By Chelsea Stevenson
Fossil Inc.'s (FOSL) second-quarter earnings rose 12% as the
fashion-accessories retailer saw sales growth in its wholesale
segment accelerate across each of its geographical regions,
particularly in Asia, though a stronger U.S. dollar cut its
worldwide sales slightly.
The company lowered its full-year earnings guidance, now
projecting $5.20 to $5.25 a share, from its May estimate of $5.30
to $5.40 per share. Fossil maintained its May sales growth
estimate.
The company estimated current-quarter earnings at $1.09 to $1.11
a share on 11% sales growth, below the view of analysts surveyed by
Thomson Reuters who expect $1.37 on a 15% sales increase. Fossil
expects some shift of sales from the current quarter into the
fourth quarter.
Shares dropped 1.9% to $68.75 premarket.
Fossil, which designs watches, jewelry, handbags, belts and
clothing, has seen double-digit percentage sales increases for over
two years, aided by its expansion in Asia, though the impact of a
weaker euro has weighed.
Fossil reported a profit of $57.3 million, or 92 cents a share,
up from $54.1 million, or 80 cents, a year earlier. Sales jumped
14% to $636.1 million. Its May projection was per-share earnings of
77 cents to 79 cents a share on 16% sales growth, below analysts'
estimates at the time.
Gross margin was flat at 56%
Retail same-store sales rose 1.8%. Direct-to-customer revenue
increased 18%.
North American wholesale sales rose 18%, due to an increase in
watch sales and the company's jewelry business. In Europe,
wholesale revenue rose 14% and in Asia Pacific it rose 27%.
Fossil's wholesale customers range from high-end sellers like
Neiman Marcus Group Inc. and Nordstrom Inc. (JWN) to low-price
retailers like Target Corp. (TGT) and Wal-Mart Stores Inc.
(WMT).
The stock is down 45% in the past three months through Monday's
close.
Write to Chelsea Stevenson at chelsea.stevenson@dowjones.com
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