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Fossil posts lower profit in Q1

16 May '06

3 min read

Watch designer Fossil Inc reported first quarter net sales and earnings for the fourteen- week period ended April 8th 2006.

The company noted that fiscal 2006 is a 53-week year as compared to a 52-week year in fiscal 2005. This extra week is included in the first quarter and the company estimates that this extra week increased net sales and operating expenses by approx. $16 million and $5 million, respectively, as compared to the first quarter of fiscal 2005.

First Quarter Results (2006 vs. 2005):

-- Net sales increased 13.6 percent to $264.2 million compared to $232.5 million;
-- Gross profit grew 9.8 percent to $133.0 million, or 50.3 percent of net sales, compared to $121.2 million, or 52.1 percent of net sales;
-- Operating income totaled $17.0 million, or 6.4 percent of net sales compared to $24.5 million, or 10.5 percent of net sales;
-- Net income was $9.7 million compared to $23.9 million (which included a $10 million nonrecurring tax benefit); and
-- Diluted earnings per share were $0.14, inclusive of $0.01 per share for stock options expense on 69,060,000 shares outstanding, as compared to $0.32, on 74,454,000 shares outstanding ($0.19 excluding the nonrecurring tax benefit).

"We are pleased to report first quarter sales and diluted earnings per share in excess of our original expectations," said Mike Kovar Senior VP and CFO.

Worldwide net sales rose 13.6 percent during the first quarter in comparison tothe prior year quarter. Net sales increases were generated in the company's international, domestic accessories and company-owned retail business segments.

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