1115 Broadway, New York, NY 10010 ˜ 212-798-4700 ˜ Fax 212-213-4925

Movie Star, Inc., Reports Fiscal 2006

Fourth-Quarter and Full-Year Financial Results

New York, New York (August 24, 2006)—Movie Star, Inc. (AMEX: MSI), today announced financial results for the fiscal fourth quarter and full year ended June 30, 2006.

For the fiscal 2006 fourth quarter, net sales increased to $8,195,000 from $8,054,000 in the same period last year. Gross margin, as a percentage of sales, was 22.8% for the fiscal 2006 fourth quarter compared with 23.5% in the fiscal 2005 fourth quarter. In the current year’s fourth quarter, a non-recurring gain of $26,000 was recorded from the last installment of the insurance settlement related to the damage caused by Hurricane Katrina to the Company’s Poplarville, Mississippi distribution center. The Company recorded a net loss of $1,515,000, or $0.10 per share, for the fiscal 2006 fourth quarter, as compared to a net loss of $2,056,000, or a loss of $0.13 per share, for the fourth quarter of fiscal 2005.

Net sales for the fiscal 2006 full year decreased to $51,639,000 from $58,533,000 in the same period a year ago. For the fiscal 2006 full year, the gross margin increased 3.0 percentage points to 27.3% from 24.3% in the comparable fiscal 2005 period. The Company reported a smaller loss from operations of $995,000 in fiscal 2006, compared to a loss from operations of $4,795,000 for 2005. Included in the loss from operations for the 2006 full-year period was a non-recurring gain totaling $1,450,000 for the previously mentioned insurance settlement. Fiscal 2005’s operating loss included $745,000 in expenses related to the closing of a distribution center, the termination of a consulting agreement and costs associated with personnel changes. The Company recorded a net loss of $1,000,000, or $0.06 per share in fiscal 2006, versus a net loss of $3,122,000, or a loss of $0.20 per share, for fiscal 2005.

Mel Knigin, President and Chief Executive Officer, stated: “With the challenges of fiscal 2006 over, we are beginning the new quarter and year more optimistic about the Company’s business outlook than we have been for some time. The new year is starting with a significantly increased level of open orders. The backlog of open orders was $41,686,000 at June 30, 2006 compared to $28,363,000 at this same time last year. We book our orders upon receipt and believe that the backlog is firm and will be shipped in the current fiscal year.

“We have added a new knit sleepwear line that was introduced at our recent August market which was well received by our customers. This new product line called Cinema Studio^tm has broadened our product offerings and has increased the amount of product that our customers may buy from us. At the time of this release, our customers have begun to place orders for shipment in our third quarter, January through March 2007.”

MOVIE STAR, INC. produces and sells ladies apparel, including sleepwear, robes, leisurewear and daywear. 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; and the risk factors listed from time to time in the Company’s SEC reports.

CONTACT: INVESTOR RELATIONS:

Movie Star, Inc. -or- SM Berger & Company, Inc.

Thomas Rende, CFO Stanley Berger

(212) 798-4700 (216) 464-6400

[Tables follow]

MOVIE STAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

	Three Months Ended		Fiscal Year Ended
	June 30,		June 30,
	2006	2005	2006	2005
	(Unaudited)
Net sales	$ 8,195	$ 8,054	$51,639	$58,533
Cost of sales	6,329	6,158	37,528	44,304
Gross profit	1,866	1,896	14,111	14,229
Selling, general and administrative expenses	4,130	5,147	16,556	19,024
Insurance recovery	(26)	-	(1,450)	-
Loss from operations	(2,238)	(3,251)	(995)	(4,795)
Interest expense, net	90	48	473	281
Loss before income tax benefit	(2,328)	(3,299)	(1,468)	(5,076)
Income tax benefit	(813)	(1,243)	(468)	(1,954)
Net loss	$(1,515)	$(2,056)	$ (1,000)	$(3,122)
BASIC NET LOSS PER SHARE	$(.10)	$(.13)	$(.06)	$(.20)
DILUTED NET LOSS PER SHARE	$(.10)	$(.13)	$(.06)	$(.20)
Basic weighted average number of shares outstanding	15,739	15,640	15,700	15,625
Diluted weighted average number of shares outstanding	15,739	15,640	15,700	15,625

MOVIE STAR, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Number of Shares)

June 30,	June 30,
2006	2005

ASSETS

Current Assets
Cash	$ 203	$ 178
Receivables, net	6,074	5,973
Inventory	8,981	11,730
Deferred income taxes	1,914	2,260
Prepaid expenses and other current assets	801	372
Total current assets	17,973	20,513
Property, plant and equipment, net	838	755
Deferred income taxes	3,296	2,473
Goodwill	537	537
Assets held for sale	174	174
Other assets	403	455
Total assets	$23,221	$24,907

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities
Notes payable	$ 4,955	$ 4,794
Accounts payable	3,273	3,579
Accrued expenses and other current liabilities	813	1,467
Total current liabilities	9,041	9,840
Deferred lease liability	339	315
Other long-term liability	59	75
Shareholders’ equity
Common stock, $.01 par value – authorized 30,000,000 shares; issued 17,755,000 shares in 2006 and 17,657,000 shares in 2005	178	177
Additional paid-in capital	4,834	4,747
Retained earnings	12,361	13,361
Accumulated other comprehensive income	27	10
Treasury stock, at cost – 2,017,000 shares	(3,618)	(3,618)
Total shareholders’ equity	13,782	14,677
Total liabilities and shareholders’ equity	$23,221	$24,907