FOSL's Q4 Earnings Jump Y/Y on Cost Cuts, Stock Rises 20%

Core Viewpoint - Fossil Group, Inc. reported a mixed performance in its fourth-quarter earnings, with a narrower net loss compared to the previous year, but significant declines in net sales driven by weak consumer demand and strategic exits from certain product categories [2][3][15]. Financial Performance - The company incurred a fourth-quarter net loss of $0.14 per share, an improvement from a loss of$0.54 per share in the prior year [2]. - Net sales totaled $342.3 million, an 18.8$421.3 million in the prior-year period [3]. - For the full year 2024, net sales were $1.1 billion, down 18.9$1.4 billion in 2023 [15]. Gross Margin and Operating Income - Despite the sales decline, gross margin expanded by 630 basis points year over year to 53.9% [4]. - The company reported an operating loss of $16.3 million, improved from a$24 million loss in the prior-year quarter [5]. Regional and Segment Performance - Sales declined by 21% in Europe, 18% in the Americas, and 13% in Asia on a constant currency basis [6]. - Direct-to-consumer sales fell 27%, driven by a 20% drop in comparable retail sales [6]. Product Category Performance - Traditional watch sales declined 10% in constant currency, while leather goods and jewelry sales dropped 37% and 19%, respectively [7]. Cost Management and Efficiency - Operating expenses decreased 10.5% year over year to 200.9 million, with SG&A expenses falling 17% to 172.1 million [8]. - The company aims to achieve 100 million in SG&A savings through various restructuring initiatives [17]. Turnaround Strategy - CEO Franco Fogliato outlined a three-pronged turnaround strategy focusing on core business refocusing, cost reduction, and balance sheet strengthening [10]. - The plan includes closing approximately 50 retail stores in 2025 and transitioning select international markets to a distributor model [11]. Leadership Changes - Fossil announced the hiring of Randy Greben as CFO, effective March 17, 2025, as part of its efforts to return to profitable growth [12]. Future Outlook - The company provided a cautious outlook for fiscal 2025, expecting net sales to decline in the mid-to-high teens and anticipating a 45 million revenue impact from store closures [16].