(Recasts with sales in first paragraph, adds byline)
By Aarthi Sivaraman
NEW YORK Nov 13 Watchmaker Fossil Inc (FOSL.O)
reported a better-than-expected quarterly profit on Tuesday,
thanks to strong international sales and boosted its full-year
earnings forecast above Wall Street expectations, sending its
shares up nearly 11 percent.
"While we have experienced moderate growth in the United
States, we are continuing to reap the benefits of our global
business platform as we experienced strong growth in Europe and
other parts of the world," Chief Executive Kosta Kartsotis said
during a conference call.
Sales grew 18.4 percent in Europe excluding the impact of
currency conversion, thanks to higher sales volume of its
namesake and licensed brand watches and jewelry. Other
international sales grew nearly 40 percent excluding the
currency impact, Fossil said.
Revenue was also helped by a same-store sales increase of
5.9 percent, a higher number of company-owned stores in the
period, better sales of its namesake and Relic brand of
handbags, and new products and cold-weather accessories.
Those factors helped boost overall third-quarter sales by
19.6 percent, to $358.6 million.
The company also looked poised for a strong fourth
quarter, given its strength in international markets, Cowen &
Co analyst Elizabeth Montgomery wrote in a research note.
Net income in the third quarter, ended Oct. 6, rose nearly
42 percent to $30.5 million, or 43 cents a share, from $21.5
million, or 31 cents, a year earlier.
The latest results included a charge tied to its probe of
stock option grants. Wall Street's average earnings forecast
was 34 cents a share, according to Reuters Estimates.
OUTLOOK, NEW STORES
For the fourth quarter, Fossil forecast earnings of 67
cents a share, in line with analysts' average estimate,
according to Reuters Estimates. It said it expects net sales to
rise 13 to 15 percent.
For the full year, it raised its earnings forecast to $1.67
per share, or $1.79 per share excluding expenses related to the
review of its stock options. The forecast trumped analysts'
average estimate of $1.58.
The increase in profit would be spurred by retail
expansion, international growth and expansion of the Fossil
brand, the company said.
The outlook also "reflects the current prevailing rate of
the U.S. dollar compared to other foreign currencies, primarily
the euro and pound," Fossil said in a statement.
Fossil had previously forecast earnings of $1.72 per share
excluding the options review charge.
The company said its board authorized the repurchase of up
to 2 million shares and said it entered into a new licensing
agreement with Burberry through 2012.
The Richardson, Texas-based company intends to open between
80 and 85 stores in 2008. It also forecast annual sales growth
of 13 percent to reach total sales of $2.5 billion in 2012.
Shares of Fossil were up 10.9 percent at $37.59 in
afternoon Nasdaq trade, after earlier rising to $38.24. The
shares have traded in a 52-week range of $39.43 to $20.59.