Fossil Sets New Records for First Quarter Sales and Profits

Andrew Klips |

Sales and Profits in First Quarter Set New Records at FossilFossil, Inc. (FOSL) on Tuesday reported record figures for revenue and earnings, aided by a gain from the fashion accessory company’s Spanish joint venture and benefits of products being shipped earlier than originally expected. The strong quarter also resulted in Fossil boosting its full-year outlook, although its guidance for the current quarter was tempered by shipments brought ahead.

For the quarter, Richardson, Texas-based Fossil reported record revenue of $680.9 million, up 15 percent from $589.5 million in the year prior quarter. Net earnings were $72.2 million, or $1.21 per share, compared to $58.1 million, or 93 cents per share in the first quarter of 2012.

Wall Street was anticipating profits of $1.05 per share on revenue of $648.5 million. Fossil had guided in February earnings between 93 cents and 98 cents per share.

The profits for the quarter included a gain of 11 cents per share related to Fossil’s future acquisition of the remaining 50 percent of its Spanish joint venture. A bit of a shipping quagmire during the quarter also boosted earnings by 2 cents per share due to a “misalignment” between Fossil and many of its customers’ fiscal calendars. The company took a 5 cent per share expense in the shift of shipments, but also a 7 cent per share gain by sending shipments in March, which were originally thought to be going out in April.

Fossil’s clients are spread across the globe and range from companies like Wal-Mart (WMT) to Neiman Marcus.

"We are off to an excellent start in fiscal 2013, with record first quarter results that exceeded both our top and bottom line expectations,” said Kosta Kartsotis, chairman and chief executive at Fossil. He added, “International expansion continued to fuel our growth, with strong performances in both Asia and Europe. In the Americas, we posted solid gains and also completed the acquisition of one of our Latin America distributors, providing an important foothold in that very promising region."

Compared to the year earlier quarter, wholesale net sales in North America increased 13.4 percent to $255.2 million. In Europe, they were up 13.7 percent to $173.9 million, while in Asia Pacific, wholesale sales rose 13.1 percent to $86.8 million. Direct-to-consumer net sales improved 22.3 percent to $165.0 million.

Same-store-sales, an important measure of sales at stores open more than one year, increased 4.3 percent.

Gross margin nipped lower by 20 basis points to 55.6 percent, in part because of a negative impact of currency exchange.

Fossil bought-back 559,000 shares of its common stock in the first quarter for an aggregate amount of $56.5 million.

Looking at the second quarter, the company sees net sales increasing 8 percent to 9 percent and earnings per share in the range of 89 cents to 94 cents. For all of 2013, Fossils expects profits between $6.00 and $6.26 per share and net sales to increase between 10 percent and 11 percent.

The yearly forecast is up from the range of $5.85 to $6.15 per share the company announced in February.

Shares of FOSL are clocking gains in excess of 8 percent in early Tuesday trading, trading around $107 each. With the move, shares are up about 15 percent in 2013.

[Image via Flickr]

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Companies

Symbol Name Price Change % Volume
FOSL Fossil Group Inc. 27.77 0.19 0.69 754,814
GYTIE null n/a n/a n/a n/a
WMT Wal-Mart Stores Inc. 72.12 1.39 1.97 9,982,598

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