Watch and luxury products maker Fossil
That being said, sales and earnings did decline from year-ago levels, but the declines were quite modest, given the ongoing economic climate. Sales were off 6.9%, to $381.4 million. Net income declined 3.3%, to $35.3 million, compared to $36.5 million in last year's third quarter.
The driving force behind these results was the strong performance of Fossil's retail stores. These direct sales cut out the middlemen and help boost profit margins. Direct-to-consumer sales (both from Fossil stores and Internet sales) increased 21% and now make up 24% of the company's total sales, compared to 18.5% last year. That shift helped boost gross margin to 55.3%, compared to 54.7% last year.
Fossil grew same-store sales by 6.4% during a horrible year, and also increased its number of retail outlets by over 20%. Expansion will help company sales abroad; more than half of the 208 stores the Fossil opened in 2009 are located outside the United States and should help drive future profit gains, especially if the dollar continues to weaken. Even better, the good news is expected to continue into the fourth quarter, as the company raised forward earnings expectations.
These surprise results caused the company's stock to jump over 9% and touch $32, a far cry from February and March, when shares could be had for under $12. Despite Fossil's run, the company still sells at about 16 times expected 2009 earnings, and analysts project about 16% earnings growth over the next five years, making the company look appealing.
What makes Fossil even more compelling is its performance in comparison to other retailers. While Coach
High-end retailers such as Saks
Fossil isn't waiting that long. While the majority of its sales still come from retailers like Nordstrom
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