Welcome to the Movado Group first quarter conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Suzanne Rosenberg of Movado Group. Ma'am, you may begin your conference. Suzanne Rosenberg: Thank you. Good morning everyone and thank you for joining us today. With me on the call is Efraim Grinberg, President and Chief Executive Officer; Rick Cote, Chief Operating Officer; and Gene Karpovich, Chief Financial Officer. Before we begin, I would like to note that this conference call contains forward-looking statements which are made in pursuance to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Factors which could cause actual results to be materially different from any future results expressed or implied are discussed in our filings with the Securities and Exchange Commission. Such forward-looking statements include statements regarding Movado's performance for fiscal 2008 and beyond. We currently expect to update estimates, however the failure to update this information should not be taken as Movado's acceptance of these estimates on a continuing basis. Movado Group may also choose to discontinue presenting future estimates at any time. During the course of today's conference call, management may present certain non-GAAP figures. For a reconciliation of these figures along with information required under SEC Regulation G, please view our earnings press release, which has been posted on our web site at movadogroup.com. Let me now outline the order of speakers and topics for today's conference call. Efraim will begin with the highlights of our first quarter performance, Gene will then review the financial details and Rick will provide you with an update on our operating initiatives along with our financial outlook. We would then be glad to answer any questions that you might have. I would now like to turn the call over to Efraim.

Thank you, Suzanne and good morning, everyone. We're very pleased with the results of our first quarter. As anticipated, sales growth slowed in the quarter, reflecting a shift in the U.S. retail calendar which resulted in timing differences in purchases by certain of our customers and predominantly affected Movado and ESQ in the U.S. market. Nevertheless, we achieved a 190 basis point improvement in adjusted gross margin and delivered earnings of $0.09 per share in our seasonally smallest quarter, demonstrating the focused execution of our operating strategies. While the shift in the retail calendar will continue to impact our results in the second quarter, our portfolio of brands remains strong and more powerful than ever. Clearly differentiated and high quality products, compelling imagery and strong brand awareness continue to drive consumer demand and provide our retail customers with an unsurpassed assortment in the marketplace. Across our portfolio, we received an excellent response from our retail partners to the powerful array of new products debuted at the Basel Watch Fair in April. As we discussed in our year-end conference call, sales growth in fiscal 2008 will be primarily driven by our licensed brand portfolio, which in addition to Coach and Tommy Hilfiger, includes our newest businesses: Hugo Boss, Juicy Couture and our recently launched Lacoste watch brand. Our licensed watch portfolio delivered a very strong performance in the first quarter with a 38% increase in sales over last year. Our licensed brands are extremely well positioned in the high end of the fashion watch category with strong product assortments and a bold presence at retail, each clearly embracing the DNA of its parent brand. Our luxury category -- Concord and Ebel -- achieved plan, recording flat sales in the first quarter resulting from the timing of deliveries of new product introductions…

(Operator Instructions) Your first question comes from Jeff Blaeser - Morgan Joseph. Jeff Blaeser - Morgan Joseph: Good morning. Thank you for taking my question. First one I guess comes to your guidance. It looks like you maintained the guidance that you had going into the quarter, yet exceeded internal Q1 expectations. Did something shift into Q1 or out of Q1, or is it more just being conservative going into the rest of the year?

Jeff, there are several things that go into it, and part of it is that less sales shifted out of the first quarter than we originally anticipated, so that enabled the quarter to be better than originally anticipated. But also I think with rising gas prices and uncertainties in the second half of the year, I think we just feel comfortable with where our guidance currently remains. Jeff Blaeser - Morgan Joseph: Okay, fair enough. I think you mentioned in your comments that you expect the retail buying pattern to affect Q2. Could you explain that a little bit more? Rick Cote: Well, under the retail calendar for some of our institutional doors that follow it, their first and second quarters end late into the following month. So it has moved some of our shipments from the first quarter into the second, and we believe also from the second into the third. Jeff Blaeser - Morgan Joseph: Finally just one more question on the gross margin and discontinued sales. Do you expect to be completed in this fiscal year? Or obviously it's difficult to give a specific time frame, but is a 62.9%-63% gross margin reasonable in the out year? Rick Cote: Well, yes, we would expect that the discontinued excess inventory sales would wrap this year in fiscal 2008, and obviously as we said in our guidance that we would expect our gross margins to be consistent with where they were last year excluding the discontinued, which was 62.5%. As you know, our strategy down the road is growing operating margin and a key factor to that is growing our gross margins to a higher level than where they are today. So we certainly would expect improvements in gross margin over the next couple of years.

Your next question comes from Kristine Koerber - JMP Securities. Kristine Koerber - JMP Securities: Hi, congratulations on a good quarter. Can you quantify the sales shift Q1 from quarter to quarter, basically, and the impact on earnings? Rick Cote: Basically, if you recall from the last conference call, I basically thought that approximately $8 million of sales would shift, and obviously it was less than that. It was probably more in the $4 million to $5 million range. In looking at the small first quarter, that having less shift obviously improves the bottom line. Basically, we would expect a similar level taking place in the second quarter and into the third quarter. So, as we said in the conference call last time that the second half of the year will have a greater percentage of our sales growth, part of that impact because of the calendar shift from retail and their managing of their inventories at their end of the their quarter. Kristine Koerber - JMP Securities: Can you comment on commodity prices and any impact that you may be seeing on your margin?

Well, we have been able to cover the rising gold prices. We have protected our gross margins and that's one reason they're strong. I think even in our boutique business, and I think Gene mentioned it, our gross margin improved quarter on quarter. So gold is not as big a factor as it used to be because we make a lot of steel watches, but we have been able to protect our margins. Kristine Koerber - JMP Securities: The Lacoste launch, are the watches in the stores now, or when will they be launched? Rick Cote: As you know, Lacoste had an existing watch business that they were licensing. We have taken that over at the beginning of the year, so the watches that you're seeing in the marketplace now are really those same watches from the previous licensee. We debuted the new designs that we will be launching into the marketplace basically now. You will see them certainly in the end of the summer timeframe. We did Hugo's at Basel; it's a great reception, and so they will be a key part to the growth of the Lacoste business in the second half of the year. Kristine Koerber - JMP Securities: Lastly, can you just remind me on the price points for the new Concord designs that you're launching? Rick Cote: The new Concord watches range in price from about $10,000 to $15,000 for steel, and from $25,000 to $30,000 in gold. We had an excellent, excellent reception to our Concord reintroduction in Basel from around the world. Kristine Koerber - JMP Securities: So you have moved it upscale quite a bit, because weren't they in the few thousand dollar range? Rick Cote: Right. We moved it upscale significantly, but the idea is also to do obviously a significantly lower number of units and to really build an exclusive luxury brand in a very tight niche.

Your next question comes from Jody Kane - Sidoti & Co. Jody Kane - Sidoti & Co.: I just want to make sure; the improvement in the first quarter was purely because of a smaller shifting in revenues? Rick Cote: Well, from the standpoint of the guidance that I had given, again, it's hard to estimate exactly what would take place and what the retailers would do, but basically the sales were at a little better level than we would expect, than we originally projected because of less shipping out, and also improvement in the gross margin percentages. Jody Kane - Sidoti & Co.: So it was originally a small loss, but there has been $0.09; so are you expecting it to be a lot softer in the second half? I'm just trying to figure out why there isn't even a little bit of improvement into the second half because of a big first quarter? Rick Cote: Again, from a standpoint less sales shifted out of the first quarter, and again, if you have a $3 million or a $4 million improvement on the sales line adjusted to the bottom line, that could easily change it by $0.08 to $0.10. So it's really, again, the first quarter is our smallest quarter, so when you are done, you just kind of have that shift. So I think we're still looking at a strong second rest of the year, and obviously there is always the economy risk that's out there. Jody Kane - Sidoti & Co.: The retail business, and the longer-term plans for store growth and store closures. Can you talk a little bit about that?

We expect that, on a door basis the retail business will remain stable; at most over the next several years, one or two more doors. We don't expect any significant closures either. We are really focused now on improving our product assortment in jewelry. We have very strong plans for the second half of the year in that area, but it obviously takes a little bit of time to do that as well and to do it well, and that's what we're focused on doing.

Your next question comes from Marie DeLucia - The DeLucia Foundation. Marie DeLucia - The DeLucia Foundation: Good morning. I would like to pick up on the commentary on the Movado Boutiques. If you could discuss in a little bit more detail what gives you the confidence of improving trends? Obviously, what happened with these boutiques when they were on such a strong track, and then the deceleration? And then I have a few other questions. Thank you.

Good morning, Marie. I haven’t talked to you in a long time. Really, I think we grew from a very small base, so the growth was an initial accelerated growth pattern. Now we have a larger base and I think we have had to refocus a little bit our jewelry assortment. We did vacate, and as I said in earlier conference calls, a number of price points as commodity costs went up. We did increase our gross margin significantly in these boutiques, so our gross margin is improving, our financial model is improving and did improve last year as well. Those are a number of positive things that have happened in the boutique business and now we're focused on improving the product assortment, filling vacated price points that we believe we will also add additional business. Marie DeLucia - The DeLucia Foundation: I wonder if you could discuss your current operations in China? Discuss with us a little bit about your thinking in terms of the expansion in that huge market. Also, does Movado participate through a distributor in any way in Central and Eastern Europe?

Let me start with the latter part of that question. We do business in Eastern Europe with Movado and with most of our brands, as well with Ebel. I don't believe we have really started yet with our licensed brands, although we're getting out feet wet in those markets and through distributors in those markets. In China, the way we're structured is we have our own operation. We announced last year that we hired a new president with a lot of experience in that market for the Movado brand and we have a local operation, but we also deal with local partners in the market for their expertise, their distribution capabilities as well. We have a small business there, but one that has been growing on a sell-through basis very nicely over the last several years. We believe it has a major potential for the future because we present an accessible luxury product and there is a growing middle class in that market. So we have a good management team in place there. We are studying our opportunities very carefully and expect to really have a strategic plan for the region in the next several months.

Your next question comes from David Taylor - David P. Taylor & Co. David Taylor - David P. Taylor & Co.: Thank you. Efraim, I know you trace retail sales of your products through your retail customers. With the 10.5% decline in domestic Movado wholesale sales, can you talk about how the retail uptake looked like in the first quarter?

It's a good question, David, and I think our overall U.S. wholesale business was down 10.5%, so it included Movado. David Taylor - David P. Taylor & Co.: With Movado and ESQ, yes, okay.

We see a nice sales increase in Movado in the first quarter with our retail partners on a comp store basis, and so we believe that the trends out there remain fairly solid. Although retail, I will have to tell you and I think it is no surprise, in the first quarter was not tremendously robust and that is the overall retail industry. I'm not talking specifically our brands, and I think that's what gives us a little bit of caution as well. But we were pleased with the retail sell-through of the Movado brand in the first quarter. David Taylor - David P. Taylor & Co.: Second question, entirely different area. The clearance of mostly 14 karat gold merchandise in Concord and Movado, it's winding down. Is it over, or is there another few million yet to come in the coming quarters?

Just two things, then I will turn it over to Rick. Mostly it's Concord now. Because of the repositioning of the brand, we've eliminated most of the older inventory and I think we'll be doing that this quarter as well and some during the balance of this year. Really what is left for us after that is, and we have talked about it in the past, is the Ebel inventory that we acquired and we expect to make major inroads into the Ebel inventory over this year. Would you like to add something to that, Rick? Rick Cote: Yes, I just want to reiterate that we would expect that between last year and this year, that that would then be behind us. David Taylor - David P. Taylor & Co.: But there is still ahead of us a few million dollars in these sales, correct? Rick Cote: There's still ahead of us continued sale of discontinued product in the manner that we've been doing it last year, yes.

Your next question comes from Jason Asaeda - Standard & Poor's. Jason Asaeda - Standard & Poor’s: In terms of the long-term plans for the jewelry business, do you think that it will be eventually sold through your wholesale partners?

No. I think we have always talked that our jewelry business is really a retail business. It's proprietary and it's exclusive to the Movado Boutiques and our strategy is for that to remain so. So we don't foresee having a wholesale business in jewelry.

Your next question comes from William Wigder - Wigder Associates. William Wigder - Wigder Associates: Good morning, Efraim. For many, many years we have heard that the point of scale in the boutique business was a level where you seem to be at today, and yet we don't seem to be close to breakeven on it. Is there something else that that's a problem in these stores? Have you looked at the stores on a comparable cost basis and a sales per square foot basis with other boutiques where you have information? Can you tell us that cost and sales basis is comparable to what we might see in other stores and it's just a matter of maybe changing the product line, or something else, or is there a deeper problem here?

Good questions. First of all, I would like to remind everybody that the Movado Boutiques are an important part of the overall brand equity that we have been building in the Movado brand and the strength of the Movado brand is a dominant brand in its marketplace. You have to remember that the predominant part of our Movado business, which is an extremely profitable business, is our wholesale business. On the retail side, obviously what has happened is that we are not generating the sales yet in the stores, in the 31 stores that we have, that we need to cover our overhead because they are profitable on a four-wall basis, and you must remember that. What causes them to lose a small amount of money, actually not a major -- over our whole P&L, it's not a major amount of money -- is our marketing investment behind the boutiques. It supports and reinforces the overall brand as well as the overhead to manage that business. The opportunity lies and the challenge as well in increasing our sales per store. As we do that, the losses will decline and profits will ensue. So there is that opportunity, and that's also as I said, it's the opportunity and it's the challenge and that's why we're very focused on driving the product assortment for the overall boutique business. William Wigder - Wigder Associates: Are we close to that profit level at this point, or are we still pretty far away? Rick Cote: From a standpoint, yes, we are close. The investment this year is in the couple of million dollar range. Again, as Efraim said, we spend even more than that on direct advertising for the boutiques that support the overall Movado brand. We're there. From the standpoint of some of the…

I think we're trying to state the facts as we see them. So we're not coloring them particularly and we're trying also always to give you a realistic point of view of where the company's going. We focus on the long-term and the long-term results of the company, not on a quarter-by-quarter basis. One reason we stopped giving quarterly guidance, we did for the first quarter because we thought it was an extenuating circumstance, and I think over the long term we have done extremely well and that is what we are focused on; building long-term value for our shareholders. That is our interest and that is our focus, and I think the company has done a very good job. William Wigder - Wigder Associates: You have done great; you have done great, really. Thank you very much.

Thank you. Old friends are on this call today.

Your next question comes from Kristine Koerber - JMP Securities. Kristine Koerber - JMP Securities: I just wanted to follow up on the guidance. So, should we assume that Q2, basically take $0.08 to $0.09 out of Q2 then, or it sounds like it may be spread over the next two quarters? Rick Cote: Let me respond to that. We don't really focus in on a quarter basis, we don't give guidance on a quarter basis. We really focus in on the full year. Obviously, tax rates change quarter to quarter. So when we're done refocusing on the full year and we're comfortable with the guidance that we've given for the full year and we really don't harp in on the quarters and don't give guidance on the quarters, and that is not our focus. Our focus is on the full year.

Your next question comes from Arnold Brief - Goldsmith & Harris. Arnold Brief - Goldsmith & Harris: You mentioned, but I'm not sure I'm interpreting it right. I gather part of the strategy for Movado has been to close some of the outlets, to reduce the number of doors that it's servicing. Could you elaborate on that a little bit, what you've done in terms of doors, and then flesh that out a little bit with why in terms of what the strategy is?

Sure. Over the last several years, we have evaluated our doors for the Movado brand. We have looked at places, locations where we have multiple doors in certain malls and we have eliminated underproductive doors to increase productivity with our remaining retail partners. We worked on that with a number of our partners to be able to do that. It has continued to increase Movado's productivity at retail and it has continued focus of the Movado brand for the next several years as well. Arnold Brief - Goldsmith & Harris: Can you give us some idea of how many doors were closed?

I think we did close over 300 doors over the last two years. Arnold Brief - Goldsmith & Harris: The productivity of the existing doors obviously then has more than offset that?

Yes, I would say that's true. Arnold Brief - Goldsmith & Harris: One other question. I understand that the contribution of the boutiques relative to their infrastructure is the problem and they make money on a four wall-basis. But if you go back in time, the comparable store sales increases of the boutiques has been very high. It slowed up recently, but over the years, it has been a pretty high number. For the sales to still be below a level which doesn't cover that infrastructure after having many years of very high comps, these things must have started at a very low level. I don't know how many times your strategies have been changed or not changed, but it seems like there's a merchandising problem here. You've left some price points, you are introducing new lines of jewelry. Could you flesh out why that sales level is?

One thing I would like to address , there has not been a change in strategy. So we do obviously make adjustments to try to drive improvement, and one of the things that has happened is that commodity prices within this area have gone up significantly over the last several years. We have adjusted our prices to protect and improve our gross margins, and accomplishing that we have vacated certain price points so we are focused on refilling that. What I did say I think in our previous conference call was also that we believe that our product had in a certain extent gotten a little too generic in certain areas, and now for the second half of the year is truly focused on being identifiably Movado which is the strength of our Movado brand overall. We are focused on coming with product that is iconically Movado for the second half of the year that celebrates Movado's 60 years of modern design. When people look at the Museum Watch, they think it was designed five years ago because it is so modern. It was designed in 1947. There are very few brands that have a product that is still selling that was designed in 1947. This is a very strong brand and our jewelry assortment that we'll have in the second half will be a similarly strong product assortment. I hope I answered the question. Arnold Brief - Goldsmith & Harris: I'm not sure why the focus wasn't there to begin with if that's what you're trying to do, is build the Movado brand.

I think at certain times, you -- Arnold Brief - Goldsmith & Harris: And you had strong comps for many years, so I'm not sure where it shifted or how it shifted.

Just from a small base, we had strong comps and we hit challenges along the way and it is a challenge that we are addressing and up to addressing. It's not the first time we have a challenge in any of our businesses.

At this point, there appear to be no further questions. I would now like to turn the floor back to management for any closing remarks.

Thank you. I would like to thank all of you for participating today and asking some very good questions. We look forward to the balance of the year. Our brands continue to perform very well at retail and we remain focused on ensuring that they remain strong in the marketplace. Again, I would like to thank all of you for participating and have a good day. Thank you.