Shares of Fossil Inc. advanced 8.5 percent to $41.06 in trading Tuesday as the accessories maker saw improved conditions for watch sales translate into first-quarter earnings that more than doubled.
In the three months ended April 3, the Richardson, Tex.-based vendor’s profits grew to $35.9 million, or 53 cents a diluted share, from $17.3 million, or 26 cents a share, a year ago. Analysts polled by Yahoo Finance had expected earnings per share of 32 cents, on average. Sales in the quarter climbed 21.7 percent to $393.2 million from $323 million in 2009. The company saw improvement at its wholesale channel and direct-to-consumer business. Same-store sales at its retail stores increased 19.4 percent on a constant-dollar basis in the period.
Overall, Fossil’s watch sales grew 50.1 percent in the first quarter. The company said Michael Kors, Michele and the namesake brand were top performers in the category.
“We generally saw a strengthening of our business on a global basis across each of our product categories,” said chief executive officer Kosta Kartsotis, who added the company began to see a favorable cycle for watch sales in the U.S. develop in the fourth quarter. “Improving market conditions and sell-through at retail have also encouraged our wholesale customers to begin increasing their retail stocking levels, reversing the trend we experienced last year.”
The firm anticipates EPS of between 32 cents and 34 cents in the second quarter, ahead of the consensus estimate of 29 cents analysts had pegged before the announcement. Fossil expects sales in the current quarter to rise between 20 and 22 percent, putting them in a range of $379 million to $385.4 million.