Fossil Jumps on Improved Fundamentals, Strong Guidance

Watch and leather goods maker Fossil Inc. saw its Q3 net income rise nearly 42% to $30.5 million (EPS of $0.43), versus net income of $21.5 million (EPS of $0.31) a year ago. Analysts were looking for EPS of $0.34 on average. Sales rose 19.6% to $358.6 million on a same store sales increase of 5.9%. International sales were especially strong with European sales up 28% excluding currency impact and wholesales sales up 32.3%. Gross profit increased 26.2% to $187 million (52.1% of net sales), while operating income jumped 47.0% to $48.5 million. Looking ahead, the company expects Q4 EPS of $0.67, with net sales rising 13% to 15%. Fossil forecast FY adjusted EPS of $1.79; the Street had been expecting EPS of just $1.58 on that basis. The board announced it would repurchase up to two million of the company's shares. CFO Mike Kovar said, "The strength of our global brand portfolio, the success of our growth strategies and our gross margin initiatives are evident in the strong results we reported today." Shares were up 12.39% in pre-market trading on the news (as of 8:44 AM ET).

Sources: Press release, Reuters, MarketWatch, AP
Commentary: Fossil’s Option Cleanup Contains No “Formula 108″ • Small-Cap Growth: Analyst Coverage Discount? • Cramer on FOSL
Stocks to watch: FOSL. Competitors: COH, GES, MOV. ETFs: PWT

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