Please ensure Javascript is enabled for purposes of website accessibility

Why Fossil Group Stock Fell 18% in the First Hour Today

By Reuben Gregg Brewer - Mar 11, 2021 at 11:39AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of Fossil plunged in early trading today thanks to the company's earnings release. Here's a quick look at what spooked investors.

What happened

Shares of watch and fashion accessory maker Fossil Group (FOSL 4.99%) fell roughly 18% in the first hour of trading on March 11. The company reported earnings after the close on March 10. There's a connection between the two events.   

So what

First the "good" news. Fossil Group reported a fourth-quarter 2020 loss of $0.08 per share, an improvement over the loss of $0.14 per share in the final quarter of 2019. It also saw a material increase in digital sales, which were up 25% year over year in the quarter. That number, meanwhile, was driven by a 50% increase from Fossil's own e-commerce channels. And the company noted it was able to reduce costs and improve its gross margin. So far so good.  

a woman with a cell phone and credit card in her hands.

Image source: Getty Images.

The bad news is that while Fossil's loss was lower it still bled red ink in the incredibly important holiday sales period. Moreover, fourth-quarter 2020 revenue of $528 million was down from $712 million in the same quarter of 2019. Yes, these results were driven by the impact of the coronavirus pandemic, but Fossil's financial performance in the quarter is far from what could be called a good result. In fact, even the increase in online sales is a mixed blessing, given that consumers were limited in the ways they could shop and those online sales may not be sustainable. Even the company's outlook for 2021 wasn't all that inspiring, as it called for 10% to 15% top-line growth over 2020. At the high end that would still leave sales about 15% below the levels seen in 2019.   

Now what

Fossil entered 2020 working on a turnaround, which was made even more difficult by the onset of the coronavirus pandemic. The fourth-quarter results and sales expectations for 2021 show that this is still very much a work in progress. It's hardly surprising that investors were displeased with the update.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fossil Group, Inc. Stock Quote
Fossil Group, Inc.
$7.99 (4.99%) $0.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.