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Fossil (FOSL) Skyrockets on Better-Than-Expected Earnings, Comps

Madeleine Johnson

Fossil Group Inc. FOSL just released its fourth quarter fiscal 2017 financial results, posting earnings xx cents per share and revenues of $921 million. Shares are soaring 50% to $14.04 shortly after the report was released.

Currently, FOSL is a #3 (Hold) on the Zacks Rank, and earnings estimate revisions are trending downwards for the next few quarters.

Fossil:

Beat earnings estimates. The watchmaker and accessories company reported adjusted earnings of 64 cents per share, surpassing the Zacks Consensus Estimate of 39 cents per share. This number excludes tax reform and restructuring charges of $2.29.

Beat revenue estimates. The company saw revenues of $921 million, topping our consensus estimate of $890.47 million but decreasing 4% year-over-year.

Global retail comps for Q4 increased 2% from the prior-year period. Positive comps in Fossil’s watch category was partially offset by negative comps in the leathers and jewelry categories.

Gross margin was 48.7% for Q4, down from 51% reported in the year ago quarter.

For fiscal 2018, Fossil expects GAAP net sales to fall in the range of (14)% to (6)%, with gross margin in the range of 51% to 53%.

"In the year ahead, we expect to be a smaller yet more profitable company that is on a solid path for the future. Our priorities are focused on delivering innovative wearable and traditional watch styles while improving performance in the handbag and jewelry categories and driving increases in digital sales.  While we continue to expect North America to be challenging given the dynamics of the retail and consumer environment in the region, with our commitment to drive out costs through our New World Fossil initiative and with improved sourcing costs, we expect to deliver more profit to the bottom line,” said CEO Kosta Kartsotis

Here’s a graph that looks at Fossil’s price, consensus, and EPS surprise:

Fossil Group, Inc. Price, Consensus and EPS Surprise

Fossil Group, Inc. Price, Consensus and EPS Surprise | Fossil Group, Inc. Quote

Fossil is involved in designing, marketing and distributing consumer fashion accessories. The Company's product portfolio includes men's and women's watches, handbags, belts, small leather goods, jewelery, sunglasses, hats, gloves and scarves, jeans, outerwear, fashion tops and bottoms, tee shirts as well as optical frames. Its brands include MICHELE, Zodiac, Relic, Emporio Armani, DKNY, Armani Exchange, Michael Kors, Diesel, Burberry, Marc by Marc Jacobs, Adidas, Skagen Denmark, and Karl Lagerfeld. Fossil Group Inc., formerly known as Fossil, Inc. is based in Richardson, Texas.

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