) is scheduled to report second quarter 2013 earnings before the
opening bell on Aug 6, 2013. Last quarter, Fossil posted a
positive surprise of 11.3%. We expect the company to beat
expectations in the second quarter too.
Why a Likely Positive Surprise?
Our proven model shows that Fossil is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP:
The expected surprise prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is +2.13%. This is
meaningful and a leading indicator of a likely positive earnings
surprise for the shares.
Zacks Rank #3 (Hold):
Fossil carries a Zacks Rank #3 (Hold). Note that stocks with a
Zacks Rank #1, #2 and #3 have a significantly higher chance of
beating earnings estimates. The Sell-rated stocks (#4 and #5)
should never be considered going into an earnings
The combination of Fossil's Zacks Rank #3 (Hold) and a
positive ESP of +2.13% makes us confident of an earnings beat on
What is Driving the Better-than-Expected
We believe that the company's strong watch sales, prudent
expense management and its ability to generate positive
comparable store sales are expected to drive earnings results in
the second quarter.
Fossil has been witnessing double-digit growth in global watch
sales after the acquisition of the Skagen brand in Apr, 2012.
After introducing Skagen brand, the company has introduced Fossil
Swiss watches in Asia and launched the long-awaited and exclusive
collection of watches for men and women by designer Karl
Lagerfeld, which received a good response.
The company also introduced Skagen jewelry in the first
quarter, which added to the company's sales. We expect all the
new products launches and brand extensions to boost watch sales
further in the second quarter.
Fossil also has a history of delivering positive comparable
store sales driven by continued strengthening of the Fossil
brand. We remain impressed with the performance of the Fossil
brand and continue to expect solid comp growth in the second
Other Stocks to Consider
Here are some other companies in the retail sector that can be
considered as our model shows that they have the right
combination of elements to post an earnings beat this
Citi Trends Inc
), Earnings ESP of +2.33% and a Zacks Rank #2 (Buy).
), Earnings ESP of +1.70% and a Zacks Rank #2.
Spartan Stores Inc.
), Earnings ESP of +2.04% and a Zacks Rank #2.
CITI TRENDS INC (CTRN): Free Stock Analysis
FOSSIL GRP INC (FOSL): Free Stock Analysis
GAP INC (GPS): Free Stock Analysis Report
SPARTAN STORES (SPTN): Free Stock Analysis
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