Fossil Group shares fell over 4% in after hours trading yesterday despite Q1 results for the watch and accessories broadly meeting investors’ expectations.
The Company reported net income of $66.3 million for the first quarter of 2014, compared to $72.2 million for the first quarter of 2013. Diluted earnings per share increased to $1.22, compared to $1.21 for the prior fiscal year’s first quarter.
CEO Kosta Kartsotis described the results as solid, with Europe among the global group’s best performing territories. “We are pleased to be off to a good start in 2014, with a solid first quarter performance that produced revenue growth at the top end of our expectations. We continued to expand our international footprint as we posted significant increases in both Europe and Asia and we expanded our business in the Americas, even as mall traffic remains challenging.
“Our growth was driven by strong performance in watches, with both Fossil and our multi-brand portfolio delivering solid increases. Our jewellery business accelerated, more than offsetting the challenges we continue to see in the leathers business. We continued our initiative to refine and optimise our operating structure to create fuel to drive our growth, and we announced an important strategic partnership with one of the most innovative companies to support our efforts in wearable technology,” said Kartsotis.
Europe wholesale net sales rose 14%, or $25.2 million, compared to the first quarter of fiscal 2013. Double digit growth in watches and jewellery products led the European sales increase and were partially offset by a decline in leathers. Most European markets posted sales increases, with the strongest growth rates coming from the United Kingdom, France and the Middle East, the company stated.