Fossil Group Inc., the parent company of Fossil Corporate Markets (asi/55145), reported a decrease of $207.5 million in net sales in 2015, a decline of 8%. Fossil attributed the drop to the conversion impact of the strong U.S. dollar. Adjusting for currency and removing an extra week, net sales last year decreased 1%.
In the fourth quarter, net sales decreased by $55.6 million – a 6.8% decline, but only 2% on a constant currency basis.
For the year, Fossil’s watch segment declined by 10% while its leather and jewelry segments declined by 2% each. Fossil CEO Kosta Kartsotis said the pressure on earnings was expected. “Despite disappointing operating results, our team remained focused on our strategic priorities to strengthen our leadership position in our core business and to extend that leadership further through our investments in wearable technology,” he said.
All three of Fossil’s geographic segments declined in 2015, but its Americas business declined the least, falling 4.9% for 2015 and 4.6% in the fourth quarter. The company’s diluted earnings per share fell from $7.10 to $4.51. As customary, Fossil did not break out ad specialty sales in its earnings statement.
For 2016, Fossil predicts that its net sales could be as low as a 3.5% decrease and as high as a 1% increase, with diluted earnings per share in the range of $2.80 to $3.60. The company said that its recent acquisition of wearable tech company Misfit will negatively affect its 2016 earnings, but will position the company for longer-term success.
“Our ability to combine the technology that consumers are demanding with the design, style and brands that they’ve always loved at the global scale necessary to drive the right economics is unparalleled,” Kartsotis said. “While near-term challenges remain, we believe that our many growth opportunities, combined with our diversified business model, solid financial position and cash flow generation, set us up to win over the long-term and drive value for our shareholders.”