Fossil Stock Plummets 25% On Abysmal Results As US, Global Consumers Choose To Save Instead Of Spend

While everyone knew Q1 would be a terrible quarter for energy companies, it is turning out to be an absolute bloodbath for consumer-facing retail companies, and the latest example was “fashion accessory”, but really watch company Fossil, which has cratered after hours after reporting not only a miss in EPS of $0.12 (Est. $0.15) and revenue (which at $660 million was 9% lower than a year ago and missed expectations of $667 million), but also missed comp store expectations which dropped 3%, on expectations of a -0.4% decline: “A strong comparable sales increase in Europe was offset by a decline in the Americas and Asia.A comparable sales increase in leathers and jewelry was offset by a decline in watches.”

The topline weakness was broad-based and included every single addressable market:

Net sales in the Americas decreased 7% or $26.0 million compared to the first quarter of fiscal 2015, with declines in watches, jewelry and leathers compared to last fiscal year.Modest sales growth in Canada and Mexico was offset by a decline in the U.S.

Net sales in Europe decreased 8% or $18.1 million compared to the first quarter of fiscal 2015, with an increase in leathers offset by declines in watches and jewelry compared to last fiscal year.Within the region, modest growth in France and Germany was offset by a decline in distributor markets and the U.K.

Net sales in Asia decreased 4% or $4.8 million compared to the first quarter of fiscal 2015, with an increase in leathers offset by declines in watches and jewelry compared to last fiscal year.Within the region, an increase in India was offset by declines in most markets, including Hong Kong and China.

Among the odd reasons the company gave to justify the weakness in demand was the “strong dollar” in Q1, seemingly unaware that the DXY was actually weaker compared to a year ago:

During the first quarter of fiscal 2016, the translation impact of a stronger U.S. dollar decreased the Company’s reported net sales by $16.4 million, operating income by $12.9 million and diluted earnings per share by $0.08. The following discussion of the Company’s net sales is calculated in constant dollars and reflects regional performance based on sales in all channels within the geographic location.