Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

3 Takeaways From Fossil, Inc. (FOSL) Earnings

Watch and accessory maker Fossil, Inc. (NASDAQ:FOSL) just reported earnings for the fourth quarter, updating investors on its business performance over the holiday season. Here are three key takeaways from the report.

Success at Internet sales
First, Fossil’s direct-to-consumer business is booming. Internet sales jumped by 20% in the quarter, and that channel now accounts for 27% of revenue. That boost was enough to make the retail category now bigger than the company’s entire wholesale business in Europe.

Fossil Inc (NASDAQ:FOSL)

Growth in direct retailing also helped Fossil log a 2.4% increase in global comparable sales, and a 15% boost in North America. That’s no small feat considering Coach, Inc. (NYSE:COH) only managed a 1% rise in sales in that market, and Tiffany & Co. (NYSE:TIF) saw sales rise by just 2% there. Both luxury goods companies admitted that they were “disappointed” by their holiday results. Fossil CEO Kosta Kartsotis, meanwhile, had good reason to be “pleased” with his company’s performance.

Jewelry sparkles again
Second, Fossil’s jewelry transition looks to be complete. Or at least it’s no longer a big drag on sales. The company has been working on repositioning that category with an overhaul of the product line. The shift had been weighing particularly hard on European sales.

Last quarter, for example, the jewelry business fell by 25% in Europe, knocking down the region’s sales by 5%. The good news for Fossil is that there was no repeat of that headwind this quarter. European sales managed to grow by 7.6% over the holiday months.

Solid outlook for 2013
And third, Fossil projected a solid year ahead. The company estimates that sales will increase by 10% to about $3.15 billion. That agrees with analyst estimates, which had pegged the figure at $3.16 billion. Fossil also sees its earnings clocking in between $5.85 and $6.15 per share, roughly the same as the Street expects.

Overall, I think the report answers a few key questions about the retailer’s business. Most important, Fossil’s growth story seems intact enough to justify its premium valuation. At over 21 times earnings, the company is a bit more expensive than Tiffany’s P/E of 20, and well more than Coach’s 14. Unlike Fossil, those are both iconic luxury brands. But also unlike Fossil, they aren’t growing earnings and sales at such a fast clip.

The article 3 Takeaways From Fossil Earnings originally appeared on and is written by Demitrios Kalogeropoulos.

Fool contributor Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Coach and Fossil. The Motley Fool owns shares of Coach and Fossil.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!