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Sep 30, 2023
Fossil Q3 2023 Earnings Report
Reported a decrease in net sales and operating loss compared to the previous year, while implementing the TAG Plan to improve profitability.
Key Takeaways
Fossil Group reported a 21% decrease in worldwide net sales, with a significant operating loss compared to the previous year's operating income. The company is focused on executing its TAG Plan to reduce costs and improve profitability, expecting $100 million in annualized cost savings for 2023.
Worldwide net sales decreased by 21% to $344 million.
Operating loss was $46 million, a decline from the previous year's operating income of $22 million.
Direct to consumer channels saw a 12% decrease in net sales in constant currency, with a 6% decrease in comparable retail sales.
Inventory decreased by 28% to $327 million, and the company's total liquidity was $140 million at quarter end.
Revenue by Geographic Location
Forward Guidance
Fossil Group updated its full year 2023 guidance, expecting a more significant decline in worldwide net sales and a lower adjusted operating margin than previously anticipated.
Positive Outlook
- Prevailing currency rates are projected to positively impact sales by 70 basis points.
- Company expects full year 2023 adjusted operating margin in the range of -6% to -8%
- The company is on track to capture expected annualized cost savings of approximately $100 million
Challenges Ahead
- Worldwide net sales declines of approximately 14% to 17% versus prior guidance of negative 5% to negative 10%.
- The expected year-over-year decline reflects an estimated fourth quarter net sales decline of 8% to 19%.
- The company expects an estimated fourth quarter adjusted operating margin of flat to -5%.
- Ongoing declines in the wholesale channel in the Americas and Europe
- A more gradual than expected recovery of sales trends in China and current trends in our retail stores.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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