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About Fossil Partners, L.P.

Fossil's bedrock is the watch business. It also distributes fashion accessories such as leather goods, handbags, sunglasses, and jewelry. A leading seller of mid-priced fashion watches in the US, its brands include company-owned Fossil and Relic watches and licensed names like Armani, Michael Kors, Chaps By Ralph Lauren, DKNY, and Kate Spade New York to name a few. It also offers private-label watches for Nordstrom, Target, and Walmart. The company peddles its products through department stores, mass merchandisers, and specialty shops in some 150 countries, as well as online and at around 485 company-owned stores in the US and abroad. Its products are also sold on cruise ships and in airports. About 40% of the company's revenue is generated in the US.

Operations

Fossil's watches — both traditional and smartwatches — are its largest product line, accounting for approximately 80% of net sales. Its primary owned watch brands include Fossil, Michele, Misfit, Relic, Skagen, and Zodiac. It also has exclusive license agreements for watches with several brand names, some of which are Armani Exchange, BMW, Diesel, DKNY, Kate Spade New York, Marc Jacobs, and Michael Kors.

The company's leather products (and Fossil eyewear) generate around 10% of sales and include handbags, small leather goods, and belts sold primarily under the Fossil and Relic brands. 

Jewelry represents more than 5% of revenue and sports name brands Diesel, Emporio Armani, Fossil, Michael Kors, and Skagen. 

Geographic Reach

Texas-based Fossil has around 215 stores under a variety of formats and banners (Fossil, Watch Station, and SKAGEN) across North America. Another 270-plus stores are located outside North America. Fossil has warehouses and distribution centers in the US (Texas), Germany, and Hong Kong. It sells its products in about 150 countries worldwide, but the US is its largest market, accounting for 40% of net sales.

The Americas segment primarily includes sales to customers in Canada, Latin America, and the US. The Europe segment comprises European countries and the Middle East and Africa. The Asia segment is based in Australia and serves China, Japan, India, and several other Asian countries.

Sales and Marketing

The company's products are distributed globally through various distribution channels, including wholesale, direct to the consumer, and through third-party distributors. Its products are sold in department stores, specialty retail stores, specialty watch and jewelry stores, and through websites.

Fossil markets its products through point-of-sale merchandise displays, print and media advertising, and company websites, catalogs, and retail stores. It has reduced its advertising costs in recent years spending $181 million in 2018 compared with $207 million and $238 million in 2017 and 2016, respectively.

The company's wholesale customers include several major department stores as well as Amazon.

Financial Performance

Fossil's revenue and profits have been on a downward spiral for the last several years with an overall drop in sales of 28% since 2014. Consumers are shifting away from traditional products to connected watches and making more purchases online versus at a brick and mortar stores.

Revenue in 2018 decreased 9% to $2.5 billion from $2.8 billion in 2017. Sales were down in all product categories — watches, leathers, and jewelry. 

The company posted a profit loss of $3.5 million in 2018, following a loss of $478.2 million in 2017. This was mainly due to lower sales, slightly offset by lower operating costs from decreased restructuring costs and store closures. In 2017, the company posted goodwill and trade name impairment charges of more than $400 million.

Cash at the end of fiscal 2018 was $410.9 million, an increase of $179.2 million from the prior year. Cash from operations contributed $248.1 million to the coffers, while investing activities used $15.6 million, mainly for additions to property, plant, and equipment. Financing activities used another $62.7 million for dividends to stockholders and the company's stock repurchase program.

Strategy

As consumers are shifting away from traditional products to connected watches, and shopping online rather than brick and mortar stores, Fossil is struggling to recover from a decline in sales. Its main focus is to improve profitability and is in the midst of a multi-year transformation that addresses these trends.

Although negatively affecting sales in the short term, Fossil has exited marginal businesses and product lines and continues to close underperforming stores. It has also terminated some of its licensing agreements. It is focusing instead on innovation and design in the watch category, where its connected watches are its only fast-growing product line. In 2018, it partnered with Citizen Watch to expand its hybrid smartwatch category, and in 2019, it sold the intellectual property related to its smartwatch technology, as well as some of its R&D staff, to Google for $40 million.

Fossil is also expanding its digital marketing efforts including e-commerce, specifically for the Fossil brand, and using digital channels such as digital media, social media, and paid search to reach more customers.

Internally, the company is reviewing its inventory and sourcing activities with an eye toward increased speed and efficiency within its operations.

Company Background

Fossil Group dates back to 1984 when it was originally an import-export company called Overseas Products International. Seeing high profits from Asian imports, the company designed its Asian-made Fossil watches with a retro image and sales took off. In 1988, it began selling its watches wholesale to department stores.

Between 1987 and 1989 sales rose from $2 million to $20 million. In 1990 a less-expensive line of watches, Relic, was created for stores such as JCPenney and Sears. The company was renamed Fossil in 1992 and went public in 1993. Its product line then included women's accessories (such as belts) and small leather goods for men. It later added sunglasses and jewelry to its product lines.

Fossil Partners, L.P.

901 S CENTRAL EXPY
Richardson, TX 75080-7302
Phone: 1 (972) 234-2525

Stats

Employer Type: Privately Owned
Senior Technology Recruiter: Christie Linebarger
Employees (This Location): 700
Employees (All Locations): 1,325

Major Office Locations

Richardson, TX

Other Locations

Dallas, TX
Richardson, TX