Fossil Group, Inc. (NASDAQ: FOSL) today announced financial results
for the fiscal second quarter ended July 1, 2023.
Second Quarter Summary
- Second quarter worldwide net sales
totaled $322 million, decreasing 13%.
- Net sales in the Company’s direct
to consumer channels were down 4% in constant currency, with
comparable retail sales growth of 3%. Net sales in our wholesale
channels were down 19%.
- FOSSIL brand sales grew slightly in
traditional watches, more than offset by declines in smartwatches
and leathers, resulting in a total brand sales decline of 8% in
constant currency.
- Operating loss of $35 million
compared to a loss of $11 million a year ago. Adjusted
operating loss of $28 million compared to adjusted operating loss
of $8 million last year.
- Inventory totaled $324 million, a
decrease of 26% versus a year ago; and the Company total liquidity
of $205 million at quarter end.
Expanded Transform and Grow
Plan
The Company is expanding its previously
announced Transform and Grow Plan (“TAG Plan”) following a more
comprehensive review of its business model. The financial goals of
the TAG Plan have expanded beyond operating expense reductions to
include gross margin improvements, which are expected to drive
incremental operating income benefits over the next three
years.
The expanded TAG Plan is expected to generate
approximately $300 million of annualized operating income benefits
by the end of 2025. The previously announced TAG Plan was expected
to generate $100 million of annualized operating income benefits by
the end of 2024. In connection with the TAG Plan, the Company
expects to incur charges of approximately $35 million in 2023, and
approximately $100 million - $120 million over the duration of the
program. With these measures, our goal is to achieve adjusted gross
margins in the low to mid 50% range and adjusted operating margins
of approximately 10%.
To execute the expanded TAG Plan, the Company
has created a Transformation Office and will partner with Alvarez
& Marsal’s Consumer and Retail Group, leaders in consumer and
retail transformation. In addition to the program outlined above,
the Transformation Office is focused on the three growth pillars
outlined in March 2023, which includes: 1) revitalizing the Fossil
brand, 2) maximizing our licensed brand portfolio in watches and
jewelry and 3) growing our premium watch offerings.
A presentation outlining our updated Transform
and Grow Plan can be found on www.fossilgroup.com in the Investor
Relations section.
Kosta Kartsotis, Chairman and CEO, stated, “By
expanding our Transform and Grow Plan, we are taking bold and
significant steps to reshape our business and financial model.
Partnering with Alvarez & Marsal, a leading consulting firm,
has brought additional insights and enabled a broader and more
comprehensive review of our business. Establishing a Transformation
Office will leverage our joint capabilities to drive accelerated
change. As a result, we have tripled the size of our original
program to $300 million in annualized benefits by 2025.
The actions to be taken under this expanded
Transform and Grow Plan will better fuel our growth strategies and
are designed to return the Company to a double digit operating
margin model and thereby create shareholder value.”
Second Quarter 2023 Operating
Results
Amounts referred to as “adjusted” as well as
“constant currency” are non-GAAP financial measures.
Reconciliations of these non-GAAP financial measures to their
closest reported GAAP measures are included at the end of this
press release.
- Net sales totaled
$322.0 million, a decrease of 13% on a reported basis and in
constant currency compared to $371.2 million in the second quarter
of fiscal 2022. Net sales, in constant currency, declined 19% in
Europe, 13% in Americas and 5% in Asia versus the same quarter last
year. Wholesale sales decreased 19% while our direct to consumer
sales declined 4% on a constant currency basis. Within our direct
to consumer channels, comparable retail sales grew 3%. Traditional
watch sales declined 8% in constant currency in the second quarter,
primarily due to declines in Americas and Europe. Smartwatch sales
decreased 46% reflecting lower consumer demand across geographies
and channels and our deemphasis of the category as compared to the
prior year period. The leathers category decreased 6% and jewelry
sales declined 19% in constant currency during the second quarter.
From a brand lens, the majority of the brands in our portfolio
decreased in the second quarter. FOSSIL branded sales decreased 8%
in constant currency largely driven by declines in smartwatches and
leathers, while traditional watch sales increased slightly.
- Gross profit
totaled $156.7 million compared to $191.3 million in the
second quarter of 2022. Gross margin decreased 290 basis points to
48.7% versus 51.6% a year ago. The year-over-year decrease
primarily reflects increased promotions, an unfavorable currency
impact, net foreign currency hedging contract losses in the current
year as compared to gains in the prior year and restructuring
charges related to product offering exits. These costs were
partially offset by decreased freight costs.
- Operating expenses
totaled $192.0 million compared to $202.3 million a year
ago. As a percentage of net sales, operating expenses
were 59.6% in the second quarter of 2023 compared to 54.5% in the
prior year second quarter. Selling, general and administrative
(“SG&A”) expenses were $187.2 million compared to $199.2
million in the second quarter of 2022. As a percentage of net
sales, SG&A expenses were 58.1% in the second quarter of 2023
compared to 53.6% in the prior year second quarter, largely driven
by decreased sales.
- Operating loss was
$35.3 million compared to $10.9 million in the second quarter of
2022. Operating margin was (11.0)% in the second
quarter of 2023 compared to (2.9)% in the prior year second
quarter. Adjusted operating loss totaled $27.6 million compared to
$7.8 million in the second quarter of 2022. Adjusted operating
margin was (8.6)% in the second quarter of 2023 compared to (2.1)%
in the prior year second quarter.
- Interest expense
increased to $5.3 million compared to $4.3 million in the second
quarter of 2022, primarily driven by a higher debt balance and an
increased interest rate.
- Other income
(expense) was income of $7.2 million compared to expense
of $1.7 million in the second quarter of 2022, reflecting net
currency gains in the second quarter of 2023 as compared to net
currency losses in the prior year second quarter.
- Income (loss) before income
taxes was $(33.5) million compared to $(16.9) million in
the second quarter of 2022.
- Adjusted EBITDA
was $(15.4) million, or (4.8)% of net sales in the second quarter
of 2023 and $(0.3) million, or (0.1)% of net sales in the prior
year quarter.
- Provision (benefit) for
income taxes was a benefit of $7.2 million, resulting in
an effective income tax rate of 21.5% compared to expense of $2.0
million and an effective tax rate of (11.8)% in the prior year. The
effective tax rate in the second quarter of 2023 was favorable as
compared to the prior year due to reduced foreign taxes.
- Net loss totaled
$26.5 million with net loss per diluted share of $0.51, which
compares to a net loss of $19.1 million and net loss per diluted
share of $0.37 in the prior year quarter. Adjusted net loss for the
second quarter was $20.4 million with adjusted net loss per diluted
share of $0.40 compared to adjusted net loss of $16.6 million with
adjusted net loss per diluted share of $0.33 in the prior year
quarter. During the second quarter of 2023, currencies
favorably affected net loss per diluted share by approximately
$0.03.
Balance Sheet Summary
As of July 1, 2023, the Company had cash and
cash equivalents of $132.1 million. Inventories at the end of the
second quarter of 2023 totaled $323.9 million, a decrease of 26%
versus a year ago. Total debt was $243.5 million.
Outlook
The Company is updating its guidance for the
full year 2023 to reflect results from the second quarter,
continued declines in our wholesale channels in the Americas and
Europe and a more gradual sales recovery in China than previously
estimated.
For fiscal year 2023, the Company now expects
worldwide net sales declines of approximately 5% to 10% versus
prior guidance of net sales declines of 5% to growth of 1%. The net
revenue guidance assumes prevailing currency rates.
The Company now expects adjusted operating
margin(1) guidance for the full year to be -2% to -4% of net sales,
down from prior guidance of flat to 3%.
The Company now expects restructuring charges of
approximately $35 million for the full year 2023 in connection with
its expanded Transform and Grow Plan.
(1) A reconciliation of adjusted operating
margin, a non-GAAP financial measure, to a corresponding GAAP
measure is not available on a forward-looking basis without
unreasonable efforts due to the high variability and low visibility
of certain income and expense items that are excluded in
calculating adjusted operating margin.
Safe Harbor
Certain statements contained herein that are not
historical facts, constitute “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995
and involve a number of risks and uncertainties. The actual results
of the future events described in such forward-looking statements
could differ materially from those stated in such forward-looking
statements. Among the factors that could cause actual results to
differ materially are: risks related to the success of the TAG
Plan; increased political uncertainty, the effect of worldwide
economic conditions; the effect of a pandemic; significant changes
in consumer spending patterns or preferences; interruptions or
delays in the supply of key components or products; acts of war or
acts of terrorism; loss of key facilities; data breach or
information systems disruptions; changes in foreign currency
valuations in relation to the U.S. dollar; lower levels of consumer
spending resulting from a general economic downturn or generally
reduced shopping activity caused by public safety or consumer
confidence concerns; the performance of our products within the
prevailing retail environment; customer acceptance of both new
designs and newly-introduced product lines; changes in the mix of
product sales; the effects of vigorous competition in the markets
in which we operate; compliance with debt covenants and other
contractual provisions and meeting debt service obligation; risks
related to the success of our business strategy; the termination or
non-renewal of material licenses; risks related to foreign
operations and manufacturing; changes in the costs of materials and
labor; government regulation and tariffs; our ability to secure and
protect trademarks and other intellectual property rights; levels
of traffic to and management of our retail stores; loss of key
personnel and the outcome of current and possible future
litigation, as well as the risks and uncertainties set forth in the
Company’s most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the “SEC”). These
forward-looking statements are based on our current expectations
and beliefs concerning future developments and their potential
effect on us. While management believes that these forward-looking
statements are reasonable as and when made, there can be no
assurance that future developments affecting us will be those that
we anticipate. Readers of this release should consider these
factors in evaluating, and are cautioned not to place undue
reliance on, the forward-looking statements contained herein. The
Company assumes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise, except as required by law.
About Fossil
Group, Inc.
Fossil Group, Inc. is a global design,
marketing, distribution and innovation company specializing in
lifestyle accessories. Under a diverse portfolio of owned and
licensed brands, our offerings include traditional watches,
smartwatches, jewelry, handbags, small leather goods, belts and
sunglasses. We are committed to delivering the best in design and
innovation across our owned brands, Fossil, Michele, Relic, Skagen
and Zodiac, and licensed brands, Armani Exchange, Diesel, DKNY,
Emporio Armani, kate spade new york, Michael Kors, and Tory Burch.
We bring each brand story to life through an extensive distribution
network across numerous geographies, categories and channels.
Certain press release and SEC filing information concerning the
Company is also available at www.fossilgroup.com.
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Investor Relations: |
Christine Greany |
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The Blueshirt Group |
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(858) 722-7815 |
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christine@blueshirtgroup.com |
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Consolidated Income
Statement Data |
For the 13Weeks Ended |
|
For the 13Weeks Ended |
|
For the 26 Weeks Ended |
|
For the 26 Weeks Ended |
($ in millions, except
per share data): |
July 1, 2023 |
|
July 2, 2022 |
|
July 1, 2023 |
|
July 2, 2022 |
Net sales |
$ |
322.0 |
|
|
$ |
371.2 |
|
|
$ |
647.0 |
|
|
$ |
747.0 |
|
Cost of sales |
|
165.3 |
|
|
|
179.9 |
|
|
|
329.6 |
|
|
|
371.3 |
|
Gross profit |
|
156.7 |
|
|
|
191.3 |
|
|
|
317.4 |
|
|
|
375.7 |
|
Gross margin |
|
48.7 |
% |
|
|
51.6 |
% |
|
|
49.1 |
% |
|
|
50.3 |
% |
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
187.2 |
|
|
|
199.1 |
|
|
|
378.1 |
|
|
|
395.0 |
|
Other long-lived asset impairments |
|
0.2 |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.5 |
|
Restructuring charges |
|
4.6 |
|
|
|
2.9 |
|
|
|
11.7 |
|
|
|
5.4 |
|
Total operating expenses |
$ |
192.0 |
|
|
$ |
202.2 |
|
|
$ |
390.0 |
|
|
$ |
400.9 |
|
Total operating expenses (% of
net sales) |
|
59.6 |
% |
|
|
54.5 |
% |
|
|
60.3 |
% |
|
|
53.7 |
% |
Operating income (loss) |
|
(35.3 |
) |
|
|
(10.9 |
) |
|
|
(72.6 |
) |
|
|
(25.2 |
) |
Operating margin |
(11.0 |
)% |
|
(2.9 |
)% |
|
(11.2 |
)% |
|
(3.4 |
)% |
Interest expense |
|
5.3 |
|
|
|
4.3 |
|
|
|
10.4 |
|
|
|
8.3 |
|
Other income (expense) - net |
|
7.1 |
|
|
|
(1.7 |
) |
|
|
9.9 |
|
|
|
(0.1 |
) |
Income (loss) before income
taxes |
|
(33.5 |
) |
|
|
(16.9 |
) |
|
|
(73.1 |
) |
|
|
(33.6 |
) |
Provision (benefit) for income
taxes |
|
(7.2 |
) |
|
|
2.0 |
|
|
|
(5.6 |
) |
|
|
6.7 |
|
Less: Net income attributable to noncontrolling interest |
|
0.2 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
0.3 |
|
Net income (loss) attributable to
Fossil Group, Inc. |
$ |
(26.5 |
) |
|
$ |
(19.1 |
) |
|
$ |
(67.8 |
) |
|
$ |
(40.6 |
) |
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.51 |
) |
|
$ |
(0.37 |
) |
|
$ |
(1.30 |
) |
|
$ |
(0.78 |
) |
Diluted |
$ |
(0.51 |
) |
|
$ |
(0.37 |
) |
|
$ |
(1.30 |
) |
|
$ |
(0.78 |
) |
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
52.3 |
|
|
|
51.7 |
|
|
|
52.1 |
|
|
|
51.9 |
|
Diluted |
|
52.3 |
|
|
|
51.7 |
|
|
|
52.1 |
|
|
|
51.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Consolidated Balance Sheet Data ($ in
millions): |
July 1, 2023 |
|
July 2, 2022 |
Assets: |
|
|
|
Cash and cash equivalents |
$ |
132.1 |
|
|
$ |
167.1 |
|
Accounts receivable - net |
|
162.7 |
|
|
|
176.5 |
|
Inventories |
|
323.9 |
|
|
|
437.9 |
|
Other current assets |
|
178.9 |
|
|
|
183.3 |
|
Total current assets |
$ |
797.6 |
|
|
$ |
964.8 |
|
Property, plant and equipment - net |
$ |
75.9 |
|
|
$ |
80.6 |
|
Operating lease right-of-use assets |
|
144.9 |
|
|
|
168.6 |
|
Intangible and other assets - net |
|
55.0 |
|
|
|
69.4 |
|
Total long-term assets |
$ |
275.8 |
|
|
$ |
318.6 |
|
Total assets |
$ |
1,073.4 |
|
|
$ |
1,283.4 |
|
|
|
|
|
Liabilities and stockholders’ equity: |
|
|
|
Accounts payable, accrued expenses and other current
liabilities |
$ |
321.2 |
|
|
$ |
420.7 |
|
Short-term debt |
|
0.4 |
|
|
|
0.6 |
|
Total current liabilities |
$ |
321.6 |
|
|
$ |
421.3 |
|
Long-term debt |
$ |
243.0 |
|
|
$ |
248.9 |
|
Long-term operating lease liabilities |
|
135.1 |
|
|
|
163.9 |
|
Other long-term liabilities |
|
36.8 |
|
|
|
55.3 |
|
Total long-term liabilities |
$ |
414.9 |
|
|
$ |
468.1 |
|
Stockholders’ equity |
|
336.9 |
|
|
|
394.0 |
|
Total liabilities and stockholders’ equity |
$ |
1,073.4 |
|
|
$ |
1,283.4 |
|
|
|
|
|
|
|
|
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Constant Currency Financial
Information
The following table presents the Company’s
business segment and product net sales on a constant currency basis
which are non-GAAP financial measures. To calculate net sales on a
constant currency basis, net sales for the current fiscal year
period for entities reporting in currencies other than the U.S.
dollar are translated into U.S. dollars at the average rates during
the comparable period of the prior fiscal year. The Company
presents constant currency information to provide investors with a
basis to evaluate how its underlying business performed excluding
the effects of foreign currency exchange rate fluctuations. The
constant currency financial information presented herein should not
be considered a substitute for, or superior to, the measures of
financial performance prepared in accordance with GAAP.
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|
|
|
|
Net Sales For the 13 Weeks Ended |
|
Net Sales For the 26 Weeks Ended |
July 1, 2023 |
|
July 2, 2022 |
|
July 1, 2023 |
|
July 2, 2022 |
($ in millions) |
As Reported |
|
Impact of Foreign Currency Exchange Rates |
|
Constant Currency |
|
As Reported |
|
As Reported |
|
Impact of Foreign Currency Exchange Rates |
|
Constant Currency |
|
As Reported |
Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
146.7 |
|
|
$ |
(0.5 |
) |
|
$ |
146.2 |
|
|
$ |
168.3 |
|
|
$ |
284.6 |
|
|
$ |
(0.2 |
) |
|
$ |
284.4 |
|
|
$ |
330.2 |
|
Europe |
|
88.3 |
|
|
|
(1.1 |
) |
|
|
87.2 |
|
|
|
107.9 |
|
|
|
194.0 |
|
|
|
3.9 |
|
|
|
197.9 |
|
|
|
232.4 |
|
Asia |
|
84.1 |
|
|
|
4.0 |
|
|
|
88.1 |
|
|
|
92.6 |
|
|
|
164.3 |
|
|
|
9.1 |
|
|
|
173.4 |
|
|
|
179.4 |
|
Corporate |
|
2.9 |
|
|
|
— |
|
|
|
2.9 |
|
|
|
2.4 |
|
|
|
4.1 |
|
|
|
0.1 |
|
|
|
4.2 |
|
|
|
5.0 |
|
Total net sales |
$ |
322.0 |
|
|
$ |
2.4 |
|
|
$ |
324.4 |
|
|
$ |
371.2 |
|
|
$ |
647.0 |
|
|
$ |
12.9 |
|
|
$ |
659.9 |
|
|
$ |
747.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product categories: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Watches: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Traditional watches |
$ |
236.1 |
|
|
$ |
1.9 |
|
|
$ |
238.0 |
|
|
$ |
258.7 |
|
|
$ |
461.5 |
|
|
$ |
9.1 |
|
|
$ |
470.6 |
|
|
$ |
520.1 |
|
Smartwatches |
|
17.8 |
|
|
|
— |
|
|
|
17.8 |
|
|
|
33.4 |
|
|
|
42.2 |
|
|
|
0.9 |
|
|
|
43.1 |
|
|
|
71.4 |
|
Total watches |
$ |
253.9 |
|
|
$ |
1.9 |
|
|
$ |
255.8 |
|
|
$ |
292.1 |
|
|
$ |
503.6 |
|
|
$ |
10.1 |
|
|
$ |
513.7 |
|
|
$ |
591.5 |
|
Leathers |
|
33.3 |
|
|
|
0.4 |
|
|
|
33.7 |
|
|
|
35.9 |
|
|
|
73.6 |
|
|
|
1.4 |
|
|
|
75.0 |
|
|
|
70.1 |
|
Jewelry |
|
27.4 |
|
|
|
— |
|
|
|
27.4 |
|
|
|
33.9 |
|
|
|
56.4 |
|
|
|
1.3 |
|
|
|
57.7 |
|
|
|
68.6 |
|
Other |
|
7.4 |
|
|
|
0.1 |
|
|
|
7.5 |
|
|
|
9.3 |
|
|
|
13.4 |
|
|
|
0.1 |
|
|
|
13.5 |
|
|
|
16.8 |
|
Total net sales |
$ |
322.0 |
|
|
$ |
2.4 |
|
|
$ |
324.4 |
|
|
$ |
371.2 |
|
|
$ |
647.0 |
|
|
$ |
12.9 |
|
|
$ |
659.9 |
|
|
$ |
747.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA, Adjusted operating
income (loss), Adjusted net income (loss) and Adjusted earnings
(loss) per share
Adjusted EBITDA, Adjusted operating income
(loss), Adjusted net income (loss) and Adjusted earnings (loss) per
share are non-GAAP financial measures. We define
Adjusted EBITDA as our net income (loss) before the impact of
income tax expense (benefit), plus interest expense, amortization
and depreciation, impairment expense, other non-cash charges,
stock-based compensation expense, restructuring expense and
unamortized debt issuance costs included in loss on extinguishment
of debt minus interest income. We define Adjusted operating income
(loss) as operating income (loss) before impairment expense and
restructuring expense. We define Adjusted net income (loss) and
Adjusted earnings (loss) per share as net income (loss)
attributable to Fossil Group, Inc. and diluted earnings (loss) per
share, respectively, before impairment expense, restructuring
expense and unamortized debt issuance costs included in loss on
extinguishment of debt. We have included Adjusted EBITDA, Adjusted
operating income (loss), Adjusted net income (loss) and Adjusted
earnings (loss) per share herein because they are widely used by
investors for valuation and for comparing our financial performance
with the performance of our competitors. We also use both non-GAAP
financial measures to monitor and compare the financial performance
of our operations. Our presentation of Adjusted EBITDA,
Adjusted operating income (loss), Adjusted net income (loss) and
Adjusted earnings (loss) per share may not be comparable to
similarly titled measures other companies report.
Adjusted EBITDA, Adjusted operating income (loss), Adjusted net
income (loss) and Adjusted earnings (loss) per share are not
intended to be used as alternatives to any measure of our
performance in accordance with GAAP.
The following tables reconcile Adjusted EBITDA
to the most directly comparable GAAP financial measure, which is
income (loss) before income taxes. Certain line items
presented in the tables below, when aggregated, may not foot due to
rounding.
|
|
|
|
|
|
|
Fiscal 2022 |
|
Fiscal 2023 |
|
|
($ in
millions): |
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Total |
Income (loss) before income taxes |
$ |
15.5 |
|
|
$ |
(4.0 |
) |
|
$ |
(39.6 |
) |
|
$ |
(33.5 |
) |
|
$ |
(61.6 |
) |
Plus: |
|
|
|
|
|
|
|
|
|
Interest expense |
|
5.1 |
|
|
|
5.8 |
|
|
|
5.0 |
|
|
|
5.3 |
|
|
|
21.2 |
|
Amortization and depreciation |
|
5.6 |
|
|
|
5.7 |
|
|
|
5.1 |
|
|
|
4.8 |
|
|
|
21.2 |
|
Impairment expense |
|
0.6 |
|
|
|
1.2 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
2.1 |
|
Other non-cash charges |
|
(0.4 |
) |
|
|
(0.3 |
) |
|
|
(0.2 |
) |
|
|
(0.5 |
) |
|
|
(1.4 |
) |
Stock-based compensation |
|
(0.3 |
) |
|
|
2.3 |
|
|
|
1.4 |
|
|
|
1.6 |
|
|
|
5.0 |
|
Restructuring expense |
|
— |
|
|
|
0.7 |
|
|
|
7.1 |
|
|
|
4.6 |
|
|
|
12.4 |
|
Restructuring cost of sales |
|
— |
|
|
|
— |
|
|
|
5.3 |
|
|
|
2.9 |
|
|
|
8.2 |
|
Unamortized debt issuance costs included in loss on extinguishment
of debt |
|
— |
|
|
|
1.1 |
|
|
|
— |
|
|
|
— |
|
|
|
1.1 |
|
Less: |
|
|
|
|
|
|
|
|
|
Interest income |
|
0.1 |
|
|
|
0.4 |
|
|
|
0.6 |
|
|
|
0.8 |
|
|
|
1.9 |
|
Adjusted EBITDA |
$ |
26.0 |
|
|
$ |
12.1 |
|
|
$ |
(16.4 |
) |
|
$ |
(15.4 |
) |
|
$ |
6.3 |
|
|
Fiscal 2021(1) |
|
Fiscal 2022 |
|
|
($ in
millions): |
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Total |
Income (loss) before income taxes |
$ |
40.9 |
|
|
$ |
27.1 |
|
|
$ |
(16.7 |
) |
|
$ |
(16.9 |
) |
|
$ |
34.4 |
|
Plus: |
|
|
|
|
|
|
|
|
|
Interest expense |
|
6.4 |
|
|
|
4.8 |
|
|
|
4.0 |
|
|
|
4.3 |
|
|
|
19.5 |
|
Amortization and depreciation |
|
7.0 |
|
|
|
6.2 |
|
|
|
6.2 |
|
|
|
5.8 |
|
|
|
25.2 |
|
Impairment expense |
|
0.6 |
|
|
|
2.9 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
4.0 |
|
Other non-cash charges |
|
1.1 |
|
|
|
(0.6 |
) |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
0.1 |
|
Stock-based compensation |
|
2.9 |
|
|
|
2.4 |
|
|
|
2.2 |
|
|
|
3.8 |
|
|
|
11.3 |
|
Restructuring expense |
|
5.4 |
|
|
|
3.2 |
|
|
|
2.6 |
|
|
|
2.9 |
|
|
|
14.1 |
|
Unamortized debt issuance costs included in loss on extinguishment
of debt |
|
— |
|
|
|
11.7 |
|
|
|
— |
|
|
|
— |
|
|
|
11.7 |
|
Less: |
|
|
|
|
|
|
|
|
|
Interest income |
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.5 |
|
Adjusted EBITDA |
$ |
64.2 |
|
|
$ |
57.6 |
|
|
$ |
(1.7 |
) |
|
$ |
(0.3 |
) |
|
$ |
119.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Prior period amounts have been adjusted to conform to
the current period presentation.
The following tables reconcile Adjusted
operating income (loss), Adjusted net income (loss) and Adjusted
earnings (loss) per share to the most directly comparable GAAP
financial measures, which are operating income (loss), net income
(loss) attributable to Fossil Group, Inc. and diluted earnings
(loss) per share, respectively. Certain line items presented in the
table below, when aggregated, may not foot due to rounding.
|
|
|
For the 13 Weeks Ended July 1, 2023 |
($ in millions, except
per share data): |
As Reported |
Restructuring Cost of Sales |
Other Long-Lived Asset Impairment |
Restructuring Expenses |
As Adjusted |
Operating income (loss) |
$ |
(35.3 |
) |
$ |
2.9 |
|
$ |
0.2 |
|
$ |
4.6 |
|
$ |
(27.6 |
) |
Operating margin (% of net sales) |
(11.0 |
)% |
|
|
|
(8.6 |
)% |
Interest expense |
|
(5.3 |
) |
|
$ |
— |
|
$ |
— |
|
|
(5.3 |
) |
Other income (expense) - net |
|
7.2 |
|
|
|
— |
|
|
— |
|
|
7.2 |
|
Income (loss) before income taxes |
|
(33.5 |
) |
|
2.9 |
|
|
0.2 |
|
|
4.6 |
|
|
(25.8 |
) |
Provision (benefit) for income taxes |
|
(7.2 |
) |
|
0.6 |
|
|
— |
|
|
1.0 |
|
|
(5.6 |
) |
Less: Net income attributable to noncontrolling interest |
|
(0.2 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
Net income (loss) attributable to Fossil Group, Inc. |
$ |
(26.5 |
) |
$ |
2.3 |
|
$ |
0.2 |
|
$ |
3.6 |
|
$ |
(20.4 |
) |
Diluted earnings (loss) per
share |
$ |
(0.51 |
) |
$ |
0.04 |
|
$ |
— |
|
$ |
0.07 |
|
$ |
(0.40 |
) |
|
For the 13 Weeks Ended July 2, 2022 |
($ in millions, except
per share data): |
As Reported |
Other Long-Lived Asset Impairment |
Restructuring Expenses |
As Adjusted |
Operating income (loss) |
$ |
(10.9 |
) |
$ |
0.2 |
|
$ |
2.9 |
|
$ |
(7.8 |
) |
Operating margin (% of net sales) |
(2.9 |
)% |
|
|
(2.1 |
)% |
Interest expense |
|
(4.3 |
) |
|
— |
|
|
— |
|
|
(4.3 |
) |
Other income (expense) - net |
|
(1.7 |
) |
|
— |
|
|
— |
|
|
(1.7 |
) |
Income (loss) before income taxes |
|
(16.9 |
) |
|
0.2 |
|
|
2.9 |
|
|
(13.8 |
) |
Provision for income taxes |
|
2.0 |
|
|
— |
|
|
0.6 |
|
|
2.6 |
|
Less: Net income attributable to noncontrolling interest |
|
(0.2 |
) |
|
— |
|
|
— |
|
|
(0.2 |
) |
Net income (loss) attributable to Fossil Group, Inc. |
$ |
(19.1 |
) |
$ |
0.2 |
|
$ |
2.3 |
|
$ |
(16.6 |
) |
Diluted earnings (loss) per
share |
$ |
(0.37 |
) |
$ |
— |
|
$ |
0.04 |
|
$ |
(0.33 |
) |
|
For the 26 Weeks Ended July 1, 2023 |
($ in millions, except
per share data): |
As Reported |
Restructuring Cost of Sales |
Other Long-Lived Asset Impairment |
Restructuring Expenses |
As Adjusted |
Operating income (loss) |
$ |
(72.6 |
) |
$ |
8.2 |
|
$ |
0.2 |
|
$ |
11.7 |
|
$ |
(52.5 |
) |
Operating margin (% of net sales) |
(11.2 |
)% |
|
|
|
(8.1 |
)% |
Interest expense |
|
(10.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(10.4 |
) |
Other income (expense) - net |
|
9.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
9.9 |
|
Income (loss) before income taxes |
|
(73.1 |
) |
|
8.2 |
|
|
0.2 |
|
|
11.7 |
|
|
(53.0 |
) |
Provision (benefit) for income taxes |
|
(5.6 |
) |
|
1.7 |
|
|
— |
|
|
2.5 |
|
|
(1.4 |
) |
Less: Net income attributable to noncontrolling interest |
|
(0.3 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.3 |
) |
Net income (loss) attributable to Fossil Group, Inc. |
$ |
(67.8 |
) |
$ |
6.5 |
|
$ |
0.2 |
|
$ |
9.2 |
|
$ |
(51.9 |
) |
Diluted earnings (loss) per
share |
$ |
(1.30 |
) |
$ |
0.12 |
|
$ |
— |
|
$ |
0.18 |
|
$ |
(1.00 |
) |
|
For the 26 Weeks Ended July 2, 2022 |
($ in millions, except
per share data): |
As Reported |
Other Long-Lived Asset Impairment |
Restructuring Expenses |
As Adjusted |
Operating income (loss) |
$ |
(25.2 |
) |
$ |
0.5 |
|
$ |
5.4 |
|
$ |
(19.3 |
) |
Operating margin (% of net sales) |
(3.4 |
)% |
|
|
(2.6 |
)% |
Interest expense |
|
(8.3 |
) |
|
— |
|
|
— |
|
|
(8.3 |
) |
Other income (expense) - net |
|
(0.1 |
) |
|
— |
|
|
— |
|
|
(0.1 |
) |
Income (loss) before income taxes |
|
(33.6 |
) |
|
0.5 |
|
|
5.4 |
|
|
(27.7 |
) |
Provision for income taxes |
|
6.7 |
|
|
0.1 |
|
|
1.1 |
|
|
7.9 |
|
Less: Net income attributable to noncontrolling interest |
|
(0.3 |
) |
|
— |
|
|
— |
|
|
(0.3 |
) |
Net income (loss) attributable to Fossil Group, Inc. |
$ |
(40.6 |
) |
$ |
0.4 |
|
$ |
4.3 |
|
$ |
(35.9 |
) |
Diluted earnings (loss) per
share |
$ |
(0.78 |
) |
$ |
0.01 |
|
$ |
0.08 |
|
$ |
(0.69 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Store Count Information
|
July 2, 2022 |
|
Opened |
|
Closed |
|
July 1, 2023 |
Americas |
157 |
|
|
0 |
|
|
11 |
|
|
146 |
|
Europe |
113 |
|
|
1 |
|
|
22 |
|
|
92 |
|
Asia |
79 |
|
|
3 |
|
|
5 |
|
|
77 |
|
Total stores |
349 |
|
|
4 |
|
|
38 |
|
|
315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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