Fossil Group, Inc. (NASDAQ: FOSL) today announced financial results
for the fiscal third quarter ended September 30, 2023.
Third Quarter Summary
- Third quarter worldwide net sales
totaled $344 million, decreasing 21%.
- Net sales in the Company’s direct
to consumer channels were down 12% in constant currency, with a
comparable retail sales decrease of 6%. Net sales in our wholesale
channels were down 25%. The Company’s global owned ecommerce
platform grew 8%.
- FOSSIL brand sales declined 14% in
constant currency, reflecting a modest contraction in traditional
watches, and more significant declines in smartwatches and
leathers.
- Operating loss of $46 million
compared to operating income of $22 million a year ago.
Adjusted operating loss of $31 million compared to adjusted
operating income of $23 million last year.
- Inventory totaled $327 million, a
decrease of 28% versus a year ago; and the Company had total
liquidity of $140 million at quarter end.
Kosta Kartsotis, Chairman and CEO, stated,
“Against a backdrop of challenging category, consumer and channel
dynamics, our year-to-date financial results are below our
expectations. We are highly focused on delivering strong execution
during the holiday season and implementing our TAG Plan designed to
right size our cost structure and improve profitability. For full
year 2023, we are on track to capture expected annualized cost
savings of approximately $100 million, putting us well on our way
to achieving the previously announced $300 million in annualized
benefits by 2025.”
Third Quarter 2023 Operating
Results
Amounts referred to as “adjusted” as well as
“constant currency” are non-GAAP financial measures.
Reconciliations of these non-GAAP financial measures to their
closest reported GAAP measures are included at the end of this
press release.
- Net sales totaled
$344.1 million, a decrease of 21.1% on a reported basis and 22.1%
in constant currency compared to $436.3 million in the third
quarter of fiscal 2022. The sales decrease was largely driven by
the wholesale channel, and to a lesser extent, softness in
smartwatch sales and our store rationalization initiatives. Net
sales, in constant currency, declined 30% in Europe, 18% in
Americas and 14% in Asia versus the same quarter last year.
Wholesale sales decreased 25%, while our direct to consumer sales
declined 12% on a constant currency basis. Within our direct to
consumer channels, comparable retail sales declined 6%. Traditional
watch sales declined 19% in constant currency in the third quarter.
Smartwatch sales decreased 49% reflecting lower consumer demand
across geographies and reduced marketing as compared to the prior
year period. The leathers category decreased 20% and jewelry sales
declined 11% in constant currency during the third quarter. From a
brand lens, the majority of the brands in our portfolio decreased
in the third quarter. FOSSIL branded sales decreased 14% in
constant currency largely driven by declines in smartwatches and
leathers.
- Gross profit
totaled $161.7 million compared to $219.6 million in the third
quarter of 2022. Gross margin decreased 330 basis points to 47.0%
versus 50.3% a year ago. The year-over-year decrease primarily
reflects (i) timing of licensor minimum royalty costs, (ii)
increased revenue recognized over time in the prior year third
quarter due to the timing of progress in completing performance
obligations under a licensing agreement and (iii) net foreign
currency hedging contract losses in the current year as compared to
gains in the prior year, partially offset by decreased freight
costs and improved product margins.
- Operating expenses
totaled $208.1 million compared to $197.1 million a year ago. The
increase in operating expenses was primarily driven by increased
restructuring costs. As a percentage of net sales, operating
expenses were 60.5% in the third quarter of 2023 compared to 45.2%
in the prior year third quarter. Selling, general and
administrative (“SG&A”) expenses were down 2.6% to $191.4
million from $196.5 million in the third quarter of 2022 primarily
driven by reduced store costs resulting from a lower store count
and savings from our TAG initiatives. As a percentage of net sales,
SG&A expenses were 55.6% in the third quarter of 2023 compared
to 45.0% in the prior year third quarter, largely driven by
decreased sales.
- Operating loss was
$46.4 million compared to operating income of $22.5 million in the
third quarter of 2022. Operating margin was (13.5)% in the third
quarter of 2023 compared to 5.2% in the prior year third quarter.
Adjusted operating loss totaled $31.1 million compared to operating
income of $23.1 million in the third quarter of 2022. Adjusted
operating margin was (9.0)% in the third quarter of 2023 compared
to 5.3% in the prior year third quarter.
- Interest expense
increased to $5.8 million compared to $5.1 million in the third
quarter of 2022, primarily driven by increased interest rates.
- Other income
(expense) was expense of $3.1 million compared to expense
of $1.9 million in the third quarter of 2022, reflecting increased
net currency losses in the third quarter of 2023 as compared to the
prior year third quarter.
- Income (loss) before income
taxes was $(55.2) million compared to $15.5 million in the
third quarter of 2022.
- Adjusted EBITDA
was $(29.3) million, or (8.4)% of net sales in the third quarter of
2023 and $26.0 million, or 6.0% of net sales in the prior year
quarter.
- Provision (benefit) for
income taxes was a benefit of $5.6 million, resulting in
an effective income tax rate of (10.1)% compared to a benefit of
$9.2 million and an effective tax rate of 59.5% in the prior year.
The effective tax rate in the third quarter of 2023 differed from
the prior year third quarter primarily due to a change in the
Company’s global mix of earnings.
- Net loss totaled
$61.1 million with net loss per diluted share of $1.16, which
compares to net income of $5.8 million and net income per diluted
share of $0.11 in the prior year quarter. Adjusted net loss for the
third quarter was $49.0 million with adjusted net loss per diluted
share of $0.93 compared to adjusted net income of $6.3 million with
adjusted net income per diluted share of $0.12 in the prior year
quarter. During the third quarter of 2023, currencies unfavorably
affected net loss per diluted share by approximately $0.05.
Transform and Grow Plan
The Company is implementing its Transform and
Grow (“TAG”) Plan designed to reduce operating expenses, improve
operating margins and advance the Company’s commitment to
profitable growth. Under the TAG Plan, the Company is focused on 1)
revitalizing its Fossil brand, 2) maximizing its licensed brand
portfolio in watches and jewelry and 3) growing its premium watch
offerings.
The TAG Plan is expected to generate
approximately $300 million of annualized operating income benefits
by the end of 2025 through the following actions: 1) driving sales
productivity, 2) reengineering end-to-end operations and 3)
streamlining overhead and improving capital efficiency. In
connection with the TAG Plan, the Company expects to incur charges
of approximately $50 million in 2023, and approximately $100
million - $120 million over the duration of the program.
Balance Sheet Summary
As of September 30, 2023, the Company had cash
and cash equivalents of $116.1 million. Inventories at the end of
the third quarter of 2023 totaled $326.7 million, a decrease of 28%
versus a year ago. Total debt was $256.4 million.
Outlook
The Company is updating its guidance for the
full year 2023 to reflect results from the third quarter, as well
as ongoing declines in the wholesale channel in the Americas and
Europe, a more gradual than expected recovery of sales trends in
China and current trends in our retail stores.
For full year 2023, the Company expects
worldwide net sales declines of approximately 14% to 17% versus
prior guidance of negative 5% to negative 10%. The expected
year-over-year decline reflects an estimated fourth quarter net
sales decline of 8% to 19% and assumes prevailing currency rates
which are projected to positively impact sales by 70 basis
points.
The Company expects full year 2023 adjusted
operating margin(1) in the range of -6% to -8% compared to prior
guidance of -2% to -4%, which reflects an estimated fourth quarter
adjusted operating margin of flat to -5%.
(1) A reconciliation of adjusted operating
margin, a non-GAAP financial measure, to a corresponding GAAP
measure is not available on a forward-looking basis without
unreasonable efforts due to the high variability and low visibility
of certain income and expense items that are excluded in
calculating adjusted operating margin.
Safe Harbor
Certain statements contained herein that are not
historical facts, constitute “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995
and involve a number of risks and uncertainties. The actual results
of the future events described in such forward-looking statements
could differ materially from those stated in such forward-looking
statements. Among the factors that could cause actual results to
differ materially are: risks related to the success of the TAG
Plan; increased political uncertainty, the effect of worldwide
economic conditions; the effect of a pandemic; significant changes
in consumer spending patterns or preferences; interruptions or
delays in the supply of key components or products; acts of war or
acts of terrorism; loss of key facilities; data breach or
information systems disruptions; changes in foreign currency
valuations in relation to the U.S. dollar; lower levels of consumer
spending resulting from a general economic downturn or generally
reduced shopping activity caused by public safety or consumer
confidence concerns; the performance of our products within the
prevailing retail environment; customer acceptance of both new
designs and newly-introduced product lines; changes in the mix of
product sales; the effects of vigorous competition in the markets
in which we operate; compliance with debt covenants and other
contractual provisions and meeting debt service obligation; risks
related to the success of our business strategy; the termination or
non-renewal of material licenses; risks related to foreign
operations and manufacturing; changes in the costs of materials and
labor; government regulation and tariffs; our ability to secure and
protect trademarks and other intellectual property rights; levels
of traffic to and management of our retail stores; loss of key
personnel and the outcome of current and possible future
litigation, as well as the risks and uncertainties set forth in the
Company’s most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the “SEC”). These
forward-looking statements are based on our current expectations
and beliefs concerning future developments and their potential
effect on us. While management believes that these forward-looking
statements are reasonable as and when made, there can be no
assurance that future developments affecting us will be those that
we anticipate. Readers of this release should consider these
factors in evaluating, and are cautioned not to place undue
reliance on, the forward-looking statements contained herein. The
Company assumes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise, except as required by law.
About Fossil
Group, Inc.
Fossil Group, Inc. is a global design,
marketing, distribution and innovation company specializing in
lifestyle accessories. Under a diverse portfolio of owned and
licensed brands, our offerings include traditional watches,
smartwatches, jewelry, handbags, small leather goods, belts and
sunglasses. We are committed to delivering the best in design and
innovation across our owned brands, Fossil, Michele, Relic, Skagen
and Zodiac, and licensed brands, Armani Exchange, Diesel, DKNY,
Emporio Armani, kate spade new york, Michael Kors, and Tory Burch.
We bring each brand story to life through an extensive distribution
network across numerous geographies, categories and channels.
Certain press release and SEC filing information concerning the
Company is also available at www.fossilgroup.com.
Investor Relations: |
|
Christine GreanyThe Blueshirt Group(858)
722-7815christine@blueshirtgroup.com |
|
|
|
Consolidated Income
Statement Data |
For the 13
Weeks Ended |
|
For the 13
Weeks Ended |
|
For the 39 Weeks Ended |
|
For the 39 Weeks Ended |
($ in millions, except per share data): |
September 30, 2023 |
|
October 1, 2022 |
|
September 30, 2023 |
|
October 1, 2022 |
Net sales |
$ |
344.1 |
|
|
$ |
436.3 |
|
|
$ |
991.1 |
|
|
$ |
1,183.3 |
|
Cost of
sales |
|
182.4 |
|
|
|
216.7 |
|
|
|
512.1 |
|
|
|
588.0 |
|
Gross profit |
|
161.7 |
|
|
|
219.6 |
|
|
|
479.0 |
|
|
|
595.3 |
|
Gross
margin |
|
47.0 |
% |
|
|
50.3 |
% |
|
|
48.3 |
% |
|
|
50.3 |
% |
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
191.5 |
|
|
|
196.5 |
|
|
|
569.5 |
|
|
|
591.5 |
|
Other long-lived asset impairments |
|
0.6 |
|
|
|
0.6 |
|
|
|
0.8 |
|
|
|
1.1 |
|
Restructuring charges |
|
16.0 |
|
|
|
— |
|
|
|
27.7 |
|
|
|
5.4 |
|
Total
operating expenses |
$ |
208.1 |
|
|
$ |
197.1 |
|
|
$ |
598.0 |
|
|
$ |
598.0 |
|
Total
operating expenses (% of net sales) |
|
60.5 |
% |
|
|
45.2 |
% |
|
|
60.3 |
% |
|
|
50.5 |
% |
Operating income (loss) |
|
(46.4 |
) |
|
|
22.5 |
|
|
|
(119.0 |
) |
|
|
(2.7 |
) |
Operating margin |
|
(13.5 |
)% |
|
|
5.2 |
% |
|
|
(12.0 |
)% |
|
|
(0.2 |
)% |
Interest
expense |
|
5.8 |
|
|
|
5.1 |
|
|
|
16.1 |
|
|
|
13.5 |
|
Other
income (expense) - net |
|
(3.0 |
) |
|
|
(1.9 |
) |
|
|
6.8 |
|
|
|
(1.9 |
) |
Income
(loss) before income taxes |
|
(55.2 |
) |
|
|
15.5 |
|
|
|
(128.3 |
) |
|
|
(18.1 |
) |
Provision (benefit) for income taxes |
|
5.6 |
|
|
|
9.2 |
|
|
|
— |
|
|
|
15.9 |
|
Less: Net income attributable to noncontrolling interest |
|
0.3 |
|
|
|
0.5 |
|
|
|
0.6 |
|
|
|
0.7 |
|
Net
income (loss) attributable to Fossil Group, Inc. |
$ |
(61.1 |
) |
|
$ |
5.8 |
|
|
$ |
(128.9 |
) |
|
$ |
(34.7 |
) |
Earnings
per share: |
|
|
|
|
|
|
|
Basic |
$ |
(1.16 |
) |
|
$ |
0.11 |
|
|
$ |
(2.47 |
) |
|
$ |
(0.67 |
) |
Diluted |
$ |
(1.16 |
) |
|
$ |
0.11 |
|
|
$ |
(2.47 |
) |
|
$ |
(0.67 |
) |
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
52.5 |
|
|
|
51.8 |
|
|
|
52.2 |
|
|
|
51.8 |
|
Diluted |
|
52.5 |
|
|
|
52.1 |
|
|
|
52.2 |
|
|
|
51.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet Data ($ in
millions): |
September 30, 2023 |
|
October 1, 2022 |
Assets: |
|
|
|
Cash and cash equivalents |
$ |
116.1 |
|
|
$ |
162.6 |
|
Accounts receivable - net |
|
194.0 |
|
|
|
215.0 |
|
Inventories |
|
326.7 |
|
|
|
452.7 |
|
Other current assets |
|
148.1 |
|
|
|
185.0 |
|
Total current assets |
$ |
784.9 |
|
|
$ |
1,015.3 |
|
Property, plant and equipment - net |
$ |
68.6 |
|
|
$ |
77.4 |
|
Operating lease right-of-use assets |
|
154.5 |
|
|
|
156.4 |
|
Intangible and other assets - net |
|
55.2 |
|
|
|
65.9 |
|
Total long-term assets |
$ |
278.3 |
|
|
$ |
299.7 |
|
Total assets |
$ |
1,063.2 |
|
|
$ |
1,315.0 |
|
|
|
|
|
Liabilities and stockholders’ equity: |
|
|
|
Accounts payable, accrued expenses and other current
liabilities |
$ |
348.1 |
|
|
$ |
428.4 |
|
Short-term debt |
|
0.5 |
|
|
|
0.4 |
|
Total current liabilities |
$ |
348.6 |
|
|
$ |
428.8 |
|
Long-term debt |
$ |
255.9 |
|
|
$ |
293.6 |
|
Long-term operating lease liabilities |
|
142.1 |
|
|
|
151.9 |
|
Other long-term liabilities |
|
37.8 |
|
|
|
50.5 |
|
Total long-term liabilities |
$ |
435.8 |
|
|
$ |
496.0 |
|
Stockholders’ equity |
|
278.8 |
|
|
|
390.2 |
|
Total liabilities and stockholders’ equity |
$ |
1,063.2 |
|
|
$ |
1,315.0 |
|
|
|
|
|
|
|
|
|
Constant Currency Financial
Information
The following table presents the Company’s
business segment and product net sales on a constant currency basis
which are non-GAAP financial measures. To calculate net sales on a
constant currency basis, net sales for the current fiscal year
period for entities reporting in currencies other than the U.S.
dollar are translated into U.S. dollars at the average rates during
the comparable period of the prior fiscal year. The Company
presents constant currency information to provide investors with a
basis to evaluate how its underlying business performed excluding
the effects of foreign currency exchange rate fluctuations. The
constant currency financial information presented herein should not
be considered a substitute for, or superior to, the measures of
financial performance prepared in accordance with GAAP.
|
Net Sales For the 13 Weeks Ended |
|
Net Sales For the 39 Weeks Ended |
September 30, 2023 |
|
October 1, 2022 |
|
September 30, 2023 |
|
October 1, 2022 |
($ in millions) |
As Reported |
|
Impact of Foreign Currency Exchange Rates |
|
Constant Currency |
|
As Reported |
|
As Reported |
|
Impact of Foreign Currency Exchange Rates |
|
Constant Currency |
|
As Reported |
Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
152.6 |
|
|
$ |
(0.8 |
) |
|
$ |
151.8 |
|
|
$ |
184.3 |
|
|
$ |
437.2 |
|
|
$ |
(1.0 |
) |
|
$ |
436.2 |
|
|
$ |
514.5 |
|
Europe |
|
107.7 |
|
|
|
(6.6 |
) |
|
|
101.1 |
|
|
|
143.7 |
|
|
|
301.6 |
|
|
|
(2.5 |
) |
|
|
299.1 |
|
|
|
376.1 |
|
Asia |
|
83.0 |
|
|
|
3.0 |
|
|
|
86.0 |
|
|
|
100.2 |
|
|
|
247.3 |
|
|
|
12.0 |
|
|
|
259.3 |
|
|
|
279.6 |
|
Corporate |
|
0.8 |
|
|
|
— |
|
|
|
0.8 |
|
|
|
8.1 |
|
|
|
5.0 |
|
|
|
— |
|
|
|
5.0 |
|
|
|
13.1 |
|
Total net sales |
$ |
344.1 |
|
|
$ |
(4.4 |
) |
|
$ |
339.7 |
|
|
$ |
436.3 |
|
|
$ |
991.1 |
|
|
$ |
8.5 |
|
|
$ |
999.6 |
|
|
$ |
1,183.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product categories: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Watches: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Traditional watches |
$ |
252.7 |
|
|
$ |
(2.7 |
) |
|
$ |
250.0 |
|
|
$ |
310.2 |
|
|
$ |
714.2 |
|
|
$ |
6.4 |
|
|
$ |
720.6 |
|
|
$ |
830.3 |
|
Smartwatches |
|
17.3 |
|
|
|
(0.3 |
) |
|
$ |
17.0 |
|
|
|
33.3 |
|
|
|
59.5 |
|
|
|
0.6 |
|
|
$ |
60.1 |
|
|
|
104.7 |
|
Total watches |
$ |
270.0 |
|
|
$ |
(3.0 |
) |
|
$ |
267.0 |
|
|
$ |
343.5 |
|
|
$ |
773.7 |
|
|
$ |
7.0 |
|
|
$ |
780.7 |
|
|
$ |
935.0 |
|
Leathers |
|
33.0 |
|
|
|
(0.2 |
) |
|
$ |
32.8 |
|
|
|
41.1 |
|
|
|
106.6 |
|
|
|
1.2 |
|
|
$ |
107.8 |
|
|
|
111.2 |
|
Jewelry |
|
34.6 |
|
|
|
(1.0 |
) |
|
$ |
33.6 |
|
|
|
37.9 |
|
|
|
91.0 |
|
|
|
0.3 |
|
|
$ |
91.3 |
|
|
|
106.5 |
|
Other |
|
6.5 |
|
|
|
(0.2 |
) |
|
$ |
6.3 |
|
|
|
13.8 |
|
|
|
19.8 |
|
|
|
— |
|
|
$ |
19.8 |
|
|
|
30.6 |
|
Total net sales |
$ |
344.1 |
|
|
$ |
(4.4 |
) |
|
$ |
339.7 |
|
|
$ |
436.3 |
|
|
$ |
991.1 |
|
|
$ |
8.5 |
|
|
$ |
999.6 |
|
|
$ |
1,183.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA, Adjusted operating
income (loss), Adjusted net income (loss) and Adjusted earnings
(loss) per share
Adjusted EBITDA, Adjusted operating income
(loss), Adjusted net income (loss) and Adjusted earnings (loss) per
share are non-GAAP financial measures. We define Adjusted EBITDA as
our net income (loss) before the impact of income tax expense
(benefit), plus interest expense, amortization and depreciation,
impairment expense, other non-cash charges, stock-based
compensation expense, restructuring expense and unamortized debt
issuance costs included in loss on extinguishment of debt minus
interest income. We define Adjusted operating income (loss) as
operating income (loss) before impairment expense and restructuring
expense. We define Adjusted net income (loss) and Adjusted earnings
(loss) per share as net income (loss) attributable to Fossil Group,
Inc. and diluted earnings (loss) per share, respectively, before
impairment expense, restructuring expense and unamortized debt
issuance costs included in loss on extinguishment of debt. We have
included Adjusted EBITDA, Adjusted operating income (loss),
Adjusted net income (loss) and Adjusted earnings (loss) per share
herein because they are widely used by investors for valuation and
for comparing our financial performance with the performance of our
competitors. We also use both non-GAAP financial measures to
monitor and compare the financial performance of our operations.
Our presentation of Adjusted EBITDA, Adjusted operating income
(loss), Adjusted net income (loss) and Adjusted earnings (loss) per
share may not be comparable to similarly titled measures other
companies report. Adjusted EBITDA, Adjusted operating income
(loss), Adjusted net income (loss) and Adjusted earnings (loss) per
share are not intended to be used as alternatives to any measure of
our performance in accordance with GAAP.
The following tables reconcile Adjusted EBITDA
to the most directly comparable GAAP financial measure, which is
income (loss) before income taxes. Certain line items presented in
the tables below, when aggregated, may not foot due to
rounding.
|
Fiscal 2022 |
|
Fiscal 2023 |
|
|
($ in
millions): |
Q4 |
|
Q1 |
|
Q2 |
|
Q3 |
|
Total |
Income (loss) before income taxes |
$ |
(4.0 |
) |
|
$ |
(39.6 |
) |
|
$ |
(33.5 |
) |
|
$ |
(55.2 |
) |
|
$ |
(132.3 |
) |
Plus: |
|
|
|
|
|
|
|
|
|
Interest expense |
|
5.8 |
|
|
|
5.0 |
|
|
|
5.3 |
|
|
|
5.8 |
|
|
|
21.9 |
|
Amortization and depreciation |
|
5.7 |
|
|
|
5.1 |
|
|
|
4.8 |
|
|
|
4.5 |
|
|
|
20.1 |
|
Impairment expense |
|
1.2 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.6 |
|
|
|
2.1 |
|
Other non-cash charges |
|
(0.3 |
) |
|
|
(0.2 |
) |
|
|
(0.5 |
) |
|
|
(0.2 |
) |
|
|
(1.2 |
) |
Stock-based compensation |
|
2.3 |
|
|
|
1.4 |
|
|
|
1.6 |
|
|
|
1.5 |
|
|
|
6.8 |
|
Restructuring expense |
|
0.7 |
|
|
|
7.1 |
|
|
|
4.6 |
|
|
|
16.0 |
|
|
|
28.4 |
|
Restructuring cost of sales |
|
— |
|
|
|
5.3 |
|
|
|
2.9 |
|
|
|
(1.3 |
) |
|
|
6.9 |
|
Unamortized debt issuance costs included in loss on extinguishment
of debt |
|
1.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.1 |
|
Less: |
|
|
|
|
|
|
|
|
|
Interest income |
|
0.4 |
|
|
|
0.6 |
|
|
|
0.8 |
|
|
|
1.0 |
|
|
|
2.8 |
|
Adjusted EBITDA |
$ |
12.1 |
|
|
$ |
(16.4 |
) |
|
$ |
(15.4 |
) |
|
$ |
(29.3 |
) |
|
$ |
(49.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2021(1) |
|
Fiscal 2022 |
|
|
($ in
millions): |
|
Q4 |
|
Q1 |
|
Q2 |
|
Q3 |
|
Total |
Income (loss) before income taxes |
|
$ |
27.1 |
|
|
$ |
(16.7 |
) |
|
$ |
(16.9 |
) |
|
$ |
15.5 |
|
|
$ |
9.0 |
|
Plus: |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
4.8 |
|
|
|
4.0 |
|
|
|
4.3 |
|
|
|
5.1 |
|
|
|
18.2 |
|
Amortization and depreciation |
|
|
6.2 |
|
|
|
6.2 |
|
|
|
5.8 |
|
|
|
5.6 |
|
|
|
23.8 |
|
Impairment expense |
|
|
2.9 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.6 |
|
|
|
4.0 |
|
Other non-cash charges |
|
|
(0.6 |
) |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
(0.4 |
) |
|
|
(1.4 |
) |
Stock-based compensation |
|
|
2.4 |
|
|
|
2.2 |
|
|
|
3.8 |
|
|
|
(0.3 |
) |
|
|
8.1 |
|
Restructuring expense |
|
|
3.2 |
|
|
|
2.6 |
|
|
|
2.9 |
|
|
|
— |
|
|
|
8.7 |
|
Unamortized debt issuance costs included in loss on extinguishment
of debt |
|
|
11.7 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.7 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.5 |
|
Adjusted EBITDA |
|
$ |
57.6 |
|
|
$ |
(1.7 |
) |
|
$ |
(0.3 |
) |
|
$ |
26.0 |
|
|
$ |
81.6 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Prior period amounts have been adjusted to conform to the
current period presentation.
The following tables reconcile Adjusted
operating income (loss), Adjusted net income (loss) and Adjusted
earnings (loss) per share to the most directly comparable GAAP
financial measures, which are operating income (loss), net income
(loss) attributable to Fossil Group, Inc. and diluted earnings
(loss) per share, respectively. Certain line items presented in the
table below, when aggregated, may not foot due to rounding.
|
For the 13 Weeks Ended September 30, 2023 |
($ in millions, except
per share data): |
As Reported |
Restructuring Cost of Sales |
Other Long-Lived Asset Impairment |
Restructuring Expenses |
As Adjusted |
Operating income (loss) |
$ |
(46.4 |
) |
$ |
(1.3 |
) |
$ |
0.6 |
|
$ |
16.0 |
|
$ |
(31.1 |
) |
Operating margin (% of net sales) |
|
(13.5 |
)% |
|
|
|
|
|
|
|
|
|
|
(9.0 |
)% |
Interest expense |
|
(5.8 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(5.8 |
) |
Other income (expense) - net |
|
(3.1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(3.1 |
) |
Income (loss) before income taxes |
|
(55.2 |
) |
|
(1.3 |
) |
|
0.6 |
|
|
16.0 |
|
|
(39.9 |
) |
Provision (benefit) for income taxes |
|
5.6 |
|
|
(0.3 |
) |
|
0.1 |
|
|
3.4 |
|
|
8.8 |
|
Less: Net income attributable to noncontrolling interest |
|
(0.3 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.3 |
) |
Net income (loss) attributable to Fossil Group, Inc. |
$ |
(61.1 |
) |
$ |
(1.0 |
) |
$ |
0.5 |
|
$ |
12.6 |
|
$ |
(49.0 |
) |
Diluted earnings (loss) per
share |
$ |
(1.16 |
) |
$ |
(0.02 |
) |
$ |
0.01 |
|
$ |
0.24 |
|
$ |
(0.93 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 13 Weeks Ended October 1, 2022 |
($ in millions, except
per share data): |
As Reported |
Other Long-Lived Asset Impairment |
As Adjusted |
Operating income (loss) |
$ |
22.5 |
|
$ |
0.6 |
|
$ |
23.1 |
|
Operating margin (% of net sales) |
|
5.2 |
% |
|
|
5.3 |
% |
Interest expense |
|
(5.1 |
) |
|
— |
|
|
(5.1 |
) |
Other income (expense) - net |
|
(1.9 |
) |
|
— |
|
|
(1.9 |
) |
Income (loss) before income taxes |
|
15.5 |
|
|
0.6 |
|
|
16.1 |
|
Provision for income taxes |
|
9.2 |
|
|
0.1 |
|
|
9.3 |
|
Less: Net income attributable to noncontrolling interest |
|
(0.4 |
) |
|
— |
|
|
(0.4 |
) |
Net income (loss) attributable to Fossil Group, Inc. |
$ |
5.8 |
|
$ |
0.5 |
|
$ |
6.3 |
|
Diluted earnings (loss) per
share |
$ |
0.11 |
|
$ |
0.01 |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
For the 39 Weeks Ended September 30, 2023 |
($ in millions, except
per share data): |
As Reported |
Restructuring Cost of Sales |
Other Long-Lived Asset Impairment |
Restructuring Expenses |
As Adjusted |
Operating income (loss) |
$ |
(119.0 |
) |
$ |
6.8 |
|
$ |
0.8 |
|
$ |
27.7 |
|
$ |
(83.7 |
) |
Operating margin (% of net sales) |
|
(12.0 |
)% |
|
|
|
|
|
|
|
|
|
|
(8.4 |
)% |
Interest expense |
|
(16.1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(16.1 |
) |
Other income (expense) - net |
|
6.8 |
|
|
— |
|
|
— |
|
|
— |
|
|
6.8 |
|
Income (loss) before income taxes |
|
(128.3 |
) |
|
6.8 |
|
|
0.8 |
|
|
27.7 |
|
|
(93.0 |
) |
Provision (benefit) for income taxes |
|
— |
|
|
1.4 |
|
|
0.2 |
|
|
5.8 |
|
|
7.4 |
|
Less: Net income attributable to noncontrolling interest |
|
(0.6 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
Net income (loss) attributable to Fossil Group, Inc. |
$ |
(128.9 |
) |
$ |
5.4 |
|
$ |
0.6 |
|
$ |
21.9 |
|
$ |
(101.0 |
) |
Diluted earnings (loss) per
share |
$ |
(2.47 |
) |
$ |
0.10 |
|
$ |
0.01 |
|
$ |
0.42 |
|
$ |
(1.94 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 39 Weeks Ended October 1, 2022 |
($ in millions, except
per share data): |
As Reported |
Other Long-Lived Asset Impairment |
Restructuring Expenses |
As Adjusted |
Operating income (loss) |
$ |
(2.7 |
) |
$ |
1.1 |
|
$ |
5.4 |
|
$ |
3.8 |
|
Operating margin (% of net sales) |
|
(0.2 |
)% |
|
|
|
0.3 |
% |
Interest expense |
|
(13.4 |
) |
|
— |
|
|
— |
|
|
(13.4 |
) |
Other income (expense) - net |
|
(1.9 |
) |
|
— |
|
|
— |
|
|
(1.9 |
) |
Income (loss) before income taxes |
|
(18.1 |
) |
|
1.1 |
|
|
5.4 |
|
|
(11.6 |
) |
Provision for income taxes |
|
15.9 |
|
|
0.2 |
|
|
1.1 |
|
|
17.2 |
|
Less: Net income attributable to noncontrolling interest |
|
(0.7 |
) |
|
— |
|
|
— |
|
|
(0.7 |
) |
Net income (loss) attributable to Fossil Group, Inc. |
$ |
(34.7 |
) |
$ |
0.9 |
|
$ |
4.3 |
|
$ |
(29.5 |
) |
Diluted earnings (loss) per
share |
$ |
(0.67 |
) |
$ |
0.02 |
|
$ |
0.08 |
|
$ |
(0.57 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count Information
|
October 1, 2022 |
|
Opened |
|
Closed |
|
September 30, 2023 |
Americas |
153 |
|
0 |
|
10 |
|
143 |
Europe |
111 |
|
2 |
|
26 |
|
87 |
Asia |
80 |
|
2 |
|
9 |
|
73 |
Total stores |
344 |
|
4 |
|
45 |
|
303 |
|
|
|
|
|
|
|
|
END OF RELEASE
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