Fossil Looks Good To Go

Suravi Thacker

Fossil (FOSL), one of the leading watch and accessory provider, posted its quarterly results recently which beat the Street’s expectations. However, its share price was punished since the company’s next quarter outlook failed to please investors.

The numbers

Driven by higher demand for watches, revenue surged 14% over last year, clocking in at $776.5 million. The top line was driven by growing sales across the categories with the watch category growing 17%, over the prior year. Growth in watch sales is a key driver for Fossil’s growth since it makes almost 77% of the watch maker’s total revenue. However, leather business was a laggard with a slight decrease in sales.

Going by the segments, both wholesale and direct-to-consumer segment performed well. On a constant currency basis, revenue for the wholesale segment grew 12.8% and from that of direct-to-consumer segment rose 18% as the company continued to expand its wings globally.

A concern for the watch retailer was declining mall traffic in the U.S. which hampered the overall sales. As a result, same store sales dropped by 2.4% during the period. Nonetheless, the company managed to register a jump in its earnings to $1.22 per share as compared to $1.10 per share last year. Also, gross margin stood at 57.1%, an expansion of 150 basis points, as sales of higher margin products increased.

What next? 

In order to attract more customers, Fossil plans to ramp up its marketing efforts. It will be expanding its presence on social media along with its print campaigns.

Also, the company plans to expand its footprint in the emerging markets such as Europe and Asia Pacific. Since sales in the U.S. have been declining, it is important for the retailer to branch out on a global basis, where demand has been on the rise.

Moreover, the watch maker recently announced that it will introduce a new line of Android wear. This new range of clothing will be launched in collaboration with Google. It will be interesting to see how this new product resonates with customers.

However, the company’s weak outlook was something which disheartened the investors. For the second quarter, revenue is expected to grow between the range of 8% and 9.5% along with earnings of $0.90 per share to $0.97 per share. On the other hand, analysts were expecting earnings of $1.16 per share and top line of $773.4 million, an increase of 9.5%.

Foolish thoughts

Fossil has a wide variety of items in its product portfolio, including apparel, jewelry, wallets and belts apart from watches, which lures customers. Moreover, watches have been one of the key strengths of the retailer, which ranges from as low as $7 and goes up to as much as $2,000 per watch. It caters to customers of all categories. Therefore, its growing top line is obvious. Additionally, it has been able to keep up with the competitive pressures and continues to expand its footprint. Its strategic initiatives look interesting and should be fruitful in the long run. Hence, prudent investors should take note of this watch maker.

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BigTimeUK.com

Russians Shopping Less as Ruble Drops Hit Rolex-Selling Airports

The spending slump comes as airports make shopping a key component of profit generation. Photographer: Mario Proenca/Bloomberg

By Richard Weiss

European airports are suffering from a slump in retail sales that typically deliver two-thirds of profit at major hubs as a sliding ruble curbs spending of Russians who can spend four times as much as the average traveler. 

The Ukraine crisis and strength of the euro, pound and Swiss franc against emerging-market currencies has hit retail sales at hubs from London to Frankfurt, with the squeeze worst at airports in the two countries at the center of the conflict. 

“We’re feeling the impact,” said Pierre Viarnaud, head of Russian operations at Hamburg-based Gebr. Heinemann SE & Co., which operates 230 shops at 61 airports. “In Moscow, we have a significant drop in spend per passenger. In Kiev, it’s even more dramatic, almost 50 percent lower than last year.”

Russians are staying at home or limiting spending when they do travel after the ruble hit a record low of 51 to the euro on March 14, two days ahead of the Crimea’s vote for rule from Moscow. The Ukrainian hryvnia has slid 30 percent against the single currency this year. 

The spending slump comes as airports make shopping a key component of profit generation, with London Heathrow’s expanded Terminal 2, which opened June 4, housing 33 retailers including Burberry and Mulberry luxury goods outlets and the first John Lewis department store at Europe’s No. 1 hub. Fraport AG, which runs the Frankfurt airport, meanwhile aims to lift retail revenue per passenger to 4 euros this year from 3.60 euros in 2013.

‘Voracious’

Russian travelers, who also flew less during the Winter Olympics in Sochi, have “voracious appetites for European luxury goods,” said HSBC aviation analyst Andrew Lobbenberg, adding that heavily-retailed airport offerings produce particularly “handsome” profit margins.

At Frankfurt airport, Europe’s third-largest hub, Russians spend almost four times the average on shopping, Fraport board member Anke Giesen said at an Airports Council International conference in the city on June 18. By contrast, local German travelers have a budget that’s less than a third of the average. 

Fraport is especially exposed because it owns stakes in St. Petersburg airport in Russia’s second-city, as well as bases in Antalya on Turkey’s Mediterranean coast and Burgas and Varna on the Black Sea in Bulgaria, which are popular holiday destinations for Russians, JP Morgan (JPM:US) said in an April 1 report.

Jewelry, Watches

Fraport’s retail and real-estate businesses have created 600 million euros ($814 million) in value in the past six years, measured as operating profit less capital costs, its annual reports show. The aviation and ground-handling units destroyed 723 million euros in value over the same period.

Vienna Airport, which has built a business model around flights to Russia and former Soviet states, blamed the ruble’s “massive devaluation” for depressing first-quarter revenue. 

“We see ourselves as the gateway to the east, and that in a way is also our weakness,” Chief Operating Officer Julian Jaeger said. 

Flughafen Zuerich AG (FHZN), which has almost tripled shopping space in the past 12 years, is seeing sales of jewelry and watches come under pressure, according to spokeswoman Sonja Zoechling, who says Russians are “very reluctant to shop.” Switzerland is home to luxury watchmakers including Rolex, Omega and Breitling, which all have airport sales outlets.

Reduced Timetable

Among major hubs, Aeroports de Paris, whose Charles de Gaulle is Europe’s second busiest, said exchange rates curbed sales at terminal shops in the first quarter, even as traffic grew on routes to China and Russia -- the latter accounting for as much as 7 percent of retail sales, according to JPMorgan. 

ADP’s retail and services arm last year generated two-thirds of group operating profit, with every other euro spent adding to earnings, versus one in 20 at the aviation business. 

Deutsche Lufthansa AG, Europe’s second-largest airline, has reacted to the Ukraine crisis by reducing frequencies to Odessa from Munich and suspending the Donetsk route through July. Its Austrian Airlines unit is curbing frequencies to Kiev, Kharkiv and Dnepropetrovsk. 

Looming large for airport retailers is the prospect of a double currency hit after the Chinese yuan traded at 8.72 to the euro on May 8, the weakest in 2 1/2 years. 

Travelers from the world’s second-largest economy spend 5.4 times more than the average, according to Fraport figures -- ahead even of the Russians.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net 

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net Christopher Jasper 

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BigTimeUK.com

Swatch’s Sistem51 collection makes regional debut

Dubai: Global watchmaker Swatch launched the Sistem51 collection for the first time in the region in Dubai on Tuesday. 


The colourful collection of automatic watches, targeted at men and women, are priced at Dh540. Currently, the watches are sold at Mall of the Emirates, but starting from Sunday, they will be available at The Dubai Mall, Deira City Centre, Ibn Battuta Mall and Marina Mall.

The collection was launched globally in Switzerland last year. 


Swatch is one of the brands in Rivoli Group’s portfolio. The watchmaker raised its stake in the Dubai-based retail group by 18 per cent to 58 per cent last year, taking over Rivoli’s outlets. Rivoli is an importer and distributor of luxury products from watches to leather goods in the UAE, Oman, Qatar and Bahrain, according to its website.

Swatch, the world’s largest watch group, makes Omega, Longines and Tissot watches, as well as Swatch-branded watches. 

News Source 


 
BigTimeUK.com

Luxury Watches on YouTube: How Brand Videos Influence Fan Videos

Thomas Owadenko - Contributor 

YouTube is just kid's stuff, right? You're not going to find adult men on YouTube doing things like looking at luxury products there, surely? Well, think again. Men in their 30s and 40s are indeed on YouTube to watch certain videos. One of the things they want to watch is… well, watches.

We looked at the YouTube footprint of seven luxury men's watches: Audemars Piguet, Blancpain, IWC, Jaeger-Le Coultre, Patek Philippe, Rolex and Vacheron Constantin. We found that like other successful YouTube brands, high rates of social actions correlated highly with community-created videos.

Watching Men's Watches on YouTube

Of the seven luxury watch brands we looked at, the three led in YouTube engagement were, in order:

1. Patek Philippe
2. Rolex
3. Blancpain

To reach our conclusions, we began by looking at the average social actions per viewer on videos created by each brand. While Rolex had many more views on its channel with 1.6 million than the other two (Blancpain at 109,000 and Patek Philippe at 72,000) it was Patek Philippe which led on owned media social actions. Social actions, in this study, relates to any like, comment, share or tweet on YouTube, Facebook or Twitter.

Patek Philippe had a remarkable 6.4% social actions per YouTube view, followed by Blancpain at 3.9% and Rolex at 3.8%. These were significantly higher than the other four brands.

Earned Media and Luxury Watches

Then we looked at the earned media social actions of these brands. In this case, we define earned media as YouTube videos created by fans, retailers or product reviewers. We found that these same three brands remained in the top three of our seven brands. For these independently created videos, Rolex had 1.6% social actions per video view, Blancpain had 1.1% and Patek Philippe had 1.0%.

This correlation continued further. The videos which fans were most interested in sharing and liking on both brand-created and fan-created videos corresponded with percentage of overall YouTube footprint from fans. Of all video views about Patek Philippe, 98.5% were of videos created by fans, retailers and reviewers. For Rolex, 98.1% of views were of videos created by the community. For Blancpain, 91.3% of viewers were created not by the brand itself, but by other YouTube channels.

So we can conclude that for luxury watches on YouTube, there is a high correlation between social actions on owned media videos and earned media videos, and these rankings correspond to high numbers of videos created by the YouTube community about these brands.

Let's take a look at the earned media stats for each brand by views. First, Patek Philippe:

Blancpain:

And Rolex

Compelling Content Leads to Higher Social Actions

Unfortunately, just because these numbers correlate doesn't tell us the reasons behind it. But from experience at Octoly, we've found that when brands in any category create videos that resonate with a segment of the YouTube audience, they correlate with higher social actions and amplified share of voice through community-created videos. In addition, a highly-targeted Adwords for Video campaign can further call attention to branded videos, enhancing the brand among its community of users and fans.

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BigTimeUK.com

Italian explorer wins €41k Rolex prize

An Italian explorer has won 50,000 Swiss francs (€41,000) to fund expeditions in South America, one of five winners of the 2014 Rolex Awards for Enterprise.

Francesco Sauro's work explores the table-top mountains on the Brazil-Venezuela border. Photo: Rolex Awards/Stefan Walter

Geologist Francesco Sauro, 29, was named as a winner on Tuesday at the Royal Society, the UK’s national academy of science.

He was one of five “young visionaries” awarded the prize, for their work to “improve the well-being of the community and the environment, as well as to advance scientific knowledge,” Rolex said in a statement.

Sauro beat off competition from 1,800 applicants to wins funds to advance his exploration of the mountains and caves of South America.

The Italian’s research focuses on the table-top mountains on the Brazil-Venezuela border, known as the tepuis, described by Sauro as “a kind of lost world”.

Over the past five years he has led five expeditions to the area, as part of the Italian association, La Venta, in coordination with a team of Venezuelan explorers. Sauro’s trips into the mountains have led him to discover new animal species and a new mineral in the cave, Rolex said.

The prize money will be used to fund further expeditions in the region over the next three years, with the aim of collecting more data.

Sauro said the research will offer “insights into the evolution of landscape and life in central South America after the opening of the Atlantic Ocean 100 million years ago.”

His work is so otherworldly that the European Space Agency (ESA) asked him to work on its training programme, taking astronauts into caves to help them cope with the extreme environments they will encounter in space. 

The Local (rosie.scammell@thelocal.com)  

BigTimeUK.com

Style deemed critical factor for smartwatch success

By PATRICK SEITZ Style will be a critical factor in the success or failure of upcoming smartwatches from the likes of Apple (NASDAQ:AAPL), LG and Motorola, a new survey shows.

Piper Jaffray on Tuesday released the results of a survey of nearly 100 well-heeled consumers in North America that was conducted over the past month. The respondents were asked for their opinions and preferences regarding watches and wearable devices. The average respondent was 32 years old with an annual household income of $130,000.

Of those surveyed, 75% own a watch. They own an average of 2.4 watches. By contrast, just 18% of respondents said they own a fitness band.

A woman wears a bright-colored Fitbit activity tracker. 

The most important factor when purchasing a watch is style, followed by price, the survey revealed.

Fossil (NASDAQ:FOSL) is the No. 1 preferred watch brand overall, with 13% share, followed by Michael Kors (NYSE:KORS) at 10%. When split by gender, Timex is the No. 1 watch brand for men and Fossil and Michael Kors tied for first with women.

Most watch owners (65%) buy new watches every four years or sooner, Piper Jaffray said. A lot of the purchase behavior is dictated by fashion trends, the investment bank said.

"We believe we have been in a gold/rose gold cycle for the last three years," Piper Jaffray analysts Erinn Murphy and Gene Munster wrote. "As such, we would expect fashion-oriented watch purchases in the coming quarters, particularly given the up-and-coming trends including double leather bands, colored faces and silver/stainless steel tones."

Meanwhile, in the activity tracker market, the No. 1 fitness band maker in the survey was Fitbit with 50% market share. Jawbone was in second with 17% market share, followed by Garmin (NASDAQ:GRMN) with 11%.

Of those who own a fitness band, 56% state they wear it daily. Among current nonowners, 18% intend to purchase a fitness band within the next year.

When asked whether they would buy a $350 Apple iWatch, 14% of respondents said yes. That's up from 12% in an October survey by Piper Jaffray.

Communication/multimedia alerts ranked as the most important feature when purchasing a smartwatch, slightly edging out fitness tracking, Piper Jaffray said. "To us, the high ranking of fitness tracking indicates that consumers are favorable to smartwatch and fitness band convergence," Murphy and Munster wrote.

Fitness bands, smartwatches and other wearable devices are expected to be a big topic of conversation at the Google I/O conference in San Francisco. The two-day Google (NASDAQ:GOOGL) conference starts Wednesday. Google is expected to talk about its Android Wear software for wearable devices and Google Fit app for health and fitness tracking.

BigTimeUK.com

RAYMOND WEIL Celebrates in Style at the London Music Awards in Benefit of the Mayor's Music Fund

LONDON, UNITED KINGDOM--(Marketwired - Jun 12, 2014)

 

RAYMOND WEIL, Luxury Swiss watchmaker, last night joined forces with The Mayor of London, Boris Johnson to host an inaugural fundraiser, the London Music Awards, a glittering celebration of the capital's musical talent that was held at the London's iconic music venue - the Roundhouse, Camden. 

Hosted by Mayor Boris Johnson, the RAYMOND WEIL sponsored event recognized the achievements of London's aspiring young musicians, its rising stars and legendary performers from all genres of music. 

A host of stars and music industry insiders attended the sell-out event that was organized in a partnership between the Mayor of London and RAYMOND WEIL to raise money for the Mayor's Music Fund. The money raised last night will ensure the future development of the Capital's aspiring musicians for years to come. In just two years, the charity has given out grants worth £1.3m, benefiting over 14,000 young musicians. 

Jazzie B, founder of chart topping dance music pioneers Soul II Soul, received the London Legend accolade, Sir Antonio Pappano, Music Director of the Royal Opera and The Orchestra of the Academia Nazionale di Santa Cecilia, was recognized for his Exceptional Contribution to Music and Lord Lloyd Webber was awarded in the Individual Philanthropy category. 

London's eclectic music scene was reflected in the diversity of the award winners. 26 year-old Kimberley Anne from Bromley won Young Composer/ Songwriter (sponsored by RPS for Music) for her acoustically based indie sound and the raw passion of her homemade instruments built in her bedroom studio. Lewisham-based Femme, 24 took the RAYMOND WEIL Rising Star award, thanks to her Debbie Harry inspired pop hooks and bright productions. The undiscovered Talent award sponsored by Live Nation when to Natalie Shay who, at just 15 years old and studying for her GCSEs at the BRIT School, has caused a stir with her live sets across the capital. 

The Mayor of London Boris Johnson says "I am immensely proud of the work that the Mayor's Music Fund is doing and has done this evening. To reach so many young people in such a small space of time is a colossal achievement. The London Music Awards with RAYMOND WEIL are more than celebrating the success of the award winners and it is more than a fundraiser, it is an opportunity to rejoice in London's fabulous musical achievements and to inspire budding musicians across the city."

Further awards were presented to Daniel Aidoo, James Lynch, Charles Campbell-Peak and Bishal Debnath, who won the Outstanding Mayor's Music Scholars award, a category sponsored by ABRSM (Associated Board of the Royal Schools of Music) and were also recognized in the corporate philanthropy category alongside Brass Tracks, a collaboration between the boroughs of Hounslow and Sutton and Zone One Brass. The final award was for Best Live Music Venue, which was voted for by Time Out readers and won by Union Chapel in Islington. 

"We are absolutely thrilled with this evening's London Music Awards. For RAYMOND WEIL to be able to assist with creating such a unique platform that not only raised a substantial amount of money for the Mayor's Music Fund but also to develop a partnership that heightens awareness of the diversity of the musical talent in London is just so rewarding for everyone involved in the Capital's music scene" - Says Craig Leach, UK CEO - RAYMOND WEIL. 

The London Music Awards are being organized to raise money for the Mayor's Music Fund, which develops the skills of talented children across the capital. Funds raised are spent on lessons and instruments, as well as giving recipients exposure to other musicians and the opportunity to perform with bands and orchestras. 

RAYMOND WEIL's involvement with the London Music Awards stems from years of support for the music industry. As the brand that has always had music at its heart, RAYMOND WEIL continues to collaborate with the music industry's emerging talents, most prestigious artists, music awards ceremonies and music based charities. 

BigTimeUK.com