Fossil Tumbles as Slow Watch Sales Raise Industry Concerns

Fossil Group Inc., a maker of wristwatches, handbags and other accessories, tumbled the most in more than two years after sluggish sales renewed concerns that demand for watches is slowing.

Fourth-quarter sales rose less than 1 percent to $1.06 billion, the company said Tuesday in a statement. Analysts predicted $1.12 billion, on average, according data compiled by Bloomberg. Earnings were $3 a share in the period, missing the $3.07 projection.

Fossil, based in Richardson, Texas, reported declining demand for both watches and leather goods, though jewelry sales increased. Fossil’s shipments to major department-store accounts in the U.S. lagged as well. The strong U.S. dollar also took a toll on sales last quarter, the company said.

“We are not entirely satisfied with our fourth-quarter performance and begin 2015 intensely focused on taking advantage of the many opportunities available to us to drive future growth,” Chief Executive Officer Kosta Kartsotis said in the statement.

The shares fell 16 percent to $83.69 at the close in New York, the biggest daily decline since May 2012. Even before the drop, the stock was down 10 percent this year.

Smartwatch Pressure

Fossil may be under pressure to incorporate newer technology into its products. Swiss competitor Swatch Group AG said earlier this month that it plans to introduce its own smartwatch within the next three months. The announcement may add pressure to Fossil to compete directly with Apple Inc.’s new device, set to debut in April.

American consumers have been turning away from watches as well. U.S. watch sales across all channels in December fell 2.5 percent from a year earlier, the third straight month of declines, according to the Rapaport Group, a research firm that tracks the diamond and jewelry market.

Fossil said sales this year would range from a 3 percent decrease to a 1 percent increase. Analysts projected a gain of about 5 percent. Earnings will be $5.45 to $6.05. Analysts estimated $7.52.

Perry Ellis International Inc., the maker of men’s fashion and sportswear, said fourth-quarter profit was 1 cent to 4 cents a share, trailing the 43 cents estimated by analysts. Slowdowns at the West Coast ports hurt revenue by $23 million in the quarter, Perry Ellis said in a statement Tuesday. The retailer had $218 million in revenue last quarter, less than the $242.5 million analysts estimated.

Shares of the Miami-based company dropped 6.5 percent to $22.38. Perry Ellis is scheduled to report full earnings the week of March 30.

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