Citigroup Says Watch Sales Jetting Up for Fossil

Citigroup has published a research report on Fossil

commenting on rising watch sales. In the report, Citigroup writes, "We view impressive results at Michael Kors as a positive readthrough to Fossil's 2012E revenue growth as FOSL is the license holder of Michael Kors watches (~12% of Fossil's revenue). Top positive reads: (1) We expect +DD comp growth in watches plus +DD store & shop in shop growth to fuel continued growth in Michael Kors watch revenues for Fossil. (2) KORS comp guidance +35% in 1Q & +20% FY should drive FOSL. (3) New geographies will continue to be positive drivers with healthy trends in Europe & South America awareness are positives. (4) KORS is pleased with early results of Jewelry which likely indicates this can be a substantial business; we think jewelry could double again in 2013E from an est. $30mm this year for Fossil in 2012E." Citigroup maintains its Buy rating and $88 price target on Fossil, which is currently trading down $1.32 from yesterday's $72.71 closing price.