $41,707      ($828)
                                               =======   =======   =======   ========


(1)  The currency translation adjustments are not adjusted for income taxes as
     they relate to permanent investments in international subsidiaries.

NOTE 4 - SEGMENT INFORMATION

The Company conducts its business primarily in two operating segments: Wholesale
and Retail. The Company's Wholesale segment includes the designing,
manufacturing and distribution of quality watches. The Retail segment includes
the Movado Boutiques and outlet stores.

The Company divides its business into two major geographic segments: Domestic,
which includes the results of the Company's North American, Caribbean and Tommy
Hilfiger South American operations, and International, which includes the
results of the Company's operations in all other parts of the world. The
Company's International operations are principally conducted in Europe, the
Middle East and Asia. The Company's International assets are substantially
located in Switzerland.

Operating Segment Data for the Three Months Ended October 31, 2006 and 2005 (in
thousands):



                          Net Sales        Operating Income (Loss)
                     -------------------   -----------------------
                       2006       2005          2006      2005
                     --------   --------      -------   -------
                                            
Wholesale            $146,396   $121,932      $20,355   $18,459
Retail                 19,876     19,804         (576)      551
                     --------   --------      -------   -------
Consolidated total   $166,272   $141,736      $19,779   $19,010
                     ========   ========      =======   =======



                                       10



Operating Segment Data for the nine months ended October 31, 2006 and 2005 (in
thousands):



                          Net Sales        Operating Income (Loss)
                     -------------------   -----------------------
                       2006       2005          2006      2005
                     --------   --------      -------   -------
                                            
Wholesale            $333,505   $290,196      $38,251   $34,370
Retail                 57,099     54,622         (964)     (936)
                     --------   --------      -------   -------
Consolidated total   $390,604   $344,818      $37,287   $33,434
                     ========   ========      =======   =======




                                          Total Assets
                     ------------------------------------------------------
                     October 31, 2006   January 31, 2006   October 31, 2005
                     ----------------   ----------------   ----------------
                                                  
Wholesale                $509,842           $481,561           $459,897
Retail                     70,922             65,125             67,240
                         --------           --------           --------
Consolidated total       $580,764           $546,686           $527,137
                         ========           ========           ========


Geographic Segment Data for the three months ended October 31, 2006 and 2005 (in
thousands):



                          Net Sales         Operating Income
                     -------------------   -----------------
                       2006       2005       2006      2005
                     --------   --------   -------   -------
                                         
Domestic             $134,418   $113,128   $ 3,072   $12,463
International          31,854     28,608    16,707     6,547
                     --------   --------   -------   -------
Consolidated total   $166,272   $141,736   $19,779   $19,010
                     ========   ========   =======   =======


Geographic Segment Data for the nine months ended October 31, 2006 and 2005 (in
thousands):



                          Net Sales         Operating Income
                     -------------------   -----------------
                       2006       2005       2006      2005
                     --------   --------   -------   -------
                                         
Domestic             $301,330   $270,435   $ 3,800   $16,132
International          89,274     74,383    33,487    17,302
                     --------   --------   -------   -------
Consolidated total   $390,604   $344,818   $37,287   $33,434
                     ========   ========   =======   =======


Domestic and International net sales are net of intercompany sales of $84.2
million and $74.4 million for the three months ended October 31, 2006 and 2005,
respectively.

Domestic and International net sales are net of intercompany sales of $194.2
million and $179.7 million for the nine months ended October 31, 2006 and 2005,
respectively.



                                          Total Assets
                     ------------------------------------------------------
                     October 31, 2006   January 31, 2006   October 31, 2005
                     ----------------   ----------------   ----------------
                                                  
Domestic                 $379,441           $388,104           $311,521
International             201,323            158,582            215,616
                         --------           --------           --------
Consolidated total       $580,764           $546,686           $527,137
                         ========           ========           ========



                                       11





                                        Long-Lived Assets
                     ------------------------------------------------------
                     October 31, 2006   January 31, 2006   October 31, 2005
                     ----------------   ----------------   ----------------
                                                  
Domestic                  $39,431            $37,903            $38,091
International              13,908             14,265             13,615
                          -------            -------            -------
Consolidated total        $53,339            $52,168            $51,706
                          =======            =======            =======


NOTE 5 - EXECUTIVE RETIREMENT PLAN

The Company has a number of employee benefit plans covering substantially all
employees. Certain eligible executives of the Company have elected to defer a
portion of their compensation on a pre-tax basis under a defined contribution,
supplemental executive retirement plan (SERP) sponsored by the Company. The SERP
was adopted effective June 1, 1995, and provides eligible executives with
supplemental pension benefits in addition to amounts received under the
Company's other retirement plans. The Company makes a matching contribution
which vests over five years. For the three months ended October 31, 2006 and
2005, the Company recorded an expense related to the SERP of $0.2 million for
each period. For the nine months ended October 31, 2006 and 2005, the Company
recorded an expense related to the SERP of $0.5 million for each period.

NOTE 6 - INVENTORIES

Inventories consist of the following (in thousands):



                  October 31,   January 31,   October 31,
                      2006          2006          2005
                  -----------   -----------   -----------
                                     
Finished goods      $133,138      $135,160      $134,350
Component parts       64,746        59,325        69,046
Work-in-process        9,825         4,097         5,547
                    --------      --------      --------
                    $207,709      $198,582      $208,943
                    ========      ========      ========


NOTE 7 - EARNINGS PER SHARE

The Company presents net income per share on a basic and diluted basis. Basic
earnings per share is computed using weighted-average shares outstanding during
the period. Diluted earnings per share is computed using the weighted-average
number of shares outstanding adjusted for dilutive common stock equivalents.

The weighted-average number of shares outstanding for basic earnings per share
were 25,758,000 and 25,328,000 for the three months ended October 31, 2006 and
2005, respectively. For diluted earnings per share, these amounts were increased
by 1,041,000 and 883,000 for the three months ended October 31, 2006 and 2005,
respectively, due to potentially dilutive common stock equivalents issuable
under the Company's stock option plan and restricted stock grants.

The weighted-average number of shares outstanding for basic earnings per share
were 25,620,000 and 25,209,000 for the nine months ended October 31, 2006 and
2005, respectively. For diluted earnings per share, these amounts were increased
by 1,039,000 and 914,000 for the nine months ended October 31, 2006 and 2005,
respectively, due to potentially dilutive common stock equivalents issuable
under the Company's stock option plan and restricted stock grants.


                                       12



NOTE 8 - COMMITMENTS AND CONTINGENCIES

At October 31, 2006, the Company had outstanding letters of credit totaling $1.2
million with expiration dates through August 31, 2007. One bank in the domestic
bank group has issued irrevocable standby letters of credit for retail and
operating facility leases to various landlords, for the administration of the
Movado Boutique private-label credit card and Canadian payroll to the Royal Bank
of Canada.

As of October 31, 2006, two European banks have guaranteed obligations to third
parties on behalf of two of the Company's foreign subsidiaries in the amount of
$2.1 million in various foreign currencies.

The Company is involved from time to time in legal claims involving trademarks
and intellectual property, contracts, employee relations and other matters
incidental to the Company's business. Although the outcome of such matters
cannot be determined with certainty, the Company's general counsel and
management believe that the final outcome would not have a material effect on
the Company's consolidated financial position, results of operations or cash
flows.

NOTE 9 - OTHER INCOME, NET

The components of other income, net for the three months and nine months ended
October 31, 2006 and 2005 are as follows (in thousands):



                                    Three Months Ended   Nine Months Ended
                                       October 31,          October 31,
                                    ------------------   -----------------
                                      2006     2005        2006     2005
                                      ----   -------       ----   -------
                                                      
Gain on sale of building (a) (b)      $374   $ 2,630       $374   $ 2,630
Discontinued cash flow hedges (c)       --    (1,622)        --    (1,622)
                                      ----   -------       ----   -------
Other income, net                     $374   $ 1,008       $374   $ 1,008
                                      ====   =======       ====   =======


(a)  The Company recorded a pre-tax gain for the three months and nine months
     ended October 31, 2006 of $0.4 million on the sale of a building acquired
     on March 1, 2004 in the acquisition of Ebel. The building was classified as
     an asset held for sale in other current assets.

(b)  The Company recorded a pre-tax gain for the three months and nine months
     ended October 31, 2005 of $2.6 million on the sale of a building acquired
     on March 1, 2004 in the acquisition of Ebel. The building was classified as
     an asset held for sale in other current assets.

(c)  The Company recorded a pre-tax loss for the three months and nine months
     ended October 31, 2005 of $1.6 million in other expense, representing the
     impact of the discontinuation of foreign currency cash flow hedges because
     it was not probable that the forecasted transactions would occur by the end
     of the originally specified time period.

NOTE 10 - INCOME TAXES

At October 31, 2006, as a result of revised income projections, the Company
recognized that it would be able to utilize a greater portion of the Swiss net
operating loss carryforward acquired with the Ebel brand in fiscal year 2005.
The taxes recorded during the three months and nine months ended October 31,
2006 reflect a discrete benefit of $3.0 million as well as an adjustment to
reflect the projected 11% annual effective tax rate.



                                       13



NOTE 11 - RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes (an
interpretation of FASB Statement No. 109)" which is effective for fiscal years
beginning after December 15, 2006. This interpretation clarifies the accounting
for uncertainty in income taxes recognized in the financial statements by
prescribing a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. The Company is currently evaluating the impact of this
interpretation.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements.
This statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The Company is currently evaluating the impact of SFAS 157 on the
Company's consolidated financial statements.


                                       14


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

FORWARD-LOOKING STATEMENTS

Statements in this Quarterly Report on Form 10-Q, including, without limitation,
statements under this Item 2, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this report, 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 the
Private Securities Litigation Reform Act of 1995. These statements are based on
current expectations, estimates, forecasts and projections about the Company,
its future performance, the industry in which the Company operates and
management's assumptions. Words such as "expects", "anticipates", "targets",
"goals", "projects", "intends", "plans", "believes", "seeks", "estimates",
"may", "will", "should" and variations of such words and similar expressions are
also intended to identify such forward-looking statements. The Company cautions
readers that forward-looking statements include, without limitation, those
relating to the Company's future business prospects, projected operating or
financial results, revenues, working capital, liquidity, capital needs, plans
for future operations, expectations regarding capital expenditures and operating
expenses, 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 in the United States and the other
significant markets where the Company's products are sold, general uncertainty
related to possible terrorist attacks and the impact on consumer spending,
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 employees and officers, the ability to successfully
integrate the operations of acquired businesses without disruption to other
business activities, the continuation of licensing arrangements with third
parties, the ability to secure and protect trademarks, patents and other
intellectual property rights, the 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, disease, general risks associated with doing business outside the
United States including, without limitation, import duties, tariffs, quotas,
political and economic stability, and success of hedging strategies with respect
to currency exchange rate fluctuations.

These risks and uncertainties, along with the risk factors discussed under Item
1A "Risk Factors" in the Company's Annual Report on Form 10-K, should be
considered in evaluating any forward-looking statements contained in this
Quarterly Report on Form 10-Q or incorporated by reference herein. All
forward-looking statements speak only as of the date of this report or, in the
case of any document incorporated by reference, the date of that document. All
subsequent written and oral forward-looking statements attributable to the
Company or any person acting on its behalf are qualified by the cautionary
statements in this section. The Company undertakes no obligation to update or
publicly release any revisions to forward-looking statements to reflect events,
circumstances or changes in expectations after the date of this report.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial


                                       15



statements. These estimates and assumptions also affect the reported amounts of
revenues and expenses. Estimates by their nature are based on judgments and
available information. Therefore, actual results could materially differ from
those estimates under different assumptions and conditions.

Critical accounting policies are those that are most important to the portrayal
of the Company's financial condition and the results of operations and require
management's most difficult, subjective and complex judgments as a result of the
need to make estimates about the effect of matters that are inherently
uncertain. The Company's most critical accounting policies have been discussed
in the Company's Annual Report on Form 10-K for the year ended January 31, 2006.
In applying such policies, management must use significant estimates that are
based on its informed judgment. Because of the uncertainty inherent in these
estimates, actual results could differ from estimates used in applying the
critical accounting policies. Changes in such estimates, based on more accurate
future information, may affect amounts reported in future periods.

As of October 31, 2006, except as noted below, there have been no material
changes to any of the critical accounting policies as disclosed in its Annual
Report on Form 10-K for the fiscal year ended January 31, 2006.

On February 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 123(R), "Share-Based Payment" ("SFAS No.
123(R)"), electing to use the modified prospective application transition
method, and accordingly, prior period financial statements have not been
restated. Under this method, the fair value of all employee stock options
granted after adoption and the unvested portion of previously granted awards
must be recognized in the Consolidated Statements of Income. Prior to February
1, 2006, employee stock option grants were accounted for under the intrinsic
value method, which measures compensation cost as the excess, if any, of the
quoted market price of the stock at grant date over the amount an employee must
pay to acquire the stock. Accordingly, compensation expense had not been
recognized for employee stock options granted at or above fair value.

Overview

The Company conducts its business primarily in two operating segments: Wholesale
and Retail. The Company's Wholesale segment includes the designing,
manufacturing and distribution of quality watches. The Retail segment includes
the Movado Boutiques and outlet stores.

The Company divides its watch business into distinct categories. The luxury
category is comprised of the Ebel and Concord brands. The accessible luxury
category is comprised of the Movado and ESQ brands. The licensed brands category
represents all brands distributed under license agreements and includes Coach,
Hugo Boss, Juicy Couture and Tommy Hilfiger.


                                       16



Results of operations for the three months ended October 31, 2006 as compared to
the three months ended October 31, 2005

Net Sales: Comparative net sales by business segment were as follows (in
thousands):



                    Three Months Ended
                       October 31,
                   -------------------
                     2006       2005
                   --------   --------
                        
Wholesale:
   Domestic        $114,542   $ 93,324
   International     31,854     28,608
Retail               19,876     19,804
                   --------   --------
Net Sales          $166,272   $141,736
                   ========   ========


Net sales for the three months ended October 31, 2006 were $166.3 million, above
prior year by $24.5 million or 17.3%. The liquidation of excess discontinued
inventory accounted for approximately $12.1 million of the increase. Net sales
excluding the liquidation of excess discontinued inventory were $154.2 million,
representing an increase of $12.5 million, or 8.8%, over the prior year. The
Company is presenting net sales excluding the liquidation of excess discontinued
inventory (and gross profit excluding liquidation sales) because the Company
believes that it is useful to investors to eliminate the effect of these
unusual sales in order to improve the comparability of the Company's results for
the periods presented.

Net sales in the domestic wholesale segment were $114.5 million for the three
months ended October 31, 2006 representing a 22.7% increase above prior year
sales of $93.3 million. The increase in net sales was primarily attributed to
higher sales in the accessible luxury brands of $11.0 million and in the
licensed brand category of $6.6 million. In the accessible luxury category,
Movado was above prior year by $9.3 million, which includes the sale of
approximately $5.0 million of excess discontinued inventory. In the licensed
brand category, Tommy Hilfiger was above prior year by $2.4 million, primarily
as a result of increased business in Latin America. In addition, Juicy Couture,
which was launched during the quarter, contributed $2.2 million of net sales.
The liquidation of excess discontinued inventory accounted for approximately
$12.1 million of the increase in domestic wholesale net sales. Net sales
excluding the liquidation of excess discontinued inventory were $102.4 million,
representing an increase of $9.1 million, or 9.8%, over the $93.3 million of net
sales in the prior year. Excluding excess discontinued inventory sales, the
luxury category recorded a decline in net sales for the three months ended
October 31, 2006 of $3.7 million. This primarily reflects the re-positioning of
the Concord brand.

Net sales in the international wholesale segment were $31.9 million for the
three months ended October 31, 2006 representing an 11.3% increase above prior
year sales of $28.6 million. The increase of $3.3 million was attributed to
higher sales volume in the licensed brand category of $3.7 million. In the
licensed brands, the sales increase was driven by growth in Hugo Boss of $3.4
million, which was primarily the result of new market expansion.

Net sales in the retail segment were $19.9 million for the three months ended
October 31, 2006 representing a 0.4% increase above prior year sales of $19.8
million. The increase was driven by an overall 1.3% increase in Movado Boutique
sales, resulting from a 0.5% comparable store sales increase in the Movado
Boutiques along with sales from non-comparable stores. Sales by the Company's
outlet stores were below prior year by 0.2%, resulting from a 5.6% comparable
store sales decrease. The Company operated 30 Movado Boutiques and 30 outlet
stores at October 31, 2006, compared to 27 Movado Boutiques and 29 outlet stores
at October 31, 2005.


                                       17



The Company considers comparable store sales to be sales of stores that were
open as of February 1st of the last year through January 31st of the current
year. The Company had 24 comparable Movado Boutiques and 26 comparable outlet
stores for the three months ended October 31, 2006. The sales from stores that
have been relocated, renovated or refurbished are included in the calculation of
comparable store sales. The method of calculating comparative store sales varies
across the retail industry. As a result, the calculation of comparable store
sales may not be the same as measures reported by other companies.

Gross Profit. Gross profit for the three months ended October 31, 2006 was $97.9
million or 58.9% of net sales as compared to $86.2 million or 60.8% of net sales
for the three months ended October 31, 2005. The increase in dollar gross profit
of $11.7 million was primarily the result of the higher sales volume. Gross
margin percentage excluding the liquidation of excess discontinued inventory was
63.5%, above the 60.8% margin recorded in the prior year. The increase in gross
margin percentage was driven by higher margins in the Movado Boutiques due to
both product mix and improved jewelry margins. In addition, increases were
recorded across most brands largely due to higher margin percentages on new
product introductions.

Selling, General and Administrative ("SG&A"). SG&A expenses for the three months
ended October 31, 2006 were $78.1 million or 47.0% of net sales as compared to
$67.2 million or 47.4% of net sales for the three months ended October 31, 2005.
The increase of $10.9 million includes higher bad debt expense of approximately
$6.0 million as a result of a change in estimate to provide for aged customer
receivables. The increase is also attributed to higher payroll and related costs
of $4.2 million, reflecting salary and benefit cost increases, increased
headcount to support the growth for both new and existing brands and higher
equity compensation costs. In addition, increased spending of $1.4 million was
made to support the retail expansion and increased spending of $0.6 million
occurred as a result of the consolidation of the Company's majority owned joint
venture with TWC established to distribute the licensed brands in France and
Germany. The increase in SG&A was partially offset by a $2.2 million
out-of-period adjustment recorded in the third quarter of fiscal 2007 related to
foreign currency transactions.

Wholesale Operating Income. Operating income in the wholesale segment increased
by $1.9 million to $20.4 million. The increase was the net result of higher
gross profit of $11.3 million, partially offset by the increase in SG&A expenses
attributable to the wholesale segment of $9.4 million. The higher gross profit
of $11.3 million was the result of the increase in net sales of $24.5 million.
The increase in SG&A expenses allocable to the wholesale segment in fiscal 2007
related principally to higher bad debt expense of approximately $6.0 million,
$4.2 million of increased salary and benefits, $0.6 million of increased
TWC-related spending, offset partially by the $2.2 million out-of-period
adjustment, each as described above under "Selling, General and Administrative".

Retail Operating (Loss) Income. Operating loss of $0.6 million and operating
income of $0.6 million were recorded in the retail segment for the three months
ended October 31, 2006 and 2005, respectively. The operating loss was the net
result of higher gross profit of $0.4 million more than offset by higher SG&A
expenses of $1.6 million. The increased gross profit was primarily attributed to
an increase in the gross profit percentage primarily due to product mix as well
as higher gross profit on jewelry. The increase in SG&A expenses was primarily
the result of increased spending for the non-comparable door expansion. These
results reflect the seasonality of the business.

Other Income. The Company recorded other income for the three months ended
October 31, 2006 and 2005 of $0.4 million and $1.0 million, respectively. As of
October 31, 2006, the Company recorded a pre-tax gain of $0.4 million on the
sale of a building acquired on March 1, 2004 in the acquisition of Ebel. As of
October 31, 2005, the Company recorded a pre-tax gain of $2.6 million on the
sale of another building acquired in the acquisition of Ebel. Both buildings
were classified as assets held for sale in other current assets. Additionally,
as of October 31, 2005, the Company recorded a pre-tax loss of $1.6 million
representing the impact of the


                                       18



discontinuation of foreign currency cash flow hedges because it was not probable
that the forecasted transactions would occur by the end of the originally
specified time period.

Interest Expense. Interest expense for the three months ended October 31, 2006
and 2005 was $1.0 million and $1.3 million, respectively. Average borrowings
were $96.3 million at an average borrowing rate of 3.9% for the three months
ended October 31, 2006 compared to average borrowings of $88.8 million at an
average rate of 5.2% for the three months ended October 31, 2005. The lower
average borrowing rate was due to the shifting of debt from the U.S. to
Switzerland, which has a more favorable borrowing rate.

Interest Income. Interest income was approximately $0.8 million for the three
months ended October 31, 2006 as compared to approximately $0.1 million for the
three months ended October 31, 2005. The repatriated foreign earnings of $150.0
million in the fourth quarter of fiscal year 2006 under the American Jobs
Creation Act of 2004 resulted in significantly higher cash balances in the
United States. The cash invested in the United States generated interest income
at the rate of 5.2%.

Income Taxes. The Company recorded a tax benefit of $2.0 million for the three
months ended October 31, 2006 as compared to a tax expense of $4.7 million for
the three months ended October 31, 2005. At October 31, 2006, as a result of
revised income projections, the Company recognized that it would be able to
utilize a greater portion of the Swiss net operating loss carryforward. The
taxes recorded during the three months ended October 31, 2006 reflect a discrete
benefit of $3.0 million as well as an adjustment to reflect the projected 11%
annual effective tax rate. For the three months ended October 31, 2005, the
annual effective tax rate was 25%.

Net Income. For the three months ended October 31, 2006, the Company recorded
net income of $21.9 million as compared to $14.1 million for the three months
ended October 31, 2005.

Results of operations for the nine months ended October 31, 2006 as compared to
the nine months ended October 31, 2005

Net Sales: Comparative net sales by business segment were as follows (in
thousands):



                    Nine Months Ended
                       October 31,
                   -------------------
                     2006       2005
                   --------   --------
                        
Wholesale:
   Domestic        $244,231   $215,813
   International     89,274     74,383
Retail               57,099     54,622
                   --------   --------
Net Sales          $390,604   $344,818
                   ========   ========


Net sales for the nine months ended October 31, 2006 were $390.6 million, above
prior year by $45.8 million or 13.3%. The liquidation of excess discontinued
inventory accounted for approximately $12.1 million of that increase. Net sales
excluding the liquidation of excess discontinued inventory were $378.5 million,
above prior year by $33.7 million, or 9.8%.

Net sales in the domestic wholesale segment were $244.2 million for the nine
months ended October 31, 2006 representing a 13.2% increase above prior year
sales of $215.8 million. The increase in net sales was primarily attributed to
higher sales in the accessible luxury brands of $20.1 million and in the
licensed brand category of $8.2 million. In the accessible luxury category,
Movado was above prior year by $16.5 million, which includes


                                       19


the sale of approximately $5.0 million of excess discontinued inventory. In the
licensed brand category, Tommy Hilfiger was above prior year by $3.5 million,
primarily as a result of increased business in Latin America. In addition, Juicy
Couture, which was launched during the third quarter, contributed $2.2 million
of net sales. Hugo Boss was above prior year by $1.5 million also reflecting the
impact of the launch of the Hugo Boss business in the domestic segment. The
liquidation of excess discontinued inventory accounted for approximately $12.1
million of the increase in domestic wholesale net sales. Net sales excluding the
liquidation of excess discontinued inventory were $232.1 million, representing
an increase of $16.3 million, or 7.6%, over the $215.8 million of net sales in
the prior year. Excluding excess discontinued inventory sales, the luxury
category recorded a decline in net sales for the nine months ended October 31,
2006 of $7.3 million. This primarily reflects the re-positioning of the Concord
brand.

Net sales in the international wholesale segment were $89.3 million for the nine
months ended October 31, 2006 representing a 20.0% increase above prior year
sales of $74.4 million. The increase of $14.9 million was attributed to higher
sales volume in the licensed brand category of $12.3 million. In the licensed
brands, the sales increase was driven by growth in Hugo Boss of $9.5 million and
increases in Tommy Hilfiger of $3.1 million, which was primarily as a result of
new market expansion. The luxury category was above prior year by $5.0 million.
This was due to the new product introductions for the Ebel brand which recorded
sales increases over last year of $7.7 million.

Net sales in the retail segment were $57.1 million for the nine months ended
October 31, 2006 representing a 4.5% increase above prior year sales of $54.6
million. The increase was driven by an overall 11.6% increase in Movado Boutique
sales, resulting from a 5.0% comparable store sales increase in the Movado
Boutiques along with sales from non-comparable stores. Net sales by the
Company's outlet stores were below prior year by 0.6%, resulting from a 3.7%
comparable store sales decrease, somewhat offset by sales from non-comparable
stores. The Company operated 30 Movado Boutiques and 30 outlet stores at October
31, 2006, compared to 27 Movado Boutiques and 29 outlet stores at October 31,
2005.

Gross Profit. Gross profit for the nine months ended October 31, 2006 was $236.0
million or 60.4% of net sales as compared to $209.0 million or 60.6% of net
sales for the nine months ended October 31, 2005. The increase in dollar gross
profit of $27.0 million was primarily the result of the higher sales volume.
Gross margin percentage excluding the liquidation of excess discontinued
inventory was 62.4%, above the 60.6% margin recorded in the prior year. The
increase in gross margin percentage was driven by higher margins in the Movado
Boutiques due to both product mix and improved jewelry margins. In addition,
increases were recorded across most brands largely due to higher margin
percentages on new product introductions.

Selling, General and Administrative. SG&A expenses for the nine months ended
October 31, 2006 were $198.7 million or 50.9% of net sales as compared to $175.6
million or 50.9% of net sales for the nine months ended October 31, 2005. The
increase of $23.1 million includes the adjustment recorded in the third quarter
for bad debt expense of approximately $6.0 million to provide for aged customer
receivables. The increase is also attributed to higher payroll and related costs
of $10.0 million reflecting salary and benefit cost increases, increased
headcount to support the growth for both new and existing brands and higher
equity compensation costs. In addition, increased spending of $9.2 million was
made to support the sales growth initiatives, including higher marketing
spending of $2.9 million, increased costs associated with the retail expansion
of $2.6 million, higher sales support activities of $2.0 million and higher
costs of $1.7 million as a result of the consolidation of the Company's majority
owned joint venture with TWC. The increase in SG&A was partially offset by a
$2.2 million out-of-period adjustment recorded in the third quarter of fiscal
2007 related to foreign currency transactions.

Wholesale Operating Income. Operating income in the wholesale segment increased
by $3.9 million to $38.3 million. The increase was the net result of higher
gross profit of $24.3 million, partially offset by the increase in SG&A expenses
attributable to the wholesale segment of $20.4 million. The higher gross profit
of $24.3


                                       20


million was primarily due to the result of the increase in net sales of $43.3
million. The increase in SG&A expenses allocable to the wholesale segment in
fiscal 2007 related principally to higher bad debt expense of approximately $6.0
million, $10.0 million of increased salary and benefits, $2.7 of
marketing-related expenses and $1.7 million of increased TWC-related spending,
offset partially by the $2.2 million out-of-period adjustment, each as described
above under "Selling, General and Administrative".

Retail Operating Loss. Operating losses of $1.0 million and $0.9 million were
recorded in the retail segment for the nine months ended October 31, 2006 and
2005, respectively. The operating loss was the net result of higher gross profit
of $2.7 million offset by higher SG&A expenses of $2.8 million. The increased
gross profit was primarily attributable to higher net sales of $2.5 million and
an increase in the gross profit percentage primarily due to product mix as well
as higher gross profit on jewelry. The increase in SG&A expenses was primarily
the result of increased spending for the non-comparable door expansion. These
results reflect the seasonality of the business.

Other Income. The Company recorded other income for the nine months ended
October 31, 2006 and 2005 of $0.4 million and $1.0 million, respectively. As of
October 31, 2006, the Company recorded a pre-tax gain of $0.4 million on the
sale of a building acquired on March 1, 2004 in the acquisition of Ebel. As of
October 31, 2005, the Company recorded a pre-tax gain of $2.6 million on the
sale of another building acquired in the acquisition of Ebel. Both buildings
were classified as assets held for sale in other current assets. Additionally,
as of October 31, 2005, the Company recorded a pre-tax loss of $1.6 million
representing the impact of the discontinuation of foreign currency cash flow
hedges because it was not probable that the forecasted transactions would occur
by the end of the originally specified time period.

Interest Expense. Interest expense for the nine months ended October 31, 2006
and 2005 was $2.8 million and $3.1 million, respectively. Average borrowings
were $100.6 million at an average borrowing rate of 3.7% for the nine months
ended October 31, 2006 compared to average borrowings of $71.0 million at an
average rate of 5.3% for the nine months ended October 31, 2005. The lower
average borrowing rate was due to the shifting of debt from the U.S. to
Switzerland, which has a more favorable borrowing rate.

Interest Income. Interest income was $2.3 million for the nine months ended
October 31, 2006 as compared to $0.2 million for the nine months ended October
31, 2005. The repatriated foreign earnings of $150.0 million in the fourth
quarter of fiscal year 2006 under the American Jobs Creation Act of 2004
resulted in significantly higher cash balances in the United States. The cash
invested in the United States generated interest income at the rate of 4.9%.

Income Taxes. The Company recorded a tax expense of $1.0 million for the nine
months ended October 31, 2006 as compared to a tax expense of $7.9 million for
the nine months ended October 31, 2005. At October 31, 2006, as a result of
revised income projections, the Company recognized that it would be able to
utilize a greater portion of the Swiss net operating loss carryforward. The
taxes recorded during the nine months ended October 31, 2006 reflect a discrete
benefit of $3.0 million as well as an adjustment to reflect the projected 11%
annual effective tax rate. For the three months ended October 31, 2005, the
annual effective tax rate was 25%.

Net Income. For the nine months ended October 31, 2006, the Company recorded net
income of $36.1 million as compared to $23.7 million for the nine months ended
October 31, 2005.

LIQUIDITY AND CAPITAL RESOURCES

Cash used in operating activities was $1.3 million for the nine months ended
October 31, 2006 as compared to $27.0 million cash used for the nine months
ended October 31, 2005. The cash used in operating activities reflects the
historic pattern of the Company to fund its working capital needs in the first
nine months of the year due to the seasonal nature of the business. For the nine
months ended October 31, 2006, the most significant


                                       21


changes in operating assets were the increases in accounts receivable of $51.8
million, primarily resulting from the growth in sales and an increase of $6.4
million in inventory levels, primarily in anticipation of the upcoming holiday
selling season. These were offset by cash provided from net earnings of $36.1
million for the nine months ended October 31, 2006 and $15.4 million of cash
provided from the increase of total current liabilities. For the nine months
ended October 31, 2005, the most significant changes in operating assets were
the increases in accounts receivable of $42.5 million, primarily resulting from
the growth in sales and an increase of $29.6 million in inventory levels. This
was partially offset by net earnings of $23.7 million for the nine months ended
October 31, 2005.

Cash used in investing activities amounted to $12.1 million and $6.5 million for
the nine months ended October 31, 2006 and 2005, respectively. The cash used
during both periods consisted of the capital expenditures primarily related to
the expansion and renovations of retail stores and computer hardware and
software enhancements. Capital expenditures in the 2006 period also included the
acquisition of tooling for new product introductions. Capital expenditures in
the 2005 period also included the acquisition of machinery and equipment to
further automate distribution activities.

Cash used in financing activities amounted to $25.5 million for the nine months
ended October 31, 2006 compared to cash provided of $40.9 million for the nine
months ended October 31, 2005. Cash used in financing activities for the nine
months ended October 31, 2006 was primarily to pay down long-term debt, while
cash provided in the nine months ended October 31, 2005 resulted primarily from
short-term borrowings required to fund the Company's working capital needs.

During fiscal 1999, the Company issued $25.0 million of Series A Senior Notes
under a Note Purchase and Private Shelf Agreement dated November 30, 1998. These
notes bear interest of 6.90% per annum, mature on October 30, 2010 and are
subject to annual repayments of $5.0 million commencing October 31, 2006. These
notes contain certain financial covenants including an interest coverage ratio
and maintenance of consolidated net worth and certain non-financial covenants
that restrict the Company's activities regarding investments and acquisitions,
mergers, certain transactions with affiliates, creation of liens, asset
transfers, payment of dividends and limitation of the amount of debt
outstanding. At October 31, 2006, the Company was in compliance with all
financial and non-financial covenants and $20.0 million of these notes were
issued and outstanding.

As of March 21, 2004, the Company amended its Note Purchase and Private Shelf
Agreement, originally dated March 21, 2001, to expire on March 21, 2007. This
agreement allows for the issuance, for up to three years after the date thereof,
of senior promissory notes in the aggregate principal amount of up to $40.0
million with maturities up to 12 years from their original date of issuance. On
October 8, 2004, the Company issued, pursuant to the Note Purchase Agreement,
4.79% Senior Series A-2004 Notes due 2011 (the "Senior Series A-2004 Notes"), in
an aggregate principal amount of $20.0 million, which will mature on October 8,
2011 and are subject to annual repayments of $5.0 million commencing on October
8, 2008. Proceeds of the Senior Series A-2004 Notes have been used by the
Company for capital expenditures, repayment of certain of its debt obligations
and general corporate purposes. These notes contain certain financial covenants,
including an interest coverage ratio and maintenance of consolidated net worth
and certain non-financial covenants that restrict the Company's activities
regarding investments and acquisitions, mergers, certain transactions with
affiliates, creation of liens, asset transfers, payment of dividends and
limitation of the amount of debt outstanding. As of October 31, 2006, the
Company was in compliance with all financial and non-financial covenants and
$20.0 million of these notes were issued and outstanding.

On December 15, 2005, the Company as parent guarantor, and its Swiss
subsidiaries, MGI Luxury Group S.A. and Movado Watch Company SA as borrowers,
entered into a credit agreement with JPMorgan Chase Bank, N.A., JPMorgan
Securities, Inc., Bank of America, N.A., PNC Bank and Citibank, N.A. (the "Swiss
Credit Agreement") which provides for a revolving credit facility of 90.0
million Swiss francs and matures on December 15, 2010. The obligations of the
Company's two Swiss subsidiaries under this credit agreement are


                                       22


guaranteed by the Company under a Parent Guarantee, dated as of December 15,
2005, in favor of the lenders. The Swiss Credit Agreement contains financial
covenants, including an interest coverage ratio, average debt coverage ratio and
limitations on capital expenditures and certain non-financial covenants that
restrict the Company's activities regarding investments and acquisitions,
mergers, certain transactions with affiliates, creation of liens, asset
transfers, payment of dividends and limitation of the amount of debt
outstanding. Borrowings under the Swiss Credit Agreement bear interest at a rate
equal to the LIBOR (as defined in the Swiss Credit Agreement) plus a margin
ranging from .50% per annum to .875% per annum (depending upon a leverage
ratio). As of October 31, 2006, the Company was in compliance with all financial
and non-financial covenants and had 59.0 million Swiss francs, with a dollar
equivalent of $47.4 million, outstanding under this revolving credit facility.

On December 15, 2005, the Company and its Swiss subsidiaries, MGI Luxury Group
S.A. and Movado Watch Company SA, entered into a credit agreement with JPMorgan
Chase Bank, N.A., JPMorgan Securities, Inc., Bank of America, N.A., PNC Bank and
Citibank, N.A. (the "US Credit Agreement") which provides for a revolving credit
facility of $50.0 million (including a sublimit for borrowings in Swiss francs
of up to $25.0 million) with a provision to allow for an increase of an
additional $50.0 million subject to certain terms and conditions. The US Credit
Agreement will mature on December 15, 2010. The obligations of MGI Luxury Group
S.A. and Movado Watch Company SA are guaranteed by the Company under a Parent
Guarantee, dated as of December 15, 2005, in favor of the lenders. The
obligations of the Company are guaranteed by certain domestic subsidiaries of
the Company under subsidiary guarantees, in favor of the lenders. The US Credit
Agreement contains financial covenants, including an interest coverage ratio,
average debt coverage ratio and limitations on capital expenditures and certain
non-financial covenants that restrict the Company's activities regarding
investments and acquisitions, mergers, certain transactions with affiliates,
creation of liens, asset transfers, payment of dividends and limitation of the
amount of debt outstanding. Borrowings under the US Credit Agreement bear
interest, at the Company's option, at a rate equal to the Adjusted LIBOR (as
defined in the US Credit Agreement) plus a margin ranging from .50% per annum to
..875% per annum (depending upon a leverage ratio), or the Alternate Base Rate
(as defined in the US Credit Agreement). As of October 31, 2006, the Company was
in compliance with all financial and non-financial covenants, and there were no
outstanding borrowings against this line.

On June 16, 2006, the Company renewed a line of credit letter agreement with
Bank of America and an amended and restated promissory note in the principal
amount of up to $20.0 million payable to Bank of America, originally dated
December 12, 2005. Pursuant to the line of credit letter agreement, Bank of
America will consider requests for short-term loans and documentary letters of
credit for the importation of merchandise inventory, the aggregate amount of
which at any time outstanding shall not exceed $20.0 million. The Company's
obligations under the agreement are guaranteed by its subsidiaries, Movado
Retail Group, Inc. and Movado LLC. Pursuant to the amended and restated
promissory note, the Company promised to pay to Bank of America $20.0 million,
or such lesser amount as may then be the unpaid balance of all loans made by
Bank of America to the Company thereunder, in immediately available funds upon
the maturity date of June 16, 2007. The Company has the right to prepay all or
part of any outstanding amounts under the promissory note without penalty at any
time prior to the maturity date. The amended and restated promissory note bears
interest at an annual rate equal to either (i) a floating rate equal to the
prime rate or (ii) such fixed rate as may be agreed upon by the Company and Bank
of America for an interest period which is also then agreed upon. The amended
and restated promissory note contains various representations and warranties and
events of default that are customary for instruments of that type. As of October
31, 2006, there were no outstanding borrowings against this line.

On July 31, 2006, the Company renewed a promissory note, originally dated
December 13, 2005, in the principal amount of up to $37.0 million, at a revised
amount of up to $7.0 million, payable to JPMorgan Chase Bank, N.A. ("Chase").
Pursuant to the promissory note, the Company promised to pay to Chase $7.0
million, or such lesser amount as may then be the unpaid balance of each loan
made or letter of credit issued by Chase to


                                       23


the Company thereunder, upon the maturity date of July 31, 2007. The Company
has the right to prepay all or part of any outstanding amounts under the
promissory note without penalty at any time prior to the maturity date. The
promissory note bears interest at an annual rate equal to either (i) a floating
rate equal to the prime rate, (ii) a fixed rate equal to an adjusted LIBOR plus
0.625% or (iii) a fixed rate equal to a rate of interest offered by Chase from
time to time on any single commercial borrowing. The promissory note contains
various events of default that are customary for instruments of that type. In
addition, it is an event of default for any security interest or other
encumbrance to be created or imposed on the Company's property, other than as
permitted in the lien covenant of the US Credit Agreement. Chase issued 11
irrevocable standby letters of credit for retail and operating facility leases
to various landlords, for the administration of the Movado Boutique
private-label credit card and Canadian payroll to the Royal Bank of Canada
totaling $1.2 million with expiration dates through August 31, 2007. As of
October 31, 2006, there were no outstanding borrowings against this promissory
note.

A Swiss subsidiary of the Company maintains unsecured lines of credit with an
unspecified length of time with a Swiss bank. Available credit under these lines
totaled 8.0 million Swiss francs, with dollar equivalents of $6.4 million and
$6.2 million at October 31, 2006 and 2005, respectively. As of October 31, 2006,
two European banks have guaranteed obligations to third parties on behalf of two
of the Company's foreign subsidiaries in the amount of $2.1 million in various
foreign currencies. As of October 31, 2006, there were no outstanding borrowings
against these lines.

The Company paid dividends per share of $0.06 quarterly or approximately $4.6
million, for the nine months ended October 31, 2006 and $0.05 per share
quarterly or approximately $3.8 million for the nine months ended October 31,
2005.

Cash and cash equivalents at October 31, 2006 amounted to $79.9 million compared
to $56.1 million at October 31, 2005. The increase in cash and cash equivalents
primarily relates to the Company's borrowings in the fourth quarter of fiscal
2006 to repatriate foreign earnings to the United States under the American Jobs
Creation Act of 2004.

Management believes that the cash on hand in addition to the expected cash flow
from operations and the Company's short-term borrowing capacity will be
sufficient to meet its working capital needs for at least the next 12 months.

Off-Balance Sheet Arrangements

The Company does not have off-balance sheet financing or unconsolidated
special-purpose entities.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes (an
interpretation of FASB Statement No. 109)" which is effective for fiscal years
beginning after December 15, 2006. This interpretation clarifies the accounting
for uncertainty in income taxes recognized in the financial statements by
prescribing a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. The Company is currently evaluating the impact of this
interpretation.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements.
This statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The Company is currently evaluating the impact of SFAS 157 on the
Company's consolidated financial statements.



                                       24



Item 3. Quantitative and Qualitative Disclosure about Market Risks

Foreign Currency and Commodity Price Risks

A significant portion of the Company's purchases are denominated in Swiss
francs. The Company reduces its exposure to the Swiss franc exchange rate risk
through a hedging program. Under the hedging program, the Company manages most
of its foreign currency exposures on a consolidated basis, which allows it to
net certain exposures and take advantage of natural offsets. The Company uses
various derivative financial instruments to further reduce the net exposures to
currency fluctuations, predominately forward and option contracts. These
derivatives either (a) are used to hedge the Company's Swiss franc liabilities
and are recorded at fair value with the changes in fair value reflected in
earnings or (b) are documented as cash flow hedges with the gains and losses on
this latter hedging activity first reflected in other comprehensive income, and
then later classified into earnings in accordance with Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"), as amended by SFAS No. 137, SFAS No. 138 and SFAS
No. 149. In both cases, the earnings impact is partially offset by the effects
of currency movements on the underlying hedged transactions. If the Company did
not engage in a hedging program, any change in the Swiss franc to local currency
would have an equal effect on the Company's cost of sales. In addition, the
Company hedges its Swiss franc payable exposure with forward contracts. As of
October 31, 2006, the Company's entire net forward contracts hedging portfolio
consisted of 141.0 million Swiss francs equivalent for various expiry dates
ranging through September 28, 2007. If the Company were to settle its Swiss
franc forward contracts at October 31, 2006, the net result would have been a
loss of $0.2 million, net of tax benefit of $0.1 million. As of October 31,
2006, the Company had 24.0 million Swiss franc option contracts related to cash
flow hedges for various expiry dates ranging through October 31, 2007. If the
Company were to settle its Swiss franc option contracts at October 31, 2006, the
net result would have been a loss of $0.1 million, net of tax benefit of $0.1
million.

The Company's Board of Directors authorized the hedging of the Company's Swiss
franc denominated investment in its wholly-owned Swiss subsidiaries using
purchase options under certain limitations. These hedges are treated as net
investment hedges under SFAS No. 133. As of October 31, 2006, the Company did
not hold a purchased option hedge portfolio related to net investment hedging.

Commodity Risk

Additionally, the Company has a hedging program related to gold used in the
manufacturing of the Company's watches. Under this hedging program, the Company
purchases various commodity derivative instruments, primarily future contracts.
These derivatives are documented as SFAS No. 133 cash flow hedges, and gains and
losses on these derivative instruments are first reflected in other
comprehensive income, and later reclassified into earnings, partially offset by
the effects of gold market price changes on the underlying actual gold
purchases. If the Company did not engage in a gold hedging program, any changes
in the gold price would have an equal effect on the Company's cost of sales. The
Company did not hold any futures contracts in its gold hedge portfolio related
to cash flow hedges as of October 31, 2006.

Debt and Interest Rate Risk

In addition, the Company has certain debt obligations with variable interest
rates, which are based on Swiss LIBOR plus a fixed additional interest rate. The
Company does not hedge these interest rate risks. The Company also has certain
debt obligations with fixed interest rates. The differences between the market
based interest rates at October 31, 2006, and the fixed rates were unfavorable.
The Company believes that a 1% change in interest rates would affect the
Company's net income by approximately $0.5 million.


                                       25



Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management,
including the Chief Executive Officer and the Chief Financial Officer, evaluated
the effectiveness of the Company's disclosure controls and procedures, as such
terms are defined in Rule 13a-15(e) under the Securities Exchange Act, as
amended. Based on that evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective as of the end of the period covered by this report.

It should be noted that while the Company's Chief Executive Officer and Chief
Financial Officer believe that the Company's disclosure controls and procedures
provide a reasonable level of assurance that they are effective, they do not
expect that the Company's disclosure controls and procedures or internal control
over financial reporting will prevent all errors and fraud. A control system, no
matter how well conceived or operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company's internal control over financial
reporting during the three months ended October 31, 2006, that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.


                                       26



                           PART II - OTHER INFORMATION

Item 1A. Risk Factors

     As of October 31, 2006, there have been no material changes to any of the
     risk factors previously reported in the Annual Report on Form 10-K for the
     fiscal year ended January 31, 2006.

Item 6. Exhibits


    
31.1   Certification of the Chief Executive Officer pursuant to Section 302 of
       the Sarbanes-Oxley Act of 2002.

31.2   Certification of the Chief Financial Officer pursuant to Section 302 of
       the Sarbanes-Oxley Act of 2002.

32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
       1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
       2002.

32.2   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
       1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
       2002.



                                       27



                                    SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        MOVADO GROUP, INC.
                                        (Registrant)


Dated: December 7, 2006                 By: /s/ Eugene J. Karpovich
                                            ------------------------------------
                                            Eugene J. Karpovich
                                            Senior Vice President and
                                            Chief Financial Officer
                                            (Chief Financial Officer)
                                            (Duly Authorized Officer)


                                            /s/ Ernest R. LaPorte
                                            ------------------------------------
                                            Ernest R. LaPorte
                                            Vice President of Finance
                                            (Principal Accounting Officer)


                                       28