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Fossil Announces Quarterly Financials

Texas-based Fossil Group Inc., the parent company of Fossil Corporate Markets (asi/55145), reported its net sales for the quarter ended July 4 decreased 4% to $740 million. Fossil said a strong U.S. dollar negatively impacted net sales by $50.9 million. On a constant currency basis, second quarter net sales increased 2%, lifted by modest growth in the Americas, Europe and Asia.

“For the second quarter, we delivered constant currency sales growth across all regions and earnings per share growth ahead of our expectations,” said Fossil CEO Kosta Kartsotis. “Sales were strong for both Fossil and Skagen in all regions, with early indications that our demand creation initiatives are working.”

For Q2, Fossil reported net income of $54.6 million versus $52.5 million a year earlier. Diluted earnings per share were $1.12. Global retail comps for the second quarter rose 2%, with gains in the Americas and Europe and a decline in Asia. Fossil said revenues related to watches and leathers were higher, while its jewelry sales in the second quarter fell.    

“While near term-challenges exist, we remain confident in our long-term strategies,” said Kartsotis. “We will continue to invest in our owned brands, create a greater consumer connection and enhance our digital capabilities, while driving our category leadership with our world-class portfolio of licensed brands. We are making great progress in our pursuit of connected accessories, with exciting new products launching this fall.”

For fiscal 2015, Fossil adjusted its guidance, calling for net sales to decrease between 1% and 3%. The company is expecting an operating margin in a range of 14% to 15% and diluted earnings per share to fall between $6.20 and $7.00. As is customary, Fossil did not break out ad specialty sales in its earnings statement.