Fossil Group Slips To Loss In Q4; Sees Lower Sales In Q1, FY20

(RTTNews) - Fossil Group, Inc. (FOSL) reported Wednesday that its net loss for the fourth quarter was $6.9 million or $0.14 per share, compared to net income of $47.6 million or $0.94 per share in the year-ago period. The company's shares are losing more than 9 percent in pre-market trading.

Per share data includes restructuring charges of $0.08 per share in the latest quarter and $0.07 per share in the year-ago period.

Worldwide net sales for the quarter declined 10 percent to $711.6 million from $786.9 million in the year-ago period and also decreased 9 percent in constant currency.

The year-over-year decline in net sales was primarily due to continued softness in traditional wholesale channels and lower than expected performance in older generation connected watches.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $0.79 per share for the quarter on revenues of $724.65 million. Analysts' estimates typically exclude special items.

During 2019, Fossil Group initiated NWF 2.0, which is designed to deliver gross margin benefits and operating expense reductions totaling $200 million over the three-year period from 2019 to 2021.

In 2019, Fossil Group captured total benefits of $50 million, primarily related to operating expense savings. In 2020, the company expects to achieve additional benefits of $65 million, consisting of $15 million of gross margin improvement and $50 million of operating expense reduction.

Looking ahead to the first quarter, Fossil expects net sales to decline in a range of 10.0 percent to 3.5 percent, including the estimated negative impacts of business exits and currency of approximately 2.5 percent and 1.3 percent, respectively.

For fiscal 2020, Fossil forecast net sales to decline in a range of 11.5 percent to 4.5 percent, including the estimated negative impact of business exits and currency of approximately 1.3 percent and 0.5 percent, respectively.

The Street expects the company to report a 7.2 percent decrease in revenue to $431.85 million in the first quarter and a 3.6 percent decline in revenue to $2.15 billion in fiscal 2020.