Bllomberg wrote:Fossil Group Inc. suffered the worst stock decline in more than three years after its sales missed analysts’ estimates, fueling concern that the watch industry is mired in a slump and losing ground to wearable technology.
Third-quarter revenue fell to $771.3 million last quarter, the Richardson, Texas-based company said on Thursday. Analysts had predicted $795.1 million. Fossil also predicted a fourth-quarter decline of as much as 16 percent.
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Fossil fell 37 percent to $32.39 in New York on Friday, the biggest decline since May 2012. The stock is now down 71 percent this year.
Flaccidsteele, this is one of your big holdings in a handful of stocks that you own.
Now that the shoe is on the other foot, maybe it would be time to reconsider your signature line, containing: "I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation)"
finiki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
A turbulent retail environment and the burgeoning wearables market have been a double whammy for the watch and accessories maker. More than three-quarters of its market value has evaporated over the past few years, wiping out a decade’s worth of gains. And if recent warnings from fellow retailers Macy’s Inc., Kohl’s Corp. and Michael Kors Holdings Ltd. are any indication, Fossil’s challenges will only be further magnified in Tuesdays’ earnings report.
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In the longer term, Fossil faces a structural shift in buying behavior. Consumers are gravitating to wearable devices such as smartwatches and fitness trackers, including Apple Inc.’s Apple Watch. Some 97.4 million wearables shipped in 2016, up 20% from a year ago, according to research firm International Data Corp. That figure is expected to increase to 124.4 million units this year.
Fossil, for its part, said a year ago that it would fast-track more than 100 new products across several brands to try to capture this market. It also acquired a wearables maker, Misfit, in late 2015. But wearables have lower margins than traditional watches. Ms. Chen says smartwatches account for as much as 20% of Fossil’s overall watch sales. As Fossil increases smartwatch sales, she warns the company’s gross margin, which has fallen for the past three years, could drop further.
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Even if Fossil exceeds beaten-down estimates and the stock surges, don’t be fooled: The same thing happened a year ago when shares jumped 30% on better-than-expected results, as the high end of Fossil’s earnings outlook exceeded analysts’ estimates. Those gains vanished within three months and the stock has fallen further ever since. Short sellers also continue to bet the stock is headed even lower, as more than 20% of Fossil shares are sold short.
Fetching 13 times projected earnings over the next 12 months, the stock has been far cheaper. Its multiple was single digits as recently as a year ago.