What happened
Shares of Fossil Group Inc. (FOSL 0.03%) plunged 70% in 2017, according to data from S&P Global Market Intelligence, as the fashion and lifestyle accessories company struggled to cope with today's difficult retail environment.
To be sure -- and keeping in mind Fossil stock also dropped nearly 30% in 2016 -- the market consistently lamented Fossil's performance with massive drops following each of its quarterly reports last year.
So what
Shares plunged more than 13% in a single day last February, when Fossil announced weaker-than-expected fourth-quarter 2016 results given a highly promotional retail environment during the holidays. But the company remained optimistic that a shift toward its wearable technology products could return the company to sustained, profitable growth over the long run.
Unfortunately, that optimism seemed misplaced after Fossil followed with an equally disappointing first-quarter 2017 report, punctuated by accelerated revenue declines and a net loss of $48 million, or $1.00 per share -- though the latter included a $0.35-per-share restructuring charge as Fossil began to close underperforming stores. Still, the report caused shares to fall another 37.6% in the month of May alone.
IMAGE SOURCE: FOSSIL GROUP.
Things went from bad to worse in August, when Fossil stock fell 25% in a single day after it posted another painful quarter. This time, however -- in addition to its continued revenue declines and restructuring charges -- Fossil was forced to incur an enormous $6.50-per-share asset impairment charge related to the "sustained compression of the company's market capitalization."
If that wasn't enough, Fossil reduced its full-year guidance and announced the resignation of its CFO, who opted to move back to California "for personal reasons."
Now what
Most recently, Fossil stock dropped another 17% in a single day in November after its latest earnings report. To be fair, Fossil's Q3 results actually exceeded expectations, with year-over-year revenue declines decelerating to 6.7%, and its quarterly GAAP loss narrowing to $0.11 per share. Chairman and CEO Kosta Kartsotis further pointed out that sales of Fossil's wearable technology devices had tripled through the first three quarters of 2017, despite ongoing retail headwinds.
But Fossil followed again with underwhelming forward guidance, providing a wide range for sales in the holiday quarter to decline 11% to 3.5%, and for earnings to be in the range of an $0.08-per-share loss to net income of $0.47 per share.
Investors will be watching closely to see how Fossil fared when it releases fourth-quarter 2017 results next month. When that happens -- for better or worse -- Fossil investors should be ready for more volatility.
