Fossil Group, Inc., a renowned watch and accessories company headquartered in Richardson, Texas, delivered an outstanding performance in the third quarter of 2020, marking a significant turnaround in its quarterly earnings. The company announced a profit of $16.0 million, or $0.31 per diluted share, a notable improvement from the net loss of $25.9 million, or $0.51 per diluted share, in the same period last year. This positive news resulted in a remarkable surge of over 32% in Fossil’s shares during after-hours trading.
This impressive growth in profit can be largely attributed to the success of Fossil’s digital channel and its thriving Chinese business, which helped offset the decline in overall revenues. The third quarter saw substantial revenue growth in the company’s e-commerce platforms and Chinese operations, paired with a 26% reduction in total operating expenses year over year. Fossil Group boasts ownership of several popular brands such as Fossil, Michele, Misfit, and Skagen.
Despite a 19% dip in total net sales to $435.5 million compared to last year’s $539.5 million, largely due to the impact of the Covid-19 pandemic, Fossil experienced a significant upsurge in e-commerce sales through its owned platforms and third-party marketplaces. These digital channels played a pivotal role in driving revenue, especially amidst the challenging retail landscape triggered by the pandemic.
Chairman and CEO of Fossil Group, Kosta Kartsotis, expressed contentment with the company’s performance in a challenging environment. He highlighted the growth in digital channels, the strength of the business in mainland China, and enhancements in wholesale operations worldwide. The sales across Asia, Europe, and the Americas witnessed varying decreases in constant currencies during the quarter.
In response to the ongoing challenges posed by Covid-19, Fossil is steadfast in prioritizing strategic initiatives aimed at digital expansion and cost reduction to fortify its position for future growth. The company’s efforts to enhance gross margins and trim operating expenses have been accelerated and are projected to yield $100 million in expense savings in 2020.
Looking forward, Fossil foresees a net sales decline of 30% to 40% in the fourth quarter due to the continued impact of the pandemic. However, the company remains agile and committed to meticulously managing liquidity, expenses, and inventory while sustaining focus on growth opportunities.
In addition to its portfolio of renowned brands, Fossil holds licenses for esteemed names like Emporio Armani, Diesel, DKNY, Kate Spade New York, and Michael Kors. As of October 2020, Fossil operates 431 stores globally, including 220 outlets. The company’s proactive approach in navigating market challenges, amplifying digital capabilities, and reducing costs positions Fossil Group for future triumph in the ever-evolving retail industry.
For more information, you can visit Fossil Group’s official website here and explore their diverse range of products and brands. Additionally, to stay updated on the latest news and developments in the retail sector, check out industry insights at Retail Dive.
