Thread regarding Fossil Inc. layoffs

Our portfolio strategy shouldnt be that hard to figure out really...

SMARTWATCHES

• Top specks, hybrid HR, LTE etc only for Fossil and Skagen with Fossil more fashion, Skagen minimalist design
• Sport models only for Puma and Misfit which should not offer other model except sport / performance oriented
• MK and other fashion brands: one more iconic model each with premium materials, design and price and low volumes, close to the offering of Tag, Movado, LV etc (no MKGO BS!)

TRADITIONAL WATCHES

• Fewer but better SKUs for Fossil and Skagen, accessible luxury positioning and more "on-trend" designs
• Reinforce luxury owned brands with credibility, Zodiac, Michele with premium pricing and dedicated storytelling
• Licence brands luxury: maximize Armani, MK, diesel focusing on luxury positioning, minimize SKUs and develop fewer but more iconic models
• Smaller license: no smart watches, no hybrids, low volumes but more creativity

JEWELERY

• Develop exertize, scale and investments to become a one stop shop partner for all the brands we also have watches for, with similar brand positionig

RETAIL

• Get out of leather where we have little credibility except for women business and fewer designs, shut all underperforming stores, make the rest smaller and with more compelling experience, especially for smart watches (see Apple store)

All of the above seems pretty basic and logical and likely more effective than bombarding the market every year with smart watches from all the brands with no differentiation and limited credibility except for a few. Segmentation should be much clearer in our portfolio, consumers want choice but ever more convenience and clear story telling

How can anybody get the inventory mix so wrong going into holiday sales?? How hard can it be, isnt it purely logical that you should weight your best product at full price at the time when consumers are spending and then promote in the off season? Having a 70% mix for Gen 4 and Sport while cheap Chinese brands and Fitbif are promoting all over is simply demented! But you can be sure that next year, with a likely recession coming, we will do exactly the opposite and be behind the curve once again!

I agree with the last post, there isn't a single chance a company like Google will ever buy Fossil, it makes no sense whatsoever. If anything I see more likely a merger with another watch manufacturer such as Timsx and Movado, or a PE stepping in givw the company still generates cash and has no debt and is valued at 50% book value. Realistically however, this has to be fixed from within and for that the strategy has to change as it is not working, no doubt about it. Going in the most important quarter of the year with a completely wrong mix of products while spending ad dollars on the latest model but having the mix majorly weighted onto the old on should be a fireabld offense, how can you get it so wrong and still have a job?? All we seem able to do is promote, promote, promote, all brands are massively discounted all the time, we cheapen the products, launch innovation and the cut the price down before consumers know about it and do it again.

I’m beginning to think this forum is a disinformation hub for insiders and apologist. A digital age carrot and stick to keep employees constantly guessing. Look at the numbers! The market is rewarding this management team with a twenty year low of four dollars per share, the previous decade it was priced above one hundred and thirty!

On the earnings call they admitted to overweighting the sport watch to the tune of 70/30 with the lower end split for gen 5, and all the while spending ad dollars on gen 5. This older generation will now have to be liquidated and docked as a write down. The guys on the call are destroying value as we speak, how is this defensible?

I would not bet on a slowdown for Fossil success as wall street is on a tear, for those who are advising good times in a market correction. Carrot!

I would not offer false hope that google will buy the company. How many retail stores does google own or lease…zilch. Why would they want to acquire lease obligations, debt, interest expenses, goodwill and old inventory. What intellectual property as it relates to health, fin tech, artificial intelligence, or enterprise programs does Fossil offer…none. They just siphoned your engineering team and the technology they developed in Burlingame. They own Fitbit now and a talented wearables team plus they have in house design capabilities…they don’t want your creatives either. Google is an ad company with seventy percent of revenue coming from that business and everything must bolster AI and data. Another carrot!

The company is trading at half the book value, I don’t see anybody let alone Google bidding for it.

What makes me sad is that they play mind games with you all through these channels and don’t give you ample time to prepare for your termination, its always “when will it happen?” “time to update the resume”. They fire folks with no advance from the bosses, and always prior to earnings in order to satisfy investors.

It’s on you to speak out, but the CEO is on the board and they must really like him! and he must really like his leadership team.

Should’ve kept Tory Burch Swiss made only, yet they cheap it down. People still pay top dollar for traditional watches, Fossil has no clue

Good intentions, bad execution summaries well what has been going on... The move into smart watches was worthwhile but not with all brands and licenses, the market is clearly polarizing and if you have no tech credibility there is no space for all the brands, who needs a Tory Burch smart watch really??? Marketing team has made so many mistakes, we kept focusing on push strategy and promotions when clearly consumers want fewer, but better choices. Similarly in traditional watches the focus should be on core brands, fewer better designs and more iconic models or collaborations. One Eleven, Mon Amie, Misfit... What a waste of time and resources. Puma is the only brand that should have a sport smart watch, is that so hard to understand??

Company is a joke. “Craft Brands” were the next big thing they thought. One-Eleven didnt sell. Then they created Mon Amie which was just a rebranded kate spade and didnt sell. Tried to market Mon Amie by painting a mural on the building....yet a section of the building that only employees can see. id–ts!

I liked the way Greg responded on the earnings call, and I’m thankful we have a smartwatch opportunity that he helped build. We still have a lot to work on like sales, planning, marketing, etc to be at our best in this category. But, our Gen 5 and Hybrid HR products are amazing, which is no easy feat. We have a lot to be proud of and to build from.

With the stock now at an historical low (4$!!!) i made a point of listening carefully to the conference call which was a case in point relative to the discussion in this forum. Greg commented on the following points 1) smart watches don't sell well in the traditional wholesale channels and we will refocus on electronics stores outlets 2) consumers are willing to pay full price for latest tech but for some absurd reason we went into 4Q with inventory mix 70% from old generation 3) wholesale teams will be redirected to traditional watches only with greater focus on best accounts 4) bigger push outside of the US where Android share is higher 5) investments in DTC and ecom platforms 6) fewer, more targeted SKUs and expand in jewelery.

All of these points actually make a lot of sense and seem pretty logical... What does not make sense however is why we didn't do it before!!! This is where management responsility is higher, having pursued an irrational strategy for the past 5 years... Remember that we went into tech storses already with Gen 3 to then pull back shortly after... Remember that we are now talking about fewer SKUs when just a few months ago the name of the game to return to growth was more products, drops etc... Remember when Greg called the Sport platform a "game changer" and just a few months later the model is discounted by more than 50% and inventories written down... Remember than Fitbit alone makes >1bn in revenues with essentially 3 SKUs, one brand and no stores and we struggle to keep 2bn with a huge portfolio, 460 stores and decades long relationships.. And on and on and on...

The market conditions have been bad but someone should take responsibility of this erratic strategy and inconsistent execution, we have been constantly one step behind and the consumers are as confused as we are... IMHO clarity should be above everything else:

1) Smartwatches only for few brands, with premium pricing, top specs and no discounts and channels that only can support a more complex product

2) Traditional watches with sharper storytelling, fewer models and more recognizable designs and clear differentiation across brands - third party channel should have no or limited overlap with smart watch offering

3) Scale in jewelery with more investments in design capabilities in a sector that is wide open for brands and isolated from tech disruption

Finally some executive who speaks truth. This group of current executives are a waste of money. They have ruined Fossil.

No respect for any of them, especialy the ones named in the above posts.

This forum should be for people who actually work at the company... Not for anybody who wants to vent whatever frustration they have with this company as stock holders or whatever other reason. This being said, I agree on one thing: we tried too many things to see what sticks. Fossil Swiss, Skagen, Misfit, smart watches, limited editions etc. and missed many trends in the same time. People have been moving away from brands with no clear story telling and we have not had that for a while. The teen market has also been huge in the past few years (Crocs anyone?) and we ignored that demographic which could have been a real engine for growth.

OH, The irony of saying “hindsight is 20/20” as we dissect this company, who’s basically having a big fat slice of humble pie! 2020 is the year of reckoning for all of it - being naive and thinking good times never end, and dependence on China manufacturing (coronavirus pandemic coming to city near you!) contracting disposable incomes in North America, Europe and retail apocalypse. The clothing industry already has shifted manufacturing among many Asian counties and India - it may be time to do the same. Or be truly radical and surprise the world by bringing manufacturing to the USA. ??

Everyone’s been stating “some mistakes” and “bets that didn’t pay off” - yes, Cancelling design tech R&D absolutely should be included. I submit that SKAGEN acquisition, and the laughable foray of Fossil Swiss Watches should be mentioned. Talk about a company with conflicting visions and Direction... wasted money and resources when it could have truly made a difference.

Future IMO looks like Google can, and will, wait until Fossil is very weak and can buy it all to gain access to another hardware designing company which already feeds on its Software ecosystem. In November 2019 Google bought Fitbit for $2.1 Billion, and Fitbit had bought Pebble before that. having too many sub license hardware partners dilutes the marketing message, weakens functionality of WearOS, very confusing to buy as a consumer; plus makes everyone look foolish. Key is One unified platform, backed with a true google branded hardware they can pour endless resources into and reap the full rewards & full profit instead of a slice.
They’d get much closer to the fashion brands as a result and could afford real “collaborations” co-branding big launches in the way Apple doesn’t allow. Samsung does cross market only its own mobiles Galaxy and home tech, but not tied with fashion labels.
Leathers and accessories business would be incidental as long as stuff can support or complement the tech. They could even push for more android mobile phone accessory and cases, phone wallets, etc. or smart jewelry that connects to google home.

It is easy to blame managdment when you are not the one taking the decisions... The truth is, market conditions have been awful and the company has been trying to make major changes at the very same time, while also cutting it debt. There were mistakes for sure but hindsight is 20/20 and progress is never smooth... Time will tell about the future of the business but in my opinion is still too early to judge, we have a strong foundation and credibility in the market place.

Wow! apologists abound one here.

Businesses have no friend or enemy like “creative destruction”. Information Technology eats traditionalist out of relevance. The CEO and management’s lack of vision even with a sufficient runway (2008) to develop or acquire technology is greatly to blame (i.e. k–ling their R&D dept. in 2010's, unloading Misfit talent at a bargain in 2019). Lack of reinvestment in your “intrinsic mote” which is design and creativity is the part of schumpeter’s “creative” element that management missed entirely.

Managerial incentives including the CEO’s focus on survival ensures the business cycle endgame and exit plan benefits them. Overpaying for Misfit then unloading the engineers to Google because managers are upset that engineering talent makes more money, does this make sense? engineers and creatives should be the ones leading lest you forget you are a “design company”.

The nikefication of the 70’s and 80’s which Fossil rode to prominence is still working for companies who reinvested in creativity and design. Think the likes of Nike (Mark Parker), Apple (Jony Ive), Polo (Ralph Lauren).

Information is the new luxury, it is the veritable apple of temptation that signify’s status. As time passes memory will serve these products as retro, and unfortunately the retro attribution that Fossil continues to play will strike hollow.

Recently, I discovered that his brother started a watch company based on a study that people would pay more for Detroit made products then went on to defraud the public with bogus “Made in US (Detroit)” claims, which they had to retract. Then it transformed into a vehicle for “creating jobs” riding on a politicians coattails all while laying people off and closing stores last year. Slick men gotta admit.

If you have to ask about the health of your company in forums like these you have a problem on the inside. When your CEO refused to show a picture of himself that’s also a sign.

Fossil still is a great company, and will no doubt thrive in the future. I'm not sure why people aren't talking about the fact that we experienced nearly all of our growth for many years (2009 - 2014?) from one brand, MK, mostly in wholesale in the U.S. and before Apple Watch. MK then peaked (as you would expect from a fashion trend that was on fire) and Apple became the biggest watch brand in the world in 3 years. Shoppers also then shifted from traditional wholesale (our bread and butter) to Amazon. These are facts....and they all happened AT THE SAME TIME!!!!! These aren't problems that Kosta created......but, he's clearly giving everything he has to create a brighter future by fighting through these changes. It's kinda stunning to think about the fact that we've lost 40% of our revenue due to these huge market shifts, and yet we have no debt and have several huge opportunities to grow with Asia, jewelry, smartwatches, etc. So, I think we're definitely positioned to grow again and thrive. Yes, the cuts are really hard. I've had to say goodbye to many friends recently. I'd say that our biggest sin was building the company too big during the MK years, so the cuts make things that much more painful. I also agree that we had some questionable leadership over time. But, I'm still really proud of Kosta and this company. I'm here to stay, and 100% believe in where we're headed.

I find it incredible that while Kosta still owns a chunk of stocks, to this day he does not take a salary, while Greg, Darren and other VPs earn more than 2 million a year, and they have a direct role in both laying off people and driving the share price down with their ineffective strategy! I agree that this is a leadership problem and the fist rule of leadership is to lead by example...these compensation packages are unacceptable while the company is bleeding and say all there is to say about how much of its culture Fossil has lost!

Thanks for your comments and sharing your experience...is there anything that Kosta can do at this point? He is still the company largest shareholder (although much smaller than he used to own) and he still cares...did Tom see this coming? There has been some turnover lately both at the board level and management (Beth etc) , do you think this can have a (positive) impact? There must me a way out of this situation.

Fossil is a complex beast who has simply lost their way. I was an executive there for about a decade, from the mid-2000's through the mid 2010's, so I saw the best of times and the beginning of the worst of times. Much of the current struggles can be attributed to one word: leadership

While Kosta is still there, many of the leaders who made Fossil what it was, have either been forced out or left on their own. The secret sauce is gone. When DH was hired to lead HR in 2011, he had come from The Limited; it's ironic, because "limited" is his HR experience. The guy is a PHD who lucked into an exec job at the Limited and parlayed that into Fossil. He lacks genuine HR experience, which is why so many in HR have quit over the past few years. Kosta always said he didn't want to become "another big, dumb company", but he hired a guy from one and allowed DH to change the culture by hiring a bunch of other C-level guys (all men!) from other big companies. In 2012, we brought in 3 new C-level execs: Ed (CIO, the outsourcing guy from JCP), John (COO, from Pandora jewelry) and Dennis (CFO from Guess, who was an absolute disaster). None of them worked well together. Greg was hired in Jan, 2013, and the sum of all of this leadership turnover changed the culture completely. Fossil used to be a place where titles didn't matter, we had no admins and everyone had an open door. Fossil became a place of hierarchy where the C-levels and SVPs only spoke to each other (and not the minions). We had our first layoff in Q1, 2009 during the recession and Kosta actually cried because he never wanted to lead a company that laid people off. Once McKinsey came up with the New World Fossil plan (2015), layoffs became a seasonal thing.

When this batch of C-level leaders took over (2012), the stock was trading +/- $100/share. Now it is less than $6/share, it's lowest level since 1998. At some point, the leaders need to own the company's performance. Is Greg the answer? You've got to be kidding me!! Nice guy, but what has he ACTUALLY done in 7 years that has made the company profitable? He and the rest of the leadership team have driven a once very profitable company into the ground. They make excuses at every town hall and earnings call about "headwinds" and blame the sales decline on things outside of their control. Really? Apple watch is not declining. Movado is not declining either. Swatch Group is growing and is very profitable. How do you think the coronavirus is going to impact Fossil? Probably 75% of Fossil watches are made in China and it's one of the few markets where sales are growing. Q1, 2020 is going to be an absolute disaster for the company!

The magic is gone. It's time to go.

Agreed, thanks for the post, it is nice to consider the future. But I can’t say that future looks bright or long. Everything explained in the meetings sounds exactly not transformative (change is not transformational by itself) and does not sound “thoughtful”, especially considering how long we all think this has been worked on. And worse, none of the meetings have been about the entire company or how we are going to do things differently, so what is the plan to become a “smaller, more profitable company” like we keep hearing? DH told the DMN that the “thoughtful” changes were to “become a more streamlined and efficient company, well-positioned to drive shareholder value," but none of what I have heard supports any of that, not even hearing “fewer skus” again. Smaller is not the same as streamlined, not by a long shot. So the shareholder value, I guess that is a temporary bump at the expense of our laid off coworkers. Still there are great coworkers here and cool things to learn, just maybe don’t go all in counting on it long term, and keep your eyes open and your ears to the ground.

As soon as the economy cools off and people don’t have as much dispensable income for luxury, they’ll come back to brands like Fossil, who offer “affordable” luxury.

I think the company will eventually stabilize and survive, maybe not thrive as its best days are behind but this is a cyclical sector and one never knows what could reignite some growth...out price point is also an issie, there is little pricing power unless we bring some genuine innovation and support the brands with big campaigns etc, which is hard to say we do...I wonder however what will happen if the share price keep collapsing and Google starts focussing on Fitbit first...private equity take over? A merger with Movado/Timex (who are possibly in a worse situation lacking smartwatches) to survive? Maybe adding Shinola to have more luxury and bring Tom K and team back on board? That would be ironic...

It ain't easy catching a falling knife...it has been a while since we had a "IT" product...we have been chasing trends and not leading, I used to think we had a moat in the portfolio, design and vertical integration...I am not so sure anymore. Management is only part of the problem but they were given a tough hand lately...I still love the company and respect its history and role in the market place but we better figure it out fast

Thanks for the post, it s good to vent outside of office politics...for what is worth I am not sure there was much foresight in the push into smartwatches...maybe we should have focussed on one brand or two but not all...the problem is, they absorbed a lot of resources and attention and reduced credibility in the traditional offering...we got into a fight with people much bigger than us and with deeper pockets...surely Google sleeping at the wheel did not help either..

Not all is bad at Fossil but surely it has been a tough period...what I am concerned about is too many false starts, smartwatches have become a decent business but considering the competition ex Apple and Samsung, we could have done better and push them even more. The presentation inside the stores is also not as good, if you do have retail at least make it a better experience...and the stores are too big for what we sell, which is ultimately small items. Investing into digital marketing has been proactive but we probably went to far cutting budget for traditional channels (tv etc.) for the broader portfolio. IMHO we did certain things right but remained stuck in other old school ways which speaks to the not great leadership in this transition. There is still time to save the ship but the urgency is higher and at the end of the day consumers will decide the future of this company as long as the product is good.