intensityjp Posted July 9, 2015 Share Posted July 9, 2015 http://www.breathecast.com/articles/apple-watch-decline-news-tech-titan-selling-less-than-20-000-iwatch-units-daily-sales-down-90-29465/ and http://www.nytimes.com/2015/06/11/fashion/why-im-breaking-up-with-the-apple-watch.html?_r=1 There is still hope for FOSL afterall. Link to comment Share on other sites More sharing options...
kab60 Posted July 9, 2015 Share Posted July 9, 2015 While I welcome the news I can't say I trust it. The story seems very shady. Link to comment Share on other sites More sharing options...
innerscorecard Posted July 9, 2015 Share Posted July 9, 2015 The report's methodology and conclusions are flawed. Additionally, product category disruption happens slowly at first - it would be wrong to conclude from slow Apple Watch sales that traditional watch sales are stable or even only a slowly melting ice cube. Link to comment Share on other sites More sharing options...
Jurgis Posted July 9, 2015 Share Posted July 9, 2015 traditional watch sales are stable or even only a slowly melting ice cube. This has been predicted: http://www.paintinghere.com/UploadPic/Salvador%20Dali/big/clock%20melting%20clocks.jpg Link to comment Share on other sites More sharing options...
kab60 Posted July 9, 2015 Share Posted July 9, 2015 Did Salvador Dali anticipate the coming of the Apple watch? I love his paintings and have visited his museum and house numerous times, but I hope he got this one wrong. Nice find by the way. :) Link to comment Share on other sites More sharing options...
intensityjp Posted July 10, 2015 Share Posted July 10, 2015 I think no one denies that smart watches have the potential to "disrupt" the wearable timepiece market, but its another thing to say that apple will necessarily get it right and take the whole market. http://mashable.com/2015/01/09/fossil-smartwatch-designers-2015/ "There is a lot of brand equity at risk when you are launching a tech product," said Greg McKelvey, chief strategy and marketing officer at Fossil. "It has to look right, feel right and have the right approach when it comes to hardware and software. We're getting there and that's why 2015 is the year it will happen. We're not in a race to get something out quickly.” Link to comment Share on other sites More sharing options...
tooskinneejs Posted November 19, 2015 Share Posted November 19, 2015 Fossil Group's equity is priced at about $1.7 billion right now. The company has about $500 million in net debt. Net income over the last five years has averaged $329 million per year. Return on equity has averaged 30 percent per year over the last five years. The company's sales have fallen this year due to a decrease in volume of sales and due to foreign currency exchange rates. As a result, Fossil Group expects to earn $200 to $230 million this year, down significantly compared to recent years. Much of the volume declines appear due to licensed brand watch sales (particularly, Michael Kors). Is this a temporary blip? Does this create a buying opportunity? I think so. Link to comment Share on other sites More sharing options...
Guest qanary Posted November 19, 2015 Share Posted November 19, 2015 On what basis do you feel this is temporary? Fossil Group's equity is priced at about $1.7 billion right now. The company has about $500 million in net debt. Net income over the last five years has averaged $329 million per year. Return on equity has averaged 30 percent per year over the last five years. The company's sales have fallen this year due to a decrease in volume of sales and due to foreign currency exchange rates. As a result, Fossil Group expects to earn $200 to $230 million this year, down significantly compared to recent years. Much of the volume declines appear due to licensed brand watch sales (particularly, Michael Kors). Is this a temporary blip? Does this create a buying opportunity? I think so. Link to comment Share on other sites More sharing options...
kab60 Posted November 19, 2015 Share Posted November 19, 2015 I'm very much under water but my thesis is that watches will continue to exist. I like(d) Fossil because they have a wide selection of brands and aren't dependant on only one brand (though Kors is obviously a big driver). I took a pretty big position (as I always do) because I also like the fact that it was owner-operated and there was a big buyback in place that can/could take advantage of a low stock price. Which is why I was negatively surprised by Q3 results and the announcement that they'll buy Misfit and then pay down debt instead of buying back shares. So I'm a bit undecided. I think it was too cheap post earnings but it sucks they can't/wont take advantage of that. Link to comment Share on other sites More sharing options...
misterkrusty Posted October 26, 2016 Share Posted October 26, 2016 any thoughts on FOSL here? price has come down enormously, yet short interest is >30% !!!! what's the bear case at $29? I thought this was an interesting long pitch: http://latticework.com/my-investment-thesis-on-fossil-group/ Link to comment Share on other sites More sharing options...
kab60 Posted October 26, 2016 Share Posted October 26, 2016 Large debtload, low profitability. I dumped it after Misfit acquisition. I hoped an owner operator would be more wise in his capital allocation. But there might be value. What do you think? Link to comment Share on other sites More sharing options...
ritrading Posted October 26, 2016 Share Posted October 26, 2016 any thoughts on FOSL here? price has come down enormously, yet short interest is >30% !!!! what's the bear case at $29? I thought this was an interesting long pitch: http://latticework.com/my-investment-thesis-on-fossil-group/ It doesn't appear to be just FOSL. Almost every apparel /accessories companies that I'm look at are seeing declines in year over year revenues. I don't believe the issue is that people decided to stop wearing clothes. I think it's due to the USD strengthening against other currencies. Companies like HBI, which have lower exposure to other countries in terms of both revenues and manufacturing, have been less affected. I've been watching this sector closely the past year. Once there's an uptick for the sector, I plan on going long on many of the companies, FOSL included. Link to comment Share on other sites More sharing options...
MrB Posted November 1, 2016 Share Posted November 1, 2016 Why I like Fossil Elevator pitch Fossil is the number 1 US watch company and number 3 global watch company. It also sells jewelry, leather goods and accessories. 55% of sales come from brands it pays royalties to license and we think this business has a compelling moat, with the rest of sales mainly coming from own brands, such as Fossil, Skagen, Relic, etc. Its competitive edge consists of its design, manufacturing and distribution in the fashion watch category, where it can bring a new product to market in 70-80 days, where its closest competitor, Movado takes at least double that time. It is also 5x the size than its closest US competitor in the licensing business. Management is well tenured, well incentivized and Kosta the CEO, holds 13% of the shares, takes zero salary, so with no dividend, the way he gets paid is the so they we get paid. We think management has solved some very difficult problems historically, which the market don't give them credit for. The company earned around $280m in free cash flow last year, averaged around $270m per annum over the last 5 and we think at $1.3Bn market cap (add another 500m for enterprise value) the risk of free cash flow decreasing substantially over the next 5 to 10 years is well priced in. In conclusion; Firstly, we recognized the risks of which most have been touched on in this thread already, but secondly, we think we are well compensated to take on those risks at current prices, with thirdly, a management that is wildly underestimated by the market. I will add to the above over coming weeks to flesh out more of our thinking. P.S. I trust Sanjeev will forgive the free plug I'm giving the guys at Singular Diligence, but they've put out some good reports on Fossil, Swatch and Movado which are well worth the money. Great starting point. http://singulardiligence.com/all-issues/ Link to comment Share on other sites More sharing options...
MrB Posted November 1, 2016 Share Posted November 1, 2016 Anybody that thinks the mechanical watch is dead, need to watch this. Do you really feel like rushing out and buying an Apple Watch after you've watched it? Maybe you do, but the point is not everybody does. Link to comment Share on other sites More sharing options...
Jurgis Posted November 1, 2016 Share Posted November 1, 2016 Anybody that thinks the mechanical watch is dead, need to watch this. Do you really feel like rushing out and buying an Apple Watch after you've watched it? Maybe you do, but the point is not everybody does. Haven't worn a watch for 20 years. No plans to start. Mechanical or not. 8) Link to comment Share on other sites More sharing options...
DooDiligence Posted November 2, 2016 Share Posted November 2, 2016 Anybody that thinks the mechanical watch is dead, need to watch this. Do you really feel like rushing out and buying an Apple Watch after you've watched it? Maybe you do, but the point is not everybody does. I'd love to have a Lange 31 and a Breguet Classique Power Reserve (if someone gave them to me) but would only wind up wearing them about as often as I do any of the Hamilton automatics I bought years ago. The engineering is fascinating but what really appeals to me (especially as a professional mariner) is the impact timepieces have had on navigation & commerce (lattitude can be obtained without any timekeeping but longitude can't.) Breguet developed the 1st tourbillion & he made timepieces for Napolean (ignore the fact that he was a douche for a minute) & general Ney (among others) which enabled more precise coordination of troop movements. All that aside; I passed on Swatch after doing what passes for a deep dive with me. Recent problems with inventory builds because Swatch has been required to manufacture regardless whether demand is there plus the overhang of pissing off a lot of businesses by wanting to cut them off from movements & more importantly escarpments plus, plus, plus the Chinese crackdown on graft (luxury watches make nice bribes...) They did however; purchase Harry Winston & still maintain a clean balance sheet. Too many things I can't make out & Ms. Hayek makes statements that lead me to believe she may not be as good a steward/business person as her father... Link to comment Share on other sites More sharing options...
MrB Posted November 2, 2016 Share Posted November 2, 2016 Anybody that thinks the mechanical watch is dead, need to watch this. Do you really feel like rushing out and buying an Apple Watch after you've watched it? Maybe you do, but the point is not everybody does. I'd love to have a Lange 31 and a Breguet Classique Power Reserve (if someone gave them to me) but would only wind up wearing them about as often as I do any of the Hamilton automatics I bought years ago. The engineering is fascinating but what really appeals to me (especially as a professional mariner) is the impact timepieces have had on navigation & commerce (lattitude can be obtained without any timekeeping but longitude can't.) Breguet developed the 1st tourbillion & he made timepieces for Napolean (ignore the fact that he was a douche for a minute) & general Ney (among others) which enabled more precise coordination of troop movements. All that aside; I passed on Swatch after doing what passes for a deep dive with me. Recent problems with inventory builds because Swatch has been required to manufacture regardless whether demand is there plus the overhang of pissing off a lot of businesses by wanting to cut them off from movements & more importantly escarpments plus, plus, plus the Chinese crackdown on graft (luxury watches make nice bribes...) They did however; purchase Harry Winston & still maintain a clean balance sheet. Too many things I can't make out & Ms. Hayek makes statements that lead me to believe she may not be as good a steward/business person as her father... I generally agree with what you said, but wish to emphasize a few points and add my own. Swatch has a compelling market position and the fact that they can cut off people from movements simply proves their market power via ETA and Nivarox in particular http://www.ablogtowatch.com/inside-nivarox-the-heart-of-the-swiss-watch-industry/ When it comes to management I agree that I'm not convinced, but considering Swatch's high quality franchise it can probably withstand quite inept management (I'm not saying management is inept). My biggest concern with Swatch is their significant China exposure (something Fossil does not have in a meaningful way) and the only way I can address that risk is to be adequately compensated for it, which I don't believe I am at current prices. So at the right price I'm definitely a buyer of Swatch, but we are currently way off. Link to comment Share on other sites More sharing options...
DooDiligence Posted November 2, 2016 Share Posted November 2, 2016 Regarding Swatch; Timken made carriage parts & they survived (who knows...) Regarding Fossil; I'll look harder at consumer cyclical in the next recession... Link to comment Share on other sites More sharing options...
MrB Posted November 2, 2016 Share Posted November 2, 2016 Regarding Swatch; Timken made carriage parts & they survived (who knows...) Regarding Fossil; I'll look harder at consumer cyclical in the next recession... Fossil's top line (and bottom line) increased over the 08-11 period. The lowest Price/Sales it got to was in 2010 at 0.49x and today it's selling at 0.42x 2016 sales or say around 0.47x forward sales. Therefore one way of looking at Fossil is to say that a recession is priced in. Link to comment Share on other sites More sharing options...
DonFanucci Posted November 2, 2016 Share Posted November 2, 2016 In 2010 FOSL had $400m of net cash, now they have $500m of net debt. Link to comment Share on other sites More sharing options...
MrB Posted November 2, 2016 Share Posted November 2, 2016 In 2010 FOSL had $400m of net cash, now they have $500m of net debt. Fair point, but debt naturally has to be considered in context, such as the free cash flow mentioned above. They could very well half that debt in one year. Link to comment Share on other sites More sharing options...
mateo999 Posted November 2, 2016 Share Posted November 2, 2016 In 2010 FOSL had $400m of net cash, now they have $500m of net debt. Fair point, but debt naturally has to be considered in context, such as the free cash flow mentioned above. They could very well half that debt in one year. Would anyone miss fossil if it didn't exist? Link to comment Share on other sites More sharing options...
Green King Posted November 3, 2016 Share Posted November 3, 2016 In 2010 FOSL had $400m of net cash, now they have $500m of net debt. Fair point, but debt naturally has to be considered in context, such as the free cash flow mentioned above. They could very well half that debt in one year. Would anyone miss fossil if it didn't exist? Luxury goods something you don't need but can't live without. Don't know if it has that. As far as i know its existence shows its value. Since i don't own a watch it don't know if it will be popular in the future. But I think it will be more of a long term problem than anything else. Link to comment Share on other sites More sharing options...
abyli Posted November 3, 2016 Share Posted November 3, 2016 Keyword here: Apple Watch! Link to comment Share on other sites More sharing options...
DooDiligence Posted November 3, 2016 Share Posted November 3, 2016 Would anyone miss fossil if it didn't exist? I've got an old Fossil wallet in my top drawer... Link to comment Share on other sites More sharing options...
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