Fossil Q2 gross profit rises 14.2 percent

Fashion-accessories retailer Fossil’s second quarter

gross profit rose 14.2 percent to 356.4 million dollars (Rs 1,962 crores) compared to 312 million dollars (Rs 1,718 crores) in the prior fiscal year second quarter. Net sales increased 14.3 percent to 636.1 million dollars (Rs 3,502 crores) compared to 556.7 million dollars (Rs 3,065 crores) for the same period last year. For the first half net sales increased 12.1 percent to 1.2 billion dollars (Rs 6,607 crores) compared to 1.1 billion dollars (Rs 6,057 crores) for the same period last year. Gross profit increased 11.7 percent to 685.3 million dollars (Rs 3,773 crores), or 55.9 percent of net sales, compared to 613.8 million dollars (Rs 3,379 crores) last year.

Gross profit margin in the second quarter remained constant at 56 percent as compared to the prior fiscal year second quarter. For the six month period, gross profit margin decreased by 20 basis points to 55.9 percent compared to 56.1 percent in the prior fiscal year period. The translation impact of a stronger U.S. dollar decreased the company’s reported net sales by approximately 21.4 million dollars (Rs 117 crores) and 28.7 million dollars (Rs 158 crores) during the second quarter and six month period respectively. The company’s worldwide net sales rose 18.1 percent with each of the company’s wholesale segments reporting increased sales growth rates as compared to the fiscal 2012 first quarter. Worldwide net sales increased 13.5 percent for the second quarter. For the six month period, consolidated net sales increased by 14.7 percent, or 160.7 million dollars (Rs 884 crores), representing sales growth in each of the company’s global wholesale and direct to consumer businesses.

During the second quarter, net sales from the North America wholesale segment rose 18.2 percent, or 38.7 million dollars (Rs 213 crores), in comparison to the prior fiscal year second quarter. Europe wholesale net sales increased 14 percent, or 19.9 million dollars (Rs 109 crores), during the second quarter as compared to the prior fiscal year second quarter.

Asia Pacific wholesale net sales rose 27.2 percent, or 18.6 million dollars (Rs 102 crores), during the second quarter in comparison to the prior fiscal year second quarter. Sales in the company’s strategically identified markets of South Korea, Japan and China increased by 29.2 percent during the second quarter.

“Our better-than-expected second quarter performance resulted in double-digit increases in sales and earnings, representing another record performance for the company and highlighted several noteworthy accomplishments toward our near and long term goals,” stated Mike Kovar, Executive Vice President and Chief Financial Officer. “Across each of our geographical segments we experienced acceleration in wholesale sales growth in comparison to our first quarter of 2012. In Asia, we saw constant dollar sales grow by 27.2 percent demonstrating the success of our investments in this opportunity and the heightened consumer demand for Fossil and our multi-brand watch portfolio.”