Shares of Fossil Group (FOSL) are plunging in morning trading after the consumer fashion accessory maker cut its guidance for fiscal year 2016 after reporting first quarter results that were below analysts’ estimates. The company also provided weak guidance for the second quarter.

WHAT’S NEW: After the market close on Tuesday, Fossil reported Q1 earnings per share of 12c on revenue of $659.8M, missing analysts’ consensus estimates of 15c and $666.6M, respectively. CEO Kosta Kartsotis said that while the results were in line with the company’s expectations, they fell below last year “given the persistent headwinds pressuring the traditional watch category and the challenging retail environment, particularly in our wholesale channel.” For the current quarter, Fossil said it expects flat EPS to a 15c profit, well below analysts’ estimates of 59c, with sales for the quarter down 8%-10%.

SLASHED GUIDANCE: Fossil said it now expects FY16 EPS of $1.80-$2.80, significantly lower than its prior forecast of $2.80-$3.60, on sales down 1.5%-5%, well below its prior down 3.5% to up 1% view. Prior to the earnings report, analysts were expecting the company to report FY16 EPS of $3.02. Kartsotis commented that headwinds impacting the company have intensified and will impact the year’s expectations despite expense management.

WHAT’S NOTABLE: In January, Fossil announced plans to launch over 100 connected devices in 2016, including activity trackers and smart watches for many brands.

ANALYST REACTION: Following the company’s Q1 results, Piper Jaffray analyst Erinn Murphy reiterated an Underweight rating on shares, but lowered her price target to $25 from $29. The analyst sees downside to the stock amid “structural problems” in traditional watches, increased spending around wearables and the lack of balance sheet flexibility.

PRICE ACTION: Fossil is down nearly 30% in morning trading to $28.48.

OTHERS TO WATCH: Michael Kors (KORS) and Kate Spade (KATE), which are listed among Fossil’s licensed brands, as well as peers Movado (MOV) and Guess? (GES) tumbled in morning trading.