CEO Kosta Kartsotis said the company expects business to grow across all of its geographic regions and continue gaining global market share. Sales of Fossil’s core watch business increased 42 percent in the fourth quarter and 40 percent for the year.
Fossil’s products, which also include jewelry, sunglasses and handbags, are sold in more than 100 countries through 23 foreign sales subsidiaries and 60 independent distributors. It also operates 360 stores.
Fossil sees some of its biggest growth potential in Asia, which now represents less than 15 percent of its sales, Kartsotis said.
Last year, sales of Fossil-branded products increased 24 percent. Kartsotis called 2011 a “remarkable year,” noting that sales in some of its other brands, Michele, Michael Kors , Marc by Marc Jacobs and Armani Exchange, doubled.
Fossil plans to consolidate its corporate offices from 2280 N. Greenville Ave. and 2325 North Central Expressway to get staffers back under one roof and allow for future expansion. The company is close to signing a lease for the former Blue Cross Blue Shield of Texas campus at 901 N. Central Expressway, which is also in Richardson. Its current headquarters on Greenville and a warehouse behind it will be sold.
While the company’s stock price has been on a tear in the last month and more than doubled in the last year, posting regular 52-week highs, shares fell $4.74, or 5.7 percent, to close at $78.77 on Tuesday.
One analyst said the market reaction was “overdone” after Fossil offered guidance for the first quarter and 2011 that only matched analyst expectations.
Brean Murray, Carret & Co. analyst Eric Beder said Fossil is one of the “best-situated growth stories” and management has “remained conservative and long-term focused.” Beder reiterated his buy rating on the stock.
In 2011, Fossil forecast a sales increase in the range of 19 to 21 percent, with higher sales increases in the first half of the year. It expects earnings per share in a range of $4.22 to $4.32, which includes a 10-cent favorable currency impact related to an expected weaker U.S. dollar.
This year, the company plans to open as many as 85 new stores worldwide and e-commerce sites in more countries.
Benchmark Co. analyst Ron Bookbinder lowered his rating on the stock Monday to a hold from a buy but at the same time raised his price target to $87 a share from $75. Bookbinder said he likes the company’s balance sheet. Fossil ended the year with about $402 million in cash and total debt of $9.8 million. It’s also spent $200 million buying back its stock.
Fourth-quarter profit increased 38 percent to $96.7 million, or $1.46 a share, in the period ended Jan. 1, compared with a profit of $70 million, or $1.03 a share, in the prior year.
Sales increased 33 percent to $701.1 million compared with $527.8 million. Analysts had expected earnings of $1.33 a share on sales of $649.8 million.
Full-year profit increased 83 percent to $255.2 million from $139.2 million in 2009. Earnings per share increased to $3.77 vs. $2.07 a share in the prior year. Sales increased 31 percent to $2.03 billion in 2010 from $1.55 billion the prior year. Analysts had forecast a profit of $3.66 a share on sales of $1.98 billion.
by Maria Halkias, Dallas Morning News