Fossil to Launch 100 Wearables for Eight Brands in 2016
Global consumer fashion accessories maker Fossil Group Inc. FOSL is now geared up to move ahead with wearables and plans to launch more than 100 wearable products including activity trackers and smart watches in 40 countries in 2016. The company announced that eight brands including Chaps, Diesel, Emporio Armani, Fossil, kate spade new york, Michael Kors, Misfit and Skagen will each launch a product in the wearables space in 2016. These products will be available by the holiday season in 2016.
The launch of these wearables is part of the company's efforts to bring increased variety of products to the wearables industry amid sluggish industry trends. We note that the company has been witnessing sluggish results since the beginning of 2015. Estimates have also been moving south over the past 30- and 60-day periods. Softness in watch sales due to a decline in its multi-brand licensed watch portfolio, weak comps in the U.S., sluggish performance in key international markets and unfavorable currency have been weighing on the stock.
In such a scenario, the continued momentum of the Fossil brand, product innovation in the watch portfolio and expansion in wearable technology are encouraging. In fact, the launch of new wearables in 2016 might mark a turnaround for this Zacks Rank #5 (Strong Sell) company. There is huge opportunity in the wearable space owing to the rising demand for smartwatches.
Fossil is expanding in the tech world and is set to compete with other traditional watchmakers like Swatch and LVMH's Tag Heuer, who have started to develop their own smartwatches. Fossil has partnered with technology giants like Alphabet, Inc. and Intel Corp., to develop next-generation fashionable products for the wearables market.
On Nov 25, Fossil launched its first Android Wear smartwatch using Google’s smartwatch platform. The Android Wear running Fossil Q Founder was launched along with a pair of connected smart bracelets called Fossil Q Dreamer and Reveler and priced at $275. It was a success and also helped the company to identify additional opportunity.
Fossil’s entry in the wearable space is surely going to benefit the company. It now operates in both the fashion and tech industries and produces a broad variety of connected products that appeal to both fashion and consumer electronics channels.
Therefore, there’s a good chance that many designer watch brands will ask Fossil to make wearable tech under their names as well. Fossil also makes apparel and other wearables that might get smart technology later, including jewelry and handbags. Android-based value watches in the emerging markets will also be a boon for the company as about half of Fossil’s revenues come from overseas.
Moreover, with the acquisition of wearable technology brand Misfit in Nov 2015, Fossil Group increased its capabilities for the development and production of the technology supporting its wearables products, thereby advancing Fossil Group's connected accessories initiative further.
Fossil is thus pinning its hopes on connected wearables and expects the new product offerings to add 20,000 distribution points in early 2016, which is almost double than before. Further, Fossil Group is scheduled to display Fall products – including wearables, watches, jewelry, leather goods and other accessories – this week, during the annual Baselworld marketplace show for the world's watch and jewelry industry.
Better-ranked stocks in the same industry include Abercrombie & Fitch Co. ANF, American Eagle Outfitters, Inc. AEO and Express Inc. EXPR. While American Eagle Outfitters and Express, Inc. sport a Zacks Rank #1 (Strong Buy), Abercrombie & Fitch holds a Zacks Rank #2 (Buy).
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