11 January 2017
Fossil Group Inc has posted revenues of $49.7 million in the fourth quarter of 2016, significantly missing investor targets leading to a 20% decline in the company’s stock.
The watch makers revenues fell 3.4% from last year to $959.2 million, which were well below the market expectations of $981.28 million. Fossil noted that there was a decline in traditional watch market, which was offset by an increase in demand for wearables. The company’s current line of wearables is slightly expensive and Fossil has to give discounts for increasing sales, which hardly leaves anything for profit. Fossil says it will renew its efforts to launch cheaper wearable devices in the market.
The company has given a weak outlook for 2017, with negative Q1 EPS. The revenues for Q1 are expected to fall to $574 to $597 million, which is well below analyst’s expectations of $659.18 million. Fossil group expects revenues to remain flat for 2017.
The company commented via press release:
“We continue to be confident in the strategies we are pursuing and their ability to enable us to improve our financial performance and drive long-term shareholder value. Our success with wearables over the last year clearly shows that our pursuit of the category and expanding our addressable market is a significant long-term opportunity for the company. As we pursue building a more nimble and responsive operating platform through our New World Fossil initiative, we’ll be even better positioned to improve profitability in a very leverage able business model.”