Aug 10, 2010
Fossil's profit triples; shares up 8%
Aug 10, 2010
Aug 10 (Reuters) - Fossil Inc's (FOSL.O) quarterly profit more than tripled and blew past Street estimates, helped by double-digit sales growth in each of its global wholesale and direct-to-consumer businesses, and the watchmaker raised its fiscal 2010 earnings view, sending its shares up 8 percent.
Fossil women's watches
For 2010, the company now expects to earn between $3.13 a share and $3.23 a share, compared with its earlier estimate of $2.25 a share to $2.35 a share.
The company, which also approved an additional $30 million share buyback plan, said a steady flow of inventory replenishment as opposed to retailers generally de-stocking a year ago resulted in North American watch shipments increasing nearly 60 percent.
Fossil, which also sells jewelry, leather goods, belts, sunglasses and apparel, said it continues to gain market share in the wholesale channel and that its Michael Kors, Fossil and Michele brands showed the strongest performance in the quarter.
The second quarter also benefited from the growing jewelry category in North America and Europe, and the expansion of leather categories internationally.
For the second quarter ended July 3, net income was $54.5 million, or 80 cents a share, compared with net income of $16.6 million, or 25 cents a share, a year ago.
Revenue for the company, whose watches sell from $7 to upwards of $2,000, rose 31 percent to $412.6 million.
Analysts, on average, had expected earnings of 34 cents per share on revenue of $382.4 million, according to Thomson Reuters I/B/E/S.
Gross profit margin rose 450 basis points to 57.4 percent in the second quarter, driven by an increase in the mix of sales of higher-margin watch products in comparison to leather products.
Shares of the Richardson, Texas-based company, which competes with Movado Group Inc (MOV.N), were up 8 percent at $46 in premarket trade. They closed at $42.47 Monday on Nasdaq.
(Reporting by Shobhana Chadha in Bangalore; Editing by Aradhana Aravindan)
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