Q1 2024 Fossil Group Inc Earnings Call Transcript
Key Points
- Fossil Group Inc (FOSL) reported first quarter net sales and operating margin in line with expectations, demonstrating effective management amidst challenging conditions.
- Gross margin increased by 300 basis points compared to the previous year, benefiting from the exit of the smartwatch category, improved product margins, and lower freight costs.
- Operating expenses declined by 20% year-over-year, reflecting cost savings from reduced headcount and operational efficiencies initiated in 2023.
- The Transform & Grow Plan is on track to deliver $100 million of annualized benefits in 2024, with significant contributions expected from product sourcing and supply chain initiatives.
- Fossil Group Inc (FOSL) received a US tax refund of $57 million, enhancing liquidity and supporting the execution of strategic plans in 2024.
- First quarter net sales totaled $255 million, down 21% in constant currency, indicating continued pressure on revenue generation.
- Approximately half of Fossil Group Inc (FOSL)'s revenue base is experiencing persistent challenges, particularly in licensed fashion watch brands and the leathers category, which were down about 30% in Q1.
- The company's exit from the smartwatch category and the closure of low to negative profit contribution retail stores create a headwind to sales in 2024.
- Economic challenges in Greater China continue to impact consumer demand, contributing to a high double-digit decline in the region.
- Despite efforts to stabilize the business, new product introductions and merchandising initiatives are not yet sufficient to offset broader category and brand challenges in major markets.
Good afternoon, ladies and gentlemen, and welcome to the Fossil Group First Quarter 2024 earnings call. At this time, all parties are in a listen only mode. This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company.
I will turn the call over to Christine Green of The Blueshirt Group to begin.
Hello, everyone, and thank you for joining us. With us today on the call are Jeff Boyer, interim CEO; and Sunil Doshi, Chief Financial Officer. I would like to remind you that information made available during this conference call contains forward-looking information and actual results could differ materially from those that will be discussed during this call.
Fossil Group's policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in the company's Form 8-K, 10-Q and 10-K reports filed with the SEC
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