Can Fossil Jumpstart Strong Earnings With Smart Accessories?

Photo Credit: Desmond Bowles

Fossil, Inc. (FOSL) Consumer Discretionary – Textiles, Apparel & Luxury Goods | Reports February 16, After Market Closes

Key Takeaways

  • The Estimize consensus is calling for EPS of $1.36, 7 cents higher than Wall Street, and revenue of $924.80 million, roughly $5 million above the Street
  • Fossil is coming off a year which saw share prices fall 67% due to a decline in its portfolio of licensed brands, weaker watch sales, and sluggish international performance from currency headwinds.
  • The recent acquisition of wearables company, Misfit, is aimed at propelling Fossil into the wearables industry
  • What are you expecting for FOSL? Get your estimate in here!
  • Fossil, is scheduled to report fourth quarter earnings February 16, after the market closes. The company is coming off a year which saw share prices fall 67% due to a decline in its portfolio of licensed brands, weaker watch sales, and sluggish international performance from currency headwinds. The nose dive in share prices reflects investors negative sentiment around Fossil's core .

    Consequently, expectations are low for this Tuesday's report. The Estimize consensus is calling for EPS of $1.36, 7 cents higher than Wall Street, and revenue of $924.80 million, roughly $5 million above the Street. Compared to the same period last year, EPS and revenue are expected to decline 54% and 12%, respectively. Despite waning sales, Fossil has beat on the bottom line each quarter of 2015 and historically has beat the Estimize EPS estimate 63% of the time. 

    Growth of Fossil's flagship product, watches, turned negative in 2015 for the first time in 5 years. Fossil's position in the category has slowly diminished due to a weakened portfolio of licensed brands and market saturation. Slower demand for Michael Kors products has played a large role in Fossil's sales decline. The Kors represents roughly 25% of Fossil's revenue and has contributed to almost 50% of the company's sales growth in the past 5 years. Moreover, Fossil recently announced it will be parting ways with Burberry in December 2017.

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