Earnings reports with signs of recovery have been as rare as dinosaur bones lately. But watch, clothing and fashion accessory maker Fossil (NASDAQ:FOSL) became a featured exhibit with its fourth-quarter numbers.

The company dusted off solid year-over-year sales and earnings growth in excess of 13% and 50%, respectively. Revenues were juiced by currency exchange, but even without those effects, sales rose 8%.

Fossil isn't the only member of the Textiles, Apparel and Luxury Goods sector to report higher sales for the quarter ended December 2009. Of this crowd, only Ralph Lauren fell short in Q4:


Sales for Qtr.
Ended Dec. 2008
(in millions)

Sales for Qtr.
Ended Dec. 2009
( in millions)

Revenue Growth

P/E (2010)






Coach (NYSE:COH)





Columbia Sportswear (NASDAQ:COLM)





Ralph Lauren (NYSE:RL)





Under Armour (NYSE:UA)










Mr. Market apparently liked Fossil's earnings; the stock popped nearly 7% after the release. Even after that spike, the stock is attractively priced; it sports a P/E at the low end of its group, and year-over-year revenue growth at the high end.

Still, Fools should be aware of a few potential pitfalls. More than 40% of its sales come from outside the U.S., keeping Fossil exposed to currency risks. Also, the $20 million share buyback it announced may sound like great news for investors, but the truth is a little less appealing. The company says it's only repurchasing shares to minimize the dilution created by the shares and options it's awarding its employees. Even after the buyback, investors' shares will still be watered down.

Many of Fossil's products are discretionary items, and its sales could take a hit if the economy weakens. The company also needs to stay on top of fashion trends to keep its watch and accessory sales ticking along.

Despite these dangers, Fossil offers investors demonstrated earnings and revenue growth at a reasonable valuation. In any stock dig, that makes it a museum-worthy find.

Fool contributor Russ Krull doesn't own shares of any stock mentioned in this article. Under Armour is a Motley Fool Rule Breakers recommendation. Coach is a Motley Fool Stock Advisor pick. Columbia Sportswear, Fossil, and Under Armour are Motley Fool Hidden Gems recommendations. VF is a Motley Fool Income Investor pick. The Fool owns shares of Under Armour. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.