* Q3 EPS $0.52 vs est $0.42
* Raises Q4, FY profit view to above Wall Street estimates
* Says accessory business outside U.S. to gain momentum
* Sees sales of Fossil brand watches improving in Q4 *
Shares rise as much as 11 pct
(Recasts; adds conference call details, analyst comments,
updates share movement)
By Shradhha Sharma
BANGALORE, Nov 10 Watchmaker Fossil Inc
(FOSL.O) posted a quarterly profit that outpaced market
estimates and its own forecast, buoyed by stronger sales at
company-owned stores, and said its international accessories
business would continue to gain momentum.
The Richardson, Texas-based company was one of the top
percentage gainers on Nasdaq on Tuesday -- its shares rising as
much as 11 percent to touch their year high at $32.07.
Of the 208 full-price accessory stores Fossil opened in the
first nine months of the current fiscal year, more than half
are located outside the United States. Comparable sales at
Fossil's European accessory stores rose 9.5 percent, and remain
its main target market for new store growth in the near term,
Chief Financial Officer Mike Kovar said on a conference call
with analysts. [ID:nWNAB3809]
Baldwin Anthony Securities analyst William Baldwin said,
"The only thing doing well in Europe is their full price
accessories business. That's the real gem of the company right
now and that's where they are putting their new stores.
The company, which competes with Movado Group Inc (MOV.N)
and Coach Inc (COH.N) among others, also benefitted from a 21
percent rise in its retail or direct-to-consumer sales during
the third quarter.
Improved domestic wholesale watch sales helped Fossil gain
global market share for its watches.
Fossil's wholesale customers include retailers such as
Neiman Marcus Inc, Nordstrom Inc (JWN.N), Macy's Inc (M.N),
Dillard's Inc (DDS.N), Wal-Mart Stores Inc (WMT.N) and Target
"We've had great selling on the new Fossil styles
introduced in October, and we believe the trend in Fossil
watches will improve during the fourth quarter," Kovar said.
Domestic watch sales at Fossil improved marginally by 3
percent in the third quarter.
Sales of Fossil's licensed watch brands, like "Michele" and
"Michael" by Michael Kors saw strong growth in the third
quarter, the company said.
"Interestingly, the consumer is chasing fashion and is
willing to pay higher prices for it," Chief Executive Kosta
Top sellers for these brands were in the $85 price range,
compared with the company's average entry price point of $55.
Fossil said the Michele brand remains the best selling
affordable luxury brand within its distribution channel.
STRONG Q3 AND OUTLOOK
Fossil raised its fourth-quarter profit view to between 82
cents a share and 86 cents a share, citing positive momentum at
its direct to consumer and watch segments, coupled with a
better currency environment.
It had earlier forecast fourth-quarter profit of 74 cents
to 80 cents per share. [nBNG511791]
Analysts on average were looking for a fourth-quarter
profit of 78 cents a share, according to Thomson Reuters
"Sales should accelerate in the fourth quarter and should
begin to benefit from an inflection in currency translation,"
Jefferies & Co analyst Randal Konik said in a note to clients.
The company reported a marginal drop in quarterly profit to
52 cents a share, versus 54 cents a share, a year earlier.
Revenue at Fossil, which sells jewelry, leather goods,
sunglasses and apparel, fell 7 percent to $381.4 million.
Analysts were expecting a profit of 42 cents a share, on
revenue of $376.9 million.
The stock, which has risen 87 percent in the last 12
months, has outperformed the S&P 1500 Apparel, Accessories &
Luxury Goods Index .15GSPTEXT, which rose 61 percent.
It was trading up $2.72 at $31.63, Tuesday afternoon on
For the alerts, double-click [ID:nWNAB3579]
(Reporting by Shradhha Sharma in Bangalore; Editing by
Gopakumar Warrier and Aradhana Aravindan)