Richardson, TX—Thanks to a better-than-expected first quarter profit, Fossil Inc. today raised its full-year profit and sales forecast, sending its shares up in early trading.
For the quarter ended March 30, the watch and accessories company posted a net profit of $72.2 million, or $1.21 a share, compared to $58.1 million, or 93 cents a share, in the same period a year ago. Included in the total was an 11-cent boost from its Spanish joint venture offset by a change in shipments.
That handily beat analysts’ average estimate expecting earnings of $59.25 million, or 97 cents a share.
Net revenue rose 15.5% to $680.9 million. Again, Fossil easily beat analysts’ forecast for $651.9 million in sales.
“We are off to an excellent start in fiscal 2013, with record first quarter results that exceeded both our top and bottom line expectations,” said Kosta Kartsotis, chief executive. “We increased Fossil brand sales, driven by double-digit watch growth and the resurgence of our retail jewelry business. Our multi-brand watch portfolio sustained its positive momentum with strong performances across several brands and we continued to develop Skagen with the introduction of a new jewelry line in the quarter. International expansion continued to fuel our growth, with strong performances in both Asia and Europe. In the Americas, we posted solid gains and also completed the acquisition of one of our Latin America distributors, providing an important foothold in that very promising region.”
Skagen Helps Sales Globally, Too
By region, net sales in North America wholesale division increased 13.3%, or $29.8 million, compared to last year. Solid growth in the watch portfolio led the North American sales increase, including a $10 million contribution from the addition of the Skagen brand. Growth in these areas helped partially offset lower shipments of leathergoods and eyewear.
Wholesale net sales in Europe rose 13.5%, or $20.5 million, compared to the first quarter 2012. Again, most of the sales growth was due to watches, which offset reduced shipments of eyewear and leathergoods. Skagen brand contributed $13 million to European sales. The company said growth was strongest in its distributor markets and the United Kingdom, while Italy posted a decline in sales.
Asia Pacific wholesale net sales rose 15.3%, or $11.7 million, compared to a year ago, largely due to strong watch sales. An additional $3 million in sales was attributed to the addition of Skagen.
Fossil also reported strong increases its sales through its own stores and websites, increasing 22.7% or $30.7 million compared to last year. The increase was attributed to expansion of its global stores and a 4.3% rise in comparable store sales. Overall sales growth was driven by a strong performance in watches as well as “repositioned jewelry business and a modest increase in the leathers category.”
As far as its current quarter goes, Fossil forecast net sales to increase 8% to 9% (estimated between $686.9 million to $693.3 million) and earnings in the range of 83 to 94 cents a share. That was downbeat compared to analysts’ consensus for $1.05 a share.
Nonetheless, for its full fiscal 2013, Fossil now expects earnings in the range of $6 to $6.26 a share, up from its prior forecast for $5.85 to $6.15. Net sales are forecast to increase 10% to 11%, which would be about $3.13 billion to $3.16 billion.
Analysts’ estimate is for Fossil to earn $6.08 a share for the year on sales of $3.16 billion.
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