Fossil Group, Inc. (FOSL) swung to a net loss for the quarter ended Apr. 01, 2017. The company has made a net loss of $48.20 million, or $ 1 a share in the quarter, against a net profit of $5.80 million, or $0.12 a share in the last year period. On an adjusted basis, loss per share was at $0.35 for the quarter compared with a profit of $0.11a share in the same period last year.
Revenue during the quarter dropped 11.82 percent to $581.80 million from $659.80 million in the previous year period. Gross margin for the quarter contracted 303 basis points over the previous year period to 49.76 percent. Operating margin for the quarter stood at negative 7.79 percent as compared to a positive 2.18 percent for the previous year period.
Operating loss for the quarter was $45.30 million, compared with an operating income of $14.40 million in the previous year period.
Kosta Kartsotis, Chief Executive Officer, commented on the results. "Our results for the first quarter, while largely in line with our expectations, continue to reflect a challenging retail environment and a watch category undergoing significant change. The strategies we are pursuing in the midst of these headwinds enable us to better compete in the environment and capitalize on the growing importance of technology to the watch category."
For financial year 2017, Fossil Group forecasts revenue to decline in the range of 6 percent to 1.50 percent. The company forecasts operating income to grow in the range of 0.50 percent to 2.20 percent and forecasts adjusted operating income to grow in the range of 3 percent to 4.50 percent. It expects diluted loss per share to be in the range of negative $0.40 to $0.30 and company expects diluted earnings per share to be in the range of $0.80 to $1.50 on adjusted basis.
For the second-quarter, Fossil Group forecasts revenue to decline in the range of 11.50 percent to 8 percent. The company forecasts operating income to decline in the range of 5.50 percent to 3.50 percent and forecasts adjusted operating income to decline in the range of 3 percent to 1 percent. It expects diluted loss per share to be in the range of $1 to $0.83. On an adjusted basis, the company expects diluted loss per share to be in the range of $0.40 to $0.23.
Debt comes down significantly
Fossil Group has recorded a decline in total debt over the last one year. It stood at $616.10 million as on Apr. 01, 2017, down 25.16 percent or $207.10 million from $823.20 million on Apr. 02, 2016. Total debt was 29.31 percent of total assets as on Apr. 01, 2017, compared with 44.06 percent on Apr. 02, 2016. Debt to equity ratio was at 0.63 as on Apr. 01, 2017, down from 0.87 as on Apr. 02, 2016.
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