By  on August 26, 2005

NEW YORK — Guess Inc. has decided it is time to make a move with its watch license.Sources close to the deal said Guess has parted ways with licensee Timex Corp. and entered into a long-term agreement for women's and men's timepieces with Fossil Inc.The move is expected to be formally announced today.Guess originally signed a license for its watches with Callanen International, a Norwalk, Conn.-based watch manufacturer, some 21 years ago. When Timex purchased Callanen in 1991, Guess moved under its umbrella.Today, Guess watches rank among the top-performing brands for Timex, selling between 4 million and 5 million pieces annually and pulling in an estimated $160 million at wholesale a year, according to industry sources. That volume is expected to increase under Fossil, which will set up its own division to build the business, sources said.The agreement reportedly includes a target of at least $1 billion in worldwide wholesale volume over the next decade.This move could boost Fossil's sluggish business. Sales for the second quarter ended July 2 for the Richardson, Tex.-based firm rose 9.8 percent to $226.2 million from $206.1 million, which was short of analysts' expectations of $232.4 million in sales. The company posted a 38.8 percent drop in income to $9.7 million, or 13 cents a diluted share, from $15.8 million, or 21 cents, in the same year-ago quarter.In the last few years, Fossil has signed licenses with Marc Jacobs and Michael Kors to produce watches for those brands. It also has licenses for watches with Burberry, Diesel, DKNY and Emporio Armani, and owns the Fossil, Relic, Michele, MW Michele and Zodiac watch brands.Middlebury, Conn.-based Timex, meanwhile, appears to be in the process of updating its image and becoming more fashion-forward. In November, the $600 million-revenue firm, which also holds the license for Nautica watches and makes sport watches under the Reef Gear and Ironman brands, signed a license with Versace to sell its Swiss watches under the subsidiary Versace SA, now renamed Vertime SA.As reported, Timex projects sales of Vertime to reach $17.9 million this year and expects to double its volume in 2006.In addition to watches, Guess offers jeanswear, sportswear, footwear and other accessories, some under license. The Los Angeles-based company reported that revenues surged 15.7 percent to $178.2 million from $154.1 million in the second quarter, driven by a strong product performance in North America and Europe.

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