Fossil Drops After Forecast Falls Short Amid Mall SlumpNick Turner
Fossil Group Inc., the maker of watches and other accessories, tumbled in late trading after its second-quarter forecast trailed analysts’ estimates amid a slump at North American malls.
Earnings will be 90 cents to 97 cents a share in the period, the Richardson, Texas-based company said yesterday in a statement. Analysts had projected $1.16 on average, according to data compiled by Bloomberg. The company predicted sales growth of 8 percent to 9.5 percent, just short of the 10 percent average estimate.
The forecast raised concerns that Fossil’s growth is ebbing following a 14 percent sales gain last quarter. While the company cited “strong performance” in its watch business, sales of leather products are suffering. Same-stores sales in North America also fell, offsetting gains in Europe and Asia Pacific and driven by a decline in traffic at shopping malls.
Fossil shares dropped 5 percent to $105.90 in extended trading after the company reported results. The stock closed at $111.45 in New York and has fallen 7.1 percent this year.
In the first quarter, Fossil posted net income of $66.3 million, or $1.22 a share, compared with $72.2 million, or $1.21, a year earlier. Earnings per share increased as a result of operating income growth and a reduction in shares outstanding, the company said. Sales rose to $776.5 million from $680.9 million.