Fossil Group Inc (NASDAQ:FOSL) Earnings Hurt By Global Currency Woes

Fossil Group Inc (NASDAQ:FOSL) released earnings and the company showed sluggish growth that was hurt by global currency concerns. They also lowered forward guidance as they don’t see any relief soon from the currency issues. The company reported an EPS of $3 per share but that missed consensus estimates by 10 cents. Earnings rose 12% when compared to the same period last year and were helped by improved operating income, a float reduction and non-operating gains. These gains were the result of the company acquiring Skagen. Currency fluctuations and devaluing caused the company to lose a potential of 23 cents per share.

Let this analyst breakdown the obvious technical-indicators for FOSL.

Strong Sales

Revenue for the fourth quarter was $1.065 billion but that missed estimates by about 5%. Sales were flat compared to the previous quarter and also missed guidance estimates. Currency devaluation caused the company to miss out on about $33 million in sales for the quarter also. Fossil Group Inc (NASDAQ:FOSL)’s global watch portfolio was responsible for a large portion of revenue and the brand continue to be extremely profitable. The addition of the Skagen brand also helped as it is a recognizable maker and adds exposure to the company. Jewelry sales were a pleasant surprise and the company’s leather products did well also. The company also partnered with Kate Spade & Company to design and develop their watches through 2025.

Strong Internals

While Fossil Group Inc (NASDAQ:FOSL) took a hit on its balance sheet over the currency concerns it ran the business efficiently. Operating expenses were decreased and those were helped by the company reducing incentives. The company continued to expand its retail stores along with royalties and other brand building expenses. Europe and Asia were good producers. They expanded revenue by 8% and 10% respectively. A big surprise came from sales that went directly to the customers. Direct sales revenue rose 16%.

Technicals

The stock has started doing some base building and barring some unforeseen event that can be expected to continue. Support is at $97.50 and looks to be strong.

About the Author

John is a special projects and general assignment reporter, noted for breaking several exclusive stories.

Leave A Response