Fossil Group(US:FOSL)2021-11-11 00:25Financial Data and Key Metrics Changes - Q3 net sales increased by 13% to $492 million, or 11% in constant currency [6][24] - Gross margins remained strong at 53%, with adjusted operating margins at 11% [6][23] - Adjusted EBITDA for Q3 was $63 million, with an adjusted EBITDA margin of 12.7% [34] - Diluted net income per share was $0.60, including $0.08 per share in restructuring charges [34] Business Line Data and Key Metrics Changes - Digital sales grew by 28% year-over-year and doubled compared to Q3 2019, representing approximately 40% of overall sales [8][27] - Traditional watch sales increased in the high teens, while connected watch sales contracted due to liquidation sales from prior years [29] - Jewelry category net sales grew by 79% in Q3, accounting for approximately 11% of total sales [29] Market Data and Key Metrics Changes - In the Americas, net sales were up 10% in constant currency, driven by strong consumer demand [24] - EMEA region saw a 21% increase in net sales in constant currency, despite pandemic-related closures [12][25] - Asia's net sales increased by 5% in constant currency, with a notable 95% increase in India, while Mainland China saw a 1% decline [14][26] Company Strategy and Development Direction - The company is focused on a digital-first strategy, enhancing consumer engagement through digital channels and product innovation [7][9] - Plans to leverage the Salesforce platform for all global websites to improve consumer engagement and personalization [9] - The company aims to achieve at least 50% of sales through digital channels over time [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong topline growth, raising the full-year sales growth outlook to 17% to 19% [21][36] - The company anticipates continued operational improvements and efficiencies to drive profitability [22][51] - Management remains optimistic about long-term growth opportunities in high-growth markets like China and India [15] Other Important Information - The company completed a $150 million senior notes offering to strengthen its financial condition [7][49] - Inventory levels were reported at $398 million, up 11% year-over-year, positioning the company well for the holiday season [35] Q&A Session Summary Question: Outlook on traditional watches versus connected watches - Management noted that traditional watches are healthy and growing, with strong performance across regions, while connected watches are being realigned for better performance [38][40] Question: Digital versus brick-and-mortar sales strategy - The company aims for a sustainable growth story in traditional watches, with digital sales currently at 40% and expected to increase [41][42] Question: Impact of supply chain disruptions - Management acknowledged supply chain challenges but noted that the impact is manageable due to the small size of products and reliance on air shipping [45][46] Question: Details on the bond offering - The $150 million bond offering was aimed at lowering capital costs and increasing financial flexibility [49] Question: Insights on increased guidance and long-term growth - The company expects continued net sales growth and improved operating margins, with a focus on efficiency and cost structure [50][51]