Fossil revenue hit by lower watch demand in North America

Fossil Group Inc reported lower-than-expected quarterly revenue and profit due to a decline in watch and leather products sales in North America, and said net sales would decrease up to 7.5 percent in the first quarter.

Shares of the fashion accessories retailer fell 13 percent in extended trading.
The company said it expects 2015 profit to be significantly hurt by a strong dollar and restructuring charges.

Fossil, which received more than half of its wholesale net sales from outside North America in the fourth quarter, said it expects a first-quarter profit of 59-69 cents per share.

Analysts on average were expecting a profit of $1.21 per share and revenue of $791.9 million, according to Thomson Reuters I/B/E/S.

Fossil said wholesale net sales in the fourth quarter ended Jan.3 fell 4 percent due to a decline in its North America wholesale business. Overall North American sales fell 11 percent to $356 million.

Margins fell 60 basis points to 56.8 percent due to increased promotional activity, the company said.

Net income attributable to Fossil rose to $154.1 million, or $3.00 per share, in the fourth quarter ended Jan. 3 from $148.5 million, or $2.68 per share, a year earlier.

On an adjusted basis, the company earned $2.92 per share, below analysts' average estimate of $3.07 per share, according to Thomson Reuters I/B/E/S.
The company's revenue of $1.06 billion, unchanged from a year earlier, fell short of the estimated $1.12 billion.

Fossil said the strong dollar knocked off $32.5 million from net sales.
Texas-based Fossil also said it had signed a global licensing agreement with Kate Spade & Co for the design, development and distribution of Kate Spade New York watches through 2025.

Up to Tuesday's close of $99.32, the stock had fallen 18 percent in the past 12 months.

$1 = £0.65