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Fossil Tanks 15% on Weak Q4 Earnings, Even Weaker Revenues

Fossil Group Inc. FOSL just released its fourth quarter fiscal 2016 earnings results, posting earnings of $1.03 and revenues of $959 million. Currently, FOSL is a #3 (Hold) on the Zacks Rank, and is down about 15% to $19.60 per share in trading shortly after its earnings report was released.

Missed earnings estimates. The company reported diluted earnings of $1.03 per share, missing Wall Street estimates of $1.12 per share.

Missed revenue estimates. The company saw revenues of $959 million, lagging behind Street estimates of $977 million and declining 3% year-over-year. Growth in its Skagen and Fossil brands was offset by a decrease in its multi-brand licensed watch portfolio.

Fossil Group also reported declines in traditional watches, which were largely offset by growth in connected watches, as well as a decrease in leathers and jewelry.

Net sales in the Americas decreased 7%. While net sales in Europe decreased 4%. Net sales in Asia, however, increased 13% thanks to a boost in watches, jewelry, and leathers compared to last fiscal year.

Looking ahead to fiscal 2017, Fossil expects GAAP net sales in the range of a 6.5% decline to flat, GAAP operating margin in a range of 0.0% to 1.5%, and GAAP diluted earnings (loss) per share in a range of (50) cents to 20 cents per share.

“Our mission in 2017 is very clear, to build upon the early success of wearables and execute against our New World Fossil initiative. We’ll double our efforts in wearables by launching over 300 skus, introducing new brands to the platform and enhancing engineering to enable additional functionality in more stylish and slimmer cases. We’ll continue to maximize the power of our owned brands and with an emphasis on innovation, work to stabilize and grow our licensed brands,” said Kosta Kartsotis, CEO of Fossil Group.

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 distribution of 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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