2023-03-08 16:40:18 ET
Fossil Group ( NASDAQ: FOSL ) sees slowing sales into 2023 after a steep drop to close 2022.
The Texas-based fashion company reported that fourth quarter worldwide net sales decreased 17% from the prior year quarter, to $499M, amid a sharp decline for the wholesale business. Gross profit fell nearly $70M from the prior year quarter to $235.4M as margins contracted 290 basis points in the same span. Management blamed higher freight costs and increased promotions for the performance.
“Our teams navigated a dynamic macro environment in 2022,” CEO Kosta Kartsotis commented. “The year came to a challenging close – against the backdrop of a retail landscape marked by elevated wholesale inventories and increased promotional activity, strength in our direct to consumer business was more than offset by soft topline trends in our wholesale channel globally.”
Moving forward, the company expects worldwide net sales to decline approximately 5% in 2023 as compared to 2022. The company also expects full-year adjusted operating income margin to range from about 0% to 3%. Negative foreign currency impacts are expected to be impactful in the first half of 2023 before easing into a tailwind later in the year.
The company’s Transform and Grow Plan (“TAG Plan”) is expected to generate annualized cost savings of approximately $100M by the end of 2024, protecting the company’s bottom line. However, management expects to incur charges of approximately $25M to $30M in 2023 pursuant to the plan.
Shares of Fossil ( FOSL ) rose 2.63% in Wednesday’s extended trading on light volume.
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Fossil Group forecasts continued sales decline into 2023