Smartwatches Power Fossil



Fossil Group Inc. is trying to prove it’s not a dinosaur by being smarter — and leaner.
The company posted net losses and declining sales in the second quarter, but came out better than Wall Street analysts feared with some serious momentum in smartwatches, stronger gross margins and lower expenses.
After sending shares of Fossil down 8.2 percent in regular trading, traders reversed course and pushed the stock up 2.7 percent to $27.02 in after-hours trading.
Kosta Kartsotis, chairman and chief executive officer, told investors that smartwatch sales grew 91 percent in the quarter — to about $116 million — and accounted for 25 percent of the company’s total watch sales, up from about 10 percent a year ago.
But even with that growth, smartwatches can do only so much for now.
“Due to structural and industry issues facing us, we expect to become a smaller but a more profitable business,” Kartsotis said. “Total sales will contract as we exit unprofitable stores, businesses, and product lines. Connected watches will continue to demonstrate strong growth but will not offset the decline in traditional watches in the near term.”
For the second quarter, Fossil’s net losses narrowed to $7.8 million, or 16 cents a share, from $344.7 million, or

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