For the third quarter of 2024, Fossil Group, Inc. FOSL incurred an adjusted internet loss per share of 51 cents, narrower than the adjusted lack of 93 cents per share within the prior-year interval.
Revenues totaled $287.8 million, reflecting a 16.4% lower from $344.1 million a 12 months in the past. This was largely pushed by weak spot throughout classes and channels, and by strategic strikes comparable to exiting the smartwatch phase and shutting sure retail areas, which impacted income by six share factors.
Fossil’s quarterly efficiency confirmed a mixture of enhancements in operational efficiencies alongside income declines. Whereas gross sales decreased, gross margin elevated primarily resulting from initiatives beneath the Remodel and Develop (TAG) Plan. This plan additionally decreased promoting, normal and administrative bills, which declined 16% in comparison with final 12 months resulting from decrease compensation and different cost-saving measures.
The TAG plan targets $300 million in annualized working earnings advantages by 2025, with round $125 million achieved in 2023 and at the least $100 million anticipated in 2024.
Fossil Group, Inc. Value, Consensus and EPS Shock
Fossil Group, Inc. price-consensus-eps-surprise-chart | Fossil Group, Inc. Quote
Key Enterprise Metrics
Gross sales by Area
Americas
Revenues within the Americas had been $121.3 million, down from $152.6 million, representing a 20% decline in fixed forex phrases. This area skilled important weak spot resulting from channel and client softness.
Europe
Gross sales in Europe dropped to $97 million, an 11% year-over-year decline on a relentless forex foundation, pushed by comparable elements affecting the Americas.
Asia
Asia reported $69 million in gross sales, marking a 17% lower in fixed forex phrases in comparison with the third quarter of 2023, with decrease client demand contributing to this downturn.
Gross sales by Product Classes
Watches
Whole watch gross sales had been $227.2 million, down from $270 million within the third quarter of 2023. Conventional watch gross sales decreased by 12% in fixed forex, and smartwatch gross sales dropped considerably resulting from Fossil’s exit from this class.
Leathers and Jewellery
Leather-based merchandise and jewellery gross sales declined 28% and 10% in fixed forex, respectively. This displays broader demand challenges in equipment and discretionary spending.
Gross Margin
Fossil’s gross margin improved to 49.4%, up from 47% within the earlier 12 months’s quarter. This enlargement was primarily attributable to the TAG Plan, which improved product margins by exiting lower-margin classes like smartwatches. Nonetheless, elevated royalty prices partially offset these positive factors.
Working Bills
Working bills totaled $166.7 million, a lower from $208.1 million final 12 months, due to efficiencies realized beneath the TAG Plan.
Working Loss
Fossil’s working loss was $24.5 million, considerably narrower than the $46.4 million loss within the third quarter of 2023. The adjusted working loss additionally narrowed to $18.7 million from $31.1 million, reflecting profitable cost-cutting measures.
Internet Loss
Fossil incurred a internet lack of $32 million for the third quarter of 2024, narrower than the web lack of $61.1 million recorded in the identical quarter of the earlier 12 months. Adjusted internet loss, which excludes restructuring and impairment costs, was $27.4 million, narrower from an adjusted internet lack of $49 million within the third quarter of 2023.
Steadiness Sheet Replace (As of Sept. 28, 2024)
Fossil held money and money equivalents totaling $106.3 million, a slight decline from $116.1 million within the prior-year interval. On the third-quarter finish, it had $23.8 million out there beneath its revolving credit score facility.
Whole property decreased notably to $812.4 million from $1.1 billion a 12 months earlier.
Lengthy-term debt stood at $173.4 million, down from $255.9 million. Brief-term debt elevated barely to $2.3 million from $0.5 million.
Shareholders’ fairness noticed a considerable lower, falling to $161.9 million from $278.8 million as of Sept. 30, 2023.
Administration Steering
For 2024, Fossil revised its outlook, projecting internet gross sales of round $1.1 billion. This steering displays an anticipated unfavourable affect of roughly $100 million from the smartwatch exit and retailer closures, together with an expectation of ongoing channel and client softness. Adjusted working margin is anticipated to be (6)-(8)%. Moreover, Fossil anticipates constructive free money stream for the 12 months, benefiting from tax refunds of about $57 million obtained within the second quarter of 2024.
Different Developments
Fossil’s strategic enterprise evaluation, introduced in March 2024, is an ongoing effort to reassess its enterprise mannequin and capital construction. This evaluation might result in additional operational changes past these coated by the TAG Plan, doubtlessly together with further price reductions, debt refinancing, or asset gross sales. The corporate has engaged Evercore as a monetary advisor to help with this course of. This restructuring effort goals to place Fossil for sustainable development and improved monetary resilience, particularly given the difficult retail setting.
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