Fossil Inc. credited its better-than-expected third-quarter profits to its focus on lifestyle-branded accessories.
But the stronger U.S. dollar prompted the Richardson, Tex.-based accessories firm to reduce its fourth-quarter earnings projection.
For the period ended Oct. 1, net income attributable to Fossil increased 2.1 percent to $69.6 million, or $1.09 a diluted share, compared with income of $68.2 million, or $1, a year earlier. Profits were 6 cents better than Wall Street had predicted with stock buybacks making the gain on a per share basis bigger than the net rise in profitability.
Quarterly sales rose 22.7 percent to $642.9 million from $523.8 million. Wholesale sales increased 15.4 percent in North America and 20.5 percent in both Europe and Asia.
On a conference call with analysts, chairman and chief executive officer Kosta Kartsotis said the brand is “getting more aspirational,” giving it the ability to further penetrate the “emotional and somewhat viral handbag industry.” He also said Fossil is in the process of clarifying its “unique positioning” and point of view.
According to Kartsotis, who recently signed a licensing deal with Karl Lagerfeld to develop watches, said he’s seeing a “fundamental shift” in Fossil’s watch business.
“It’s not really the fashion watch business anymore, it’s not novelty…it’s more lifestyle branded watches,” he said, explaining that consumers are responding to the storytelling aspect of the brand, as well as a higher-priced, more detailed product.
Nonetheless, the firm to reduce its fourth-quarter earnings projection to $1.75 to $1.78 a diluted share, down from the $1.78 to $1.82 projected in August.
The company’s stock slipped 2.5 percent to $94.81 by the end of trading today.