Thursday, fashion accessories company Fossil, Inc. (FOSL) said it expects earnings for the fourth quarter to exceed its prior guidance, helped by net sales, which is estimated to top its prior forecast, led by U.S. wholesale and direct to consumer segments.
The Richardson, Texas-based company currently expects net sales for the fourth quarter ended January 2, to be in the range of $520 million to $525 million, representing a 12% to 13% increase in comparison to the $464.1 million of net sales in the fourth quarter of the previous year.
On average, six analysts polled by Thomson Reuters currently expect the company to report sales of $503.06 million for the quarter. Analysts' estimates typically exclude special items.
Earlier, on November 10, while announcing the financial results for the third quarter fiscal 2009, Fossil estimated that fourth quarter net sales would be in the range of $497 million to $506 million.
The company attributed the superior performance primarily to stronger wholesale shipments in the U.S and net sales increases in its worldwide direct to consumer segment, mainly due to comparable store sales surpassing the company's original expectations.
Earlier, on November 10, Fossil lifted its earnings per share outlook to a range of $0.82 to $0.86, from its previous announced guidance of $0.74 to $0.80. In the same quarter a year ago, the company had reported earnings of $0.69 per share.
Currently, Street analysts expect the company to report earnings of $0.85 per share for the quarter.
The company then said at prevailing foreign currency rates, it expects its fourth-quarter earnings to be favorably impacted by about $0.17 as a result of the weaker U.S. dollar in comparison to last year. The company pointed out that its prior year results included a benefit of approximately $0.21 related to a lower effective tax rate and an unfavorable charge of about $0.11 related to trade name and store impairment.
Mike Kovar, executive vice president and chief financial officer, said, "Our Fossil brand outperformed our expectations during the holiday season driven by continued innovative product offerings resulting in a particularly strong performance from the core watch category. We also benefited from an increasingly strong brand message and by providing excellent customer experiences in our direct channels. Stronger than expected sell-thru across many of our US wholesale accounts also favorably impacted our net sales as retailers continued to flow receipts to meet demand."
The company intends to report full results for the fourth quarter on February 16.
FOSL is currently up $0.45 or 1.32% and trades at $34.64.
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