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2023 ReportPeers and competitors of Fossil Group:
Malibu BoatsDear Stockholders, Over the past several years, we have been challenged in an unprecedented manner - first with a global pandemic and now with a geopolitical and humanitarian crisis in Eastern Europe. Our hearts and prayers go out to the Ukrainian people during these devastating times. Despite these challenges, disruptions and hardships, our teams have adapted and supported each other, our communities, and our company. We are incredibly proud of our global team’s agility and commitment, truly a testament to the “All for One” spirit that drives our Fossil culture. Amid the pandemic disruptions of the past two years, we transformed and reshaped our business to a digitally-led organization through the “New World Fossil 2.0 – Transform to Grow Program”. By reorganizing ways of working, reducing our reliance on physical brick and mortar distribution and accelerating our investments in digital and brand building, we are on a path to sustained, profitable growth. In 2021, we grew worldwide net sales by 16% and significantly improved our profitability, delivering earnings per share of $0.48. Additionally, global sales generated by our digital channels exceeded 40%. During the year, we successfully completed our multi-year work under the New World Fossil program, which exceeded our $250 million cost savings target. With a leaner cost base, we also improved our balance sheet with a $150 million notes offering, ending the year with over $400 million in liquidity and a more flexible capital structure. Brand building through product innovation and marketing remains at the heart of everything we do and 2021 was no exception. From our Limited Edition Space Jam collection and celebration of existing iconic watch designs to our latest generation smartwatch, Gen 6, we saw strong consumer response to our brands. With product newness and storytelling, we drove a 22% growth in traditional watches. We also saw jewelry emerge as a category that is contributing more meaningfully to our growth. While this is still a relatively small category for Fossil Group, jewelry is a large addressable market, where our design and distribution capabilities create a natural growth adjacency. F O S S I L G R O U P A N N U A L R E P O R T 1 S T R A T E G I C P R I O R I T I E S We are executing against a large and growing watch market, with favorable trends in both the traditional and smartwatch segments and in even larger addressable markets in jewelry and leathers. Our 2021 results reinforce that our strategic initiatives are working. You can expect to see us continue to sharpen our focus on these areas that are contributing to our business performance and driving value for our shareholders. Our strategic priorities remain at the center of our growth plans for 2022 and include accelerating our digital footprint, building brand heat through product innovation and marketing, capturing operating efficiencies and driving growth in China and India. Our ESG program, Make Time for Good, reflects our strategy to be a more purpose-driven organization and enhance the communities in which we operate. In 2022, we look forward to sharing our first sustainability report. L O O K I N G A H E A D In these extraordinary times, I am extremely proud of what our organization has accomplished. As we look ahead, while the macro environment remains dynamic, we are clear about our path forward. We enter 2022 with confidence in our positioning and our ability to deliver sustainable, profitable growth. We are grateful to our shareholders and remain committed to driving performance that creates consistent value. Sincerely, K O S T A N . K A R T S O T I S Chairman and CEO 2 F O S S I L G R O U P A N N U A L R E P O R T Financial Highlights F I S C A L Y E A R (in thousands, except per share data) Net sales ($) Gross profit ($) 2021 2020 2019 2018 2017 1,870,036 1,613,343 2,217,712 2,541,488 2,788,163 966,374 770,356 1,099,438 1,340,137 1,358,839 Operating income (loss) ($) 92,637 <135,319> <28,383> 62,711 <424,276> Net income (loss) attributable to Fossil Group, Inc. ($) 25,434 <96,095> <52,365> <3,478> <478,172> Earnings per share: Basic ($) Diluted ($) Weighted average common shares and common equivalent shares outstanding: Basic (#) Diluted (#) Working capital ($) Total assets ($) 0.49 0.48 <1.88> <1.88> <1.04> <1.04> <0.07> <0.07> <9.87> <9.87> 51,961 52,777 51,116 51,116 50,230 50,230 49,196 49,196 48,468 48,468 487,108 431,949 500,278 652,766 781,900 1,368,719 1,478,505 1,604,732 1,575,198 1,658,372 Total long-term liabilities ($) 367,714 479,947 541,711 380,764 568,337 Stockholders’ equity attributable to Fossil Group, Inc. ($) 463,226 439,090 503,054 585,543 576,133 F O S S I L G R O U P A N N U A L R E P O R T 3 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 O F F I C E O F T H E C H A I R M A N Kosta N. Kartsotis Chairman of the Board and Chief Executive Officer Jeffrey N. Boyer Chief Operating Officer Greg A. McKelvey Executive Vice President, Chief Commercial Officer Randy C. Belcher Executive Vice President, Asia Pacific Holly L. Briedis Executive Vice President, Chief Digital Officer Sunil M. Doshi Senior Vice President, Chief Financial Officer and Treasurer Steven A. Evans Executive Vice President, Chief Brand Officer Darren E. Hart Executive Vice President, Human Resources Melissa B. Lowenkron Senior Vice President and General Manager, Fossil Brand Mark R. Belgya Director William B. Chiasson Director Kim Harris Jones Director Kevin Mansell Lead Director Diane L. Neal Director Marc R. Y. Rey Director Gail B. Tifford 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 18, 2022, at 9:00 a.m. local time in a virtual meeting format via webcast. 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 4 F O S S I L G R O U P A N N U A L R E P O R T F O S S I L G R O U P A N N U A L R E P O R T 5 W W W . F O S S I L G R O U P . C O M
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