Fossil smartwatches are make or break in stifled market

Financial analysts are pouring cold water on Fossil’s smart wearables bid, characterizing it as a hardware sector with shrinking margins and indeterminate growth.

The company wrapped its fourth fiscal quarter on December 31 and have just put out numbers for it: sales are down 3 percent for the season and 6 percent for the year, compared to 2015. Watches, leathers and jewelry all shrunk. Operating income shrunk. Net income shrunk. The only bright spot against the Americas and European geographies is a 13 percent revenue spike from Asia.

Traditional high-margin watches fell away from customer checkouts and corporate’s focus. And so, 2016 was the year that Fossil went all-in on smartwatches and wearable tech with the gearings of Skagen and Misfit and introduced a bevy of Q wearables.

“Delivering some stability in the watch category during the quarter reinforces our belief that with our technology capabilities, we can turn what was once a headwind into a tailwind,” said CEO Kosta Kartsotis.

Kartsotis promises that Fossil and its associated brands will be putting out 300 SKUs this year.

Alas, margin has indeed been on the decline, dropping 2 whole percentage points to 51 percent in Q4. And with forward guidance for a flat or down year in sales, margins and earnings, the headwinds are still more apparent right now than before with single-digit growth in global wearables sales and Apple Watch incumbency.

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About The Author
Jules Wang
Jules Wang is News Editor for Pocketnow and one of the hosts of the Pocketnow Weekly Podcast. He came onto the team in 2014 as an intern editing and producing videos and the podcast while he was studying journalism at Emerson College. He graduated the year after and entered into his current position at Pocketnow, full-time.