Fossil shares shoot up after Skagen announcement

Skagen-mens-watch.jpg

Texas watch and manufacturer experiencing little slowdown in Europe.

Fossil, the US watch and jewellery giant that last week announced it was set to acquire global watch brand Skagen Designs, has enjoyed an increase in its share price in the days following the announcement.

On January 12 the company’s shares rose from $79.37 (£51.67) to $86.70 (£56.46) after the news that it will acquire Skagen Designs with a view to pushing the brand to a global level.

Fossil said that within Europe its sales remain steady and in Germany – its primary market – sales are “solid”.

Story continues below
Advertisement

Eric Beder of Brean Murray Carret & Co, a boutique New York investment bank raised his rating for Fossil Inc. on Monday January 9, describing the watch and jewellery manufacturer’s shares as “a good entry point for investors”.

Beder said he anticipates a stock price hike this year, and blames previously declining share prices on Fossil’s “conservative outlook” for 2012.

"We note last year gross margins were affected by rising costs and an inability to raise prices on models already in the pipeline,” said Beder.

“We do not believe inability to raise pricing will be a margin issue in 2012.”

He is said to have boosted Fossil’s rating to "Buy" from "Hold" and initiated a $100 price target.

Fossil Inc.’s shares have now dipped slightly to $86.59 (£56.40). They have previously achieved $134.29 (£87.48) on July 19 last year, and fell to their lowest on August 18, to $74.24 (£48.36).

Speaking of last week’s announcement, Fossil’s chief executive Kosta Kartsotis said: commented “It is a great privilege to join together with our Skagen colleagues to share their Danish design story with the world.

“Skagen is unique and has enormous potential as a lifestyle brand. We see many similarities in the history and values of our two companies and look forward to creating something greater together."

Fossil has enjoyed sales growth with its fashion-led watch brands over the past year, with Michael Kors becoming one of its leading brands.

Burberry today announced that its watch line, distributed in the UK by Fossil, was one of the “fastest growing categories” among Burberry’s product lines, with total revenue growth of 23% to £417 million, and like-for-like sales up 13%.

Revenues from the British brand’s licensing division were up 12% on an underlying basis in the period, which includes its watches.

The company has declined to comment to analysts about its share price.
 

 

Authors

*

Related posts

Top