Despite a 42.7 percent decline in first-quarter profits, Fossil Inc. handily beat analysts’ expectations and boosted full-year guidance, sending its stock up nearly 10 percent Tuesday.

Tight inventory and cost management helped offset weak consumer demand and a stronger dollar that dragged down profit, the company said, giving it earnings of $17.3 million, or 26 cents a diluted share, for the three months ended April 4. This compares with net income of $30.2 million, or 43 cents a share, in the year-ago period. Sales fell 9.3 percent to more than $323 million from $356.2 million last year. Analysts surveyed by Yahoo Finance had expected earnings per share of 16 cents on revenue of $324.3 million.



The company said total U.S. wholesale sales decreased 4 percent to $100.7 million, as its European wholesale sales dropped 20.5 percent to $103.4 million. Other international sales, which consist of export sales to distributors and sales from Canada, Mexico and Asia-Pacific wholesale operations, fell 20.2 percent to $52.4 million.

“We remain confident that our diversified global operating model, along with the continued focus on inventory and expense discipline, will enable us to achieve our goal this year and position us for increased profitability and opportunity in the future,” chief executive officer Kosta Kartsotis said on the company’s earnings call.
The ceo said Fossil’s domestic wholesale customers are “sensing that the bottom has occurred and some stability is returning to their businesses,” adding “our distributor markets are beginning to show some signs of relief as well.”

The Richardson, Tex.-based watch, accessories and apparel marketer raised its 2009 outlook to a profit of between $1.50 and $1.70 a share, up from a previous estimate of $1.40 to $1.60 a share. Analysts expected EPS of $1.45.

For the second quarter, Fossil expects EPS to be between 18 and 20 cents, with a negative impact of 13 cents due to currency comparisons. Analysts anticipated 16 cents a share on sales of $323.3 million.

Shares closed at $21.55, up $1.81, or 9.2 percent, in Nasdaq trading Tuesday. They moved as high as $23.74 earlier in the day.