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Fossil Group Inc (FOSL) Shares Plunge on Wearables Worries

Analysts expect pricing for wearables to be 10% lower

   

Fossil Group Inc (NASDAQ:FOSL) suffered a rough fourth quarter due to the company’s wearables.

Fossil Group IncThese accessories were priced higher than many were willing to pay for them, and it is believed the company will respond to this by appeasing its customers. Fourth-quarter earnings came in at $1.03 per share on an adjusted basis, or 14 cents lower than expected.

Revenue amounted to $959 million, which also missed the target of $977 million in net sales that Wall Street had called for. Fiscal 2017 earnings are slated to be in the range of $1 to $1.70 per share, while analysts expect earnings of $1.75 per share.

It is believed that Fossil Group will respond to these declining figures by reinvesting in the pricing of its wearables by making them lower. However, this will ultimately drive down the company’s profitability.

Pricing is expected to be about 10% lower, analysts believe. For its fiscal first-quarter report, Fossil is projected to earn between 25 cents per share to 10 cents per share, while Wall Street has this figure at seven cents per share.

It is difficult for Fossil Group to sell its high-priced watches in the current market due to other wearable devices such as smartwatches being priced at a similar amount and containing more features than the devices.

It remains to be seen whether or not the company will recover from a rough end to 2016.

FOSL stock plummeted 16.6% Wednesday.

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Article printed from InvestorPlace Media, http://investorplace.com/2017/02/fossil-group-inc-fosl-2/.

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