Fashion Watches Fossil Second Quarter Double Expectations

Fossil, the US accessories group, released second quarter sales figures, and the group's turnover declined year-on-year. It is expected to continue this trend in the second half of this year.

However, Fossil's turnover and profit exceeded analysts' expectations, and Fossil shares rose 8% to $32.86 per share.

Fossil is the largest in the world.

One of the watches manufacturers, mainly Emporio Armani, DKNY, Armani Exchange, Michael Kors, Diesel, Burberry and other brand design and manufacture watches accessories.

In the first three months ended July 2nd, the net turnover of the company fell from $740 million a year ago to $685 million 400 thousand.

The result is also more than FactSet's earlier estimate of $672 million.

The company pointed out that Fossil

The turnover of products and jewellery has increased, but the decline in the performance of watches has greatly offset the increase in revenue.

In the second quarter, Fossil net profit fell to $6 million, diluted 13 cents per share, compared with the same period last year, 54 million 600 thousand dollars, diluted earnings per share of 1.12 U.S. dollars, adjusted earnings per share 12 cents, more than FactSet previously expected 9 cents per share.

The company's CEO Kosta Kartsotis pointed out that although the company's quarterly results were worse than the same period last year, it was in line with the company's upper and lower expectations.

In fact, although the overall turnover has declined, several business areas still perform well, but in the traditional watch category, especially the company's authorization.

Business continues to slump.

Fossil is expected to dilute its performance in 2016 due to the impact of the acquisition of wearable technology Misfit. The gross profit margin of this quarter also declined, from 55.2% a year ago to 51.9%. The company attributed the decline to the promotions of discount stores and the negative impact of exchange rate changes.

Fossil expects net sales to decline between 1.5% and 5% in 2016, while diluted earnings per share are between $1.8 and $2.65, less than Capital IQ forecasts earnings per share of $2.03.

For fashion brands, watches have become an important source of profit for economic growth. Behind this, they often cooperate with Fossil, which designs, produces, distributes and sells millions of watches every year through franchising.

Fossil has a strong position in the US market. Every 5 watches sold still have only 1 Fossil products. However, the analysis indicates that the market will enter a contraction period in 2017. According to Euromonitor data, the sales of American watches increased by 6.3% in 2013, 1.7% in 2014, 1.3% in 2015, and 0.5% in 2016.

In order to find market growth, Fossil began to focus on wearable technology in the market. At the end of last year, it bought Misfit, a wearable device manufacturer for $260 million, to support its development of the smart watch market.

Fossil executives have talked about the company's desire for the wearable technology market many times, and think that technology is a new trend. In fact, Fossil group competitors are making every effort to enter the wearable market, and hope that wearable technology can slowly enter the mainstream market.