Fossil debuts Hybrid HR, a new device and platform that combines smartwatch features with analog looks.

Ahead of Fossil Group’s earnings report on Wednesday, the company launched a new hybrid watch from its house Fossil brand. The new entry is unlike any device it has introduced before.

After teasing the technology in August, the company finally unveiled its Hybrid smartwatch HR — a platform and a device that’s equal parts analogue watch, complete with physical hands, and digital smartwatch with notifications and heart-rate data strewn across the watch face.

It’s effectively a mash-up combining the classic look of hybrids and several of the functions of a full smartwatch.

“We know our customers desire both form and function,” said Steve Evans, executive vice president at Fossil. “They have loved how our hybrid smartwatches look like a watch, but act like a smartwatch, [and] have requested additional ways to stay connected.”

According to the company, the “two big unlocks” requested by customers have been heart-rate tracking and a legible, always-on display, to make notifications easier to see. Hybrid HR offers both, as well as longer battery life — in this case, of more than two weeks, compared to the typical two days offered by touchscreen smartwatches.

Fossil Hybrid HR

Hybrid HR features analogue hands and a low power-efficient display.  Jim Wright

The power-efficient screen displays glanceable updates that show information such as heart rate, calls and text previews, workout tracking and current weather, among other things. Customers can also control their music, ring their phones if misplaced and track steps and sleep. Other features include water resistance, rapid charging and interchangeable straps in leather, silicone and stainless steel.

The watch retails for $195 (£189) and launches for online purchase on Wednesday and in select Fossil retail stores globally. It will be available in India beginning Nov. 18.

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The new watches have interchangeable straps available in leather, silicone and stainless steel.  Jim Wright

To be clear, Fossil’s Hybrid HR software is new and is not to be confused with the company’s other Wear OS devices, which is developed by Google. The tech giant bought some of the watch maker’s technology and talent in January, and since then, the two companies have been working together on some sort of undisclosed effort.

When asked if Hybrid HR platform was the product of this work, Fossil neglected to connect Hybrid HR with any particular partner, telling WWD that the details on the Google deal remain confidential.

It all suggests that Fossil’s not done tinkering with the formula and that — apart from its crop of Wear OS smartwatches, previous hybrid watch development and new Hybrid HR entry — there could be yet another Fossil-related platform in the pipeline.

Either way, if Fossil fans can expect one thing, it should be that the company will keep pushing to blend style and technology.

“We pride ourselves on being innovators in the fashion watch space,” Evans continued, “and we believe that the hybrid smartwatch is the future of fashion watches.”

However, innovation is one thing; financials are another. The big question now is whether the company can stem the tide of losses evident in its latest earnings report, and what role Hybrid HR might play in that.

On Wednesday, Fossil Group reported net loss of $25.9 million in the fiscal third quarter. The loss clocked in at 51 cents per share, with adjusted losses for asset impairment and restructuring costs coming in at 15 cents per share.

Naturally, chairman and chief executive Kosta Kartsotis tried to spin at least part of the results in a positive direction: “For the third quarter, sales performance was in line with our guidance range with sales improving sequentially from the second quarter across most geographies and all categories,” he said in a statement. “The quarter also saw progress on key initiatives, including double-digit growth in Asia, strong global e-commerce expansion driven by double-digit online watch category growth, and robust performance from our Generation 5 connected watches.”

But Kartsotis acknowledged the quarterly downturn, which brought in worldwide net sales of $539.5 million — a decrease of $69.3 million, or 11 percent, compared to the third quarter of 2018.

The company chalked the contraction up to “negative currency effects, store closures and business exits, lower inventory liquidation levels and a reduction of sales in the lower margin off-price channel.” Other considerations hinge on factors outside of Fossil’s control, like market movements in leather and jewelry.

The numbers prompted the ceo to admit that sales were “not up to our goals, and we are highly focused on bringing about a positive change in our top-line trajectory.” He vowed to continue to improve profitability by bringing down costs and investing “in high growth areas.” Over the next several years, Fossil Group plans to continue pushing on the technology front, as well as traditional watches and jewelry, to adapt to changes in consumer behaviors.

Shares of Fossil dropped 25.8 percent to $9.32 in after-hours trading Wednesday.

It’s not exactly an ideal backdrop for a product debut, and the results may place a heightened focus on the next quarter’s performance.

That all puts a lot of pressure on Hybrid HR to become an out-of-the box success. Fossil needs to show traction for the new watch and the platform that powers it, especially during the high-value holiday season.

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