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
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