Fossil Group Inc. (NASDAQ:FSOL) soared after the watchmaker released its fourth-quarter earnings report on Tuesday after market. The result beat analysts’ estimates and surprised investors, pointing to a 2016 turnaround.
The company reported net revenue of $992.5 million in the quarter ended in Jan.2, 6.8 percent lower than previous quarter, but still handily beat analysts’ estimate of $928.2 million. Similarly, net income dropped by more than half to $70.1 million, but the earnings per share of $1.46 were $0.16 better than the consensus forecast among investors.
From geographical perspective, the revenue in Europe rose 3% on a constant-currency. Sales in the Americas were down 5% in dollar terms. Asia took the biggest hit, reporting 15% lower revenue offset by just 6 percentage points of currency pressure.
The result will be better if we ignore the effect of strong dollar. Without dollar's strength, sales would drop only 2 percent, and earnings would have been $0.28 per share higher.
The Richardson, Texas-based Company also provided a better guidance. The company expected that sales for the full 2016 year would be in a range of a drop of 3.5% and a rise of 1 percent, better than analysts’ estimate of a 4 percent decline.
Chief Executive Officer Kosta Kartsotis said the addition of the Kate Spade New York and Chaps brands have helped Fossil’s licensed business, while investments in its namesake and Skagen lines also boosted results. Investors are expecting a turnaround for the entire luxury market in 2016.
Fossil shares jumped as much as 27.80 percent to $43.04 at 12:06 p.m. in New York.