Making Financial Headlines · Page 5
Fossil Finds Its Turnaround Is Running Ahead of the Clock
· New York time
Watchmaker Fossil says sales have returned to growth and the company is returning to profit, early signs that its turnaround strategy is progressing. Its chief executive says the effort is ahead of plan, giving the company a stronger recovery story than a promise that improvement is merely coming. Sales growth and profitability address different parts of the business. One concerns the direction of revenue; the other concerns what remains after costs. The company has reported improvement on both fronts, though early progress does not guarantee that the same pattern will continue. The chief executive's assessment of the plan is management's view of the recovery. The reported direction of sales and profit gives investors concrete results to weigh against that assessment. For a retailer and watchmaker, turning around operations requires more than an appealing product pitch: customers must buy enough, and the business must manage its costs. Fossil has supplied the obvious watch metaphor by saying progress is ahead of schedule. The more interesting business question is whether the improvement lasts after the pleasing first reading. A watch can display the time beautifully, but it cannot make the next quarter arrive with the same numbers.
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