Thread regarding Fossil Inc. layoffs

Garmin, has credibility in the space given it was a gos tracker and it focussed on power users and athletes, Fossil is a fashion company selling overpriced quartz sudo-watches, it quite something it has any market share at all. Seriously this Forum seems to be 5 disgruntled employees always repeating the same stuff. Business has been tough, very tough, the company had to make tough decision, it is still surviving, it has hardly any debt now and it can live another day. Mistakes were made here and there, it s business, deal with it.

True, most of the companies stated dropped the ball because of leadership, but only one had the previous experience of releasing a Bluetooth watch back in 2006 in collaboration with Sony Ericsson, and that was Fossil. If they knew it could be done why would they blatantly avoid the prospect of behemoths like Apple and tinkerers alike from entering this space. The company should have invested the cash when it had it instead of buying back stock, and yes that means adopting technology. How preposterous to think that Disney should’ve stuck to “traditional” hand drawn animation when the objective was to push the medium by any means to dominate the market.

Companies who have a proper movement supply chain and are diversified like Swatch, Seiko, Citizen are doing ok. High luxury has been doing ok. Garmin, a company which was not in the wearables accessor market has a higher market share than Fossil and runs wear os. Showing you that you can enter a market if you are truly dedicated to allocating resources.

For all the criticism about Fossil management, I would like someone to mention another company in the traditional watch segment who has don't much better in the last 5 years: Timex, Movado, Invicta??? The truth is , they have all been under the same huge pressure from consumers moving to Apple watch and shifting channel...these are not tech companies people, they have always sold overpriced cheap products manufactured in China and it was working just fine. Truth is also that Fossil partnered with Google early on and was fully committed to Wear OS: unfortunately though Google was not and did not deliver on their side of the bargain. I am hopeful the worst has passed and there is some more stability from now on with traditional watches returning in demand and connected having slowly matured to an acceptable standard.

Leadership is to blame, if markets were efficient and competition was non existent there would be no incentive to pay outlandish sums and options to CEO’s and Executives. Fossil never funded proper R&D, knowing full well that microchips as observed by Moore’s would likely be embedded on wrist worn devices. They initiated a stock buyback instead of pouring money into research and strategic acquisitions, which caused a cash crunch when debt was heavy on the books and not to mention a negative return for their investment. When they did acquire it was too late and offloaded the engineers to google. The market signals were clear, Apple would release a product. They lived for a good while off of Kors, and invested in net negative ideas such as Swiss and Crafts. Instead of skewing connected watches to what was selling they overweighted to what was not selling, and are now living with excess inventory which affects their own pricing scheme causing lower recorded revenue. The only reason to restructure the company is because of their bad strategic choices from years ago, again, there would be no need if they had proper leadership. It was in decline before the pandemic. Any general who goes into war doesn’t return a defeated man complaining about the conditions of war, yes, the opposition will be shooting at you and the weather may turn.

As painful as the process of the last few years may have been the company may in fact be on the right track. COVID has been bad but it may have helped accelerating a process of restructuring (reducing headcount , closing stores) which was long overdue. Let s be honest , Fossil has never had particularly exciting products but just fair, accessible and good for gifting watches and accessories. It followed the playbook that worked at the time: open stores and expand your wholesale accounts. Then came the Apple watch and Amazon. One cannot blame management for everything, they have been handed horrible cards for the last four years and they are starting to re-emerge a leaner company, a less US focussed company and a more e-commerce driven company with a wider product offering in watches (gen 5, hybrid) to stay in the fight. It has been painful but the recent results show that the company can still survive, if not thrive.

Press release before the call allows investors to see the numbers, that’s why stock went up after hours. Although if they’d waited for they realize that gains were less organic and more operational cuts, lease expirations, and slashing cap ex. Remember that, as you walk through the tear stained halls and hear haunts of former employees cries that the reward for loyalty is a lighter wallet, while the leadership team is recompensed with a higher stock price. Now that they’ve rewarded investors will the positive cash flow be used to pay everyone in full?

Fossil beat expectations, EPS +.31 (3QLY -.51), meaning they swung to profitability. Revenue may have been down, but it was far less than management had projected in the prior release.

Revenue is only one factor investors consider. Margin improvement, operating income, and debt reduction also caused the stock to soar this time.

Someone bought the stock after hours before the earnings release. The revenue is down. The stock soared by 35%. Why?