Fossil Group(US:FOSL)2025-05-14 22:00Financial Data and Key Metrics Changes - First quarter net sales totaled $239 million, down 6% in constant currency, with core sales declining 8% year-over-year, showing a sequential improvement from a 12% decline in Q4 [28][29] - Gross margin expanded to 61.1%, an increase of 880 basis points compared to the previous year, primarily due to higher product margins and reduced promotional activity [29] - SG&A expenses decreased by $17 million to $136 million, representing an 11% reduction year-over-year [30] Business Line Data and Key Metrics Changes - The Fossil traditional watch business posted a 7% growth globally, excluding the impact of the additional retail week and store closures, improving from low single-digit growth in Q4 [29] - The Kors brand returned to growth with double-digit gains in Q1, while the Armani Exchange also saw double-digit growth [15] Market Data and Key Metrics Changes - The wholesale business for the core brand grew in double digits year-over-year in the U.S., with continued momentum in scalable markets like India [16] - Inventory levels totaled $182 million, down 19% compared to a year ago, indicating effective inventory management [32] Company Strategy and Development Direction - The turnaround plan focuses on three pillars: refocusing on core brands, rightsizing the cost structure, and strengthening the balance sheet [8][21] - The company is investing in brand marketing and enhancing storytelling to drive engagement and demand, including collaborations with popular brands and influencers [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround plan, citing strong execution and positive results from recent initiatives [6][26] - The company reiterated its full-year guidance, expecting worldwide net sales to decline in the mid to high teens, while also anticipating continued narrowing of year-over-year sales declines [37] Other Important Information - The company ended the quarter with total liquidity of $100 million, including $78 million in cash and cash equivalents [32] - A sale-leaseback agreement for the European distribution center is expected to close in Q2, bringing in excess of $20 million to the balance sheet [33] Q&A Session Summary Question: What is the outlook for the company's sales and profitability? - The company expects worldwide net sales to decline in the mid to high teens for 2025, with a focus on narrowing year-over-year sales declines in subsequent quarters [37] Question: How is the company addressing the global tariff situation? - The company is confident in mitigating tariff impacts through a diverse revenue stream, established vendor relationships, and strategic pricing adjustments [34][35]