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Why Fossil Group Stock Plunged Today

By Joe Tenebruso - Updated Feb 26, 2020 at 4:08PM

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The watchmaker sees a rough road ahead.

What happened

Shares of Fossil Group (FOSL 4.51%) plummeted more than 20% on Wednesday, following the release of the watchmaker's fourth-quarter results and guidance. 

So what 

Net sales fell 10% year over year, to $712 million, as declines in its Americas and Europe segments more than offset growth in its Asia division. This sales shortfall, combined with inventory writedowns, resulted in a net loss of $6.9 million, or $0.14 per share.

Fossil's wholesale business remains under pressure from the struggles of department stores. The impact of retail store closures and bankruptcies more than offset growth in Fossil's e-commerce business.

CEO Kosta Kartsotis said in a press release, "As we navigate the challenging operating environment, we are taking actions to pivot our business model by deploying greater resources toward the direct-to-consumer channel, accelerating our connected product offerings and building on our success in the Asia region." 

A downwardly sloping line chart

Image source: Getty Images.

Now what

Kartsotis is hoping that cost cuts and a renewed focus on smartwatches will help to stabilize its traditional retail business. But Fossil must now contend with a new challenge: potential supply chain and sales disruptions related to the coronavirus outbreak.

In turn, management is guiding for full-year net sales to decline as much as 11.5% in 2020. The company also said it could generate a pre-tax loss of as much as $57 million in the coming year.

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Fossil Group, Inc. Stock Quote
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