Fossil Inc. (FOSL, Financial) filed Quarterly Report for the period ended 2010-04-03.
Fossil Inc. has a market cap of $2.8 billion; its shares were traded at around $41.88 with a P/E ratio of 20.4 and P/S ratio of 1.7. Fossil Inc. had an annual average earning growth of 11.9% over the past 10 years. GuruFocus rated Fossil Inc. the business predictability rank of 4.5-star.FOSL is in the portfolios of Chuck Royce of Royce& Associates, Ron Baron of Baron Funds, Jeremy Grantham of GMO LLC.
Gross Profit. First Quarter gross profit margin increased by 340 basis points to 55.8% compared to 52.4% in the Prior Year Quarter. This expansion in gross margin coupled with higher sales levels resulted in gross profit increasing by $50 million, or 29.5%, to $219.4 million in comparison to $169.4 million last year. A weaker U.S. dollar in comparison to Prior Year Quarter contributed 130
Operating Expenses. First Quarter operating expenses expressed as a percentage of sales decreased to 42.8% compared to 45.1% in the Prior Year Quarter. Total operating expenses increased by $22.6 million, which, included a $5.1 million unfavorable impact from the translation of foreign-based expenses as a result of the weaker U.S. dollar as compared to the Prior Year Quarter. On a constant dollar basis, operating expenses increased $17.5 million, primarily the result of increased sales. Our wholesale and corporate cost areas accounted for $7.5 million and $3.6 million, respectively, of the increase while our direct to consumer business operating expenses increased by $6.4 million. Expense increases associated with our wholesale segments were primarily attributable to increased payroll and marketing expenses while expense increases in our corporate cost area were primarily related to increased payroll, equity compensation and legal fees. Expense increases within our direct to consumer segment were primarily attributable to store growth over the last twelve months. For fiscal year 2010, we are not anticipating any significant change in operating expenses as a percentage of net sales. We expect that increases in net sales will be offset by higher levels of operating expenses primarily due to the normalization of compensation and other expenses that we reduced in 2009, a higher sales mix of direct to consumer sales which carry higher levels of operating expenses as a percentage of net sales, but also generate higher gross margins as well, and further investments in supporting our current and long-term growth initiatives.
Provision For Income Taxes. Income tax expense for the First Quarter, attributable to Fossil Inc., was $15.7 million, resulting in an effective income tax rate of 30.4%. For the Prior Year Quarter, income tax expense was $9.3 million, resulting in an effective rate of 35.0%. The lower effective tax rate for the First Quarter in comparison to the Prior Year Quarter was the result of a higher proportion of foreign income, which was taxed at lower effective tax rates, and the recognition of previously unrecognized tax benefits. We estimate our fiscal year 2010 effective tax rate will approximate 35%, excluding any discrete events.
Net Income Attributable to Fossil, Inc. First Quarter net income attributable to Fossil, Inc. increased by 107.3% to $35.9 million, or $0.53 per diluted share, inclusive of a favorable $0.05 per diluted share impact related to the weaker U.S. dollar comprised of $0.07 from the translation of foreign-based s
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Fossil Inc. has a market cap of $2.8 billion; its shares were traded at around $41.88 with a P/E ratio of 20.4 and P/S ratio of 1.7. Fossil Inc. had an annual average earning growth of 11.9% over the past 10 years. GuruFocus rated Fossil Inc. the business predictability rank of 4.5-star.FOSL is in the portfolios of Chuck Royce of Royce& Associates, Ron Baron of Baron Funds, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
The majority of our products are sold at price points ranging from $50 to $500. Although the current economic environment continues to weigh on consumer discretionary spending levels and, ultimately, our net sales, we believe that the price/value relationship and the differentiation and innovation of our products, in comparison to those of our competitors, will allow us to maintain or grow our market share in those markets in which we compete. Historically, during recessionary periods, the strength of our balance sheet, our strong operating cash flow and the relative size of our business with our wholesale customers, in comparison to that of our competitors, have allowed us to weather recessionary periods for longer periods of time and generally resulted in market share gains to us.Gross Profit. First Quarter gross profit margin increased by 340 basis points to 55.8% compared to 52.4% in the Prior Year Quarter. This expansion in gross margin coupled with higher sales levels resulted in gross profit increasing by $50 million, or 29.5%, to $219.4 million in comparison to $169.4 million last year. A weaker U.S. dollar in comparison to Prior Year Quarter contributed 130
Operating Expenses. First Quarter operating expenses expressed as a percentage of sales decreased to 42.8% compared to 45.1% in the Prior Year Quarter. Total operating expenses increased by $22.6 million, which, included a $5.1 million unfavorable impact from the translation of foreign-based expenses as a result of the weaker U.S. dollar as compared to the Prior Year Quarter. On a constant dollar basis, operating expenses increased $17.5 million, primarily the result of increased sales. Our wholesale and corporate cost areas accounted for $7.5 million and $3.6 million, respectively, of the increase while our direct to consumer business operating expenses increased by $6.4 million. Expense increases associated with our wholesale segments were primarily attributable to increased payroll and marketing expenses while expense increases in our corporate cost area were primarily related to increased payroll, equity compensation and legal fees. Expense increases within our direct to consumer segment were primarily attributable to store growth over the last twelve months. For fiscal year 2010, we are not anticipating any significant change in operating expenses as a percentage of net sales. We expect that increases in net sales will be offset by higher levels of operating expenses primarily due to the normalization of compensation and other expenses that we reduced in 2009, a higher sales mix of direct to consumer sales which carry higher levels of operating expenses as a percentage of net sales, but also generate higher gross margins as well, and further investments in supporting our current and long-term growth initiatives.
Provision For Income Taxes. Income tax expense for the First Quarter, attributable to Fossil Inc., was $15.7 million, resulting in an effective income tax rate of 30.4%. For the Prior Year Quarter, income tax expense was $9.3 million, resulting in an effective rate of 35.0%. The lower effective tax rate for the First Quarter in comparison to the Prior Year Quarter was the result of a higher proportion of foreign income, which was taxed at lower effective tax rates, and the recognition of previously unrecognized tax benefits. We estimate our fiscal year 2010 effective tax rate will approximate 35%, excluding any discrete events.
Net Income Attributable to Fossil, Inc. First Quarter net income attributable to Fossil, Inc. increased by 107.3% to $35.9 million, or $0.53 per diluted share, inclusive of a favorable $0.05 per diluted share impact related to the weaker U.S. dollar comprised of $0.07 from the translation of foreign-based s
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