MOVIE STAR 2004 ANNUAL MEETING SPEECH

Good morning. On behalf of the Board of Directors, management and employees of Movie Star, Inc., we appreciate your interest and support in the Company and we appreciate your attending our 2004 annual meeting.

Fiscal 2004 was not an easy year; it was both challenging and filled with opportunity. Our challenge was sales. Net sales for the year declined to $53.7 million from $64.9 in the prior year. This resulted primarily from a decrease in orders with our primary customer, Wal-Mart. Net income decreased to $128,000, or $0.01 per diluted share, from $3.4 million, or $0.22 per diluted share, reported last year. The gross margin slipped modestly compared with last year, from 31.7% to 30 % and selling, general and administrative expenses would have been almost the same as the prior year had it not been for a special charge of slightly more than $1.0 million taken in the 2004 third quarter.

In meeting this challenge of reduced sales, we were able to maintain a strong balance sheet at the end of our fiscal year. At June 30, 2004, we had 2.5 million dollars of cash, our current ratio was 7 to 1, there was no material debt, and shareholders’ equity was 17.7 million dollars.

Our challenge is finding ways to increase sales in a profitable manner.

During the year, a number of opportunities were considered to broaden our product mix and enhance our sales growth potential. One of them was Sidney Bernstein & Son Lingerie. We were delighted to have acquired the assets and over $7,000,000 of open customer orders from Sidney Bernstein & Son Lingerie. Their line of ladies’ intimate apparel will further expand our product offerings, as well as diversify and broaden our sales distribution. The acquisition closed at the beginning of August 2004 and the integration will be completed by January 2005. We expect this acquisition to have a positive impact on our results in fiscal 2005.

We were also very pleased to announce that the Company entered into a licensing agreement with Maidenform Inc. Under this agreement we will produce a new and exciting line of ladies’ sleepwear and robes to be sold under the Maidenform^® name. This Collection will be available in a few months in leading department stores, chains and upscale specialty stores nationally. We are also introducing a new line of sleepwear, robes and daywear under the Maidenform trademarks Sweet Nothings^®, Self Expressions^® and Rendezvous^® to be available to select mass merchandisers and national chains by the fall of 2005.

In addition to diversifying our product offerings and the price points of our products, these lines further expand business opportunities with existing and new retailers.

Another opportunity that exists for us is our flexibility in sourcing our product. Because we have not owned any manufacturing facilities in quite a few years, we have been able to move our production to countries that have more advantageous pricing while maintaining our quality standards. For example, recently we have been working with a manufacturer in India that is a vertical operation, which means that they knit and weave the fabrics that we use, then they dye and finish the fabric as well as print it if necessary – the fabrics are then cut and sewn into finished garments. This all takes place in the same facility, so it becomes one stop shopping. This particular factory has its expertise in knitted and woven cotton fabrics which has enabled us to expand our product line at competitive pricing with faster deliveries. This will allow us to target certain markets that we have not been able to target in the past. Our ability to move quickly and change with the market is one of our strengths.

We also recently incorporated a subsidiary in Canada to further develop our distribution network. While this operation is just beginning, we are hopeful that its growth will accelerate.

These opportunities give us the potential for sales growth and increased profitability.

In February of this year, the Company’s largest shareholder and his family sold their stock, representing approximately 22.7% of our outstanding shares, to TTG Apparel, which is managed by Michael Tokarz. Since then, the Company has expanded its Board of Directors from six to seven members and added three new board members, two of whom qualify as independent directors and were recommended to the Board by Mr. Tokarz. These additions increased the total number of independent directors to four. These four independent directors all have diversified and successful business backgrounds that, along with the other directors, senior management and our new largest shareholder bring a new and revitalized vision to the Company that will contribute to the Company’s further success. Also, the disciplines in managing a public company today are significantly more demanding than they were just a few years ago. Our Board recognizes and understands this and is acting appropriately.

As expected, the Company reported lower financial results for the 2005 fiscal first quarter compared with the same period last year. Sales for the first quarter of fiscal 2005 decreased approximately $4.0 million to $12.8 million due primarily to a shift in orders from the first quarter to the second quarter. Sales from the Sidney Bernstein & Son Division contributed approximately $3 million to the first quarter’s sales. The gross profit margin percentage was lower, and generally will be lower, due to the Sidney Bernstein & Son division operating at a lower margin then the Movie Star’s core product line. This lower margin was expected. Absent the Sidney Bernstein & Son Division, the Company’s gross margin was almost equal to the same period last year. The Company recorded a net loss for the first quarter of fiscal 2005 of $230,000, or $0.01 per share.

The balance sheet at September 30, 2004 remained solid; although, we used cash and additional funds from our line of credit to pay for the acquisition of Sidney Bernstein & Son Lingerie.

We are seeing the foundation for a very strong Company taking hold. Even though business challenges and competition remain fierce, we are optimistic about our future. We are working hard to profitably grow our business and we are continuously exploring strategies and opportunities that will diversify and strengthen our Company as well as enhance shareholder value.We appreciate your support and thank you for attending.