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What Are Fossil Group’s Projections for 2016?

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Dec. 4 2020, Updated 10:52 a.m. ET

Price movement of Fossil Group

Fossil Group (FOSL) rose by 33.0% to close at $44.33 per share at the end of the third week of February 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is 36.2%, 45.6%, and 21.3%, respectively.

At times, the stock has broken the support of all moving day averages. Currently, FOSL is trading 30.8% above its 20-day moving average, 28.6% above its 50-day moving average, and 19.4 below its 200-day moving average.

The Schwab US Mid-Cap ETF (SCHM) invests 0.19% of its holdings in Fossil Group. The ETF tracks a market-cap-weighted index of mid-cap stocks in the D0w Jones US Total Stock Market Index. The YTD price movement of SCHM is -8.0% as of February 18, 2016.

The market caps of Fossil Group’s competitors are as follows:

  • Coach (COH): $10.0 billion
  • Kate Spade (KATE): $2.2 billion
  • Guess (GES): $1.6 billion
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Performance of Fossil Group in 4Q15 and fiscal 2015

Fossil Group reported 4Q15 net sales of $992.5 million, a fall of 6.8% compared to net sales of $1,064.8 million in 4Q14. Sales from the Americas, Europe, and Asia business segments fell by 4.6%, 6.5%, and 15.4%, respectively, in 4Q15 compared to 4Q14.

The company reported restructuring expenses and operating income of $2.7 million and $88.9 million, respectively, in 4Q15 compared to $0.0 million and $222.1 million, respectively, in 4Q14. Its net income and EPS (earnings per share) fell to $70.4 million and $1.46, respectively, in 4Q15, compared to $154.1 million and $3.00, respectively, in 4Q14.

Fiscal 2015 results

In fiscal 2015, FOSL reported net sales of $3,228.8 million, a fall of 8.0% YoY (year-over-year). It reported restructuring expenses of $24.4 million in fiscal 2015. The company opened 30 stores in Europe and 11 stores in Asia.

Its net income and EPS fell to $220.6 million and $4.51, respectively, in fiscal 2015, compared to $376.7 million and $7.10, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents and inventories both rose by 4.7% in fiscal 2015. Its current ratio fell to 2.9, and its debt-to-equity ratio rose to 1.0 in fiscal 2015 compared to a current ratio and a debt-to-equity ratio of 3.3 and 0.76, respectively, in fiscal 2014.

During fiscal 2015, the company invested $229.5 million to repurchase 2.7 million shares of its common stock at an average price of $84 per share. As of January 2, 2016, it had $829.3 million remaining on its existing share repurchase authorization.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Fossil Group are 9.8x and 2.3x, respectively, as of February 19, 2016. Standpoint Research downgraded Fossil Group from “buy” to “hold.”

Projections

The company has made the following projections for 1Q16:

  • Net sales will decrease in the range of 7% to 10%.
  • Operating margin will be in the range of 1.0% to 2.5%.
  • EPS will be in the range of $0.05 to $0.20.

The company has made the following projections for fiscal 2016:

  • Net sales growth will be in the range of -3.5% to 1%.
  • Operating margin will be in the range of 7.0% to 8.5%.
  • EPS will be in the range of $2.80 to $3.60.
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