Fossil Group Inc. Reports Decline in First-Quarter Net Sales
Fossil Group Inc., a Texas-based company known for its fashion watches and accessories, announced a 22 percent decline in net sales for the first quarter of 2024, with sales totaling $255 million. This decrease comes after the departure of longtime CEO Kosta N. Kartsotis and the company’s decision to exit the smartwatch business due to a patent infringement lawsuit.
Jeffrey N. Boyer, the chief operating officer, has been named interim CEO following Kartsotis’ departure after 20 years of leadership. Closing stores and discontinuing the smartwatch channel has led to a revenue loss of approximately $100 million, impacting the company’s financial performance. In 2023, Fossil experienced a net loss of $157 million.
In response to these challenges, Fossil is taking strategic measures to stabilize the business, including closing underperforming stores, reducing inventories, and conducting a strategic review of its operations with the help of Evercore as a financial adviser. Despite a net loss of $24.3 million in the first quarter, Fossil has shown improvement compared to the previous year.
The company’s stock closed at 97 cents per share, and executives anticipate annual net sales of $1.2 billion for the year, down from $1.4 billion in the previous year. Fossil aims to generate positive free cash flow in 2024, with a $57 million tax refund expected to contribute to this goal in the second quarter.
In an effort to drive growth, Fossil launched an ad campaign called “Made for This” last year to strengthen its connection with customers. With multiple brands under its portfolio, including owned labels like Fossil and licensed brands such as Michael Kors and Tory Burch, Fossil continues to adapt to market challenges and consumer preferences.