* Sees 2nd-qtr profit/shr $0.90-$0.97 vs est $1.16
* Sees 2nd-qtr sales growth of 8-9.5 pct
* 1st-qtr profit/shr $1.22 vs est $1.17
* 1st-qtr oper expense up 19 pct
* Shares fall 8 pct after market
(Adds comment from CEO, CFO, analyst)
By Devika Krishna Kumar
May 13 Watches and fashion accessory retailer
Fossil Group Inc forecast a much lower-than-expected
profit for this quarter as costs rise.
Fossil shares fell 8 percent in extended trading after the
company reported the third straight decline in quarterly
comparable sales in North America, its biggest market.
The company, which has been struggling to keep up with
fast-growing affordable luxury peers such as Michael Kors
Holdings Ltd and Kate Spade & Co, said expense
rate would be "significantly higher" in the second quarter.
The company plans to expand its print campaigns and social
media presence to draw more customers to its stores, Chief
Executive Kosta Kartsotis said on a call on Tuesday.
"Our biggest challenges are the retail environment here in
the U.S. and jumpstarting our leathers business," said Chief
Financial Officer Dennis Secor.
Sales at Fossil's leathers business - which lagged overall
same-store sales in the first quarter - would be an area the
company will focus on, Nomura retail equity analyst Simeon
Siegel told Reuters.
Fossil sells bags, wallets and belts apart from jewellery,
apparel and accessories. Its watches sell for $7 to upwards of
The company's proprietary watch brands, such as Fossil and
Skagen, have grown slower than licensed brands such as Michael
Kors and Armani, said Siegel.
"They're trying to work around and ... figure out where the
right distribution and target audience should be," he said.
The retailer said it expects second-quarter earnings of
90-97 cents per share and sales growth of 8-9.5 percent -
implying sales of $764.5 million-$775 million.
Analysts on average were expecting earnings of $1.16 per
share on revenue of $773.4 million, according to Thomson Reuters
Watch sales fell in Fossil's North American stores open for
at least a year due to weak mall traffic in the first quarter
ended April 5.
Global retail comparable store sales fell 2.4 percent,
marking the third straight quarterly decline.
Worldwide net sales increased 14 percent to $776.5 million.
Operating expense jumped 19 percent to $338.5 million.
Net income fell to $66.3 million, or $1.22 per share, from
$72.2 million, or $1.21 per share, a year ago.
Analysts expected the company to earn $1.17 on revenue of
Fossil shares, which have fallen more than 11 percent in six
months, closed at $112.08 on the Nasdaq on Tuesday.
(Reporting by Devika Krishna Kumar in Bangalore; Editing by