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RICHARDSON, United States– Fossil Group Inc. tumbled as much as 28 percent in late trading after the wristwatch company gave a bleaker outlook, a sign that a retail slump and Apple Inc.'s incursion into the industry are taking a grim toll.
Fossil now expects sales to decline as much as 8.5 percent this year, compared with a previous range of up to six percent. The company also predicted a deeper loss than it had forecast earlier, hurt by a write-down of its assets.
The guidance provided little hope to investors that Fossil can pull out of its tailspin soon. It’s saddled with a deep reliance on the struggling department store industry, and the broader watch industry is under attack by Apple and other technology companies. Though Fossil has been expanding into smartwatches and wearable devices, the effort has been slow to pay off.
“We operate in a market and retail environment experiencing unprecedented disruption,” Chief Executive Officer Kosta Kartsotis said in a statement.
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The stock fell as low as $8.54 in extended trading. Even before the plunge, Fossil was down 54 percent in 2017. And the shares declined in the previous three years, underscoring investor pessimism that the company can stage a comeback.
As it tries to rebuild, Fossil is releasing a flurry of new devices, including fitness trackers and other tech-heavy timepieces. The company has said it will introduce 300 products this year to fight the downturn. It’s also been closing underperforming stores.
Fossil now expects a loss of as much as $7.42 a share this year. That includes a write-down of $6.50 and 60 cents in restructuring charges.
Adding to the upheaval, chief financial officer Dennis Secor is leaving the Richardson, Texas-based company. The executive “has decided to relocate back to California for personal reasons,” Fossil said. Jeffrey Boyer, a board member who previously served as CFO at Pier 1 Imports Inc., will take over the role.
By Nick Turner, Stephanie Wong; Editor: Nick Turner
