Fossil, smartwatch, wearables

Watch giant Fossil Inc. — which logged declining third-quarter sales and profits — likes what it sees in the wearables market and is refocusing its business around the techie accessories and other growth areas.

The company expects to log $150 million in restructuring charges, primarily in 2017 and 2018, as it undertakes a far-reaching effort to streamline the way it responds to customers’ needs and adjusts its store fleet.

Chief executive officer Kosta Kartsotis described it as “a multiyear plan to reinvent Fossil Group.”

“While it is early in the process, we envision a comprehensive plan that will evolve our model and the way we work, the way we develop product and the way we bring our products to market,” he said.

Investors maintained their skepticism and sent shares of the company down 2.9 percent to $24 in after-hours trading on Wall Street.

Kartsotis said the company entered the holiday season “well positioned with our new wearables in the marketplace.”

Fossil bought wearable tech firm Misfit for $260 million last year and has since been marching headlong into the category.

The firm launched wearables across eight brands including Chaps, Diesel, Emporio Armani, Fossil, Kate Spade New York, Michael Kors, Misfit and Skagen over the last couple of months. The onslaught added more than 100 stockkeeping units in the category, including display smartwatches, hybrids and activity trackers in 40 countries and 20 different languages.

The ceo called the push “a huge milestone for our company; we know this is truly just the beginning of our wearables journey…. The growing interest in connected accessories and our early success in the space reinforce our need to deploy our resources behind this category and our most compelling growth opportunities.”

The smartwatch category is generally seen as promising, but it is dominated by the Apple Watch and is in the midst of something of a slump as consumers wait for brands to refresh their offerings. International Data Corp. said last month that the global smartwatch turnover fell to an estimated 2.7 million units shipped in the third quarter, a 52 percent drop.

But growth is expected to pick up again as the market matures.

And Fossil is looking to get its piece of the pie to sweeten its financials. The company’s third-quarter net income fell to $17.4 million, or 36 cents a share, from $57.5 million, or $1.19, a year ago. Sales for the three months ended Oct. 1 declined 4.3 percent to $738 million, from $771.3 million.

In constant currencies, the company’s sales in the Americas fell 7 percent, while European sales declined 4 percent and Asian sales gained 8 percent. Its watch sales fell 2 percent overall.

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