Fossil Group posts FY19 net sales of $2.2 billion

02 Mar '20

3 min read

Pic: Fossil Group/ Chaps

Fossil Group, a global design, marketing and innovation company specialising in lifestyle accessories, reported its worldwide net sales reduced 10 per cent to $712 million in Q4 FY19 compared to $786.9 million in Q4 FY18. Worldwide net sales in full FY19 that ended on December 28, 2019 decreased 13 per cent to $2.2 billion compared to $2.5 billion in FY18.

The year-over-year (YoY) decline was reportedly due to continued softness in traditional wholesale channels and lower than expected performance in older generation connected watches. Store closures and business exits adversely impacted the YoY net sales comparison. Global retail comparable sales in constant currency decreased 3 per cent.

Gross profit for the quarter totalled $307.9 million compared to $416.9 million in Q4 FY18. Gross margin decreased 43.3 per cent, reportedly driven by inventory valuation charges, increased product costs including tariffs and freight, and heightened promotional activity.

Operating expenses in Q4 totalled $308.8 million compared to $349.6 million a year ago. Selling, general and administrative (SG&A) expenses decreased 12 per cent to $303.6 million, primarily resulting from corporate and regional infrastructure reductions driven by NWF 2.0 initiatives, lower variable marketing expenses, store closures, and the currency effects of a stronger dollar, as company reported.

Fourth quarter operating loss was $0.9 million compared to operating income of $67.3 million in same period prior year.

Gross profit in full FY19 totalled $1.1 billion compared to $1.3 billion in 2018, while gross margin decreased to 49.6 per cent versus 52.7 per cent a year ago.

Full year operating expenses was $1.1 billion. SG&A expenses decreased 12 per cent to $1.1 billion, reportedly resulting from corporate and regional infrastructure reductions driven by NWF 2.0 initiatives, store closures and the currency effects of a stronger US dollar.

Operating loss in FY19 totalled $28.4 million compared to operating income of $62.7 million in FY18.

Strong performance in the company's latest generation display product, Gen 5, and new Hybrid HR watch, reflected positive response to Fossil group's high-performance technology and design innovation.

Fossil group in its guidance for FY20 expects: net sales decline in the range of 11.5 per cent to 4.5 per cent, including the estimated negative impact of business exits; gross margin in the range of 50.5 per cent to 51.5 per cent; operating expenses ranging from $1,015 million to $1,055 million, including restructuring charges of $35 million, inclusive of severance and related costs; and operating margin around the range of 1.5 per cent.

Fibre2Fashion News Desk (JL)

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