Dear Stockholders,
During 2019, our teams worked diligently to execute against our strategic and operational priorities, while
facing considerable industry headwinds. Most notably, ongoing contraction in the wholesale channel
is driving transformation across the industry and within our business model. We are addressing these
challenges by seeking opportunities to maximize sales growth in other channels, while also pivoting our
financial model to generate profitability over the long-term. Despite the challenges of 2019, Fossil Group
had a number of important successes:
• We completed our first New World Fossil program, NWF 1.0, which over the last three
years, delivered $200 million of run-rate improvement across gross margin and operating
expense. We also launched our New World Fossil 2.0 - Transform to Grow program,
which is designed to drive operational efficiency and improve profitability, while also
providing us with the ability to invest in new growth opportunities. In 2019, we captured
total benefits of $50 million, primarily through operating expense reductions, which puts
us on track to achieve gross margin benefits and operating expense reductions totaling
$200 million by 2021.
•
From a product perspective, we delivered world-class technology upgrades in connected
watches and exciting new innovations across our traditional watch categories. Positive
response to our latest generation smartwatches tells us that high performance
technology combined with the latest fashion designs will drive consumer interest and
purchases. In addition, our accelerated product drop strategy, combined with a digital
first marketing approach drove more consumer engagement than ever before.
• We also made significant strides in the Asia Pacific region as we broadened our reach in
key markets and delivered double digit growth. Importantly, we advanced our Direct to
Consumer and online marketplace businesses by optimizing our segmented assortment
strategy in key markets.
• We ended the year in solid financial condition with $200 million of cash and virtually no
net debt.
In 2020, we are focusing on four key priorities that are expected to improve our operational efficiency and
position us for improved financial performance over the long-term.
Priority number one is delivering exceptional storytelling and innovation. We believe the path forward
to changing our sales trajectory will come first and foremost from great product and unmatched
creativity. Although we’ll have fewer product stories in the market in 2020, we’re going to tell them in
bolder ways through focused digital marketing programs. We’ll be refining our assortment levels and
distribution strategy in connected watches to more closely reflect consumer preferences across channel
and assortment. Additionally, we plan to launch connected LTE product and aggressively expand in the
consumer electronics and telecom channels, while reducing our connected presence in select wholesale
accounts and brands.
Our second priority is driving commercial transformation. The consumer is increasingly gravitating to
all things digital, and we’re moving quickly to improve our digital capabilities across the company. The
implementation of our new ecommerce platform is in process now and will bring us a robust set of tools
to support a larger direct to consumer business in the coming years.
Our third priority is to expand on our opportunities in China and India, where the emerging middle class
has a strong affinity for our categories and brands. We’ve had great success with our localized marketing
and segmented assortment approach, and we see even more runway to accelerate growth in these
markets going forward.
Our fourth priority is continuing to implement New World Fossil 2.0. This year, we are focusing on re-
engineering our supply chain with the goal of reducing lead times, lowering costs, and enhancing our
overall competitiveness.
We appreciate the continued support of our stockholders and remain committed to restoring growth and
improving profitability over the long-term. We thank our management team and Fossil Group employees
around the world for their hard work and dedication as we strive to transform the business and create
value for all of our stakeholders.
Sincerely,
K O S T A N . K A R T S O T I S
Chairman and CEO
Financial Highlights
F I S C A L Y E A R
(in thousands, except per share data)
Net sales ($)
Gross profit ($)
2019
2018
2017
2016
2015
2,217,712
2,541,488
2,788,163
3,042,371
3,228,836
1,099,438
1,340,137
1,358,839
1,578,186
1,753,467
Operating income (loss) ($)
<28,383>
62,711
<424,276>
127,146
291,234
Net income (loss) attributable to Fossil Group, Inc. ($)
<52,365>
<3,478>
<478,172>
78,868
220,637
Earnings per share:
Basic ($)
Diluted ($)
Weighted average common shares and common
equivalent shares outstanding:
Basic (#)
Diluted (#)
Working capital ($)
Total assets ($)
<1.04>
<1.04>
<0.07>
<0.07>
<9.87>
<9.87>
1.64
1.63
4.52
4.51
50,230
50,230
49,196
49,196
48,468
48,468
48,136
48,323
48,800
48,924
500,278
652,766
781,900
932,705
953,141
1,604,732
1,575,198
1,658,372
2,186,897
2,355,661
Total long-term liabilities ($)
541,711
380,764
568,337
756,874
933,589
Stockholders’ equity attributable
to Fossil Group, Inc. ($)
Return on average stockholders’ equity
attributable to Fossil Group, Inc. [ 1 ]
503,054
585,543
576,133
1,006,236
921,388
<9.8%>
<0.6%>
<62.3%>
8.2%
24.7%
Calculated by dividing net income (loss) attributable to Fossil Group, Inc. by five quarter average stockholders’ equity attributable to Fossil Group, Inc.
Corporate Information
E X E C U T I V E O F F I C E R S & D I R E C T O R S
Kosta N. Kartsotis
Chairman of the Board
and Chief Executive Officer
Randy C. Belcher
Executive Vice President, Asia Pacific
Jeffrey N. Boyer
Executive Vice President,
Chief Operating Officer
and Chief Financial Officer
Steven A. Evans
Executive Vice President, Owned Brands
Martin R. Frey
Executive Vice President, EMEA
Darren E. Hart
Executive Vice President, Human Resources
Greg A. McKelvey
Executive Vice President,
Chief Commercial Officer
Beth A. Moeri
Executive Vice President,
Portfolio Brands
Mark R. Belgya
Director
William B. Chiasson
Director
Kim Harris Jones
Director
Kevin Mansell
Director
Diane L. Neal
Director
Thomas M. Nealon
Director
James E. Skinner
Director
Gail B. Tifford
Director
James M. Zimmerman
Director
O U R W E B S I T E
C O R P O R A T E I N F O R M A T I O N
The company maintains a website at www.fossilgroup.com. Certain
event and investor relations information concerning the company are
available at the site.
A N N U A L M E E T I N G
The Annual Meeting of Stockholders will be held on
Wednesday, May 20, 2020, at 9:00 a.m. local time at the company’s
headquarters, 901 S. Central Expressway, Richardson, Texas 75080.
C O M P A N Y I N F O R M A T I O N
A copy of the company’s Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission, and the Annual Report to
Stockholders, in addition to other company information, is available
to stockholders without charge upon written request to Fossil Group,
Investor Relations, 901 S. Central Expressway, Richardson, Texas
75080-7302, or online at www.fossilgroup.com.
Transfer Agent & Registrar
Computershare
P. O. Box 505000
Louisville, KY 40233-5000
Principal Independent Auditors
Deloitte & Touche, LLP
2200 Ross Avenue
Dallas, Texas 75201
Corporate Counsel
Akin Gump Strauss Hauer & Feld, LLP
2300 N. Field Street, Suite 1800
Dallas, Texas 75201
FOSSIL
MICHELE
MISFIT
SK AGEN
BMW
DIESEL
DKNY
ARMANI EXCHANGE
EMPORIO ARMANI
K ATE SPADE NEW YORK
MICHAEL KORS
PUMA
RELIC
TORY BURCH
WATCH STATION
ZODIAC