Fossil Group(US:FOSL)2023-03-09 21:37Financial Performance - Net sales for fiscal year 2022 were $1,682,439, a decrease of 10.0% from $1,870,036 in 2021[336]. - Gross profit for 2022 was $830,679, down from $966,374 in 2021, reflecting a gross margin decline[336]. - Operating loss for 2022 was $(1,473), compared to an operating income of $92,637 in 2021[336]. - Net loss attributable to Fossil Group, Inc. for 2022 was $(44,157), a significant decline from a net income of $25,434 in 2021[336]. - The company reported a total comprehensive loss of $(52,569) for 2022, compared to a comprehensive income of $18,249 in 2021[336]. - Basic earnings per share for 2022 were $(0.85), down from $0.49 in 2021[336]. - Fossil Group reported a net loss of $43.526 million for fiscal year 2022, compared to a net income of $26.624 million in 2021 and a net loss of $95.940 million in 2020[342]. - Total revenue for fiscal year 2022 was $1,682,439,000, a decrease from $1,870,036,000 in fiscal year 2021, representing a decline of approximately 10.0%[382]. - Consolidated net sales for fiscal year 2022 were $1,682,439, a decrease of 10.0% from $1,870,036 in fiscal year 2021[473]. Assets and Liabilities - Total current assets decreased to $945,300 in 2022 from $1,022,755 in 2021, a reduction of approximately 7.6%[333]. - Total assets decreased to $1,238,128 in 2022 from $1,368,719 in 2021, a decline of about 9.5%[333]. - Total current liabilities decreased to $425,920 in 2022 from $535,647 in 2021, a reduction of approximately 20.5%[333]. - The company had a total stockholders' equity of $403.009 million at the end of 2022, down from $440.032 million at the end of 2021[341]. - Total debt borrowings increased to $386.067 million in 2022, up from $254.717 million in 2021[342]. - The Company had total debt outstanding as of December 31, 2022, was $216.4 million, with principal amounts repayable of $223.3 million[420]. - The Company had deferred income tax assets totaling $197.1 million and deferred income tax liabilities totaling $37.1 million as of December 31, 2022[422]. Cash Flow and Expenses - The company experienced a net cash used in operating activities of $110.856 million in 2022, compared to a net cash provided of $50.029 million in 2021[342]. - Cash paid for interest in fiscal year 2022 was $17.5 million, an increase from $16.1 million in 2021 and a decrease from $21.2 million in 2020[460]. - The company reported cash paid for income taxes, net of refunds, of $5.8 million in 2022, compared to a refund of $16.7 million in 2021[460]. - The company incurred stock-based compensation expenses of $8.060 million in 2022, compared to $9.497 million in 2021[342]. - Operating lease costs for fiscal year 2022 were $76,528,000, down 12% from $86,994,000 in fiscal year 2021[435]. Inventory and Sales - Inventory at the end of fiscal year 2022 totaled $376,028,000, an increase from $346,850,000 in fiscal year 2021[385]. - The company’s finished goods inventory increased to $355,030,000 in fiscal year 2022 from $323,180,000 in fiscal year 2021[385]. - Fossil Group's consolidated net sales from licensed products accounted for 46.5% of total sales in 2022, down from 50.5% in 2021[348]. - Revenue from traditional watches in the Americas was $518,995,000, while smartwatches generated $65,649,000, contributing to a total of $584,644,000 for watches in the Americas[382]. - Traditional watches accounted for 68.9% of total net sales in fiscal year 2022, generating $1,158,889, while smartwatches contributed 9.0% with $151,602[473]. Foreign Currency and Interest Rate Risks - The company reported a significant exposure to foreign currency exchange rate risks, particularly with the euro and Chinese yuan, which could materially impact supply channels and manufacturing costs[313]. - A 10% unfavorable change in the U.S. dollar against foreign currencies would decrease net pre-tax income by approximately $13.7 million and reduce consolidated stockholders' equity by about $37.3 million[316][317]. - As of December 31, 2022, a 100 basis point increase in interest rates would increase annual interest expense by approximately $0.7 million[318]. - The company employs forward contracts to manage foreign currency risks, with no significant changes anticipated in its exposure management strategies[314]. - The Company had forward contracts designated as cash flow hedges with a total amount of $1,070.5 million in Japanese yen and $337.6 million in Mexican pesos as of December 31, 2022[393]. Operational Risks and Strategies - The company has no long-term contracts with customers, facing intense competition in both specialty retail and e-commerce sectors[23]. - The company is subject to risks from supply chain disruptions due to changes in U.S. trade policy with China and the ongoing impacts of the COVID-19 pandemic[19]. - The company’s ability to grow sales is dependent on its business strategy and consumer acceptance of new products and technologies[19]. - The company has a significant reliance on its license agreements for globally recognized fashion brand names, which could impact its operations if lost[19]. - The TAG Plan is expected to generate estimated annualized benefits of at least $100 million by the end of 2024, with an approximate 8% reduction in the global workforce in 2023[479]. Segment Performance - The company evaluates its reportable segments based on net sales and operating income, with segments including Americas, Europe, and Asia[468]. - Operating income for the Americas segment in fiscal year 2022 was $116,401, down from $157,012 in fiscal year 2021, representing a decline of 26.0%[470]. - Net sales from the United States in fiscal year 2022 were $619,981, a decrease from $682,900 in fiscal year 2021, reflecting a decline of 9.2%[474]. - Net sales from Germany were approximately $194.1 million in fiscal year 2022, accounting for more than 10% of consolidated net sales[477]. Tax and Deferred Tax Assets - The Company recorded $58.6 million of deferred tax assets for net operating losses of foreign subsidiaries as of December 31, 2022[423]. - The total valuation allowance against deferred tax assets was $143.3 million at December 31, 2022, with $75.5 million attributable to U.S. operations and $67.8 million to foreign operations[427]. - The Company had unrecognized tax benefits of $24.0 million as of December 31, 2022, which could favorably impact the effective tax rate if recognized[429]. - The balance of unrecognized tax benefits decreased from $29,833,000 in 2022 to $23,998,000 in 2022, reflecting a reduction of approximately 19.4%[431].