2023-05-10 16:41:05 ET
Fossil Group ( NASDAQ: FOSL ) fell in postmarket trading after posting a wider loss in Q1 than a year ago with EPS coming in at -$0.61 vs. -$0.37 last year.
The fashion company disclosed a 14% decline in sales on a reported basis in Q1 and 11% drop in constant currency. Sales in constant currency declined 15% in the Americas, 11% in Europe and 2% in Asia. Wholesale sales declined 20% during the quarter partially offset by 8% growth in the direct to consumer channels on a constant currency basis. Within the direct to consumer channels, Fossil's comparable retail sales grew 13%.
In terms of products, traditional watch sales declined 11% in constant currency compared to the prior year. Sales in smartwatches decreased 34% in constant currency, reflecting lower consumer demand across geographies and channels as compared to a year ago. The leathers category grew 21% and jewelry sales decreased 13% in constant currency during the first quarter. As for brands, both Michael Kors and Emporio Armani saw a drop in Q1. Fossil branded sales increased 1% in constant currency.
Gross margin increased 40 basis points to 49.4% of sales and primarily reflected timing of licensor minimum royalty costs and favorable product and region mix. Those benefits were partially offset by an unfavorable currency impact, increased promotions and a $5.3M restructuring charge related to product offering exits.
Adjusted EBITDA was -$16.4M vs. -$1.7M a year ago.
On the balance sheet, Fossil ( FOSL ) had a cash position of $127M at the end of the quarter. Inventories at the end of the quarter totaled $337M, a decrease of 13% from a year ago. Total debt was $235M.
Looking ahead, Fossil ( FOSL ) expects worldwide net sales to decline approximately 5% to net sales growth of 1%.
Shares of Fossil ( FOSL ) peeled off 4.44% in postmarket trading.
More on Fossil:
- Fossil Group: Decline Toward Zero In Real Time
- Read more breakdowns on Fossil from Seeking Alpha analysts
- View the growth metrics
- See the financial and valuation comparisons to sector peers
- Dig into the Seeking Alpha Quant Rating
For further details see:
Fossil slides after posting a wider Q1 loss than a year ago