Fossil shifts more of its focus to e-commerce

February 18, 2016 06:00 AM

Growing online sales in the face of declining overall sales signals a shift in the corporate strategy for watch and accessories maker Fossil Inc.

Online sales grew double digits year over year in 2015, though Fossil CEO Kosta Kartsotis didn’t specify a dollar figure or a specific percentage when he spoke with analysts during the retailer’s fourth quarter earnings call. Fossil is No. 213 in the Internet Retailer 2015 Top 500 Guide. data shows that Fossil has grown at an average annual rate of 14.58% over the past five years, going to an Internet Retailer-estimated $130.1 million in online sales in 2014 from $75.5 million in 2010.

A combination of online growth and a shift in consumer shopping preferences means the company will focus more efforts online heading into 2016, Kartsotis said. Fossil ended fiscal 2015 with 281 stores in the Americas, down 5.1% from the 296 stores it had at the end of fiscal 2014.

“As mall traffic continues to decline, our digital and omnichannel investments should allow us to compete in this new age of retail,” he said on the call, according to a transcript from Seeking Alpha. “Given the returns on these (e-commerce) investments, and ensuring we continue to evolve with the customer, we look to bolster our digital capabilities through continued investments in our platform and shopping experience.”

The company relaunched and upgraded its mobile platform just before the 2015 holiday shopping season, and Kartsotis said Fossil plans to upgrade its fulfillment and mobile capabilities in 2016.

“Additionally, we have initiatives targeted to support our Fossil brand focus on gifting and personalization, including custom watch-building capability as well as embossing and engraving capability online, something we executed in the first quarter in time for Valentine's Day,” he said.

For the fourth quarter ended Jan. 2, Fossil reported:

  • Revenue in the Americas region of $518.0 million, down 4.6% from $543.0 million last year.
  • Net revenue of $992.5 million, down 6.8% from $1.065 billion last year.
  • Gross profit of $525.5 million, down 13.0% from $604.3 million last year.

For fiscal 2015, Fossil reported:

  • Revenue in the Americas region of $1.662 billion, down 4.9% from $1.748 billion last year.
  • Net revenue of $3.229 billion, down 8.0% from $3.510 billion last year.
  • Gross profit of $1.753 billion, down 12.4% from $2.001 billion last year.



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