Stocks continued their rally on Wednesday as both the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) indexes finished in record territory yet again, with gains of roughly 0.5%.

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Gains in financial stocks helped push the popular Financial Select Sector SPDR ETF (NYSEMKT:XLF) up by 0.78%. On the other hand, gold prices ticked down to keep Direxion Daily Gold Miners Bull 3X ETF (NYSEMKT:NUGT) in negative territory.

Outside the stock exchange in New York.

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Groupon (NASDAQ:GRPN) and Fossil Group (NASDAQ:FOSL) were two of the biggest individual movers thanks to their respective fourth-quarter earnings reports.

Fossil forecasts a rough year ahead

Fossil shares slumped by 15% to an eight-year low after the company announced disappointing holiday-quarter results. The watchmaker, which has struggled to adjust to rapidly shifting consumer preferences, posted a 3% sales decline. That was worse than executives had predicted back in November when they forecast a slight revenue uptick. Management said losses in its traditional watch brands were only partially offset by growth in connected watches.

Fossil also had to cut prices to keep its products moving, and the increased promotional activity sent gross profit margin down by 2 full percentage points to 51%. On the bright side, cost cuts helped deliver a 7% operating margin, or right in line with the company's target.


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Comments from the executive team didn't address the revenue shortfall, but instead highlighted small but encouraging growth in the wearables products. "The fourth quarter was pivotal for Fossil," CEO Kosta Kartsotis said in a press release, "with our wearable launches demonstrating they could be the catalyst to drive growth in the watch category."

Kartsotis and his team aren't expecting those gains to deliver solid operating results in the coming year, though. They forecast sales declines of as much as 6.5% in 2017 as operating margin dives to almost zero from 4% last year and 9% in 2015.

Groupon sees a rebound on the way

Groupon jumped 23% after the daily deals specialist announced improved operating results while issuing an aggressive outlook for the new fiscal year. Billings growth in the American market accelerated to an 11% pace year over year, and the company added 5.2 million active U.S. customers for fiscal 2016, marking its best outing in four years. The recent LivingSocial acquisition helped, but the core Groupon business contributed most of the gains. "[O]ur concentrated focus on key strategy initiatives provided a strong foundation for Groupon," CEO Rich Williams said in a press release. Gross profit was flat as solid gains in the U.S division offset big declines across other areas.

The deals service is pushing ahead with plans to focus most of its attention on the U.S market while exiting less-profitable geographies where growth is slowing. An additional 11 countries will be axed this year, which will bring overall revenue down and narrow its portfolio to just 15 markets.

On a comparable basis, though, Groupon expects gross profit to rise slightly to $1.30 billion to $1.35 billion as adjusted earnings improves to a midpoint of $220 million from $178 million last year. The prospect of growth, however minor, was enough to send this battered stock higher on the day, although even after the spike it is down more than 80% since going public in 2012.

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