Fossil Group Inc

Fossil Group Inc.
Pursuing the Art of Watchmaking
By Helga Gonda
Keith Boone
Howard Newell
Elizabeth Brobbey
Boris Tchokouani

Issue?
There are many substitutes for watches. With the increasing use of
mobile devices, Fossil Group Inc. and the market find the demand
for watches on the decline.
How to better compete against the makers of Rolex and the Omega
watches
Gaining new markets? Setting up for the David/ Goliath battle

Company Analysis– Boris & Howard
Financials/ SWOT Analysis/ Value Chain
The Fossil Group Inc. Story - Elizabeth
History/ Products/
Industry Analysis– Keith
Industry Environment/ General Environment, Porter’s 5
forces
Recommended Actions For the Future – Helga
Current Strategies/ changes recommended
Agenda
Item 1
Item 2
Item 3
Item 4

THE FOSSIL GROUP INC.
STORY
Elizabeth

Company History
● Fossil brand was born at its
headquarters in Richardson,
Texas
● Fossil was founded by brothers,
Tom and Kosta Kartsotis
● American vintage style
● Started to acquire assembly
facilities in the early 1990s
● Fossil incorporated on December
26, 1991

Product Lines
● Watches
○ fine watches
○ premium branded and
designer watches
○ digital and analog
watches
○ contemporary fashion
and fashion brand
names
● Fashion accessories
● Apparel
● Footwear

Scope of the Firm
● Geographic
○ North America Wholesale segment
○ Europe Wholesale segment
○ Asian Pacific Wholesale segment
○ Direct to Consumer segment
● Target customers
○ Wholesale customer: department stores
and speciality retail stores
○ Dillard’s, JCPennys, Kohl’s, Macys,
Nordstrom, Neiman Marcus, Saks Fifth
Avenue, Target and Walmart
○ “Style-conscious consumers”
● Technologies
○ Collaboration with Intel: fashionable and
wearable technology

Key Competitors and Industry
Revenue
● Kenneth Cole
● Guess
● Coach
● Louis Vuitton
● Swatch
● Rolex

How Companies Can Remain
Relevant
● Have an established brand to maintain a clear market
position.
● Multiple product lines with different price tiers.
● Build a customer base that focuses on brand loyalty.
● Maintain excellent customer relations to establish
repeat clientele.
● Be in close proximity to key markets.

General Environment
● The accessory market is expected to increase 10% in
2015 to a U.S. Market Share of $54 billion.
● International trade programs allow for jewelry and
watches to be imported from countries with lower
manufacturing cost.
● Older customers are more likely to purchase from
established department stores and jewelry stores
● Younger consumers are more likely to purchase
accessories from discount retailers.

Key Threats and Opportunities
● Smartphones and wearable technology poses a significant
threat to the accessory industry in particular the watch
market.
● Smaller entrants will find it difficult to enter the industry
because large corporations already hold a substantial
portion of the market with their established brands.
● Integration of accessories in apparel stores poses a threat to
retailers in this industry.
● Opportunities in the men accessories market currently exist.
● Opportunities exist for creating a digital experience that
improves in-store and virtual experience.

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COMPANY ANALYSIS-
FINANCIALS
Boris

Financial Ratios
Comparison
-Net profit margin: Percentage of
revenues that are kept as net
income
-Return on Assets: How efficient
the firm is at turning assets to
earnings.
-Debt to Equity ratio: Indicates what
portion of equity and debt the
company uses to finance assets.

Geographic
Information
Net sales and long-lived assets
related to the Company’s
operations in the U.S., Europe, Asia
Pacific and all other international
markets were as follows (in
thousands):
Geographic Region Net Sales Long-term
Assets
United States $1,525,107 $411,458
Europe 1,052,497 264,173
Asia Pacific 504,124 65,91
All other
international
178,243 10,230
Consolidated $3,259,971 $750,952

Fossil, Inc Industry Median
Profitability
Gross Profit Margin 57.32% 44.33%
Net Profit Margin 10.43% 8.55%
Return on Equity 33.12% 21.66%
Return on Assets 17.21% 12.41%
Return on Invested Capital 24.10% 19.05%
Effective Tax Rate 31.24% 26.40%
Liquidity
Current Ratio 3.01 2.72
Quick Ratio 1.59 1.5
Debt Ratio
Total Debt/Equity 0.48 0.25
Interest Coverage 8.76 10.19
Growth

Market
performance
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COMPANY ANALYSIS- SWOT/
VALUE CHAIN
Howard

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Geographic
Region
Q1 Q2 Q3 Q4
United States 1254 1254 1254 1254
Europe and Asia 324 324 324 324
Strengths Weakne
sses
32 32 32
1. Distribution
channels
2. Designing and
manufacturing
3. Financial
performance
1.
Few
supplier
s for key
inputs
2.
Invento
ry
buildup
2 2 2
Opportunities Threats
1 1 1
1. Collaboration
with technology
companies to
develop smart
watches
1. C
e
ll
u
l
1 1 1

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CURRENT STRATEGIES AND
RECOMMENDATIONS
Helga

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Fossil Group Inc

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