Shares in Fossil Group roared 70 per cent higher in after-hours trading after the watch maker reported a forecast-beating set of results.
Facing pressure from the rise of smartwatches and activity trackers, the Texas-based company last year began strategic initiatives to position itself for long-term profitable growth. Boosting growth in its wearable technology category is one key goal.
Fossil reported a 4 per cent decline in sales to $921m in its fiscal fourth quarter, a result that came in above the median of $889.6m in a Thomson Reuters survey of analysts. For the full year, sales rose 1.1 per cent year-on-year, beating the company’s own expectations for a decline of between 1.5 per cent to 6 per cent.
The company’s net loss for the December quarter of $79.9m widened from a $49.7m loss a year ago and was adversely affected by recent changes to the US tax code.
Excluding the tax changes and a restructuring charge, Fossil reported diluted earnings per share of 64 cents in its fourth quarter, in line with guidance and above the 40 cents analysts had pencilled in.
Kosta Kartsotis, chairman and chief executive, said that although sales and earnings in the year were “challenged, as expected”, the company had made progress towards its strategic goals of driving growth in wearables, lowering supply chain costs and boosting its digital capabilities.
Sales of wearables nearly doubled to over $300m, or 14 per cent of total sales, Mr Kartsotis noted.
For the year ahead, Fossil forecasts net sales to decline in the range of 6 per cent to 14 per cent, and for an operating margin of 0 to 4 per cent, compared to minus 15.2 per cent in 2017.
“In the year ahead, we expect to be a smaller yet more profitable company that is on a solid path for the future,” Mr Kartsotis said.
Shares were up 70 per cent in after-hours trade on the Nasdaq to $15.50, having closed 7.8 per cent higher during regular trading on Tuesday.
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