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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2024
FOSSIL GROUP, INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| Delaware | | 001-41040 | | 75-2018505 |
| (State or other jurisdiction of | | (Commission File Number) | | (IRS Employer |
| incorporation or organization) | | | | Identification No.) |
| | | | | | | | | | | |
| 901 S. Central Expressway | | |
| Richardson, | Texas | | 75080 |
| (Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (972) 234-2525
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| | | | | | | | | | | | | | |
| Title of each class | | Ticker Symbol | | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | | FOSL | | The Nasdaq Stock Market LLC |
| 7.00% Senior Notes due 2026 | | FOSLL | | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 8, 2024, Fossil Group, Inc. (the “Company”) issued a press release announcing financial results for the fiscal quarter ended June 29, 2024. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Current Report and the accompanying exhibit is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Current Report in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| | | | | | | | |
| Exhibit No. | | Document Description |
| 99.1 | | |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Date: August 8, 2024 | | |
| | |
| FOSSIL GROUP, INC. |
| | |
| | |
| By: | /s/ JEFFREY N. BOYER |
| | Jeffrey N. Boyer |
| | Interim Chief Executive Officer |
Exhibit 99.1
FOSSIL GROUP, INC. REPORTS SECOND QUARTER 2024 FINANCIAL RESULTS
Continued Operational and Financial Progress under TAG Plan
Maintains Full Year 2024 Outlook
Richardson, TX, AUGUST 8, 2024 (GLOBE NEWSWIRE) - Fossil Group, Inc. (NASDAQ: FOSL) today announced financial results for the fiscal second quarter ended June 29, 2024.
Second Quarter Summary
•Second quarter worldwide net sales decreased to $260 million, down 19% on a reported basis and 18% in constant currency, which includes five points of negative impact related to the Company’s strategic actions to exit the smartwatch category and optimize its retail store portfolio.
•Gross margins expanded 390 basis points to 52.6%, primarily reflecting progress under the Company’s Transform and Grow ("TAG") Plan.
•Selling, general and administrative (“SG&A”) expenses of $154 million were down 18% versus last year, primarily due to lower compensation costs as a result of efficiencies from the Company’s TAG Plan.
•Second quarter operating loss of $34 million compared to operating loss of $35 million a year ago. Adjusted operating loss of $17 million compared to adjusted operating loss of $28 million last year.
•Inventory totaled $202 million, a decrease of 38% versus a year ago; the Company had total liquidity of $156 million at quarter end, including cash and cash equivalents of $105 million and $51 million of availability under its revolving credit facility.
“Our second quarter results were in line with our expectations and reflect continued progress under our TAG Plan,” said Jeffrey Boyer, Interim CEO. "Strong execution of our initiatives resulted in gross margin expansion, cost reduction and adjusted operating margin improvement in the second quarter. Our teams remain focused on further advancing our TAG Plan, while progressing on our actions to stabilize the business, strengthen the balance sheet and conduct a strategic review of our business model and capital structure.”
Second Quarter 2024 Operating Results
Amounts referred to as “adjusted” as well as “constant currency” are non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to their closest reported GAAP measures are included at the end of this press release.
•Net sales totaled $260.0 million, a decrease of 19.3% on a reported basis and 18.5% in constant currency compared to $322.0 million in the second quarter of fiscal 2023. The sales decrease was largely driven by overall category, consumer and channel softness. Declines in smartwatch sales resulting from our exit of the category, and our store rationalization initiatives comprised approximately 5 points of the sales decline in the second quarter. Net sales, in constant currency, declined 18% in the Americas, 15% in Europe and 20% in Asia. Wholesale sales declined 16% while our direct to consumer sales decreased 22% on a constant currency basis. Within our direct to consumer channels, comparable retail sales declined 10%. In our major product categories, traditional watch sales declined 17% in constant currency in the second quarter compared to the prior year period. The leathers category decreased 18% and jewelry sales declined 10% in constant currency during the second quarter. From a brand lens, the majority of the brands in our portfolio decreased in the second quarter.
•Gross profit totaled $136.9 million compared to $156.7 million in the second quarter of 2023. Gross margin increased 390 basis points to 52.6% versus 48.7% a year ago. The year-over-year increase is primarily due to initiatives under our TAG Plan, including our exit from the smartwatch category and improved product margins in our core categories.
•Operating expenses totaled $170.9 million, down 11% compared to $192.0 million a year ago. As a percentage of net sales, operating expenses were 65.7% in the second quarter of 2024 compared to 59.6% in the prior year second quarter. Operating expenses in the second quarter of 2024 included $16.7 million of restructuring costs, primarily related to professional services and employee costs, while operating expenses in the second quarter of 2023 included $4.6 million of restructuring costs. SG&A expenses were $153.6 million, down 18% compared to the second quarter of 2023. As a percentage of net sales, SG&A expenses were 59.1% in the second quarter of 2024 compared to 58.1% in the prior year second quarter, largely driven by decreased sales.
•Operating loss was $34.0 million compared to $35.3 million in the second quarter of 2023. Operating margin was (13.1)% in the second quarter of 2024 compared to (11.0)% in the prior year second quarter. Adjusted operating loss totaled $16.7 million compared to $27.6 million in the second quarter of 2023. Adjusted operating margin was (6.4)% in the second quarter of 2024 compared to (8.6)% in the prior year second quarter.
•Interest expense decreased to $4.1 million compared to $5.3 million in the second quarter of 2023, primarily driven by a lower debt balance.
•Other income (expense) was $1.5 million compared to $7.2 million in the second quarter of 2023, reflecting decreased net currency gains in the second quarter of 2024 as compared to the prior year second quarter.
•Income (loss) before income taxes was $(36.6) million compared to $(33.5) million in the second quarter of 2023.
•Adjusted EBITDA was $(11.7) million, or (4.5)% of net sales in the second quarter of 2024 and $(15.4) million, or (4.8)% of net sales in the prior year quarter.
•Provision (benefit) for income taxes was an expense of $2.2 million, resulting in an effective income tax rate of (6.0)% compared to a benefit of $7.2 million and an effective tax rate of 21.5% in the prior year.
The effective tax rate in the second quarter of 2024 differed from the prior year second quarter primarily due to a change in the Company’s global mix of earnings.
•Net loss totaled $38.8 million with net loss per diluted share of $0.73, which compares to net loss of $26.5 million and net loss per diluted share of $0.51 in the prior year quarter. Adjusted net loss for the second quarter was $25.1 million with adjusted net loss per diluted share of $0.47 compared to adjusted net loss of $20.4 million with adjusted net loss per diluted share of $0.40 in the prior year quarter. During the second quarter of 2024, currencies unfavorably affected net loss per diluted share by approximately $0.08.
Balance Sheet Summary
As of June 29, 2024, the Company had total liquidity of $156.0 million, including $104.9 million of cash and cash equivalents and $50.8 million of availability under its revolving credit facility. Inventories at the end of the second quarter of 2024 totaled $202.1 million, a decrease of 38% versus a year ago. Total debt was $159 million.
Transform and Grow Plan
The Company remains on track with its TAG Plan, a comprehensive operational plan designed to reduce operating expenses, improve operating margins and advance the Company’s commitment to profitable growth. The plan encompasses multiple workstreams with a target to drive $300 million in annualized operating income benefits by the end of 2025. The TAG Plan generated annualized operating income benefits of approximately $125 million in 2023 and is expected to generate additional annualized operating income benefits of at least $100 million in 2024. Restructuring costs associated with the TAG Plan are estimated to be $40 million in fiscal year 2024.
Strategic Business Review
In March 2024, the Company announced a strategic review of its current business model and capital structure. This includes efforts to optimize its business model through additional changes to its operations, as well as further structural cost reductions, which are under consideration. The Company anticipates this effort will expand on its current TAG Plan and could include additional debt and equity financing options, including monetization of various assets to strengthen its balance sheet. The Company has retained Evercore to act as its financial advisor.
Outlook
The Company is reiterating its full year financial outlook for 2024. Worldwide net sales are expected to be approximately $1.2 billion, reflecting consumer and channel softness, as well as approximately $100 million of negative impact related to the exit of its smartwatch business, and the closure of owned retail stores. Fiscal year adjusted operating margin(1) is expected to be in the range of -3% to -5%. The Company expects to generate positive free cash flow(2) in full year 2024, inclusive of tax refunds of approximately $57 million, which were received in the second quarter of 2024.
(1) A reconciliation of adjusted operating margin, a non-GAAP financial measure, to a corresponding GAAP measure is not available on a forward-looking basis without unreasonable efforts due to the high variability and low visibility of certain income and expense items that are excluded in calculating adjusted operating margin.
(2) Free cash flow is a non-GAAP financial measure, defined as net cash from operating activities less net cash used in investing activities. A corresponding reconciliation of free cash flow to a corresponding GAAP measure is not available on a forward-looking basis without unreasonable effort.
Safe Harbor
Certain statements contained herein that are not historical facts, including, but not limited to, statements regarding our outlook, expected financial position, TAG Plan benefits and expenses, liquidity and strategic review, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: increased political uncertainty, the effect of worldwide economic conditions; the effect of a pandemic; risks related to the success of our restructuring program; the impact of any activist shareholders; the failure to meet the continued listing requirements of Nasdaq; significant changes in consumer spending patterns or preferences; interruptions or delays in the supply of key components or products; acts of war or acts of terrorism; loss of key facilities; a data security or privacy breach or information systems disruptions; changes in foreign currency valuations in relation to the U.S. dollar; lower levels of consumer spending resulting from inflation, a general economic downturn or generally reduced shopping activity caused by public safety or consumer confidence concerns; the performance of our products within the prevailing retail environment; customer acceptance of both new designs and newly-introduced product lines; changes in the mix of product sales; the effects of vigorous competition in the markets in which we operate; compliance with debt covenants and other contractual provisions and meeting debt service obligations; risks related to the success of our business strategy; the termination or non-renewal of material licenses; risks related to foreign operations and manufacturing; changes in the costs of materials and labor; government regulation and tariffs; our ability to secure and protect trademarks and other intellectual property rights; levels of traffic to and management of our retail stores; loss of key personnel or failure to attract and retain key employees and the outcome of current and possible future litigation, as well as the risks and uncertainties set forth in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Readers of this release should consider these factors in evaluating, and are cautioned not to place undue reliance on, the forward-looking statements contained herein. The Company assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
About Fossil Group, Inc.
Fossil Group, Inc. is a global design, marketing, distribution and innovation company specializing in lifestyle accessories. Under a diverse portfolio of owned and licensed brands, our offerings include watches, jewelry, handbags, small leather goods, belts and sunglasses. We are committed to delivering the best in design and innovation across our owned brands, Fossil, Michele, Relic, Skagen and Zodiac, and licensed brands, Armani Exchange, Diesel, DKNY, Emporio Armani, kate spade new york, Michael Kors, and Tory Burch. We bring each brand story to life through an extensive distribution network across numerous geographies, categories and channels. Certain press release and SEC filing information concerning the Company is also available at www.fossilgroup.com.
| | | | | |
| Investor Relations: | Christine Greany |
| The Blueshirt Group |
| (858) 722-7815 |
| christine@blueshirtgroup.com |
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Consolidated Income Statement Data | For the 13
Weeks Ended | | For the 13
Weeks Ended | | For the 26 Weeks Ended | | For the 26 Weeks Ended |
| ($ in millions, except per share data): | June 29, 2024 | | July 1, 2023 | | June 29, 2024 | | July 1, 2023 |
Net sales | $ | 260.0 | | | $ | 322.0 | | | $ | 514.9 | | | $ | 647.0 | |
Cost of sales | 123.1 | | | 165.3 | | | 244.6 | | | 329.6 | |
Gross profit | 136.9 | | | 156.7 | | | 270.3 | | | 317.4 | |
Gross margin | 52.6 | % | | 48.7 | % | | 52.5 | % | | 49.1 | % |
Operating expenses: | | | | | | | |
Selling, general and administrative expenses | 153.6 | | | 187.2 | | | 305.9 | | | 378.1 | |
| Other long-lived asset impairments | 0.6 | | | 0.2 | | | 1.0 | | | 0.2 | |
Restructuring charges | 16.7 | | | 4.6 | | | 26.7 | | | 11.7 | |
Total operating expenses | $ | 170.9 | | | $ | 192.0 | | | $ | 333.6 | | | $ | 390.0 | |
Total operating expenses (% of net sales) | 65.7 | % | | 59.6 | % | | 64.8 | % | | 60.3 | % |
Operating income (loss) | (34.0) | | | (35.3) | | | (63.3) | | | (72.6) | |
Operating margin | (13.1) | % | | (11.0) | % | | (12.3) | % | | (11.2) | % |
Interest expense | 4.1 | | | 5.3 | | | 9.2 | | | 10.4 | |
Other income (expense) - net | 1.5 | | | 7.1 | | | 5.3 | | | 9.9 | |
Income (loss) before income taxes | (36.6) | | | (33.5) | | | (67.2) | | | (73.1) | |
| Provision (benefit) for income taxes | 2.2 | | | (7.2) | | | (3.9) | | | (5.6) | |
Less: Net income attributable to noncontrolling interest | — | | | 0.2 | | | (0.1) | | | 0.3 | |
| Net income (loss) attributable to Fossil Group, Inc. | $ | (38.8) | | | $ | (26.5) | | | $ | (63.2) | | | $ | (67.8) | |
Earnings per share: | | | | | | | |
Basic | $ | (0.73) | | | $ | (0.51) | | | $ | (1.20) | | | $ | (1.30) | |
Diluted | $ | (0.73) | | | $ | (0.51) | | | $ | (1.20) | | | $ | (1.30) | |
Weighted average common shares outstanding: | | | | | | | |
Basic | 52.9 | | | 52.3 | | | 52.7 | | | 52.1 | |
Diluted | 52.9 | | | 52.3 | | | 52.7 | | | 52.1 | |
`
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Consolidated Balance Sheet Data ($ in millions): | | June 29, 2024 | | | July 1, 2023 |
Assets: | | | | | |
Cash and cash equivalents | | $ | 104.9 | | | | $ | 132.1 | |
Accounts receivable - net | | 133.1 | | | | 162.7 | |
Inventories | | 202.1 | | | | 323.9 | |
Other current assets | | 102.3 | | | | 178.9 | |
Total current assets | | $ | 542.4 | | | | $ | 797.6 | |
Property, plant and equipment - net | | $ | 47.2 | | | | $ | 75.9 | |
Operating lease right-of-use assets | | 140.2 | | | | 144.9 | |
Intangible and other assets - net | | 55.9 | | | | 55.0 | |
Total long-term assets | | $ | 243.3 | | | | $ | 275.8 | |
Total assets | | $ | 785.7 | | | | $ | 1,073.4 | |
| | | | | |
Liabilities and stockholders’ equity: | | | | | |
Accounts payable, accrued expenses and other current liabilities | | $ | 277.1 | | | | $ | 321.2 | |
Short-term debt | | 2.6 | | | | 0.4 | |
Total current liabilities | | $ | 279.7 | | | | $ | 321.6 | |
Long-term debt | | $ | 156.5 | | | | $ | 243.0 | |
Long-term operating lease liabilities | | 125.4 | | | | 135.1 | |
Other long-term liabilities | | 37.0 | | | | 36.8 | |
Total long-term liabilities | | $ | 318.9 | | | | $ | 414.9 | |
Stockholders’ equity | | 187.1 | | | | 336.9 | |
Total liabilities and stockholders’ equity | | $ | 785.7 | | | | $ | 1,073.4 | |
Constant Currency Financial Information
The following table presents the Company’s business segment and product net sales on a constant currency basis which are non-GAAP financial measures. To calculate net sales on a constant currency basis, net sales for the current fiscal year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. The Company presents constant currency information to provide investors with a basis to evaluate how its underlying business performed excluding the effects of foreign currency exchange rate fluctuations. The constant currency financial information presented herein should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
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| Net Sales For the 13 Weeks Ended | | Net Sales For the 26 Weeks Ended |
| June 29, 2024 | | July 1, 2023 | | June 29, 2024 | | July 1, 2023 |
| ($ in millions) | As Reported | | Impact of Foreign Currency Exchange Rates | | Constant Currency | | As Reported | | As Reported | | Impact of Foreign Currency Exchange Rates | | Constant Currency | | As Reported |
| Segment: | | | | | | | | | | | | | | | |
| Americas | $ | 119.6 | | | $ | (0.1) | | | $ | 119.5 | | | $ | 146.7 | | | $ | 229.6 | | | $ | (0.9) | | | $ | 228.7 | | | $ | 284.6 | |
| Europe | 74.8 | | | 0.5 | | | 75.3 | | | 88.3 | | | 153.6 | | | (0.5) | | | 153.1 | | | 194.0 | |
| Asia | 65.2 | | | 1.9 | | | 67.1 | | | 84.1 | | | 130.7 | | | 4.0 | | | 134.7 | | | 164.3 | |
| Corporate | 0.4 | | | — | | | 0.4 | | | 2.9 | | | 1.0 | | | — | | | 1.0 | | | 4.1 | |
| Total net sales | $ | 260.0 | | | $ | 2.3 | | | $ | 262.3 | | | $ | 322.0 | | | $ | 514.9 | | | $ | 2.6 | | | $ | 517.5 | | | $ | 647.0 | |
| | | | | | | | | | | | | | | |
| Product categories: | | | | | | | | | | | | | | | |
| Watches: | | | | | | | | | | | | | | | |
| Traditional watches | $ | 194.1 | | | $ | 1.6 | | | $ | 195.7 | | | $ | 236.1 | | | $ | 380.6 | | | $ | 1.5 | | | $ | 382.1 | | | $ | 461.5 | |
| Smartwatches | 8.4 | | | — | | | 8.4 | | | 17.8 | | | 17.3 | | | — | | | 17.3 | | | 42.2 | |
| Total watches | $ | 202.5 | | | $ | 1.6 | | | $ | 204.1 | | | $ | 253.9 | | | $ | 397.9 | | | $ | 1.5 | | | $ | 399.4 | | | $ | 503.6 | |
| Leathers | 27.2 | | | 0.2 | | | 27.4 | | | 33.3 | | | 54.7 | | | 0.5 | | | 55.2 | | | 73.6 | |
| Jewelry | 24.2 | | | 0.4 | | | 24.6 | | | 27.4 | | | 50.5 | | | 0.6 | | | 51.1 | | | 56.4 | |
| Other | 6.1 | | | 0.1 | | | 6.2 | | | 7.4 | | | 11.8 | | | — | | | 11.8 | | | 13.4 | |
| Total net sales | $ | 260.0 | | | $ | 2.3 | | | $ | 262.3 | | | $ | 322.0 | | | $ | 514.9 | | | $ | 2.6 | | | $ | 517.5 | | | $ | 647.0 | |
Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share
Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share are non-GAAP financial measures. We define Adjusted EBITDA as our net income (loss) before the impact of income tax expense (benefit), plus interest expense, amortization and depreciation, impairment expense, other non-cash charges, stock-based compensation expense, restructuring expense and unamortized debt issuance costs included in loss on extinguishment of debt minus interest income. We define Adjusted operating income (loss) as operating income (loss) before impairment expense and restructuring expense. We define Adjusted net income (loss) and Adjusted earnings (loss) per share as net income (loss) attributable to Fossil Group, Inc. and diluted earnings (loss) per share, respectively, before impairment expense, restructuring expense and unamortized debt issuance costs included in loss on extinguishment of debt. We have included Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share herein because they are widely used by investors for valuation and for comparing our financial performance with the performance of our competitors. We also use both non-GAAP financial measures to monitor and compare the financial performance of our operations. Our presentation of Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share may not be comparable to similarly titled measures other companies report. Adjusted EBITDA, Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share are not intended to be used as alternatives to any measure of our performance in accordance with GAAP.
The following tables reconcile Adjusted EBITDA to the most directly comparable GAAP financial measure, which is income (loss) before income taxes. Certain line items presented in the tables below, when aggregated, may not foot due to rounding.
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| | | Fiscal 2023 | | Fiscal 2024 | | | | |
| ($ in millions): | | | Q3 | | Q4 | | Q1 | | Q2 | | Total | | |
| Income (loss) before income taxes | | | $ | (55.2) | | | $ | (27.8) | | | $ | (30.4) | | | $ | (36.6) | | | $ | (150.0) | | | |
| Plus: | | | | | | | | | | | | | |
| Interest expense | | | 5.8 | | | 5.7 | | | 5.1 | | | 4.1 | | | 20.7 | | | |
| Amortization and depreciation | | | 4.5 | | | 4.6 | | | 4.5 | | | 3.9 | | | 17.5 | | | |
| Impairment expense | | | 0.6 | | | 1.3 | | | 0.4 | | | 0.6 | | | 2.9 | | | |
| Other non-cash charges | | | (0.2) | | | 0.1 | | | (0.1) | | | 0.1 | | | (0.1) | | | |
| Stock-based compensation | | | 1.5 | | | 1.1 | | | 1.0 | | | 0.6 | | | 4.2 | | | |
| Restructuring expense | | | 16.0 | | | 15.5 | | | 10.1 | | | 16.7 | | | 58.3 | | | |
| Restructuring cost of sales | | | (1.3) | | | (1.3) | | | (0.2) | | | — | | | (2.8) | | | |
| | | | | | | | | | | | | |
| Less: | | | | | | | | | | | | | |
| Interest income | | | 1.0 | | | 0.9 | | | 1.1 | | | 1.1 | | | 4.1 | | | |
| Adjusted EBITDA | | | $ | (29.3) | | | $ | (1.6) | | | $ | (10.7) | | | $ | (11.7) | | | $ | (53.4) | | | |
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| | Fiscal 2022(1) | | Fiscal 2023 | | | | |
| ($ in millions): | | Q3 | | Q4 | | Q1 | | Q2 | | Total | | |
| Income (loss) before income taxes | | $ | 15.5 | | | $ | (4.0) | | | $ | (39.6) | | | $ | (33.5) | | | $ | (61.6) | | | |
| Plus: | | | | | | | | | | | | |
| Interest expense | | 5.1 | | | 5.8 | | | 5.0 | | | 5.3 | | | 21.2 | | | |
| Amortization and depreciation | | 5.6 | | | 5.7 | | | 5.1 | | | 4.8 | | | 21.2 | | | |
| Impairment expense | | 0.6 | | | 1.2 | | | 0.1 | | | 0.2 | | | 2.1 | | | |
| Other non-cash charges | | (0.4) | | | (0.3) | | | (0.2) | | | (0.5) | | | (1.4) | | | |
| Stock-based compensation | | (0.3) | | | 2.3 | | | 1.4 | | | 1.6 | | | 5.0 | | | |
| Restructuring expense | | — | | | 0.7 | | | 7.1 | | | 4.6 | | | 12.4 | | | |
| Restructuring cost of sales | | — | | | — | | | 5.3 | | | 2.9 | | | 8.2 | | | |
| Unamortized debt issuance costs included in loss on extinguishment of debt | | — | | | 1.1 | | | — | | | — | | | 1.1 | | | |
| Less: | | | | | | | | | | | | |
| Interest income | | 0.1 | | | 0.4 | | | 0.6 | | | 0.8 | | | 1.9 | | | |
| Adjusted EBITDA | | $ | 26.0 | | | $ | 12.1 | | | $ | (16.4) | | | $ | (15.4) | | | $ | 6.3 | | | |
| | | | | | | | | | | | |
(1) Prior period amounts have been adjusted to conform to the current period presentation.
The following tables reconcile Adjusted operating income (loss), Adjusted net income (loss) and Adjusted earnings (loss) per share to the most directly comparable GAAP financial measures, which are operating income (loss), net income (loss) attributable to Fossil Group, Inc. and diluted earnings (loss) per share, respectively. Certain line items presented in the table below, when aggregated, may not foot due to rounding.
| | | | | | | | | | | | | | | | | |
| For the 13 Weeks Ended June 29, 2024 |
| ($ in millions, except per share data): | As Reported | | Other Long-Lived Asset Impairment | | Restructuring Expenses | | As Adjusted |
| Operating income (loss) | $ | (34.0) | | | $ | 0.6 | | | $ | 16.7 | | | $ | (16.7) | |
| Operating margin (% of net sales) | (13.1) | % | | | | | | (6.4) | % |
| Interest expense | (4.1) | | | — | | | — | | | (4.1) | |
| Other income (expense) - net | 1.5 | | | — | | | — | | | 1.5 | |
| Income (loss) before income taxes | (36.6) | | | 0.6 | | | 16.7 | | | (19.3) | |
| Provision (benefit) for income taxes | 2.2 | | | 0.1 | | | 3.5 | | | 5.8 | |
| Less: Net income attributable to noncontrolling interest | 0.1 | | | — | | | — | | | 0.1 | |
| Net income (loss) attributable to Fossil Group, Inc. | $ | (38.8) | | | $ | 0.5 | | | $ | 13.2 | | | $ | (25.1) | |
| Diluted earnings (loss) per share | $ | (0.73) | | | $ | 0.01 | | | $ | 0.25 | | | $ | (0.47) | |
| | | | | | | | | | | | | | | | | | | |
| For the 13 Weeks Ended July 1, 2023 |
| ($ in millions, except per share data): | As Reported | Restructuring Cost of Sales | Other Long-Lived Asset Impairment | | Restructuring Expenses | | As Adjusted |
| Operating income (loss) | $ | (35.3) | | $ | 2.9 | | $ | 0.2 | | | $ | 4.6 | | | $ | (27.6) | |
| Operating margin (% of net sales) | (11.0) | % | | | | | | (8.6) | % |
| Interest expense | (5.3) | | — | | — | | | — | | | (5.3) | |
| Other income (expense) - net | 7.2 | | — | | — | | | — | | | 7.2 | |
| Income (loss) before income taxes | (33.5) | | 2.9 | | 0.2 | | | 4.6 | | | (25.8) | |
| Provision for income taxes | (7.2) | | 0.6 | | — | | | 1.0 | | | (5.6) | |
| Less: Net income attributable to noncontrolling interest | (0.2 | ) | — | | — | | | — | | | (0.2 | ) |
| Net income (loss) attributable to Fossil Group, Inc. | $ | (26.5) | | $ | 2.3 | | $ | 0.2 | | | $ | 3.6 | | | $ | (20.4) | |
| Diluted earnings (loss) per share | $ | (0.51) | | $ | 0.04 | | $ | — | | | $ | 0.07 | | | $ | (0.40) | |
| | | | | | | | | | | | | | | | | | | |
| For the 26 Weeks Ended June 29, 2024 |
| ($ in millions, except per share data): | As Reported | Restructuring Cost of Sales | Other Long-Lived Asset Impairment | | Restructuring Expenses | | As Adjusted |
| Operating income (loss) | $ | (63.2) | | $ | (0.2) | | $ | 1.0 | | | $ | 26.7 | | | $ | (35.7) | |
| Operating margin (% of net sales) | (12.3) | % | | | | | | (6.9) | % |
| Interest expense | (9.2) | | — | | — | | | — | | | (9.2) | |
| Other income (expense) - net | 5.3 | | — | | — | | | — | | | 5.3 | |
| Income (loss) before income taxes | (67.1) | | (0.2) | | 1.0 | | | 26.7 | | | (39.6) | |
| Provision (benefit) for income taxes | (3.9) | | — | | 0.2 | | | 5.6 | | | 1.9 | |
| Less: Net income attributable to noncontrolling interest | 0.1 | | — | | — | | | — | | | 0.1 | |
| Net income (loss) attributable to Fossil Group, Inc. | $ | (63.1) | | $ | (0.2) | | $ | 0.8 | | | $ | 21.1 | | | $ | (41.4) | |
| Diluted earnings (loss) per share | $ | (1.20) | | $ | — | | $ | 0.02 | | | $ | 0.40 | | | $ | (0.78) | |
| | | | | | | | | | | | | | | | | | | |
| For the 26 Weeks Ended July 1, 2023 |
| ($ in millions, except per share data): | As Reported | Restructuring Cost of Sales | Other Long-Lived Asset Impairment | | Restructuring Expenses | | As Adjusted |
| Operating income (loss) | $ | (72.6) | | $ | 8.2 | | $ | 0.2 | | | $ | 11.7 | | | $ | (52.5) | |
| Operating margin (% of net sales) | (11.2) | % | | | | | | (8.1) | % |
| Interest expense | (10.4) | | — | | — | | | — | | | (10.4) | |
| Other income (expense) - net | 9.9 | | — | | — | | | — | | | 9.9 | |
| Income (loss) before income taxes | (73.1) | | 8.2 | | 0.2 | | | 11.7 | | | (53.0) | |
| Provision for income taxes | (5.6) | | 1.7 | | — | | | 2.5 | | | (1.4) | |
| Less: Net income attributable to noncontrolling interest | (0.3 | ) | — | | — | | | — | | | (0.3 | ) |
| Net income (loss) attributable to Fossil Group, Inc. | $ | (67.8) | | $ | 6.5 | | $ | 0.2 | | | $ | 9.2 | | | $ | (51.9) | |
| Diluted earnings (loss) per share | $ | (1.30) | | $ | 0.12 | | $ | — | | | $ | 0.18 | | | $ | (1.00) | |
Store Count Information
| | | | | | | | | | | | | | | | | | | | | | | |
| July 1, 2023 | | Opened | | Closed | | June 29, 2024 |
| Americas | 146 | | 2 | | 28 | | 120 |
| Europe | 92 | | 1 | | 24 | | 69 |
| Asia | 77 | | 2 | | 10 | | 69 |
| Total stores | 315 | | 5 | | 62 | | 258 |
END OF RELEASE
v3.24.2.u1
Cover Page Document
|
Aug. 08, 2024 |
| Cover [Abstract] |
|
| Document Type |
8-K
|
| Document Period End Date |
Aug. 08, 2024
|
| Entity Registrant Name |
FOSSIL GROUP, INC.
|
| Entity Incorporation, State or Country Code |
DE
|
| Entity File Number |
001-41040
|
| Entity Tax Identification Number |
75-2018505
|
| Entity Address, Address Line One |
901 S. Central Expressway
|
| Entity Address, City or Town |
Richardson,
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TX
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75080
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972
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234-2525
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false
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false
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false
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false
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false
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| Title of 12(b) Security |
Common Stock, par value $0.01 per share
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| Trading Symbol |
FOSL
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| Security Exchange Name |
NASDAQ
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0000883569
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false
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Common Stock, par value $0.01 per share
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FOSL
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NASDAQ
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| Senior Notes |
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7.00% Senior Notes due 2026
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FOSLL
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