Holders Flee Fossil (FOSL) on Weak Q4 Sales Results, Outlook

February 14, 2012 9:19 AM EST
Fossil, Inc. (Nasdaq: FOSL) shares are trading down over 4 percent early Tuesday morning following fourth-quarter results from the watch and jewelry designer. The stock last traded at $99.90.

Net sales increased 18.5 percent year over year to $830.8 million, but fell short of the analyst estimate of $841.12 million. North American sales were up 18 percent, European sales were up 18.5 percent and Asian sales were up 13.8 percent.

North America made up 37 percent of total revenue, Europe accounted for 26.9 percent, Asia totaled 10.4 percent and direct-to-consumer accounted for 25.7 percent.

Gross profit rose 16.4 percent to $465.9 million and accounted for 56.1 percent of net sales, down from 57.1 percent during the same quarter last year.

Operating income of $174.4 million grew 16.6 percent from 2010's fourth quarter and totaled 21 percent of total sales.

Net income increased 22 percent from the year-ago quarter to $117.9 million, while diluted earnings per share rose 28.1 percent to $1.87. Earnings topped the Street’s consensus of $1.77 per share.

Cash, cash equivalents and securities available for sale totaled $287.65 million, down substantially from the $401.7 million the company began the year with.

"We are pleased to cap off another outstanding year for Fossil by continuing with strong, double-digit sales growth across our operating segments," stated Mike Kovar, Executive Vice President and Chief Financial Officer of Fossil, Inc.

"As we begin fiscal year 2012, we will continue to emphasize the strategies that contributed to our strong performance last year," Mr. Kovar stated further. "We will continue our investment in support of our expansion in Asia and in our direct to consumer channel with expectations that this will lead to sustainable long-term growth. We are also excited by the new opportunities presented by our recently announced agreement to acquire Skagen Designs, Ltd. We remain confident in our strategies and expect fiscal 2012 to represent another year of strong growth and significant accomplishments toward our long-term goals and objectives."

Fossil expects both first-quarter and fiscal 2012 net sales to be up in the 15 percent range, inline with the Street’s consensus of a 15.2 percent increase. First-quarter fiscal 2012 diluted earnings per share are expected to be in a range of $0.90 to $0.92, below the Street’s consensus of $0.98. For fiscal year 2012, the company expects diluted earnings per share in a range of $5.40 to $5.50, inline with the Street’s consensus of $5.44.

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