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Fossil reports weaker watch sales and moves further into smartwatch sector

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Accessories brand Fossil has cut its full-year earnings guidance as third-quarter earnings fell 45% on weaker sales, particularly of its watches.

It revealed that it has also agreed to acquire wearable technology firm Misfit for $260m, a deal that will see it expand its presence in the smartwatch sector.

For the full year, the brand now expects net sales to decline 8-10.5%, and diluted earnings to be in the range of $4.15-4.75 from its previous estimates of $4.80-5.60 and a sales decrease of 4-8%.

The brand posted a profit of $57.5m, down from $103.7m a year earlier during the third quarter. Revenue decreased 14% to $771.3m. Gross margin fell to 54.2% from 56.9%.

CEO Kosta Kartsotis said: “While our results for the third quarter were within our expectations, we are not satisfied with our overall performance. Currency aside, our Skagen and Fossil brands performed well in a challenging environment as our initiatives in branding and innovation resonated with consumers around the world. Our branded jewelry and leathers business increased but were more than offset by a decline in our watch business, reflecting general weakness in the category.”

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