Fossil (FOSL) Down More Than 50% YTD: Any Scope For Revival?
Zacks Investment Research | Dec 18, 2019 09:34PM ET
Fossil Group, Inc. (NASDAQ:FOSL) has been losing investors’ confidence due to drab sales trend, stemming from sluggishness in traditional watches, leather and jewelry businesses. Traditional watch sales have been bearing the brunt of intense competition and rising demand for connected watches. Also, adverse impacts from currency fluctuations, tariffs and business exits are hurting the top line. In fact, management expects an additional impact of $5-$10 million from tariffs for 2020.
The aforementioned hurdles have exerted pressure on Fossil’s third-quarter 2019 results, wherein management slashed sales and operating margin guidance for 2019. The company expects net sales to decline in the range of 11-13% compared with the earlier expectation of 8-12% decline. This includes negative impacts of 2.5% and 2% stemming from business exits and currency movements, respectively. Further, operating margin is anticipated to be 1-1.7% compared with the prior view of 2.5-3.5%.
Fossil’s lacklustre performance has been weighing on investors’ sentiments for a while. Consequently, this Zacks Rank #5 (Strong Sell) stock has tumbled 50.3% in this year compared with the Zacks Investment Research
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