Fossil Group Inc (FOSL) Sales Are Actually Getting Worse, Says Oppenhimer

Is Fossil Group Inc (NASDAQ:FOSL) making a comeback? The fashion watch and accessories maker’s shares jumped nearly 90% in Wednesday’s trading session on the back of fourth-quarter earnings beat. Specifically, on an adjusted basis, FOSL reported earnings of 64 cents per share, topping analysts’ expectations of 40 cents per share. In addition, revenue came in at $920.8 million, ahead of the Wall Street consensus estimate of $890 million for the quarter.

However, Oppenheimer analyst Anna Andreeva is going into party-pooper mode, reiterating a Perform rating on FOSL shares.

Andreeva wrote “On the surface, FOSL appears to be playing better defense, with New World Fossil restructuring initiative benefiting ’17 by $95M and another $100M+ to go in ’18 and thereafter; the company is closing stores (60 doors this year globally) and tweaking wholesale/concession distribution, while reengineering wearables’ profitability. At the same time, wearables growth is moderating in ’18 (guided 20-25%) with hybrids (~40% of connected sales) being more challenging, and traditional watches still resetting lower with partners managing inventories down. Stock is heavily shorted and is up big AMC on covering; net/net, in our view, not much has changed fundamentally: sales guided down sharply for 1Q18, profitability improvement aided by financial fixes as underlying trend is still negative.”

Net net, Wall Street is not rooting for FOSL stock’s success, earning a weak analyst consensus rating. TipRanks analytics exhibit FOSL as a Sell. Based on 10 analysts polled by TipRanks in the last 12 months, 5 issue a Hold on FOSL stock, 4 recommend a Sell, and only one analyst has a bullish Buy rating.

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