(By Balaseshan) Fossil Inc. (NASDAQ:FOSL) shares jumped 18.64% in premarket after the fashion accessories maker reported a 11.6% increase in quarterly earnings on a double-digit rise in sales as well as strong growth in its geographical segments. Results exceeded Street's expectations.
Earnings for the second quarter were $57.3 million or $0.92 per share, up from $51.4 million or $0.80 per share last year. Excluding the impact of costs related to the acquisition of Skagen, earnings per share would have been $0.93 for the latest quarter.
Sales jumped 14.3% to $636.1 million. The translation impact of a stronger U.S. dollar decreased the company's reported net sales by about $21.4 million for the current quarter.
Analysts, on average, polled by Thomson Reuters had expected a profit of $0.78 per share on revenue of $634.86 million for the second quarter.
Global watch sales led the company's quarterly sales growth, increasing 17.1%, while its leather business grew 8.2% primarily related to direct to consumer channel. Direct to consumer net sales increased by 17.7% on a 11.2% rise in the average number of company-owned stores open during the quarter and comparable store sales gains of 1.8%.
Sales from North America wholesale segment grew 18.2%, primarily attributable to a 25.2% increase in watch sales and a 95.1% jump in jewelry sales. Excluding sales of SKAGEN branded products, U.S. wholesale sales increased 14.7%.
Europe wholesale net sales increased 14.0%. Excluding SKAGEN branded products, sales growth of 7.5% was primarily attributable to a 13.0% increase in watch shipments and a 10.3% rise in third party distributors sales.
Asia Pacific wholesale net sales grew 27.2%. Excluding sales of SKAGEN branded products and sales generated from assembly operations, net sales grew 24.6% largely attributable to increased watch sales of $14.5 million.
As relating to sales for the second half of fiscal 2012, historically the company has experienced balanced growth between its fiscal third and fourth quarters. However this year, given an earlier end to the third quarter versus last year, the company expects some shift of sales from the third quarter into the fourth quarter.
The company also expects Skagen related sales increases to be more impactful in the fourth quarter as it completes the transition of Skagen's third party distributor businesses into its subsidiary environment early in fourth quarter. For the fourth quarter, the company expects reported net sales to increase about 16%, with constant dollar net sales increasing 18%.
For the third quarter, Fossil expects reported net sales to increase about 11% with constant dollar net sales increasing 15%. The company anticipates earnings of $1.09 to $1.11 per share and adjusted earnings of $1.15 to $1.17 per share. Street analysts predict profit of $1.37 per share on revenue growth of 15.30%.
For the fiscal 2012, the company now projects earnings of $5.20 to $5.25 per share and adjusted earnings of $5.29 to $5.34 per share, while Street predicts $5.28 per share. Previously, Fossil had expected earnings of $5.30 to $5.40 per share.
FOSL closed Monday's regular session up 1.99% at $69.79. The stock has been trading between $62.77 and $139.20 for the past 52 weeks.