Fossil Group Inc. · Q1 2021 earnings

Briefing

Fossil's first quarter performance was marked by better-than-expected sales, driven by improved consumer demand in the U.S., strength in Mainland China, and digital channel growth, alongside solid gross margins and cost control, leading to improved profitability.

Fossil Group, Inc. reported a 7% decrease in worldwide net sales to $363 million, but experienced a 40% growth in digital sales. The company's gross margin improved to 50.3%, and operating expenses were reduced by $75 million. The operating loss was reduced to $17 million, and the company achieved its New World Fossil 2.0 program financial targets.

• Worldwide net sales decreased by 7% to $363 million, but digital sales grew by 40%.
• Gross margin increased to 50.3% due to reduced inventory valuation adjustments and minimum licensed product royalties.
• Operating expenses decreased by $75 million, including $53 million in cost reduction from the New World Fossil 2.0 program.
• Operating loss improved to $17 million compared to $134 million in the previous year.

Headline financials

Revenue & EPS history

For fiscal year 2021, the Company now expects worldwide net sales growth of approximately 12% to 16% as compared to fiscal 2020 and Adjusted EBITDA margin of approximately 5% to 7%. For the 13-week quarter ending July 3, 2021, worldwide net sales are expected to increase in the range of 50% to 55% compared to the 13-week quarter ended July 4, 2020, primarily reflecting the current level of pandemic restrictions in key markets compared to last year.