Richardson, Texas based Fossil Group (FOSL) reported $0.75 as earnings per share for the recently concluded quarter. This exceeded analysts’ predictions of $0.63 a share. Fossil reported a quarterly profit of $38.1 million compared to profit prior to 12 months ago of $66.3 million.
Thanks to the major headwinds in currency, the company’s revenues did not make to the consensus estimate. Fossil Group Inc. is anticipating further currency issues. The fashion products company reported sales of $725 million in the quarter compared to the $732 million estimate by the analysts. Fossil Group’s revenue dropped 6.7% when compared on a year-over-year basis.
The company updated its second quarter guidance to an EPS of $0.80 - $0.91 per share. Fossil Group also adjusted its financial year 2015’s guidance to an EPS of $5.25 – 6.05 per share.
Fossil Group’s debt – to – equity ratio of 0.64 is on the low end overall, but high when compared to the industry on average. However, the company’s quick ratio of 1.62 suggests and displays strong liquidity.
Fossil Group’s net operating cash flow dropped to $189.97 million or by 18% when compared to the same quarter in 2014.
Words from up top
According to Fossil Group’s Chief Executive Officer, Kosta Kartsotis- ‘Looking at the business operationally during the quarter, we continued our leadership in watches, which led our performance. We grew our own brands with both FOSSIL and SKAGEN posting solid increases, especially in watches, and we increased our business and our licensed portfolio. We grew across all of our regions and continued to expand internationally with the strong performance in Europe. We delivered positive comps in our retail stores, and we continue to invest to drive our future growth while returning capital to our shareholders.’
Kartsotis went on to say during the earnings call - ‘ While there are pockets of our business that remain challenging, we're off to a good start and remain focused on delivering both our near- and longer-term objectives. We have spent several decades developing competitive advantage that have us positioned to take advantage of the growing global watch market and accessories markets. Our expertise in design and creativity, combined with our operational competencies, including our supply chain and global distribution capabilities, enable us to partner with the best brands in the world and help each of them reach their full potential, growing our global footprint in watches and fashion accessories.’
The company remains focused on maintaining their business in their developed markets and repeating the same success in new markets where the company’s potential to gain market share is noticeably larger. Fossil Group has built a strong, scalable platform from which it can carry out operations and from where it can leverage the expertise in design, manufacturing and distribution.
Company profile
Fossil Group Inc. is based out of Richardson, Texas and along with its subsidiaries is responsible for developing, marketing and distributing consumer fashion accessories. Its products are offered under brands such as Diesel, Armani Exchange, Marc Jacobs and Michael Kors. The company focuses on 4 marketing segments: North America Wholesale, Europe Wholesale, Asia Pacific Wholesale and Direct to Consumer. Fossil Group owns and operates 153 retail stores and 143 outlet stores. These are all U.S. based outlets. Fossil Group also own 197 retail stores and 100 outlet stores internationally.
Analysis
Analysts give Fossil Group Inc. a ‘HOLD’ rating. The factors leading to this rating are mixed between strengths and weaknesses of Fossil Group Inc. The company’s strengths are visible in many areas like its revenue growth, a notable return on equity as well as attractive levels of valuation. Countering the company’s strengths are the company’s weaknesses such as weak operating cash flow and a low performing stock itself.
