Fossil narrows losses despite declining sales, appoints new CFO
Fossil Group, Inc. has reported a net loss of $4.0 million, or $0.08 per diluted share, for the fourth quarter ended January 2, 2021, marking an improvement from the loss of $6.9 million, or $0.14 per diluted share, posted by the Richardson, Texas-based watch and accessory company in the same period in the previous year.
Quarterly net sales at the group, which owns the Fossil, Michele, Relic, Skagen and Zodiac brands, and holds licenses for labels including Armani Exchange, Kate Spade New York and Michael Kors, actually decreased 26% year over year, from $711.6 million to $528.1 million. The decline in constant currencies was 28%. According to Fossil, this decrease reflected Covid-19-related reductions in traffic, both at its owned stores and at wholesale doors.
As has been the case at many brands and retailers since the start of the pandemic, strength in the company’s digital channels helped to partially offset the negative impact of the health crisis on its brick-and-mortar operations, contributing growth of 25% on a constant currency basis.
In spite of the overall decline in its revenues, Fossil was able to achieve progress in its bottom line thanks, in part, to the actions taken by the company to reduce its selling, general and administrative expenses, which totaled $230 million, down 24% from the prior-year period.
“Our teams were resilient in 2020 and adeptly navigated the challenging external environment while remaining focused on our strategic growth priorities,” commented Fossil chairman and CEO Kosta Karsotis in a release. “During the year, we leveraged and expanded our digital capabilities to best serve our customers during a period of heightened online demand.”
Full-year net sales at the company fell 27% in 2020, from $2.2 billion to $1.6 billion, while annual net loss was $96.1 million, or $1.88 per diluted share, compared to a loss of $52.4 million, or $1.04 per diluted share, in the previous year.
On Wednesday, Fossil also announced that it has promoted its current SVP for global finance and accounting, Sunil Doshi, to the role of CFO and treasurer, effective March 29, 2021. Doshi succeeds Jeffrey Boyer, who will retain his role as COO and continue to be a member of the company’s office of the chairman.
Doshi, who will report to Boyer in his new role, brings more than 20 years of experience in senior finance roles to the position. Having previously held the role of CFO for Fossil Group’s Americas region from 2012 to 2015, the executive rejoined the company in June 2020.
In between his two periods at Fossil, he worked as CFO at Mitra QSR and Zoe’s Kitchen. Doshi, who holds a BS in accounting from Ohio State University and an MBA from the University of Chicago’s Booth School of Business, started his career at L Brands.
Looking forward, Fossil expects net sales to decline in the range of 12% to 17% in the first quarter ending April 3, 2021, and increase in the range of 10% to 15% in fiscal 2021.
Having closed net 30 stores over the course of 2020, Fossil Group currently operates some 421 locations around the world. The company intends to further reduce its store count by approximately 65 to 75 locations in 2021.
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