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FOSSIL GROUP, INC. REPORTS SECOND QUARTER FISCAL YEAR

Second Quarter Net Sales of $597 Million and GAAP Diluted EPS (Loss) of $(7.11);

Adjusted EPS (Loss) of $(0.61) Excluding Non-Cash Intangible Asset Impairment Charges of $6.50;

Provides Third Quarter and Updates Annual Fiscal 2017 GAAP Guidance

__________________________________________

Richardson, TX. August 8, 2017 – Fossil Group, Inc. (NASDAQ: FOSL) (the “Company”) today reported its financial results for the fiscal quarter ended July 1, 2017. In the second quarter of fiscal 2017, the stronger U.S. dollar negatively impacted net sales by $8.3 million. Second quarter fiscal 2017 net sales decreased 13% (12% on a constant currency basis) as compared to the second quarter of fiscal 2016.

Second Quarter Fiscal Year 2017 Revenue Summary

In the second quarter of fiscal 2017, reported worldwide net sales decreased 13% or $88.6 million as growth in connected watches was more than offset by declines in traditional watches. Declines in leathers and jewelry and changes in foreign currency also negatively impacted net sales. The following table provides a summary of net sales performance for the second quarter of fiscal 2017 compared to the second quarter of fiscal year 2016.

Second Quarter 2017
Reported
Results (1)
Constant
Currency (2)
Total Company(13)%(12)%
Americas(16)%(16)%
Europe(10)%(7)%
Asia(9)%(8)%
Watches(9)%(8)%
Leathers(25)%(24)%
Jewelry(22)%(20)%

The Company reported net income (loss) for the second quarter of fiscal 2017 of $(344.7) million compared to $6.0 million for the second quarter of fiscal 2016. Diluted earnings (loss) per share were $(7.11) compared to $0.12 for the second quarter of fiscal 2016. Diluted earnings (loss) per share for the second quarter of fiscal 2017 included non-cash intangible asset impairment charges of $6.50, a restructuring charge of $0.13 per diluted share and a negative impact from changes in foreign currency of $0.08 per diluted share. The non-cash intangible asset impairment charge was triggered by the sustained compression of the Company’s market capitalization that occurred throughout most of the latter part of the second quarter of fiscal 2017.

Kosta Kartsotis, Chief Executive Officer, commented. "With the first half of 2017 now behind us, we believe that our traction in wearables, our significant progress in our supply chain evolution and our reduction in infrastructure costs, show that we are pursuing strategies that can improve our profitability and return the company to solid growth over time. Even as we operate in a market and retail environment experiencing unprecedented disruption, we believe we are focusing on actions that can deliver solid results and returns for our shareholders over time."

Kosta Kartsotis continued, "In the second quarter, the strength of our wearables product, particularly in key brands, once again demonstrated that wearables have the ability to help mitigate the ongoing softness in the traditional watch category and ultimately, we believe, turn current headwinds into tailwinds. We remain confident that technology in wrist wear is increasingly important for many consumers and the catalyst for stabilizing and growing our watch business overtime. We have a significant number of exciting new products hitting the market over the next few months that are much improved over our current models. This next generation of wearables has increased functionality, slimmer cases, brighter screens, more brands and more robust software. We continue to believe we are in the best position to take advantage of the convergence of fashion and technology given our capabilities and portfolio of brands."

Mr. Kartsotis concluded, "Our focus remains on executing our New World Fossil restructuring efforts, advancing our wearables initiative, and stabilizing and growing our core watch business to drive long term profitable growth. Given our conviction in the positive impact these initiatives can have on our financial performance, we are also working to ensure that we have the proper capital structure needed to support our long-term financial objectives. We are taking the necessary steps to strengthen our financial position to further enable us to execute our strategies well into the future and position our business model for continued strong cash flow generation."

Compared to the second quarter of fiscal 2016, the impact of a stronger U.S. dollar decreased the Company’s fiscal 2017 reported net sales by $8.3 million and operating income by $4.5 million. The following discussion of the Company’s net sales is presented on a GAAP basis and in constant dollars and reflects regional performance based on sales in all channels within the geographic location.

Second quarter fiscal 2017 worldwide net sales decreased $88.6 million or (13)% and $80.3 million in constant currency (a 12% decline) compared to the second quarter of fiscal 2016. Across product categories, watches declined with growth in connected watches more than offset by a decline in traditional watches. Leathers and jewelry also declined compared to last fiscal year.

Net sales in the Americas decreased $56.4 million or 16% and $55.0 million in constant currency (also a 16% decline) compared to the second quarter of fiscal 2016. Across product categories, watches declined with growth in connected watches more than offset by a decline in traditional watches. Leathers and jewelry also declined compared to last fiscal year. A sales decline in the U.S. drove the decrease in the region.

Net sales in Europe decreased $21.2 million or 10% and $14.8 million in constant currency (a 7% decline) compared to the second quarter of fiscal 2016. Across product...


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