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Fossil Reports Net Income Spike

Fossil Group Inc., parent company of supplier Fossil Corporate Markets, reported a 13.5% net income increase for the third quarter of 2014.

Fossil Group Inc., parent company of supplier Fossil Corporate Markets (asi/55145), reported a 13.5% net income increase for the third quarter of 2014. The company in the quarter earned $103.7 million, compared to $89.7 million for 2013’s third quarter. Fossil acknowledged year-over-year growth in all its business segments, including 6% net sales growth in its North American wholesale segment.

“The third quarter marked another strong period for our company,” said CEO Kosta Kartsotis. “We reported better-than-expected top and bottom line results, advanced many of the strategic initiatives that we expect will continue our favorable performance in the future and returned value to shareholders by capitalizing on our strong balance sheet and executing our share repurchase program.”

The results from the earnings report beat analyst expectations, and Fossil shares surged 8.8% in after-hours trading after the earnings report was released, though the company’s stock price had decreased by as much as 20% compared to a year ago.

The company recorded its strongest growth in the wholesale European market (15.6% increase) and Asia Pacific (11.4% increase). In the quarter, Fossil’s growth margin decreased 50 basis points to 56.9%, while its operating margin decreased 10 basis points to 17.3% of net sales – slight declines attributed to increased cost of goods and increased advertising in the outlet channel.

For the rest of 2014, Fossil Group expects its net sales to increase approximately 8.5%-9.5%, with expected increases of 3%-6% for the fourth quarter. “Our overarching goal is to consistently deliver profitable top-line growth while investing in high return initiatives that can fuel our momentum over the long term,” said Kartsotis, “and we believe fiscal 2014 is shaping up to represent a year of progress toward this objective.”