Fossil Posts Upbeat Q3 Earnings, But Sales Miss Views

reported upbeat earnings for the third quarter on Thursday, but the company's sales missed analysts' estimates. The Richardson, Texas-based company reported a quarterly profit of $57.5 million, or $1.19 per share, compared to $103.7 million, or $1.96 per share, in the year-ago period. Its revenue dropped 14 percent to $771.3 million. However, analysts were expecting a profit of $1.13 per share on revenue of $793.72 million. The company's watch sales during the quarter shrank 17 percent in the quarter. Net sales in the Americas slipped 11 percent for the quarter, while sales in Europe dropped 15 percent. Net sales in Asia dipped 19 percent in the latest quarter. Its gross margin shrank to 54.2 percent from 56.9 percent. The company's global sales at stores open more than a year declined 1 percent for the quarter. During the third quarter, Fossil Group repurchased 0.2 million shares of its common stock at an average price of $69 per share. Kosta Kartsotis, Chief Executive Officer said, "While our results for the third quarter were within our expectations, we are not satisfied with our overall performance. Currency aside, our Skagen and Fossil brands performed well in a challenging environment as our initiatives in branding and innovation resonated with consumers around the world. Our branded jewelry and leathers business increased but were more than offset by a decline in our watch business, reflecting general weakness in the category." The company agreed to acquire Misfit Inc. for $260 million. For the year, Fossil expects adjusted earnings of $5.60 to $6.20 per share and adjusted sales to drop 3.5 percent to 10 percent. For the current quarter, the company projects adjusted earnings of $1.40 to $2.00 per share, on adjusted sales to drop 2 percent to 11 percent. Analysts expected earnings of $2.12 per share. Fossil shares dipped 15.57 percent to $43.07 in the after-hours trading session.