Fossil posts Q3 loss, announces cost reduction plan

Fossil Group, Inc. third quarter worldwide net sales totalled 344 million dollars, down 21 percent.

The company is implementing its Transform and Grow (TAG) Plan designed to reduce operating expenses, improve operating margins and advance its commitment to profitable growth.

The company said that the plan is expected to generate approximately 300 million dollars of annualised operating income benefits by the end of 2025.

Commenting on the financial results, Kosta Kartsotis, Fossil chairman and CEO, stated in a statement: “Against a backdrop of challenging category, consumer and channel dynamics, our year-to-date financial results are below our expectations.For full year, we are on track to capture expected annualised cost savings of approximately 100 million dollars, putting us well on our way to achieving the previously announced 300 million dollars in annualised benefits by 2025.”

The company’s net sales in the direct to consumer channels were down 12 percent in constant currency, with a comparable retail sales decrease of 6 percent. Net sales in the wholesale channels were down 25 percent, while global owned ecommerce platform grew 8 percent.

The company added that Fossil brand sales declined 14 percent in constant currency, reflecting a modest contraction in traditional watches, and more significant declines in smartwatches and leathers.

Operating loss rose to 46 million dollars and adjusted operating loss increased to 31 million dollars. Adjusted EBITDA was negative 29.3 million dollars or negative 8.4 percent of net sales in the third quarter. Net loss totaled 61.1 million dollars with loss per diluted share of 1.16 dollars, while adjusted net loss was 49 million dollars with adjusted loss per diluted share of 93 cents.

For the full year, the company expects net sales decline of approximately 14 percent to 17 percent versus prior guidance of negative 5 percent to negative 10 percent. Fourth quarter net sales are estimated to decline between 8 percent to 19 percent.