* Fourth-quarter adj earnings/share $2.27 vs est $2.26
* Revenue $947.7 mln vs est $930.4 mln
* Sees FY13 earnings/share view to $5.85-$6.15 vs est $6.12
* Shares rise as much as 7 percent
(Adds comments from conference call, analyst comments, updates
By Arpita Mukherjee
Feb 12 Accessory maker and retailer Fossil Inc
posted strong revenue growth on its success with
marketing "affordable luxury" and signed a deal with fashion
brand Tory Burch that could replicate its success selling
Michael Kors watches.
The company also said it expects Asia, especially China, to
account for a third of its revenue as its moderately priced
luxury products gain traction.
The company sells watches ranging from $7 to upwards of
$2,000, but many are offered in the $100 to $250 range. Apart
from its namesake brand, it sells Michael Kors, Armani Exchange,
and Marc by Marc Jacobs watches.
Fossil has been attempting to reposition its low-priced
jewelry line to be more in sync with the "affordable luxury"
image it has cultivated for its watches and handbags.
"Asia's rapidly growing middle class loves watches and
jewelry and in particular our brands ... (it) also represents
our highest margin region so high return opportunity for us as
well," Chief Executive Kosta Kartotis said in a conference call.
Asia-Pacific wholesale sales grew 19 percent to $102.8
million in the fourth quarter ended Dec. 29. The region
contributed about 11 percent of total sales in the period.
Luxury companies, hurt by a slow European market, have moved
on to greener pastures such as China.
To expand in China, Fossil plans to open more retail
concessions, or shop-in-shop stores, which are company-owned,
brand-specific stores in bigger retail establishments.
Citibank analyst Oliver Chen said Fossil would continue to
gain market share given its leadership in moderately-priced
watches and expects Asia sales to hit the one-third revenue mark
in about four years.
A fourth of global luxury purchases were made by Chinese
shoppers last year, surpassing U.S. consumers, according to
consultancy Bain & Co.
Companies such as Swatch Group SA, German fashion
house Hugo Boss and Louis Vuitton parent LVMH
are optimistic that 2013 will benefit from improved
demand in China and the United States.
Fossil shares were up 4.5 percent at $112.30 on Tuesday on
THE NEXT MICHAEL KORS?
The license to sell Tory Burch-branded watches will help
Fossil benefit from the designer's popularity, including among
celebrities such as Anne Hathaway and Jessica Alba.
"Tory Burch will be well received by investors as many will
make (and rightfully so) comparisons to the very successful
Michael Kors line of watches," Piper Jaffray analyst Neely
Tamminga wrote in a note.
The Michael Kors line under license from the fashion house
grew from $62 million in 2009 to likely close out 2012 at about
$500 million, Tamminga said.
Michael Kors Holdings Ltd on Tuesday raised its
full-year forecast as strong holiday sales of luxury items in
North America and Europe helped it race past Wall Street
estimates in the third quarter.
Tamminga, however, reckons that Tory Burch will likely not
launch until late 2014 and would not ramp up to the size of the
Michael Kors license for at least a few years.
Fourth-quarter earnings rose to $151.1 million, or $2.51 per
share, from $117.9 million, or $1.87 per share, a year earlier.
On an adjusted basis, Fossil earned $2.27 per share, beating
analysts expectations of $2.26 per share, according to Thomson
Revenue rose 14 percent to $947.7 million driven primarily
by a double-digit growth in its global watch portfolio and came
in above analysts' view of $930.4 million.
The Skagen brand, which Fossil bought last year,
contributed to the sales rise across North America, Europe and
The company also forecast full-year earnings of between
$5.85 and $6.15 per share, while analysts were expecting
earnings of $6.12 per share.
(Reporting by Arpita Mukherjee in Bangalore; Editing by Roshni
Menon and Saumyadeb Chakrabarty)