The third quarter results were presented by the fashion brands owner Fossil Group Inc. (NASDAQ: FOSL). Like several other premium retailers, the company reported a decline in revenue in stationary stores, but was able to compensate for some of the losses through e-Commerce.
In the third quarter, global revenues of the FOSL declined 19 percent year-on-year to $435 million. The reason for the downturn is the pandemic, which in the United States and Europe has closed several shopping centers and shops. In the Chinese market, which has already got rid of several Covid restrictions, a slight recovery was evident. Fossil Group expanded its investment in e-Commerce in the third quarter, which boosted online revenue by 66 percent year-on-year through the company’s own platforms and by 44 percent on third-party sites.
Despite the drop in revenue, as part of its market modernization program, FOSL was able to increase its gross margin to 52.8 percent thanks to a $75 million reduction in operating expenses. In the duration from 2019 to 2021, this initiative includes decreasing the operating costs of the organization by more than $200 million.
In addition, a high level of online sales, a successful product selection and thoughtful pricing had a positive effect on the margin. Compared to an operating loss of $9 million a year earlier, operating income was $18 million. Cash and cash equivalents amount to $324 million and net debt as of October 3, 2020 is $239 million.
While the Fossil Group is afraid to make a prediction for the fourth quarter, the effect of COVID-19 on the one hand is great, but the pre-holiday season, on the other hand, is approaching and high demand for gifts is anticipated. According to the management, the overlap of these variables will not carry sales growth; most likely they will decrease by 30-40 percent in the global market.
Fossil Group is a multinational accessories corporation specializing in design and distribution. The company sells products including Fossil, Relic, Diesel, Emporio Armani, PUMA, Michele, Armani Exchange, DKNY, and Michael Kors under its brands. Watches, jewellery, bags, small leather goods and so on are among the other items offered.
Fossil Group Inc. (FOSL) shares rose more than 15 percent to $8.99 on November 16.