Fossil (FOSL) reported earnings on Tue 13 Feb 2018 (a/h)

** charts before earnings **

 

** charts after earnings **

 

** 4 months later **

Fossil beats by $0.24, beats on revs; guides Q1 revs below consensus; guides FY18 revs below consensus 
Wearable device revenue almost doubled in 2017 to $300 million

Company posted surprise gain in same-store sales last quarter

• Reports Q4 (Dec) earnings of $0.64 per share, excluding non-recurring items, $0.24 better than the Capital IQ Consensus of $0.40; revenues fell 4.0% year/year to $921 mln vs the $889.56 mln Capital IQ Consensus.
• Co issues downside guidance for Q1, sees Q1 revs down 6-12% to ~$512-547 mln vs. $568.52 mln Capital IQ Consensus Estimate. Gross margin in the range of 50% to 52% Operating expenses as a percent of net sales, including restructuring charges, ranging from 58% to 61% Operating margin in the range of (11)% to (6)% Other income/(expense) of approximately $(2) million based on prevailing currency rates Interest expense of approximately $12 million Income (loss) before income taxes in the range of $(70) million to $(45) million
• Co issues downside guidance for FY18, sees FY18 revs down 6-14% to $2.40-2.62 bln vs. $2.71 bln Capital IQ Consensus Estimate. Gross margin in the range of 51% to 53% Operating expenses as a percent of net sales, including restructuring charges, ranging from 49% to 51% Operating margin in the range of 0% to 4% Other income/(expense) of ~$(10) million based on prevailing currency rates Interest expense of ~$50 million Income (loss) before income taxes in the range of $(60) million to $40 million.
• "In the year ahead, we expect to be a smaller yet more profitable company that is on a solid path for the future," Mr. Kartsotis, continued. "Our priorities are focused on delivering innovative wearable and traditional watch styles while improving performance in the handbag and jewelry categories and driving increases in digital sales. While we continue to expect North America to be challenging given the dynamics of the retail and consumer environment in the region, with our commitment to drive out costs through our New World Fossil initiative and with improved sourcing costs, we expect to deliver more profit to the bottom line. The credit agreement completed last month increases the financial flexibility we have to continue to invest in support of our growth and achieve our ultimate goal of creating greater value for all Fossil stakeholders."