Shares of Fossil Group (NASDAQ: FOSL) rallied Wednesday, after the company reported earnings and sales that topped analysts' estimates because of a surprise jump in demand for wearables.
Same-store sales climbed 2% in the fourth quarter, Fossil said Tuesday, as the company rolled out new hybrid and display smartwatches across 14 brands. E-commerce sales were up 31% during the period.
Sales of wearable devices nearly doubled last year to over $300 million, and the category now accounts for 14% of Fossil's overall watch revenue. Similar to the Apple Watch and Fitbit devices, Fossil aims to sell more smart products that monitor heart rates and track steps.
Said CEO Kosta Kartsosis, "With wearable launches ahead of holiday, we significantly improved the trajectory for Michael Kors watches and drove a double digit increase in fourth quarter Armani watch sales.
"Our priorities are focused on delivering innovative wearable and traditional watch styles while improving performance in the handbag and jewelry categories and driving increases in digital sales," Kartsotis added about initiatives in fiscal 2018.
Total sales globally fell 4% to $921 million during the fourth quarter, but analysts were expecting revenue of $890 million.
The company reported a net loss of $80 million, or $1.65 a share, compared with net income of $50 million, or $1.03 per share, a year earlier Excluding one-time items (a charge related to new tax legislation in the U.S.), Fossil earned 64 cents a share, while analysts were calling for 40 cents.
Shares vaulted $6.41, or 70.9%, mid-morning Wednesday to $15.45
