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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 450 company-owned stores in the US and abroad. Its products are also sold on cruise ships and in airports. About 35% 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 200stores under a variety of formats and banners (Fossil, Watch Station, and SKAGEN) across North America. The company has nearly 285 retail and outlet stores internationally. 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 more than 35% 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 $171 million in 2019 compared with $181 million and $207.1 million in 2018 and 2017, respectively.

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

Financial Performance

During fiscal year 2019, net sales decreased 13% to $2.2 billion as compared to fiscal year 2018. During fiscal year 2019, sales of FOSSIL branded products decreased 10%, as compared to fiscal year 2018, with declines across all product categories. FOSSIL brand watch sales decreased 8% during fiscal year 2019, driven by declines in Americas and Europe while Asia increased modestly.

The company generated a net loss of $52.4 million in fiscal year 2019, as compared to a net loss of $3.5 million in fiscal year 2018.

Cash at the end of fiscal 2019 was $207.7 million, a decrease of $203.1 million from the prior year. Cash from operations used $14.2 million, while investing activities provided $18.7 million, mainly from proceeds from asset divestitures. Financing activities used another $208.5 million for debt payments.

Strategy

Fossil's goal is to drive shareholder value by increasing earnings and making a positive impact on its people, planet and communities. While the company currently operate in a challenging business environment, it is leveraging its business strengths while continuing to lead a significant internal transformation to strengthen its business model. The company plan to achieve its business strategy by focusing on the following strategic initiatives: profitability; innovation; sustainability; and e-commerce and digitalization.

The company is focused on improving its overall profitability through revenue-management strategies to price and position its products optimally and most effectively. This includes improving its gross margins by increasing economies of scale with its smartwatches, re-negotiating pricing with their suppliers, and further reducing its supply chain costs. Fossil Group also focused on lowering its base expenses by leveraging lower sales with lower variable expenses and by achieving organizational efficiencies through its New World Fossil initiatives. The company continue to close its low-performing stores and exit unprofitable businesses as it improve its net income and working capital and reduce its outstanding debt position.

Fossil are investing in its digital infrastructure and commerce capabilities across its owned and third-party e-commerce sites. The company plan to continue to expand its digital capabilities for consumer insight, analytics and the use of data throughout their organization, as well as shifting to a new marketing and commerce platform to drive greater personalization and a better consumer experience.

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

Firm Stats

Employer Type: Privately Owned
Dc Manager Shipping: Kendrick Blanton
Inbound coordinator: Snjezana Jojic
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