Nov. 12--Richardson-based Fossil Inc. on Tuesday reported better-than-expected third-quarter results but said it's lowering its fourth-quarter forecast as the global economy deteriorates and a stronger U.S. dollar affects its overseas business.

Chief executive Kosta Kartsotis said the company is becoming as "lean and mean as we can" to handle the uncertainty. Fossil is hiring fewer people and cutting spending, but it's moving forward with new products to feed its wholesale pipeline and to grow its retail business, he said during a call with investors.

Fossil is also ready to pounce on market share opportunities that may come up, he said, and the company is benefiting from longtime relationships in Asia, where Fossil has a track record with factories.

Shares gained 84 cents a share Tuesday to close at $15.82. The company said it has total debt of $9.1 million and enters the fourth quarter with $125 million in cash.

Since the end of the third quarter, business conditions have grown more challenging worldwide, said Mike Kovar, chief financial officer. At the same time, the U.S. dollar has strengthened appreciably against most other currencies, which has a big impact on Fossil because more than half its revenue is generated outside the U.S.

The watch and accessories maker said it now expects to earn 70 cents a share in the fourth quarter, down from an estimated range of 94 cents to 97 cents a share given in August.

Fossil also said it will open 40 to 50 stores next year, down from this year's 83 stores and a previous forecast to duplicate that in 2009. Fossil will open 37 stores in the fourth quarter and will end this year with 325 stores. It also cut capital spending this year to $65 million to $70 million, down from its previous estimate of up to $80 million.

Third-quarter net income increased 20 percent to $36.5 million, or 54 cents a share, compared with net income of $30.5 million, or 43 cents, a year ago. The consensus estimate from analysts surveyed by Thomson Reuters was 49 cents for the quarter ended Oct. 4.

Sales in the quarter increased 14 percent to $409.8 million from $358.6 million last year.

Fossil's retail division posted a 2.7 percent same-store sales increase in the third quarter. While double-digit same-store sales declines characterized October for most retailers, Fossil said its sales rose 4.8 percent in its accessories stores and its outlet store sales were up 6.8 percent.

Third-quarter online sales rose 33 percent, including a 7.8 percent increase in the U.S. and strong gains from a Web site that opened a year ago in Germany. It recently opened other online sites in the United Kingdom, Singapore and Australia. Third-quarter watch and accessories wholesale revenue rose 12.1 percent overseas and 7.7 percent in the U.S. Jewelry was its fastest-growing category, rising 31 percent.

-----

To see more of The Dallas Morning News, or to subscribe to the newspaper, go to http://www.dallasnews.com.

Copyright (c) 2008, The Dallas Morning News

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

FOSL,

A service of YellowBrix, Inc.