Fossil Goes Bare Bones, Sees Bright Future

RICHARDSON, Texas (TheStreet) -- Fossil(FOSL Quote) has been making strides to avoid extinction -- and the more bare-bones company appears poised to perform better in the coming quarter.

Although the watchmaker posted a 34% fall-off in second-quarter earnings, it managed to beat Wall Street's expectations and raised its full-year outlook. The company attributed the better-than-expected profit to tighter inventory controls and cost-cutting measures.

Fossil has laid off employees and reduced salaries for all executive officers and senior vice-presidents to help combat falling sales amid the recession.

During the quarter, the watchmaker earned $16.6 million, or 25 cents a share, compared with $25.1 million, or 36 cents, in the year-ago period. Analysts expected a profit of 20 cents a share.

The company said the stronger dollar weighed on results, pulling earnings down by 4 cents a share.

Sales fell 11% to $315.9 million from $353.2 million.

While Fossil expects the recession to continue to suppress earnings in the third and fourth quarter, the company did boost its full-year outlook in the range of $1.63 to $1.73 a share. It previously forecast earnings in the range of $1.50 to $1.70 a share. .

-- Reported by Jeanine Poggi in New York.