Why Fossil's fortunes are thriving
The watch and accessories maker appeals to both well-heeled and budget-conscious consumers. Its stock, though, is no bargain at the moment.
Net income at the Richardson, Texas, company rose to $67.7 million, or $1.15 per share, compared with $57.3 million, or 92 cents per share, a year earlier. Revenue surged 11% to $706 million, helped by gains in all regions across multiple product lines. The results handily beat Wall Street expectations of 93 cents per share of profit on revenue of $691.2 million.
The secret to Fossil’s success lies in the breadth of its product offerings. The company’s watches, which are sold under brands such as Fossil, Armani, Michael Kors and Marc Jacobs are priced at as little as $7 and as much as $2,000. Watch sales surged 15% in the quarter, and Fossil expects its sales growth in the category to outpace the industry's. Fossil's jewelry sales also leaped, by 24%.
Sales for the Fossil brand were robust, posting a 17% gain overall, lead by strong demand for watches. Small leather goods such as wallets performed well as did women’s handbags. Wholesale sales jumped by double-digits in both the Europe and Asia. They rose 4.2% in North America.
The company also continues to benefit from last year’s $236.9 million acquisition of Skagen Designs. During the quarter, it launched a Skagen jewelry line, which will compliment its watch offerings. Fossil expects to further leverage the Skagen brand.
Fossil’s results were so good that Wall Street ignored the fact that Fossil's yearly profit guidance was below analyst forecasts because the company is ramping up advertising and marketing spending ahead of the holiday season. Fossil plans to open as many as 75 stores this year, mostly outside the U.S.
The report surely surprised Barclay’s analyst Matthew McClintock, who on Monday cut his rating on Fossil to "sell," a rarity on Wall Street, citing what he called deteriorating sales trends. That led to a one-day sell-off that reversed sharply on Tuesday.
Though some of its fashions are bargains, Fossil's stock isn't. It trades at a price-to-earnings multiple of 18.2, near a five-year high. And in Tuesday trading, the shares blew by the stock’s average 52-week price target of $114.73, closing at $126.50.
So, investors should wait for the shares to go "on sale" before adding them to their portfolios. Now isn't the right time to buy this watchmaker's stock.
Jonathan Berr is among the least fashionable people he knows. He doesn't own shares of the listed stocks. Follow him on Twitter @jdberr.
PEOPLE STILL OUT OF, AND HAVE STOPPED LOOKING FOR WORK!!!! that statement trumps the stupid 'stimulus worry' thing hands down. bottom line: liberalism is a mental disorder, its believers and whiny sycophants are by definition whackjob, mental cases, deranged lunatics, just look at them walkin' down the street, it's pathetic here in New York for example..
did you know serial killers are democraps? and liberals?, personally that doesn't suprise me at all!! fancy that! figures doesn't it, disgusting dirt bag libs with an agenda nobody wants to hear or know about, so they go nuts, classic study in stupidity and utter and shear insanity of the lefty obamazombie loonies, meanwhile what has their messiah done for THEM?? NOTHING, same as everyone else, and they just can't stand it!!! IT'S KILLIN' EM!! and instead of admitting they're wrong, they'll go down with the ship, hey, as long as they go down! cool!
You haven't heard of Fossil ? These have been around since the 80's. They're mostly fashion watches- Had a couple of cool looking ones back in my college day's, but they weren't that expensive. You'd pay around 50 bucks for a decent one- they'd last about 2-3 years then you'd go get another.
Now for all my casual wear- it's Swiss Army ! They're very durable and keep excellent time. The one I wear to surf is the military issue. But if I scuba dive or fish offshore, it's Omega all the way.
NW..S.fisher. It's called hype and the need to have, I guess.
I swear to God, A couple days ago an article on Fossil seem to relate to an Energy company, oil/gas driller or something...I guess I just don't keep up??
Kind of sounds like Lands End, American Eagle or Urban Outfitters; Places we don't shop much at except maybe for Christmas gifts or Gift Cards...
And as far as $127 dollar stock...??? At least I know what Wal-Mart, Target and McDonalds do.
Still not interested in FOSL.
No azz driver, it still looks gay....
Hardly a true Liberal...
And my guess, is you are facetious in many ways...Right? I thought so...
SRT.....How does any of that RANT, have anything to do with Fossil.???
And I wish you would get rid of that GAY picture, it's un-nerving; But does excite Fatty Cakes.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Consumers are very status conscious in Asia, Africa and other emerging-market areas. This is especially true in China.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.