Fossil Group Q3 Profit Up 17%, But Sees Q4 Results Below Estimates

(RTTNews) - Fashion accessories and watch retailer Fossil Group Inc. (FOSL) on Tuesday reported a 17 percent increase in profit for the third quarter from last year, reflecting growth in the company's multi-brand global watch portfolio, as well as the global expansion of the Fossil and Skagen brands. Revenue for the quarter beat analysts' expectations.

Looking ahead, the company forecast results for the fourth quarter below Street view. However, the company maintained its earnings outlook for fiscal 2013 and raised its sales growth forecast for the year.

The Richardson, Texas-based company's third-quarter net income was $89.7 million or $1.58 per share, up from $76.8 million or $1.26 per share in the year-ago period. On average, analysts polled by Thomson Reuters estimated earnings of $1.36 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's results include about $20 million in sales related to shipments which the company had expected to deliver in the fourth quarter. In addition, the company deferred about $5 million in anticipated third-quarter expenses into the fourth quarter.

Net sales for the quarter grew 18 percent to $810.4 million from $684.2 million in the prior-year period and beat analysts' consensus revenue estimate of $771.93 million for the quarter.

The translation impact of a weaker U.S. dollar increased the company's reported net sales by about $2.5 million during the latest quarter.

The sales increase was driven by growth in the company's multi-brand global watch portfolio, as well as the global expansion of the Fossil and Skagen brands. Sales of the company's jewelry and leather products also contributed to the growth.

Wholesale net sales for the quarter rose 19 percent to $615.0 million, with growth in all wholesale segments, including the favorable effects of shipment timing shifts. Direct to consumer net sales increased 16 percent to $195.4 million. Global retail comps declined 0.5 percent, with increases in Europe and Asia Pacific and a decrease in North America.

Looking ahead to the fourth quarter, Fossil forecasts earnings in a range of $2.26 to $2.46 per share on net sales growth of 6 to 8 percent. Analysts expect the company to report earnings of $2.60 per share for the quarter on revenue growth of 10.10 percent to $1.04 billion.

The company said that the sales growth rate for the fourth quarter will be unfavorably impacted by about 400 basis points due to the $20 million shift of shipments into the third quarter from the fourth quarter and the $17 million shift of North American holiday shipments from the third quarter into the fourth quarter.

For fiscal year 2013, Fossil maintained its outlook for earnings in a range of $6.15 to $6.35 per share, but raised its forecast for net sales growth to a range of 12 percent to 12.75 percent from the prior range of 11 percent to 12 percent.

Analysts expect the company to report earnings of $6.30 per share for the year on revenue growth of 12 percent to $3.20 billion.

FOSL closed Tuesday's regular trading session at $134.02, up $3.82 or 2.93 percent on a volume of 1.99 million shares. In after-hours, the stock further gained $0.98 or 0.73 percent to $135.00.