What Happened To Fossil Watches?
Jun 04, 2021As they have grown in the technology sector, like Apple and Fitbit, they have also tried to conquer a small strip of space on your wrist. The watch, the global watch industry has certainly seen its fortunes change since the introduction of the smartphone and the demand for fitness. Trackers and smart
watches
are growing, butwatches
haven't completely disappeared. High-end Swiss-made watches have flourished in recent years, catering to customers eager for beautifully crafted timepieces that exemplify traditional analog craftsmanship in a highly digitalized era, other legacy watchmakers have had to adapt and offer to customers. a new reason to keep watches on your wrists and one company that has suffered especially is Fossil Fossil was once a high-flying brand in 2014, it had $3.5 billion in annual sales and peaked at $139.20 on April 5 in 2012.The company's worldwide net sales fell 27% from $2.2 billion in 2019 to $1.6 billion in 2020 and the stock plummeted to around twelve dollars on May 24, 2021. It closed and earned 30 stores in 2020 and said it hopes to reduce its number of stores by another 65. to 75 in total in 2021. In addition to its own brand, the
fossil
group also owns the names Michelle Misfit Relic Skogen and Zodiac and makes watches for several companies Armani Exchange bmw skechers diesel dkny emporio armani kate spade new york michael kors puma and tory But the company has been licking its wounds and repositioning itself in a tumultuous time when smartwatches are taking over the market segment.Brands like Fossil were once owned by I'm not saying it's going away, but it's a hard sell these days, you know especially? In that smartwatch price range, you're really fighting against the tide, Fossil has brought its own smartwatches to market, started a multi-year turnaround plan, grown its e-commerce business, and focused on growing markets in China and India, but will that be enough? One of the things that sets watches apart is how they work. Two of the main categories are quartz watches and mechanical watches. For a long time, all watches and clocks were mechanical. Mechanical watches use gears and springs to keep pace with time.
Then in 1969, Japanese manufacturers such as Seiko began introducing quartz watches. These watches are electronic and usually run on batteries. The battery sends electricity to a quartz crystal that vibrates at a very constant frequency, a world standard for precision, and that frequency is used to measure time. Quartz watches made watches much cheaper. More available and much more accurate than mechanical watches, the following years are sometimes called the quartz crisis or the quartz revolution. The 1980s saw the rise of fashion watches, perhaps best exemplified by the Swatch brand, which made low-priced quartz watches that often came with eye-catching designs and bright colors throughout the '80s, the praise of The samples grew and grew and you would see these plastic quartz fashion watches in 40's or less, but they had a collectible nature and many of them started going for $1,500. dollars twenty thousand dollars was crazy it was in this environment that Fossil was founded in 1984 by tom carsodius a greek american businessman the business began selling inexpensive watches made in asia the company was named after a nickname that tom kartsotis and his brother had had during his father, as the trend for fashion watches continued,
fossil
watches developed their own cult.I remember in the late '80s and early '90s there was really a collectability around fossils, there were groups of collectors, there were people who collected the cans they came in, in fact, if you go to the Fossil headquarters in Dallas there's a whole wall of these cans that people have collected over the years and breakfast clubs that got together and talked about Fossil. The company is headquartered in Richardson, Texas, and as of December 2019, it employed a total of 10,200 workers in 2020. Kartsotis left the company as president in 2010 when he left to found shinola detroit, a company with some
what
similar products that advertised itself as a company manufactured in the United States, brother Costa, who had joined the company in 1988, took over. of president in recent years.Watches have consistently accounted for around 80 percent of total fossil sales. As of 2021, its watch business can be divided into traditional watches. Smart Watches. and hybrids, which are watches that look analog but have smartwatch functions. Fossil also manufactures and sells accessories such as jewelry, bags, small leather goods and belts for both its own brands and licensed brands; these have represented between approximately 16 percent and almost 20 percent of annual income. sales since 2017. There is also a small licensed eyewear company that accounted for approximately half a percent of sales in fiscal 2020. Fossil sells its products in 140 countries through 23 company-owned sales subsidiaries and through a network of approximately 75 independent distributors.
In addition to its headquarters in Texas, the company has offices in Hong Kong and Switzerland, with the majority of its watches manufactured in Asia and sourced through a Hong Kong subsidiary. In fiscal 2020, about 43% of Fossils' global watch production was wholly or mostly assembled or sourced. Own factories fell slightly from 47 the previous year. Sales fell more than 27 in fiscal 2020 compared to 2019 and almost 13 in that year compared to 2018. The company had a net loss of $96.1 million in 2020 and $52 million in 2019 compared . with just three and a half million in 2018. Fossil said in its 2019 10k that changes in consumer interests and purchasing patterns have led to a challenging environment, as wholesale sales to retailers have been weak in both the US and Europe as consumers increasingly prefer sales from the connected watch group. a mid-priced watch that puts it in a crowded market that is struggling with the growth of smartwatches.
Apple makes more watches than any other brand combined. Buying a smart watch certainly cannibalizes the purchase of a fashion watch, so if you are a consumer standing in the busy watch department of a department store it is almost like being in a casino where there is sensory overload, there are small objects shiny ones everywhere and those trendy watches are competing for those smartwatch dollars and they just aren't winning the fight to be sure. Smartwatches and other connected devices that can track time are a potential threat to all watchmakers, but luxury watchmakers have done quite well in meeting a different kind of demand for something that represents traditional analog technology and craftsmanship. of the old school.
Luxury mechanical devices may attract customers. because they are not high tech products with a mechanical watch which is usually a hand assembled living breathing mechanical watch that is driven by its wearer, so with proper service by a watchmaker, that watch can last for generations and It becomes a companion of yours that you use. on your wrist throughout the trials and tribulations of your life and becomes part of your story, so I think more and more consumers are realizing, whether through social media or better messaging the groups of brand collectors, who know, gee, instead of a fashion watch that is something disposable maybe they should invest in a mechanical watch a whole ecosystem of enthusiasts, collectors, publications and distributors have united around the For luxury watches there is a strong secondary market and even older ones can sell for remarkably high prices.
Watches are one of those product categories that double as a hobby, there are dedicated communities around them. I really have to thank websites like ho den ki because it has really created a loyal following, built its own community and has really great educational and entertaining content for beginners and experts alike. It's not a perfect benchmark, but one indicator of the overall health of the watch market is the health of Switzerland's exports in 2019. Swiss wristwatch exports hit an all-time low of 20 million units, a decline of 13 compared to 2018 and below the levels observed during the financial crisis. which started in 2009, it is also worth noting that the Apple Watch alone outsold the entire Swiss watch industry in 2019 with 30.7 million units;
However, the value of Swiss wristwatch exports increased to 20.5 billion francs, about a 3 percent increase from 2018, that increase was almost everything else decreased, especially steel watches and Of course, 2020 was a different story, attributed almost entirely to the coronavirus pandemic. Exports of wristwatches were valued at 16.1 billion francs, a decrease of 21.4 percent compared to 2019. The number of wristwatches sold fell by 33 percent to approximately 13.8 million units half a century since the quartz crisis decimated the Swiss watch industry high-end mechanical watches are thriving quartz watches that once threatened them with extinction are now struggling to meet their own high-tech challenge and achieve a part of the smartwatch market is difficult.
When you think about the smartwatch, you also think about its integration with your phone and your computers. Consumers tend to trust a tech company in that sense, so you'll go to Apple because you have the iPhone, you know your Apple file, Apple's user is the same as Samsung's, it will integrate with your Galaxy phone, plus of technology. Ongoing Issues Facing Malls in January 2021 Fossils' international company-owned store count stands at 152 retail outlets and 121 outlet stores. Physical purchases account for a considerable portion of fossil sales. Fossil did not respond to a request for comment, so
what
is Fossil doing?To turn its business around, the company has a four-point plan in place: the first is to drive what it calls innovation and storytelling, basically developing new products and marketing them. There is also, from a design perspective, a lack of novelty. in the watch category, it's an investment to come up with new cases, new styles and I'm sure until they see that demand they won't make that investment, in addition to the smartwatch headwinds, the latter is stepping up its bespoke digital business that customers are increasingly purchasing products online, thirdly, it is focusing on growing markets in India and China and, fourthly, it is tightening its supply chain, reducing costs and improving its overall competitiveness.
Fossil began its new global fossil initiative in 2016, a multi-year restructuring plan aimed at freeing up funds. For investments in digital marketing and new products, the company completed the first phase of the plan in the third quarter of fiscal 2019 and achieved $200 million in execution cost savings over a three-year period. The company is now in the second stage. The so-called new fossil world 2.0 involves cutting costs and focusing on key growth markets, particularly in Asia, and on new products, especially its connected watches. The company said in May 2021 that the plan generated $50 million in expense savings in 2019, $175 million in 2020 and $53 million in the first quarter of 2021.
In a presentation in September 2020, Fossil said which believes its total addressable market will grow from $145 billion in 2019 to $185 billion in 2023, that is, for everything related to watches, leather and jewelry, but will it be so? Can a fashion brand succeed in this era where the watches sold are either high-end watches or computers? There are some successful direct-to-consumer brands that could show the way, like Olivia Burton and Mvmt or the movement that was bought by Movado. group in 2018. mvmt or movement is a great example: it started as a direct-to-consumer brand and built a following online through Instagram, as well as having a great variety at a good price and now, under movado, it has really succeeded in men and women and has been more accessible in the mass market, there are also some well-known legacy brands that have managed to generate some interest and excitement among mechanical watch lovers and enthusiasts.
One such company is Timex, which sells many lower-priced quartz watches at retail.in the same way. Fossil does it and then there's Timex who are doing some really cool things that are bringing long-time lovers like me back to the brand, so in 2017 Timex released their first hand-wound mechanical watch since 1982 and many of We were shocked that we got this hand. Mechanically wound reissue of the classic Marlin watch is just one portion of Timex's business, but it makes the brand intriguing to collectors who care about watches like Timex. Fossil has a recognizable name that in its own way resonates with consumers.
Fossil is a It is a traditional brand, it may not have the level of luxury of a Rolex, of course, but it is a historical brand and consumers perceive it as good quality watches. Three of the top five watch brands in sales are exclusively smart watch manufacturers, Apple Samsung and Fitbit, but smart watches. Brock says it can be a sort of gateway drug into the world of watches that can benefit companies that make a compelling product. Most smartwatch users report that owning a smartwatch now will not stop me from purchasing now or in the future. Fossil's plan is a traditional watch.
To revamp its business enough to survive, the question remains whether it can reverse its declines and lure buyers away from shiny new products made by Apple, Samsung and other big tech companies.
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