Fossil beats in 1Q but outlook disappoints

Fossil's 1st-quarter profit declines, shares down after hours on weak outlook

Associated Press

RICHARDSON, Texas (AP) -- Fossil Group Inc. reported Tuesday that its first-quarter net income fell 8 percent, despite sales gains across all its business segments.

The quarter's results beat market expectations, but the watch, jewelry and accessories maker gave a weak forecast that sent its shares down in after-hours trading.

Fossil earned $66.3 million, or $1.22 per share, for the period that ended April 5. That's compared with net income of $72.2 million, or $1.21 per share, in its first quarter last year. The prior year included an 11 cent per share benefit tied to an acquisition.

Higher expenses offset its sales gains for the period. Its revenue increased to $776.5 million from $680.9 million, with a boost from an extra week in the most recent quarter and gains overseas.

Analysts polled by FactSet were anticipating earnings of $1.18 per share on revenue of $771.6 million.

Fossil said that it expects to earn 90 to 97 cents per share for its second quarter on revenue gains of 8 to 9.5 percent. Based on last year's second-quarter revenue of $706.2 million, the forecast suggests revenue of $762.7 million to $773.3 million.

Analysts forecast earnings of $1.16 per share on revenue of $772.9 million.

The Richardson, Texas-based company also reaffirmed its full-year forecast of earnings between $6.90 and $7.30 per share on revenue gains of 8 to 10 percent. This calculates forecast revenue of $3.52 billion to $3.56 billion, based on its 2013 revenue of nearly $3.26 billion.

Analysts were anticipating earnings of $7.21 per share on revenue of $3.58 billion.

Fossil shares fell $5.70, or more than 5 percent, to $105.75 in after-hours trading.

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