Fossil

Fossil Inc. (Richardson, Texas) reported a 16.6 percent increase in net sales for its first quarter ended April 2, 2005.

Gross profit grew 19 percent, 52.1 percent of net sales.

“We began the quarter positively, posting solid sales increases across our many watch and accessory brands,” said senior vp, cfo, Mike Kovar. “Despite continued momentum domestically and in Asia, sales slowed markedly in certain European markets in March, which tempered sales and earnings results for the quarter, especially given the higher operating margin rates associated with this segment of our business. While operating earnings were below our expectations, we were pleased with the continued strength in our accessories business and retail segment. Additionally, our new initiatives, such as Michele and mass market watches, remain strong while adding new distribution channels to the company. While we are still forecasting double-digit sales growth over the balance of the year, we believe it is prudent to revise our 2005 earnings guidance to reflect our first quarter results and some weakening in sales volume.”

Worldwide net sales rose 16.6 percent during the quarter, with particular strength in the domestic wholesale, retail and other international segments. Total domestic wholesale sales rose by 22.2 percent driven by a 25.6 percent sales gain in the company’s domestic watch business (including Michele and mass-market watches). Sales of domestic Fossil watches decreased by 3.7 percent in the quarter. Domestic sales of the company’s accessory and sunglass businesses rose 18.4 percent, with particular strength in Fossil women’s and men’s leather categories and Fossil eyewear.

Company-owned retail store sales increased 30.8 percent, mostly as a result of a 12.5 percent increase in the average number of stores opened during the quarter. Same-store sales gained 12.3 percent.