Fossil Group Inc. (NASDAQ: FOSL)
On Tuesday February 13th, 2018 after the market closed for trading, Fossil Group, the company famous for their name brand watches years ago posted their fourth quarter earnings report.
Within seconds, shares skyrocketed higher. At one point they went from closing at $9.04 to reaching $18.06 for more than 100% increase on the numbers report. After some consolidation and profit-taking, shares closed at 8 p.m. in the after-hours session at $16.30 which was up 80.31% or up $7.26 per share.
Fueling this move is likely the high short interest in the company's shares. Short interest is the amount of shares that are sold first by being borrowed with the hope that the shares will be able to be bought back lower at a later date.
The current short interest is 42%. That is enormous. Many eyes will be watching this stop when it opens for trading on Wednesday morning. A short interest of 40% can create a steady stream of short-covering and new buying by investors which can magnify the move even more than has already occurred.
After certain adjustments were taking into consideration, the company reporting earning $0.64 cents per share. Analysts have been expecting $0.40 per share.
The boost in earnings is being attributed to what the company says were increases in wearable technology. The company sells products under various well-known names. Some of them are the following; DKNY, Michael Kors, Chaps, Burberry.
Kosta Kartsotis, Fossil Group, Chairman and CEO had this to say on earnings: “In fiscal 2017, Fossil Group, embarked on a set of strategic initiatives aimed at accelerating the evolution of the business to position the Company for long term profitable growth. While sales and earnings were challenged as expected, we generated progress toward our objectives that include: driving growth in wearables across our portfolio of powerful brands, leveraging our scale to lower supply chain costs, increasing our digital capabilities, and continuing the transformation of our business through New World Fossil. To this end, fiscal 2017 saw us nearly double wearables to over $300 million, representing 14% of total watch sales. This success drove an increase in Fossil watch sales for the second half of the year with positive comps in our direct business during the important holiday quarter . . ."
The above price chart shows the after-hours session on the right and the regular session on the left. Note how quiet and tranquil it traded during the regular session. Then note how violent the shares rose once the earnings numbers were announced.
The above price chart shows fossil going back to July of last year on the daily time frame. The green oval area indicates where shares will likely open for trading on Wednesday morning. Note how it is well above that red dotted resistance line.
Fossil Group, Inc., together with its subsidiaries, designs, develops, markets, and distributes consumer fashion accessories. The company's principal products include a line of men's and women's fashion watches and jewelry, handbags, small leather goods, belts, sunglasses, and soft accessories.
It offers its products under its proprietary brands, such as FOSSIL, MICHELE, MISFIT, RELIC, SKAGEN, and ZODIAC, as well as under the licensed brands, including ADIDAS, ARMANI EXCHANGE, BURBERRY, CHAPS, DIESEL, DKNY, EMPORIO ARMANI, KARL LAGERFELD, KATE SPADE NEW YORK, MARC JACOBS, MICHAEL KORS, and TORY BURCH.
The company sells its products through department stores, specialty retail stores, specialty watch and jewelry stores, mass market stores, e-commerce sites, licensed and franchised FOSSIL retail stores, and retail concessions, as well as sells its products on airlines and cruise ships.
As of December 31, 2016, it owned and operated 94 retail stores and 129 outlet stores located in the United States, as well as 230 retail stores and 132 outlet stores internationally. The company was formerly known as Fossil, Inc. and changed its name to Fossil Group, Inc. in May 2013. Fossil Group, Inc. was founded in 1984 and is headquartered in Richardson, Texas.-YahooFinance
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.