NEW YORK (TheStreet) -- Shares of watch retailer Fossil Group (FOSL) are down by 7.14% to $70.27 on heavy volume in early afternoon trading on Wednesday, as the luxury retail goods sector takes a hit due to the weak earnings performance by designer brand Michael Kors (KORS) .
Other luxury retail stocks falling today include Movado Group (MOV) , lower by 2.21% to $26.99, Kate Spade (KATE) , declining by 3.79% to $25.62, and Coach Inc. (COH) , slipping by 4.68% to $34.85 this afternoon.
The company also posted its slowest sales growth in 3 ½ years and guided below estimates for the full year.
Separately, TheStreet Ratings team rates FOSSIL GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate FOSSIL GROUP INC (FOSL) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, FOSSIL GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for FOSSIL GROUP INC is rather high; currently it is at 58.32%. Regardless of FOSL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.25% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 42.6% when compared to the same quarter one year ago, falling from $66.34 million to $38.07 million.
- Net operating cash flow has decreased to $84.97 million or 12.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: FOSL Ratings Report