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Fossil CEO says turnaround is ahead of plan as sales return to growth
Fossil Group reported a return to quarterly profitability and slight sales growth, early signs that its turnaround strategy may be gaining traction. The watchmaker has struggled for years to compete with smartwatches and address falling sales, debt and reduced shopping-centre footfall.
For the quarter ended 3 October, operating income was $25.3 million, compared with a $21.7 million loss a year earlier, while net sales rose 0.4% to $271.2 million. Net income was $11.7 million, or 19 cents a share, and operating expenses fell 11.1% to $137 million. Fossil raised its annual sales forecast to $980 million to $990 million and expects positive free cash flow by year-end; traditional watch sales rose 6.4%, while sales in Asia increased 15.1%.
In short
- Fossil returned to profit and recorded slight sales growth.
- Traditional watch sales rose 6.4%.
- The company raised its full-year sales outlook.
Explained simply
Fossil Group is an American company best known for making watches and fashion accessories. It sells traditional watches as well as other products, and competes in a market reshaped by smartwatches and changing shopping habits.
The company has faced years of falling sales, debt and fewer shoppers visiting shopping centres. Its turnaround strategy aims to reduce costs and improve the business; whether that can support lasting growth matters to the company, its employees and investors.