Fossil Group Inc (FOSL) 2024 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Fossil Group Third Quarter 2024 Earnings Call. (Operator Instructions) This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company. Now I'll turn the call over to Christine Greany of The Blueshirt Group to begin.

女士們、先生們，下午好，歡迎參加 Fossil 集團 2024 年第三季財報電話會議。（操作說明）本次電話會議正在錄音中，未經本公司書面許可，不得全部或部分複製。現在我將把電話轉給 Blueshirt Group 的 Christine Greany 開始。

Hello, everyone, and thank you for joining us. On September 4, Fossil Group announced the appointment of Franco Fogliato as Chief Executive Officer effective September 18, and he will be joined on today's call by Andrew Skobe, Interim Chief Financial Officer.

大家好，感謝您加入我們。9 月 4 日，Fossil Group 宣布任命 Franco Fogliato 為首席執行官，自 9 月 18 日起生效，臨時財務長 Andrew Skobe 也將參加今天的電話會議。

I would like to remind you that information made available during this conference call contains forward-looking information, and actual results could differ materially from those that will be discussed during this call. Fossil Group's policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in the company's Form 8-K, 10-Q and 10-K reports filed with the SEC. In addition, Fossil assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

我想提醒您，本次電話會議期間提供的資訊包含前瞻性訊息，實際結果可能與本次電話會議期間討論的結果有重大差異。Fossil Group 關於前瞻性陳述的政策以及涉及可能導致實際結果與此類陳述存在重大差異的多種因素的其他信息，可在該公司向SEC 提交的8-K、10-Q 和10-K 表格報告中輕鬆取得。此外，Fossil 不承擔公開更新或修改任何前瞻性聲明的義務，無論是由於新資訊、未來事件或其他原因，除非法律要求。

During today's call, we will refer to constant currency results. Please note that you can find a reconciliation of actual results to constant currency results and other information regarding non-GAAP financial measures discussed on this call in Fossil's earnings release, which was filed today on Form 8-K and is available in the Investors section of fossilgroup.com.

在今天的電話會議中，我們將參考固定匯率結果。請注意，您可以在Fossil 的收益報告中找到實際結果與固定貨幣結果的調節以及有關本次電話會議中討論的非GAAP 財務指標的其他信息，該報告已於今天以8-K 表格形式提交，並可在投資者部分找到。

With that, I'll now turn the call over to Franco.

現在我將把電話轉給佛朗哥。

Good afternoon, everyone, and thank you for joining us. I'm thrilled to be here for my first earnings call as the Fossil Group Chief Executive Officer and look forward to getting to know our shareholders in the coming months.

大家下午好，感謝您加入我們。我很高興能以 Fossil 集團執行長的身份參加第一次財報電話會議，並期待在未來幾個月內了解我們的股東。

First of all, I would like to take the opportunity to thank our team globally, particularly Jeff, for leading the company during the transition, and for the warm welcome I have received. In my first weeks with the company, I have immersed myself in the business, spending time with employees throughout the organization and meeting customer, partners and vendors.

首先，我想藉此機會感謝我們的全球團隊，特別是傑夫，感謝他們在過渡期間領導公司，並感謝我受到的熱烈歡迎。在公司的頭幾週，我全心投入業務中，與整個組織的員工共度時光，並會見客戶、合作夥伴和供應商。

I'm conducting this deep dive across all of our key geographies, the Americas, Europe and Asia as well as our channels and our incredible portfolio of brands. It's been exciting and empowering to hear universal support for Fossil Group and a strong desire to see us win. It's also been incredibly helpful to learn the biggest issues facing the company. Importantly, in my first 60 days, I have gained conviction about the opportunities we have and the action we need to take.

我正在對我們所有的關鍵地區（美洲、歐洲和亞洲）以及我們的管道和令人難以置信的品牌組合進行深入研究。聽到大家對 Fossil 團體的普遍支持以及看到我們獲勝的強烈願望，我們感到非常興奮和充滿力量。了解公司面臨的最大問題也非常有幫助。重要的是，在我任職的前 60 天裡，我對我們擁有的機會和我們需要採取的行動有了信心。

Before I talk about the future, let me tell you why I'm here. I have great admiration for the Fossil brand and the role this company has played in shaping the watch industry. The heritage of our core Fossil brand runs deep. We are recognized around the world, and this year, Time Magazine ranked us as the fourth watch brand overall, just behind world-class brands like Apple and Rolex.

在談論未來之前，讓我先告訴你我來這裡的原因。我非常欽佩 Fossil 品牌以及該公司在塑造手錶行業中所發揮的作用。我們核心 Fossil 品牌的傳統根深蒂固。我們在世界各地得到認可，今年《時代》雜誌將我們列為第四大手錶品牌，僅次於蘋果和勞力士等世界級品牌。

Over the past 27 years, I've been fortunate to lead iconic global brands, gaining valuable experience running business portfolios with omnichannel operation in multiple geographies. Fossil Group has 14 brands in 3 channels across 120 countries, a level of complexity that my background is well suited for. I honed my skills in product, operations and strategy over decades and orchestrated successful turnarounds at Salomon and Columbia Sportswear.

在過去的 27 年裡，我有幸領導了標誌性的全球品牌，並獲得了在多個地區透過全通路經營經營業務組合的寶貴經驗。Fossil Group 在 120 個國家的 3 個管道擁有 14 個品牌，這種複雜程度非常適合我的背景。幾十年來，我磨練了自己在產品、營運和策略方面的技能，並在 Salomon 和 Columbia Sportswear 精心策劃了成功的扭虧為盈。

Most recently at Salomon, I started with building a competitive and execution-oriented team and culture. During my 2.5-year tenure, we reignited the top line and drove double-digit sales growth. We achieved this by creating a new brand platform, streamlining our product offering, building joint business plans with our vendors and partners and refocusing our distribution and pricing models.

最近在所羅門，我開始建立一個有競爭力、以執行為導向的團隊和文化。在我的 2.5 年任期內，我們重新點燃了營收並推動了兩位數的銷售額成長。我們透過創建新的品牌平台、簡化我們的產品供應、與我們的供應商和合作夥伴制定聯合業務計劃以及重新調整我們的分銷和定價模式來實現這一目標。

At Fossil, we have incredible brands, talented people and the power to unlock greater potential for the future. I have full confidence in our capabilities to return this business to growth and value creation. We can achieve this through discipline, simplification and focus. Our core strength is creating great, innovative watches and marketing them with compelling storytelling.

在 Fossil，我們擁有令人難以置信的品牌、才華橫溢的人才以及釋放未來更大潛力的能力。我對我們使該業務恢復成長和創造價值的能力充滿信心。我們可以透過紀律、簡化和專注來實現這一目標。我們的核心優勢是創造出色、創新的手錶，並透過引人入勝的故事進行行銷。

We provide a seamless shopping experience for our customer, primarily in the wholesale channel, with our direct-to-consumer business serving as an important expression of our brand and emotional connection to consumer. As we build a game plan to turn around the business, we will be developing a brand-led and consumer-focused model to execute our plan.

我們主要在批發管道為客戶提供無縫的購物體驗，我們的直接面向消費者的業務是我們品牌和與消費者情感聯繫的重要體現。當我們制定扭轉業務的遊戲計劃時，我們將開發一個以品牌為主導、以消費者為中心的模型來執行我們的計劃。

There are three key areas we are prioritizing in the immediate term. Number one is redefining and focusing on our core. First and foremost, we believe there is an opportunity to reassess the core business and simplify our operating model.

我們近期優先考慮三個關鍵領域。第一是重新定義並專注於我們的核心。首先，我們相信有機會重新評估核心業務並簡化我們的營運模式。

Anything that is not core is a distraction, and we will evaluate options for these noncore assets. We see significant potential to drive change across the category, distribution and geography. This includes traditional watches, wholesale, digital and key markets globally.

任何非核心資產都會分散注意力，我們將評估這些非核心資產的選擇。我們看到了推動品類、分銷和地理變革的巨大潛力。這包括傳統手錶、批發、數位和全球主要市場。

Focus and simplification will again be key drivers of strategic choices. In short, you can expect to see us make bold moves to reignite growth in our Fossil brand. As we speak, we are working on a new brand platform, a new pricing architecture, a new go-to-market approach to prioritize our profitable channels and regions and reduce penetration in the unprofitable ones.

重點和簡化將再次成為策略選擇的關鍵驅動力。簡而言之，您可以期待看到我們採取大膽舉措，重新激發 Fossil 品牌的成長。正如我們所說，我們正在開發一個新的品牌平台、新的定價架構和新的進入市場方法，以優先考慮我們的獲利管道和地區，並減少對無利可圖管道和地區的滲透。

Some of the specific actions we are taking in the near term to reignite sales include the following: first, we're bringing a global brand ambassador for the Fossil brand, which we expect to announce next week. A second action we're taking is the return to a more normalized level and cadence on promotion, which may create a headwind to sales, but is expected to drive further improvement in gross margin while also strengthening our overall brand profile.

我們近期為重振銷售而採取的一些具體行動包括：首先，我們將為 Fossil 品牌帶來一位全球品牌大使，預計下週宣布。我們採取的第二個行動是恢復到更正常的水平和促銷節奏，這可能會對銷售造成不利影響，但預計將推動毛利率進一步提高，同時也加強我們的整體品牌形象。

Third, are leveraging the success of our women's Raquel line and our leadership position in the watch rings with design and materials updates. And lastly, we have the relaunch of our popular Machine platform coming to market in early '25 as part of our effort to strengthen our men's offering. Ultimately, we need outstanding product offerings at the right price points with stronger upper funnel marketing and less promotional intensity.

第三，利用我們女式 Raquel 系列的成功以及我們在錶圈領域的領導地位，進行設計和材料更新。最後，我們在 25 年初重新推出了廣受歡迎的 Machine 平台，作為我們加強男裝產品的努力的一部分。最終，我們需要以合適的價格提供出色的產品，同時加強漏斗上層行銷和減少促銷強度。

Our new Fossil brand platform will be aimed at reigniting our connection with consumers and deepening Fossil's cultural relevance. This will be supported with a strong innovation pipeline and compelling marketing. In fact, we are preparing to launch a major global campaign in 2025 featuring our new brand ambassador. As we focus on these initiatives to grow the Fossil brand, we're also taking action to stabilize the sales into our major licensed brands. We expect to revitalize our key partnerships under new and more realistic scenarios.

我們新的 Fossil 品牌平台旨在重新點燃我們與消費者的聯繫並加深 Fossil 的文化相關性。這將得到強大的創新管道和引人注目的行銷的支持。事實上，我們正​​準備在 2025 年推出由新品牌大使主演的大型全球活動。在我們專注於這些發展 Fossil 品牌的舉措的同時，我們也採取行動穩定我們主要授權品牌的銷售。我們期望在新的、更現實的情況下重振我們的主要合作夥伴關係。

From a distribution perspective, we see a clear opportunity to rebuild our relationship with our wholesale partners and return to our roots in this important channel. This means prioritizing our partners from a product, merchandising and promotional perspective. We also see a significant opportunity to strengthen our digital business and operate this channel more profitably. We're moving as quickly as possible to execute against this plan, the majority of which are already underway.

從分銷的角度來看，我們看到了一個明顯的機會來重建我們與批發合作夥伴的關係，並回歸我們在這個重要管道中的根源。這意味著從產品、銷售和促銷的角度優先考慮我們的合作夥伴。我們也看到了加強我們的數位業務並提高營運該通路利潤的重大機會。我們正在盡快執行該計劃，其中大部分已經在進行中。

Returning now to our key focus areas. Number two is rightsizing the business. In tandem with reassessing and simplifying our core, we plan to rightsize our infrastructure to ensure that we are optimized for profitability from a smaller and more focused base. This work will begin next year and will be incremental to our current TAG Plan, which Andy will talk more about during his remarks.

現在回到我們的重點關注領域。第二是調整業務規模。在重新評估和簡化我們的核心的同時，我們計劃調整我們的基礎設施規模，以確保我們在更小、更集中的基礎上優化盈利能力。這項工作將於明年開始，並將是我們當前 TAG 計劃的增量，安迪將在演講中詳細討論該計劃。

Our third priority is a commitment to strengthening the balance sheet and improving liquidity. We're moving quickly here and aggressively pursuing options which may include actions to monetize assets as we redefine our core and simplify our operations.

我們的第三個優先事項是致力於加強資產負債表和改善流動性。我們正在迅速採取行動，並積極尋求各種選擇，其中可能包括在重新定義我們的核心並簡化我們的營運時將資產貨幣化的行動。

The Board and I are fully aligned on the opportunities at hand and the change that needs to occur to execute this turnaround and create value for shareholders. We have a strong sense of urgency, and you can expect to see us moving swiftly. When we hold our year-end earnings call, I will have had another few months at the helm. At that time, I will provide an update on the actions we have taken thus far and share our comprehensive strategy and game plan for Fossil Group's next chapter.

董事會和我對當前的機會以及執行這項轉變並為股東創造價值所需發生的變革完全一致。我們有強烈的緊迫感，您可以期待看到我們迅速行動。當我們召開年終財報電話會議時，我將再掌舵幾個月。屆時，我將介紹我們迄今為止所採取行動的最新情況，並分享我們為 Fossil 集團下一章提供的全面策略和遊戲計劃。

Now I will turn the call to Andy to discuss the financials.

現在我將打電話給安迪討論財務問題。

Thank you, Franco. We are excited to welcome you and to work together to lead the company in focusing on our key strategic priorities.

謝謝你，法蘭哥。我們很高興歡迎您並共同努力領導公司專注於我們的關鍵策略重點。

Good afternoon, everyone. As expected, our third quarter performance reflects continued pressure on the top line, while initiatives under our transformation and growth plan continue to drive improvement across gross margin, SG&A and adjusted operating profit.

大家下午好。正如預期的那樣，我們第三季的業績反映了營收的持續壓力，而我們的轉型和成長計畫下的舉措繼續推動毛利率、SG&A 和調整後營業利潤的改善。

Third quarter net sales totaled $288 million, down 16% in constant currency. 600 basis points of the decline is attributable to our smartwatch exit and store closures. We continue to see stabilization trends in Fossil traditional watches, which declined 4% globally on a comp basis in Q3 as well as India, which was up about 10%, excluding connected.

第三季淨銷售額總計 2.88 億美元，以固定匯率計算下降 16%。下降 600 個基點歸因於我們的智慧手錶退出和商店關閉。我們繼續看到 Fossil 傳統手錶的穩定趨勢，按比較計算，第三季度全球範圍內下降了 4%，印度則上漲了約 10%（不包括連接在內）。

We also see strength in selected licensed brands such as Armani Exchange, SKECHERS and Tory Burch. The most challenging area of our business continues to be our larger licensed watch brands as some of our partners work through their respective repositioning efforts. We are working closely with them to adapt our plans and programs accordingly.

我們也看到了 Armani Exchange、SKECHERS 和 Tory Burch 等精選授權品牌的實力。我們業務中最具挑戰性的領域仍然是我們較大的授權手錶品牌，因為我們的一些合作夥伴正在透過各自的重新定位努力。我們正在與他們密切合作，以相應地調整我們的計劃和項目。

Gross margin expanded 240 basis points versus last year at 49.4%. This can be traced primarily to the exit of connected and TAG benefits from retail pricing, promotional initiatives and account renegotiations. Incremental royalties for several brands with contractual minimums partially offset these margin benefits.

毛利率較去年增加 240 個基點，達到 49.4%。這主要可以追溯到零售定價、促銷活動和帳戶重新談判中互聯和 TAG 利益的退出。幾個具有合約最低限額的品牌的增量特許權使用費部分抵消了這些利潤收益。

SG&A expenses were down $31 million to $161 million compared to last year, representing a 16% decrease as we focus on cost takeout. The year-over-year reductions are attributable to lower store operating costs on fewer stores, lower compensation and administrative expenses resulting from our TAG initiatives, and decreased marketing spend versus the prior year. These ongoing cost actions are expected to drive continued reductions in SG&A dollars in the fourth quarter, with Q4 comparisons expected to be similar to Q3.

與去年相比，SG&A 費用減少了 3,100 萬美元，至 1.61 億美元，下降了 16%，因為我們專注於成本削減。年比減少的原因是門市數量減少、門市營運成本降低、我們的 TAG 計劃帶來的薪酬和管理費用降低以及行銷支出與上年相比減少。這些持續的成本行動預計將推動第四季的銷售、行政管理費用持續減少，第四季的比較預計與第三季相似。

During Q3, we closed seven stores, ending the quarter with 251 stores, a 17% reduction compared to a year ago. We have exited 53 locations year-to-date and expect to close up to 58 by year-end. As a reminder, these closures occur at natural lease expiration with very minimal closing costs.

第三季度，我們關閉了 7 家門市，本季末門市數量為 251 家，比去年同期減少 17%。今年迄今，我們已退出 53 個地點，預計到年底將關閉至 58 個。提醒一下，這些關閉是在租約自然到期時發生的，而關閉成本非常低。

Our focus on gross margin expansion and cost reduction allowed us to significantly improve the adjusted operating loss in the third quarter. On a year-over-year basis, we narrowed our Q3 adjusted operating loss to $19 million, reflecting an improvement of 39% compared to the adjusted operating loss of $31 million last year.

我們對毛利率擴張和成本降低的關注使我們能夠在第三季顯著改善調整後的營運虧損。與去年同期相比，我們將第三季調整後營運虧損縮小至 1,900 萬美元，與去年調整後營運虧損 3,100 萬美元相比，改善了 39%。

We remain on track to achieve continued benefits across margin, gross margin and operating expenses from our TAG plan in the coming quarters. Our initiatives include SKU rationalization, pricing, promotional actions, workforce reductions, procurement and indirect cost savings and store closures. We expect to capture annualized adjusted operating income benefits of $100 million in full year 2024 and $300 million of annualized total planned benefits by the end of 2025.

我們仍有望在未來幾季從我們的 TAG 計劃中實現利潤率、毛利率和營運費用方面的持續效益。我們的措施包括 SKU 合理化、定價、促銷行動、裁員、採購和間接成本節省以及關閉商店。我們預計到 2024 年全年，年化調整後營業收入收益將達到 1 億美元，到 2025 年底，年化總計畫收益將達到 3 億美元。

Now turning to the balance sheet. We ended the quarter with total liquidity of $130 million, including $106 million in cash and cash equivalents and $24 million available under our revolving credit facility. Inventory levels decreased by 30% compared to a year ago, which aligns with our expectations. Operating cash use was $23 million, reflecting expected inventory investment in the quarter.

現在轉向資產負債表。截至本季末，我們的流動資金總額為 1.3 億美元，其中包括 1.06 億美元的現金和現金等價物以及循環信貸額度下的 2,400 萬美元。庫存水準較去年同期下降 30%，符合我們的預期。營運現金使用量為 2,300 萬美元，反映了本季的預期庫存投資。

We made progress against our asset monetization opportunities in Q3, completing the sale of our building in France, which generated approximately $8 million in net proceeds. Additionally, we are making further progress towards the sale leaseback of our distribution center located in Germany, which we expect to close in the first quarter of next year.

我們在第三季的資產貨幣化機會方面取得了進展，完成了法國大樓的出售，產生了約 800 萬美元的淨收益。此外，我們正在德國配送中心的售後回租方面取得進一步進展，預計該中心將於明年第一季關閉。

We continue working with our advisors on our strategic review as we focus on reassessing our core business and simplifying our operating model. This includes an ongoing analysis of our business model, development of strategic initiatives, refinement of our financial plans and comprehensive reviews of our capital structure and financing alternatives.

我們將繼續與顧問合作進行策略審查，重點是重新評估我們的核心業務並簡化我們的營運模式。這包括對我們的業務模式進行持續分析、制定策略舉措、完善我們的財務計劃以及對我們的資本結構和融資方案進行全面審查。

As Franco mentioned, we are reviewing options for our smaller owned noncore assets or brands to improve focus and execution on our major businesses.

正如弗蘭科所提到的，我們正在審查我們較小的非核心資產或品牌的選擇，以提高對我們主要業務的關注和執行力。

Moving to guidance. We are revising our outlook for the full year to reflect current business trends and our assertive actions to stabilize the business, which Franco discussed. Worldwide net sales are expected to be approximately $1.1 billion, while the adjusted operating margin loss is expected to range from negative 6% to negative 8%.

轉向指導。我們正在修改全年展望，以反映當前的業務趨勢以及我們為穩定業務而採取的果斷行動，弗朗哥對此進行了討論。全球淨銷售額預計約為 11 億美元，而調整後的營業利潤率損失預計為負 6% 至負 8%。

We expect the business to have positive cash flow in 2024 with sufficient liquidity for the foreseeable future. We remain on track to achieve at least $100 million of annualized P&L benefits in 2024 across margin and SG&A under our TAG Plan. Restructuring costs related to TAG are estimated to be approximately $40 million for the full year of 2024.

我們預計該業務將在 2024 年實現正現金流，並在可預見的未來擁有充足的流動性。根據我們的 TAG 計劃，我們仍有望在 2024 年實現至少 1 億美元的年度損益效益，包括保證金和銷售、一般管理費用。預計 2024 年全年與 TAG 相關的重組成本約為 4,000 萬美元。

Now I'll turn the call back to Franco for closing comments.

現在我將把電話轉回弗朗哥以徵求結束意見。

Thank you, everyone, for listening today. I'm incredibly grateful to be here, and we're committed to turning around this business and creating value for our shareholders. We recognize there is a lot of heavy lifting to do. We're up to the task. We look forward to talking to you on our year-end earnings call when we outline our new strategic plan for the future.

謝謝大家今天的收聽。我非常感激來到這裡，我們致力於扭轉這項業務並為股東創造價值。我們體認到還有很多繁重的工作要做。我們能勝任這項任務。我們期待在年終財報電話會議上與您交談，屆時我們將概述我們未來的新策略計劃。

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝大家的加入。您現在可以斷開連線。