Fossil (NASDAQ:FOSL) is a watch and accessories firm working toward a clearer trend of earnings and cash flow generation. Recently reported results were decent from a top-line perspective but confirm there is still work to do on the bottom line.

For the firm's second quarter, Fossil's net sales grew 14.6%. While it reported diluted earnings growth of 23%, the company's press release detailed that results benefited from a lower tax rate and advertising expenses that were shifted to the first quarter of this year. Sales results for the six-month period were similar, growing 14.1%, but diluted earnings fell 31.1%.

In terms of quarterly sales, most of the company's main businesses reported double-digit growth, and company-owned retail stores posted an impressive total sales increase of 28.8%, mostly because of new stores, but same-store sales increased 8.3%. Operating expenses fell, but so did gross margin. For the upcoming year, management guided earnings at $1.11 per share, for a forward P/E of just under 17.

Fossil has a diverse number of product offerings and a number of avenues to sell those goods, including its own retail stores and outside department and retail stores. It primarily sells fashion watches with a more moderate, $40-$150 price range, but also sells apparel, sunglasses, and leather goods, just to name a few. Proprietary brands include its namesake and Relic watches and accessories, but it also obtains licenses to sell other names such as DKNY, Diesel, and Michael Kors. Finally, it makes some private-label watches for the bigger retailers, including Wal-Mart (NYSE:WMT), Target (NYSE:TGT), and Sears Holdings' (NASDAQ:SHLD) Kmart stores.

Overall, Fossil has a very solid track record of sales growth that has averaged almost 17% annually over the past five years. But over that time frame, earnings have grown only about 3% per year, and they have been negative on average over the past one- and three-year periods. Cash flow mirrors that inconsistency, and last year operating cash flow fell way below reported net income. And business acquisitions and capital expenditures to expand retail stores and overall growth eat up a good portion of cash flow generated from operations, though management is also buying back its own stock which is a positive for current shareholders.

Fortunately, the company has no long-term debt. But overall, its watches are subject to the whims of a fickle consumer base. And while the company is working hard to expand into more profitable high-end watches, it still also relies on lower-margin accessories. Competitor Movado (NYSE:MOV) has a better stock chart over the past one-, two-, and five-year periods, and Fossil has also underperformed the S&P 500 over this time frame.

As such, I'll look into other names in the crowded fashion and retailing investment realm. In terms of those on my watch list, I have yet to digest GameStop's (NYSE:GME) recent earnings results, and Dick's Sporting Goods (NYSE:DKS) just reported today. For a similar valuation to Fossil, I'm betting I can find more consistent profitability trends.

For related Foolishness:

GameStop is a Motley Fool Stock Advisor recommendation. Wal-Mart is an Inside Value selection.

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further.The Fool has an ironclad disclosure policy.