Fossil Group Reports Second Quarter 2024 Financial Results
Intellectia.AI Updated: 1970-01-01
Fossil Group Reports Second Quarter 2024 Financial Results
Fossil Group, Inc. (NASDAQ: FOSL) has released its financial results for the fiscal second quarter ending June 29, 2024.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | YoY Comparison | Consensus Estimates |
|---|---|---|---|---|
| Total Revenue | $260 million | $322 million | -19.3% | $435.5 million |
| Earnings Per Share (EPS) | -$0.73 | -$0.51 | -43.1% | $0 |
| Adjusted Operating Loss | $16.7 million | $27.6 million | -39.5% | Not provided |
| Gross Margin | 52.6% | 48.7% | +390 bps | Not provided |
| Adjusted Net Loss Per Share | -$0.47 | -$0.40 | -17.5% | Not provided |
Financial Performance Interpretation: Fossil Group experienced a significant revenue decline of 19.3% year-over-year, driven largely by its strategic decision to exit the smartwatch category and retail optimization initiatives. However, gross margins improved thanks to the company's Transform and Grow (TAG) Plan, which has focused on cost reduction and operational efficiencies. Despite greater losses per share, adjusted operating losses were reduced compared to the previous year.
Revenue Performance by Segment
| Segment | Q2 2024 Revenue | YoY Comparison |
|---|---|---|
| Americas | Decreased 18% | - |
| Europe | Decreased 15% | - |
| Asia | Decreased 20% | - |
| Wholesale Sales | Decreased 16% | - |
| Direct to Consumer | Decreased 22% | - |
| Traditional Watches | Decreased 17% | - |
| Leather Goods | Decreased 18% | - |
| Jewelry | Decreased 10% | - |
Segment Performance Interpretation: Across all geographic segments and product categories, Fossil Group saw notable declines. The Americas region experienced an 18% drop in revenue, while Europe and Asia saw 15% and 20% declines, respectively. Additionally, traditional watch sales fell by 17%, reflective of the overall challenging retail environment and the company's strategic exits from certain product lines.
Key Operational Data
| Operational Metric | Q2 2024 | Q2 2023 | YoY Comparison |
|---|---|---|---|
| Inventory | $202 million | $326 million | -38% |
| Total Liquidity | $156 million | Not specified | - |
| Cash and Cash Equivalents | $105 million | Not specified | - |
| Availability under Credit Facility | $51 million | Not specified | - |
Executive Commentary
Interim CEO Jeffrey Boyer stated, “Our second quarter results were in line with our expectations and reflect continued progress under our TAG Plan. Strong execution of our initiatives resulted in gross margin expansion, cost reduction, and adjusted operating margin improvement in the second quarter."
Dividends and Share Repurchase Program
No information on announced dividends or share repurchase programs was provided.
Forward Guidance
Fossil Group is maintaining its full-year 2024 outlook, with expected worldwide net sales of approximately $1.2 billion. Adjusted operating margins are expected to be in the range of -3% to -5%. The company also expects to generate positive free cash flow for the full year.
Stock Price Movement
Following the earnings release, Fossil Group's stock price increased by 4.59%.
The second quarter has highlighted the challenges facing Fossil Group but also underscores the progress being made under the TAG Plan to steer the company back towards stabilization and growth.