Fashion accessories and watch retailer Fossil, Inc. (FOSL) reported Tuesday a profit for the first quarter that increased from last year, reflecting gains from Spanish Joint Venture and strong sales growth amid double-digit sales increases across each of its wholesale and retail operations.
Both earnings per share and quarterly sales topped analysts' expectations. The company also provided earnings and revenue growth guidance for the second quarter, and raised its earnings forecast for the full-year 2013, while maintaining annual revenue growth guidance.
"We are off to an excellent start in fiscal 2013, with record first quarter results that exceeded both our top and bottom line expectations. We increased FOSSIL brand sales, driven by double-digit watch growth and the resurgence of our retail jewelry business," CEO Kosta Kartsotis said in a statement.
The Richardson, Texas-based company reported net income of $72.2 million or $1.21 per share for the first quarter, higher than $58.1 million or $0.93 per share in the prior-year quarter. Results for the latest quarter include $0.11 per share gain on Spanish joint-venture, and a net $0.02 per share benefit from shift of shipments.
On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.97 per share for the quarter. Analysts' estimates typically exclude special items.
Worldwide net sales for the quarter increased 15.7 percent to a record level of $680.9 million from $589.53 million in the same quarter last year, and topped twelve Wall Street analysts' consensus estimate of $650.99 million.
The sales increase was driven by double-digit growth of the multi-brand global watch portfolio as well as the expansion of the global FOSSIL brand. Sales of jewelry products increased, while sales of leathers and eyewear declined.
Net sales grew across its wholesale and direct segments, with North America wholesale sales increasing 13.3 percent, Europe wholesale sales advancing 13.5 percent, and Asia Pacific wholesale sales rising 15.3 percent, Asia wholesale sales growing 13 percent.
The company's direct-to-consumer sales increased 22.7 percent, with global retail comps increasing 4.3 percent, the 20th consecutive quarter of positive comps.
The company noted that international expansion continued to fuel growth, with strong performances in both Asia and Europe. The company also posted solid gains in the Americas, and also completed the acquisition of one of its Latin America distributors, providing an important foothold in that very promising region.
Operating margin for the quarter contracted 20 basis points to 13.9 percent from last year, as gross profit margin declined 20 basis points to 55.6 percent from the prior-year quarter.
Looking ahead to the second quarter, Fossil expects earnings in a range of $0.89 to $0.94 per share, on anticipated quarterly net sales growth of 8 to 9 percent. Analysts expect the company to report earnings of $1.05 per share on quarterly revenues of $699.15 million for the quarter.
For fiscal 2013, Fossil raised its earnings guidance to a range of $6.00 to $6.26 per share from the prior estimates of $5.85 to $6.15 per share, while maintaining its net sales growth forecast between 10 and 11 percent. Street is currently looking for fiscal 2013 earnings of $6.11 per share on annual revenues of $3.16 billion.
FOSL closed Monday's regular trading session at $98.96, up $0.90 on a volume of 1.14 million shares. In the past 52-week period, the stock has been trading in a range of $62.77 to $129.13.
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