24/7 Wall St. » MOV

Fossil Shares Plunge on Lower Outlook (FOSL, GES, MOV)

Paul Ausick — Tue, 08 May 2012 13:13:54 +0000

Fashion accessories maker Fossil Inc. (NASDAQ: FOSL) reported first quarter earnings this morning, and delivered more bad news than good. Investors are responding by fleeing the stock.

The company, which competes with other accessories makers like Guess? Inc. (NYSE: GES) and Movado Group Inc. (NYSE: MOV), posted adjusted EPS of $0.93 compared with a consensus estimate of $0.92. And that’s the end of the good news. Revenue of $589.5 million badly missed the consensus estimate of $617.6 million. Currency translation effects accounted for just $7.3 million of the difference.

But the worst news came in a revised outlook for the second quarter and for the full 2012 fiscal year. Fossil cut its second quarter EPS outlook to $0.77-$0.79, well below the consensus estimate of $0.94. Even adjusting for one-time costs only kicks the range up by $0.07 on either end. Revenue was forecast at +16% (+19% in constant dollars), but also falls short of consensus estimates.

For the full-year, diluted EPS is now forecast at $5.30-$5.40, where the consensus estimate called for $5.56. Again a net adjustment for one-time items only raises the forecast by $0.07. Full-year revenue is also forecast to come in slightly below the consensus estimate of $3 billion.

Analysts had forecast first quarter revenue growth of 15% year-over-year, second-quarter growth of 17%, and full year growth of 16.9%. But from the lower base set by first quarter sales, the projections are tossed out. Which makes the EPS estimates even less likely.

Fossil’s margins fell from 56.2% last year to 55.8% this year due to higher labor and component costs and more sales to third-party distributors. Investors very likely fear that this is just the beginning of sharp slide.

Shares are trading down about -25% in the pre-market, at $94.10 in a 52-week range of $69.57-$139.20. Ugly.

Paul Ausick

Filed under: Consumer Goods, Earnings Tagged: FOSL, GES, MOV

The Mr. Dumas Accounting Award: Fuqi International (FUQI, MOV, JADE, ZLC)

Administrator — Wed, 17 Mar 2010 11:32:18 +0000

Fuqi International Inc. (NASDAQ: FUQI) got killed last night and things are not looking bright this morning. The Chinese jewelry designer found “accounting errors” which led to overstated profits for the first three quarters in 2009. And for the quarter, its revenue and earnings were short of estimates. The good news is that the range taken off earnings for the three quarters was listed as a range of $0.15 to $0.19 off of the $1.66 for that combined period. The bad news is that the bad news looks more recent than farther back: fourth quarter earnings range was put at $0.24 to $0.28 EPS versus a prior range of $0.55 to $0.60; revenue was put in a range of $175 to $180 million versus a previous range of $182 to $191 million.

This came on the same day that Movado Group Inc. (NYSE: MOV) was hit on a poor outlook and it also seemed to at least have some after-hours impact on LJ International Inc. (NASDAQ: JADE). Too bad that Zale Corporation (NYSE: ZLC) didn’t help lift any of these companies as its stock continued to recover with big additional gains yesterday.

The company noted that an internal investigation showed the cost of sales had been artificially low in the first three quarters last year. That means that its profits and its net income for the three quarters were artificially higher as well. The problem is that the accounting errors were not clarified, and to boot the company had to delay its annual report filing.

Even the Chinese are buying cheaper products, it is up to you if you want to believe the CEO comments that some customers were delaying orders for the Chinese New Year. It seems like the delays and slowdown in China is much more than a brief period. Lower margins were brought on by lower-priced and less profitable products, go figure.

Fuqi shares were down almost 30% last night to under $14.00 versus an already volatile 52-week trading range of $3.65 to $32.68 and versus a $19.00 closing price Tuesday. Its market cap before factoring in the drop in value on Wednesday was about $524 million.

Filed under: Accounting, China, Consumer Goods, Earnings, Earnings Warning, Emerging Markets, Luxury, Restatements Tagged: FUQI, JADE, MOV, ZLC

Endorsers Wants Brady & Patriots Super Bowl Victory (NKE, MOV, GPS, KO, GPS, KFT, DIS, TM)

247wallst — Sun, 03 Feb 2008 12:24:11 +0000

We are constantly looking for the business angle of current events, and what could be more pressing than the Super Bowl today. More people watch the Super Bowl than watch live coverage of presidential elections. So if we wanted to look at who the endorsement crowd wants to win the game, we’d simply look at the endorsements of team leaders. The Patriots’ Brady as QB trumps the Giants’ Eli Manning on the endorsement roster.

Sports Illustrated estimated a $9 million endorsement take-home from Tom Brady. Eli Manning’s endorsements were "only" estimated at $5 million.

Brady has Nike (NYSE: NKE), Movado (NYSE: MOV) and Glaceau Smart Water, part of Coca-Cola (NYSE: KO). He has also appeared in ads for Gap Inc. (NYSE: GPS) as well at Stetson Cologne by Coty.

Eli Manning has appeared in commercials for Oreo’s, owned by Kraft Foods (NYSE: KFT). He also has a deal with Citizen Watch Co., Reebok (part of Adidas) and ESPN Radio, part of Disney (NYSE: DIS). His endorsement from Toyota of New Jersey appears to be local rather than national, although maybe Toyota Motors (NYSE: TM) would jump on his coat tails if Manning-lite scores an underdog victory.

The Patriots are favored by the odds-makers, and their leader is still favored by endorsers. If you prefer the stock market over football, using history would mean you’d prefer the Giants to win for the stock market. Someone will make up a statistic for anything.

Jon C. Ogg
February 3, 2008