Movie Star, Inc., Reports Fiscal 2007 Second-Quarter and First-Half Financial Results.

NEW YORK -- Movie Star, Inc. (AMEX:MSI) ("Company") today announced financial results for the fiscal 2007 second quarter and first half ended December 31, 2006.

Net sales for the fiscal 2007 second quarter were $17,524,000, compared to last year's $17,867,000. Gross margin, as a percentage of sales, increased five percentage points to 34.6% for the fiscal 2007 second quarter from 29.6% in the fiscal 2006 second quarter. Pre-tax income for the fiscal 2007 second quarter was $963,000, compared to $1,017,000 in the same quarter last year. The fiscal 2007 second quarter included a $496,000 gain on the sale of property, plant and equipment and an $803,000 expense for merger related fees associated with the Company's previously announced merger with Frederick's of Hollywood. The Company recorded net income of $578,000, or $0.04 per diluted share, for the fiscal 2007 second quarter, as compared to $610,000, or $0.04 per diluted share, for the second quarter of fiscal 2006.

Net sales for the first half of fiscal 2007 increased to $36,214,000 from $31,504,000 in the same period last year. For the first half of fiscal 2007, the gross margin increased 4.3 percentage points to 32.8% from 28.5% in the comparable period of fiscal 2006. The Company recorded net income of $944,000, or $0.06 per diluted share, versus $239,000, or $0.02 per diluted share, in the comparable period of fiscal 2006. Net income for the first half of fiscal 2007 included $1,342,000 in fees associated with the Company's previously announced merger with Frederick's of Hollywood and the aforementioned gain on the sale of property, plant and equipment, which is primarily the result of the sale of the Company's former distribution center in Pennsylvania.

Mel Knigin, the Company's President and Chief Executive Officer, stated, "We are encouraged with our financial results through the first half of fiscal 2007. Our gross margins were strong despite a modest decline in second-quarter sales. The gross margin percentage was one of our highest for a quarterly period and was due primarily to a more profitable product mix and lower markdowns.

"We expect our second half sales to compare favorably to last year's second half, as a result of our strong open order position, which was approximately $25,000,000 at December 31, 2006, compared with $17,000,000 at December 31, 2005. We are continuing our commitment to managing our costs and working to improve upon last year's second half gross margins. Further, we are excited about the recently announced plan to merge with Frederick's of Hollywood. The combined company will have sales approaching $200,000,000, better efficiencies and a powerful brand portfolio."

MOVIE STAR, INC. designs, manufactures (through independent contractors), imports, markets and distributes women's intimate apparel, including sleepwear, robes, leisurewear and daywear, to mass merchandisers, specialty and department stores, discount retailers, national and regional chains and direct mail catalog marketers throughout the United States. Current collections include the Cinema Etoile premium line of intimate apparel and the Movie Star line of apparel sold as private label programs.

Certain of the matters set forth in this press release are forward-looking and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: business conditions and growth in the industry; general economic conditions; addition or loss of significant customers; the loss of key personnel; product development; competition; risks of doing business abroad; foreign government regulations; fluctuations in foreign rates; rising costs for raw materials and the unavailability of sources of supply; the timing of orders booked; failure to realize the merger's anticipated synergies; approval of the transactions by Movie Star's shareholders and satisfaction of various other conditions to the closing of the merger contemplated by the merger agreement; and the other risks that are described from time to time in Movie Star's SEC reports.

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