Fossil (NASDAQ:FOSL) posted slower-than-expected first-quarter revenue growth and took an axe to its guidance amid trouble in Europe, prompting a 27% plunge in the fashion accessory maker’s shares on Tuesday.
The company posted a profit of $58.1 million, or 93 cents a share, last quarter, compared with a profit of $55.8 million, or 86 cents a share, a year earlier. The most recent quarter exceeded estimates from analysts by a penny a share.
Revenue increased 9.8% to $589.5 million, but that trailed the Street’s view of $617.6 million. Global watch sales jumped 13.7% to $50.9 million.
“In Europe, a softening macro environment toward the end of the first quarter and changes in our merchandising and assortment strategies across certain categories negatively impacted both our wholesale and retail sales in that region," Mike Kovar, the company’s chief financial officer, said in a statement.
Fossil said its quarterly European sales rose 4.7% to $7.1 million, compared with an 18.8% surge to $12.1 million in Asia-Pacific and a 9.3% jump to $19.2 million in North America.
Looking ahead, Fossil slashed its full-year EPS outlook to $5.30 to $5.40, down from $5.40 to $5.50 previously and below estimates from analysts for $5.56. Yet the company upped its 2012 sales view to a rise of 16%.
For the current quarter, Fossil said it sees EPS of 77 cents to 79 cents, which is well below the Street’s view of 94 cents.
“While we are cautious about the European economy and its impact on our financial results, we remain confident that continued strength in watch sales,” increasing square-footage growth and other positive factors will translate to double-digit growth in 2012, Kovar said.
The bar had been raised high for Fossil as Wall Street bid its shares up nearly 60% on the year as of Monday’s close.
But Fossil’s shares tumbled 27.55% to $90.96 Tuesday morning, leaving them up just 15.5% in 2012.