Cover Page
Cover Page - shares | 9 Months Ended | |
Oct. 01, 2022 | Nov. 02, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 01, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-41040 | |
Entity Registrant Name | FOSSIL GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 75-2018505 | |
Entity Address, Address Line One | 901 S. Central Expressway, | |
Entity Address, City or Town | Richardson, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75080 | |
City Area Code | 972 | |
Local Phone Number | 234-2525 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 51,836,456 | |
Entity Central Index Key | 0000883569 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Common stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | FOSL | |
Security Exchange Name | NASDAQ | |
Senior Notes | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 7.00% Senior Notes due 2026 | |
Trading Symbol | FOSLL | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 162,612 | $ 250,844 |
Accounts receivable - net of allowances for doubtful accounts of $15,025 and $16,388, respectively | 214,987 | 255,131 |
Inventories | 452,747 | 346,850 |
Prepaid expenses and other current assets | 184,964 | 169,930 |
Total current assets | 1,015,310 | 1,022,755 |
Property, plant and equipment - net of accumulated depreciation of $418,090 and $436,663, respectively | 77,379 | 89,767 |
Operating lease right-of-use assets | 156,448 | 177,597 |
Intangible and other assets-net | 65,849 | 78,600 |
Total long-term assets | 299,676 | 345,964 |
Total assets | 1,314,986 | 1,368,719 |
Current liabilities: | ||
Accounts payable | 204,040 | 229,877 |
Short-term and current portion of long-term debt | 354 | 554 |
Accrued expenses: | ||
Current operating lease liabilities | 48,238 | 58,721 |
Compensation | 40,072 | 73,595 |
Royalties | 21,380 | 38,714 |
Customer liabilities | 34,671 | 40,886 |
Transaction taxes | 8,293 | 17,147 |
Other | 43,430 | 46,675 |
Income taxes payable | 28,249 | 29,478 |
Total current liabilities | 428,727 | 535,647 |
Long-term income taxes payable | 24,069 | 20,452 |
Deferred income tax liabilities | 458 | 504 |
Long-term debt | 293,583 | 141,354 |
Long-term operating lease liabilities | 151,928 | 174,520 |
Other long-term liabilities | 25,988 | 30,884 |
Total long-term liabilities | 496,026 | 367,714 |
Commitments and contingencies (Note 13) | ||
Stockholders’ equity: | ||
Common stock, 51,827 and 52,146 shares issued and outstanding at October 1, 2022 and January 1, 2022, respectively | 518 | 521 |
Additional paid-in capital | 304,498 | 300,848 |
Retained earnings | 184,909 | 229,132 |
Accumulated other comprehensive income (loss) | (96,876) | (67,275) |
Total Fossil Group, Inc. stockholders’ equity | 393,049 | 463,226 |
Noncontrolling interests | (2,816) | 2,132 |
Total stockholders’ equity | 390,233 | 465,358 |
Total liabilities and stockholders’ equity | $ 1,314,986 | $ 1,368,719 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED (Parenthetical) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 15,025 | $ 16,388 |
Property, plant and equipment, accumulated depreciation | $ 418,090 | $ 436,663 |
Common stock, shares issued (in shares) | 51,827,267 | 52,145,738 |
Common stock, shares outstanding (in shares) | 51,827,267 | 52,145,738 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) UNAUDITED - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Statement [Abstract] | ||||
Net sales | $ 436,271 | $ 491,827 | $ 1,183,292 | $ 1,265,808 |
Cost of sales | 216,651 | 232,305 | 588,010 | 601,857 |
Gross profit | 219,620 | 259,522 | 595,282 | 663,951 |
Operating expenses: | ||||
Selling, general and administrative expenses | 196,530 | 205,718 | 591,521 | 593,522 |
Other long-lived asset impairments | 608 | 551 | 1,060 | 6,314 |
Restructuring charges | 0 | 5,447 | 5,438 | 18,716 |
Total operating expenses | 197,138 | 211,716 | 598,019 | 618,552 |
Operating income (loss) | 22,482 | 47,806 | (2,737) | 45,399 |
Interest expense | 5,127 | 6,422 | 13,445 | 20,284 |
Other income (expense) - net | (1,859) | (482) | (1,915) | 882 |
Income (loss) before income taxes | 15,496 | 40,902 | (18,097) | 25,997 |
Provision for income taxes | 9,214 | 8,978 | 15,904 | 19,177 |
Net income (loss) | 6,282 | 31,924 | (34,001) | 6,820 |
Less: Net income (loss) attributable to noncontrolling interests | 433 | 504 | 738 | 1,032 |
Net income (loss) attributable to Fossil Group, Inc. | 5,849 | 31,420 | (34,739) | 5,788 |
Other comprehensive income (loss), net of taxes: | ||||
Currency translation adjustment | (13,465) | (3,237) | (37,437) | (12,293) |
Cash flow hedges - net change | 3,668 | 2,085 | 7,836 | 3,607 |
Total other comprehensive income (loss) | (9,797) | (1,152) | (29,601) | (8,686) |
Total comprehensive income (loss) | (3,515) | 30,772 | (63,602) | (1,866) |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 432 | 504 | 738 | 1,032 |
Comprehensive income (loss) attributable to Fossil Group, Inc. | $ (3,947) | $ 30,268 | $ (64,340) | $ (2,898) |
Earnings (loss) per share: | ||||
Basic (in dollars per share) | $ 0.11 | $ 0.60 | $ (0.67) | $ 0.11 |
Diluted (in dollars per share) | $ 0.11 | $ 0.60 | $ (0.67) | $ 0.11 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 51,825 | 52,141 | 51,843 | 51,900 |
Diluted (in shares) | 52,052 | 52,766 | 51,843 | 52,738 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY UNAUDITED - USD ($) $ in Thousands | Total | Stockholders' equity attributable to Fossil Group, Inc. | Common stock | Additional paid-in capital | Treasury stock | Retained earnings | Accumulated other comprehensive income (loss) | Noncontrolling interest |
Beginning balance (in shares) at Jan. 02, 2021 | 51,474,000 | |||||||
Beginning balance at Jan. 02, 2021 | $ 440,032 | $ 439,090 | $ 515 | $ 293,777 | $ 0 | $ 203,698 | $ (58,900) | $ 942 |
Increase (Decrease) in Shareholders' Equity | ||||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units (in shares) | 857,000 | |||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units | 0 | $ 8 | (8) | |||||
Acquisition of common stock for employee tax withholding | (2,405) | (2,405) | (2,405) | |||||
Retirement of common stock (in shares) | (188,000) | |||||||
Retirement of common stock | 0 | $ (2) | (2,403) | 2,405 | ||||
Stock-based compensation | 7,139 | 7,139 | 7,139 | |||||
Net income (loss) | 6,820 | 5,788 | 5,788 | 1,032 | ||||
Other comprehensive income (loss) | (8,686) | (8,686) | (8,686) | |||||
Ending balance (in shares) at Oct. 02, 2021 | 52,143,000 | |||||||
Ending balance at Oct. 02, 2021 | 442,900 | 440,926 | $ 521 | 298,505 | 0 | 209,486 | (67,586) | 1,974 |
Beginning balance (in shares) at Jul. 03, 2021 | 52,127,000 | |||||||
Beginning balance at Jul. 03, 2021 | 409,327 | 407,857 | $ 521 | 295,704 | 0 | 178,066 | (66,434) | 1,470 |
Increase (Decrease) in Shareholders' Equity | ||||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units (in shares) | 21,000 | |||||||
Acquisition of common stock for employee tax withholding | (56) | (56) | (56) | |||||
Retirement of common stock (in shares) | (5,000) | |||||||
Retirement of common stock | 0 | (56) | 56 | |||||
Stock-based compensation | 2,857 | 2,857 | 2,857 | |||||
Net income (loss) | 31,924 | 31,420 | 31,420 | 504 | ||||
Other comprehensive income (loss) | (1,152) | (1,152) | (1,152) | |||||
Ending balance (in shares) at Oct. 02, 2021 | 52,143,000 | |||||||
Ending balance at Oct. 02, 2021 | $ 442,900 | 440,926 | $ 521 | 298,505 | 0 | 209,486 | (67,586) | 1,974 |
Beginning balance (in shares) at Jan. 01, 2022 | 52,145,738 | 52,146,000 | ||||||
Beginning balance at Jan. 01, 2022 | $ 465,358 | 463,226 | $ 521 | 300,848 | 0 | 229,132 | (67,275) | 2,132 |
Increase (Decrease) in Shareholders' Equity | ||||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units (in shares) | 896,000 | |||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units | 0 | $ 9 | (9) | |||||
Acquisition of common stock for employee tax withholding | (12,443) | (12,443) | (12,443) | |||||
Retirement of common stock (in shares) | (1,215,000) | |||||||
Retirement of common stock | 0 | $ (12) | (2,947) | 12,443 | (9,484) | |||
Stock-based compensation | 6,606 | 6,606 | 6,606 | |||||
Net income (loss) | (34,001) | (34,739) | (34,739) | 738 | ||||
Other comprehensive income (loss) | (29,601) | (29,601) | (29,601) | |||||
Distribution of noncontrolling interest earnings | $ (5,686) | (5,686) | ||||||
Ending balance (in shares) at Oct. 01, 2022 | 51,827,267 | 51,827,000 | ||||||
Ending balance at Oct. 01, 2022 | $ 390,233 | 393,049 | $ 518 | 304,498 | 0 | 184,909 | (96,876) | (2,816) |
Beginning balance (in shares) at Jul. 02, 2022 | 51,807,000 | |||||||
Beginning balance at Jul. 02, 2022 | 394,025 | 397,274 | $ 518 | 304,775 | 0 | 179,060 | (87,079) | (3,249) |
Increase (Decrease) in Shareholders' Equity | ||||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units (in shares) | 22,000 | |||||||
Acquisition of common stock for employee tax withholding | (13) | (13) | (13) | |||||
Retirement of common stock (in shares) | (2,000) | |||||||
Retirement of common stock | 0 | (13) | 13 | |||||
Stock-based compensation | (264) | (264) | (264) | |||||
Net income (loss) | 6,282 | 5,849 | 5,849 | 433 | ||||
Other comprehensive income (loss) | $ (9,797) | (9,797) | (9,797) | |||||
Ending balance (in shares) at Oct. 01, 2022 | 51,827,267 | 51,827,000 | ||||||
Ending balance at Oct. 01, 2022 | $ 390,233 | $ 393,049 | $ 518 | $ 304,498 | $ 0 | $ 184,909 | $ (96,876) | $ (2,816) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Operating Activities: | ||
Net income (loss) | $ (34,001) | $ 6,820 |
Adjustments to reconcile net loss to net cash provided used in operating activities: | ||
Depreciation, amortization and accretion | 17,587 | 23,410 |
Non-cash lease expense | 60,073 | 68,920 |
Stock-based compensation | 5,821 | 7,139 |
Decrease in allowance for returns and markdowns | (8,519) | (11,838) |
Gain on disposal of assets | (448) | (5,169) |
Property, plant and equipment and other long-lived asset impairment losses | 1,060 | 6,322 |
Non-cash restructuring charges | 876 | 1,747 |
Bad debt expense | 5,611 | 961 |
Other non-cash items | 9,973 | 10,975 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 22,677 | (25,571) |
Inventories | (137,244) | (111,673) |
Prepaid expenses and other current assets | (16,091) | 31,732 |
Accounts payable | (19,151) | 70,156 |
Accrued expenses | (56,944) | (30,007) |
Income taxes | 2,470 | 2,523 |
Operating lease liabilities | (68,533) | (83,443) |
Net cash used in operating activities | (214,783) | (36,996) |
Investing Activities: | ||
Additions to property, plant and equipment | (8,717) | (6,739) |
Decrease in intangible and other assets | 993 | 6,903 |
Proceeds from the sale of property, plant and equipment and other | 28 | 11,360 |
Net cash (used in) provided by investing activities | (7,696) | 11,524 |
Financing Activities: | ||
Acquisition of common stock | (12,444) | (2,405) |
Distribution of noncontrolling interest earnings and other | (6,069) | (232) |
Debt borrowings | 261,983 | 85,182 |
Debt payments | (111,237) | (179,997) |
Net cash provided by (used in) financing activities | 132,233 | (97,452) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (644) | (5,564) |
Net decrease in cash, cash equivalents, and restricted cash | (90,890) | (128,488) |
Cash, cash equivalents, and restricted cash: | ||
Beginning of period | 264,572 | 324,246 |
End of period | $ 173,682 | $ 195,758 |
FINANCIAL STATEMENT POLICIES
FINANCIAL STATEMENT POLICIES | 9 Months Ended |
Oct. 01, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
FINANCIAL STATEMENT POLICIES | FINANCIAL STATEMENT POLICIES Basis of Presentation. The condensed consolidated financial statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”). The information presented herein includes the thirteen-week period ended October 1, 2022 (“Third Quarter”) as compared to the thirteen-week period ended October 2, 2021 (“Prior Year Quarter”), and the thirty-nine week period ended October 1, 2022 ("Year To Date Period") as compared to the thirty-nine week period ended October 2, 2021 ("Prior Year YTD Period"). The condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s financial position as of October 1, 2022, and the results of operations for the Third Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period. All adjustments are of a normal, recurring nature. Effective during fiscal year 2021, the Company made a change to the presentation of product net sales to include third-party smartwatch bands within the smartwatch product type. Third-party smartwatch bands were previously reported within the jewelry product type. The Company's historical disclosures have been recast to be consistent with its current presentation. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended January 1, 2022 (the “2021 Form 10-K”). Operating results for the Third Quarter are not necessarily indicative of the results to be achieved for the full fiscal year. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods reported. We base our estimates on the information available at the time and various other assumptions believed to be reasonable under the circumstances, including estimates of the impact of the coronavirus (“COVID-19”) pandemic. Actual results could differ from those estimates, including the impact of the COVID-19 pandemic. The Company has not made any changes in its significant accounting policies from those disclosed in the 2021 Form 10-K. Business. The Company is a global design, marketing and distribution company that specializes in consumer fashion accessories. Its principal offerings include an extensive line of men's and women's fashion watches and jewelry, handbags, small leather goods, belts and sunglasses. In the watch and jewelry product categories, the Company has a diverse portfolio of globally recognized owned and licensed brand names under which its products are marketed. The Company's products are distributed globally through various distribution channels, including wholesale in countries where it has a physical presence, direct to the consumer through its retail stores and commercial websites and through third-party distributors in countries where the Company does not maintain a physical presence. The Company's products are offered at varying price points to meet the needs of its customers, whether they are value-conscious or luxury oriented. Based on its extensive range of accessory products, brands, distribution channels and price points, the Company is able to target style-conscious consumers across a wide age spectrum on a global basis. Operating Expenses. Operating expenses include selling, general and administrative ("SG&A"), other long-lived asset impairments and restructuring charges. SG&A expenses include selling and distribution expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and warehouse facilities, the four-wall operating costs of the Company's retail stores, point-of-sale expenses, advertising expenses and art, and design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and support costs such as treasury, legal, information services, accounting, internal audit, human resources, executive management costs and costs associated with stock-based compensation. Restructuring charges include costs to reorganize, refine and optimize the Company’s infrastructure and store closures. See Note 16—Restructuring for additional information on the Company’s restructuring plan. Earnings (Loss) Per Share (“EPS”). Basic EPS is based on the weighted average number of common shares outstanding during each period. Diluted EPS adjusts basic EPS for the effects of dilutive common stock equivalents outstanding during each period using the treasury stock method. The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS (in thousands, except per share data): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Numerator: Net income (loss) attributable to Fossil Group, Inc. $ 5,849 $ 31,420 $ (34,739) $ 5,788 Denominator: Basic EPS computation: Basic weighted average common shares outstanding 51,825 52,141 51,843 51,900 Basic EPS $ 0.11 $ 0.60 $ (0.67) $ 0.11 Diluted EPS computation: Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units 227 625 — 838 Diluted weighted average common shares outstanding 52,052 52,766 51,843 52,738 Diluted EPS $ 0.11 $ 0.60 $ (0.67) $ 0.11 At the end of the Third Quarter and Year To Date Period, approximately 1.7 million and 2.2 million weighted average shares issuable under stock-based awards, respectively, were not included in the diluted EPS calculation because they were antidilutive. The total antidilutive weighted average shares included 12,900 and 26,100 weighted average performance-based shares at the end of the Third Quarter and Year To Date Period, respectively. Additionally, 73,500 weighted average performance-based shares were not included in the diluted EPS calculation at the end of the Third Quarter because performance targets were not met. At the end of each of the Prior Year Quarter and Prior Year YTD Period, approximately 0.3 million weighted average shares issuable under stock-based awards were not included in the diluted EPS calculation because they were antidilutive. The total antidilutive weighted average shares included 12,900 weighted average performance-based shares at the end of each of the Prior Year Quarter and Prior Year YTD Period. Additionally, 48,400 and 30,300 weighted average performance-based shares were not included in the diluted EPS calculation at the end of the Prior Year Quarter and Prior Year YTD Period, respectively, because performance targets were not met. Cash, Cash Equivalents and Restricted Cash. Restricted cash included in intangible and other-assets net was comprised primarily of restricted cash balances for appealed tax assessments held in escrow and for pledged collateral to secure bank guarantees for the purpose of obtaining retail space. The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of October 1, 2022 and October 2, 2021 that are presented in the condensed consolidated statement of cash flows (in thousands): October 1, 2022 October 2, 2021 Cash and cash equivalents $ 162,612 $ 181,782 Restricted cash included in prepaid expenses and other current assets 106 118 Restricted cash included in intangible and other assets-net 10,964 13,858 Cash, cash equivalents and restricted cash $ 173,682 $ 195,758 Recently Issued Accounting Standards In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance ("ASU 2021-10"). The new standard increases transparency of government assistance by focusing on the types of assistance given, an entity's accounting for the assistance, and the effect of the assistance on the entity's financial statements to allow for more comparable information for investors and other financial statement users. This standard is effective for financial statements issued for annual periods beginning after December 15, 2021, but early adoption is permitted. This standard will not have a material impact on the Company's consolidated financial statements or related disclosures. In October 2021, FASB issued ASU 2021-08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). The guidance is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. The guidance requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606 as if they had originated the contracts, as opposed to at fair value on the acquisition date. The standard will be effective for business combinations that occur after January 1, 2023. Early adoption is permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. While the impact of this amendment is dependent on the nature of any future transactions, the Company currently does not expect this standard to have a material impact on the Company's consolidated financial statements or related disclosures. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04") and subsequent guidance that clarified the scope and application of its original guidance. ASU 2020-04 provides optional expedients and exceptions to the current guidance on contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts and hedging relationships that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company will adopt these standards when LIBOR is discontinued and does not expect it to have a material impact on its consolidated financial statements or related disclosures. Recently Adopted Accounting Standards In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Income Taxes (Topic 740) . It also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 at the beginning of fiscal year 2022, and it did not have a material effect on the Company's condensed consolidated financial statements. |
REVENUE
REVENUE | 9 Months Ended |
Oct. 01, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Disaggregation of Revenue. Due to changes in the Company’s product types as discussed in Note 1 to the Condensed Consolidated Financial Statements, product results for the Prior Year Quarter and Prior Year YTD Period have been recast to present results on a comparable basis. The Company's revenue disaggregated by major product category and timing of revenue recognition was as follows (in thousands): For the 13 Weeks Ended October 1, 2022 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 132,077 $ 102,142 $ 75,970 $ 9 $ 310,198 Smartwatches 14,578 10,401 8,327 — 33,306 Total watches $ 146,655 $ 112,543 $ 84,297 $ 9 $ 343,504 Leathers 27,262 5,683 8,150 — 41,095 Jewelry 8,353 22,955 6,560 — 37,868 Other 2,056 2,498 1,205 8,045 13,804 Consolidated $ 184,326 $ 143,679 $ 100,212 $ 8,054 $ 436,271 Timing of revenue recognition Revenue recognized at a point in time $ 183,900 $ 143,453 $ 100,076 $ 800 $ 428,229 Revenue recognized over time 426 226 136 7,254 8,042 Consolidated $ 184,326 $ 143,679 $ 100,212 $ 8,054 $ 436,271 For the 13 Weeks Ended October 2, 2021 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 130,988 $ 113,501 $ 101,275 $ — $ 345,764 Smartwatches 25,205 16,344 12,528 8 54,085 Total watches $ 156,193 $ 129,845 $ 113,803 $ 8 $ 399,849 Leathers 23,389 7,231 5,770 — 36,390 Jewelry 12,285 25,554 8,486 — 46,325 Other 1,895 3,257 1,435 2,676 9,263 Consolidated $ 193,762 $ 165,887 $ 129,494 $ 2,684 $ 491,827 Timing of revenue recognition Revenue recognized at a point in time $ 193,367 $ 165,598 $ 129,313 $ 1,004 $ 489,282 Revenue recognized over time 395 289 181 1,680 2,545 Consolidated $ 193,762 $ 165,887 $ 129,494 $ 2,684 $ 491,827 For the 39 Weeks Ended October 1, 2022 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 366,714 $ 253,728 $ 209,857 $ 23 $ 830,322 Smartwatches 47,228 33,347 24,134 — 104,709 Total watches $ 413,942 $ 287,075 $ 233,991 $ 23 $ 935,031 Leathers 69,091 18,372 23,763 — 111,226 Jewelry 25,548 62,730 18,217 — 106,495 Other 5,944 7,933 3,592 13,071 30,540 Consolidated $ 514,525 $ 376,110 $ 279,563 $ 13,094 $ 1,183,292 Timing of revenue recognition Revenue recognized at a point in time $ 513,393 $ 375,433 $ 279,193 $ 3,032 $ 1,171,051 Revenue recognized over time 1,132 677 370 10,062 12,241 Consolidated $ 514,525 $ 376,110 $ 279,563 $ 13,094 $ 1,183,292 For the 39 Weeks Ended October 2, 2021 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 349,024 $ 266,316 $ 262,416 $ 1,053 $ 878,809 Smartwatches 78,308 43,277 28,477 24 150,086 Total watches $ 427,332 $ 309,593 $ 290,893 $ 1,077 $ 1,028,895 Leathers 63,851 19,933 20,057 — 103,841 Jewelry 26,506 61,974 16,560 — 105,040 Other 5,294 8,019 4,115 10,604 28,032 Consolidated $ 522,983 $ 399,519 $ 331,625 $ 11,681 $ 1,265,808 Timing of revenue recognition Revenue recognized at a point in time $ 521,702 $ 398,533 $ 331,180 $ 6,490 $ 1,257,905 Revenue recognized over time 1,281 986 445 5,191 7,903 Consolidated $ 522,983 $ 399,519 $ 331,625 $ 11,681 $ 1,265,808 Contract Balances. As of October 1, 2022, the Company had no material contract assets on the Company's condensed consolidated balance sheets and no deferred contract costs. The Company had contract liabilities of (i) $0.9 million and $4.9 million as of October 1, 2022 and January 1, 2022, respectively, related to remaining performance obligations on licensing income, (ii) $3.4 million and $3.0 million as of October 1, 2022 and January 1, 2022, respectively, primarily related to remaining performance obligations on wearable technology products and (iii) $2.8 million and $3.6 million as of October 1, 2022 and January 1, 2022, respectively, related to gift cards issued. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Oct. 01, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following (in thousands): October 1, 2022 January 1, 2022 Components and parts $ 22,546 $ 23,668 Work-in-process 4 2 Finished goods 430,197 323,180 Inventories $ 452,747 $ 346,850 |
WARRANTY LIABILITIES
WARRANTY LIABILITIES | 9 Months Ended |
Oct. 01, 2022 | |
Product Warranties Disclosures [Abstract] | |
WARRANTY LIABILITIES | WARRANTY LIABILITIES The Company’s warranty liability is recorded in accrued expenses-other in the Company’s condensed consolidated balance sheets. Warranty liability activity consisted of the following (in thousands): For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Beginning balance $ 19,159 $ 21,916 Settlements in cash or kind (5,465) (8,096) Warranties issued and adjustments to preexisting warranties (1) (148) 5,296 Ending balance $ 13,546 $ 19,116 _______________________________________________ (1) Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Oct. 01, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s income tax expense and related effective rates were as follows (in thousands, except percentage data): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Income tax (benefit) expense $ 9,214 $ 8,978 $ 15,904 $ 19,177 Effective tax rate 59.5 % 22.0 % (87.9) % 73.8 % The effective tax rate in the Third Quarter was unfavorable as compared to the Prior Year Quarter due to a higher level of foreign losses for which no tax benefit could be accrued. The Prior Year Quarter tax rate also benefited from favorable discrete items. The overall tax rate is impacted by the Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Cuts and Jobs Act which requires the inclusion of certain foreign income in the tax return which absorbs all of the U.S. net operating loss ("NOL"). Foreign income taxes are also paid on this same foreign income, resulting in double taxation. The Year To Date Period effective tax rate is negative due to the overall pre-tax loss whereas the Prior Year YTD Period effective tax rate was positive since the Prior Year YTD Period income was positive. Both effective rates are high since income tax was accrued on foreign entities with positive taxable income and no tax benefit can be realized on the U.S. NOL. The effective tax rate can vary from quarter-to-quarter due to changes in the Company's global mix of earnings, the resolution of income tax audits and changes in tax law. As of October 1, 2022, the Company's total amount of unrecognized tax benefits, excluding interest and penalties, was $28.9 million, of which $23.9 million would favorably impact the effective tax rate in future periods, if recognized. In the second quarter of fiscal year 2022, the U.S. Internal Revenue Service opened an examination of the Company's 2019 federal income tax return to review the refund claim filed under provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which allowed carrybacks of NOLs for that year. The Company is subject to examinations in various state and foreign jurisdictions for its 2013-2021 tax years, none of which the Company believes are significant, individually or in the aggregate. Tax audit outcomes and timing of tax audit settlements are subject to significant uncertainty. The Company has classified uncertain tax positions as long-term income taxes payable, unless such amounts are expected to be settled within twelve months of the condensed consolidated balance sheet date. As of October 1, 2022, the Company had recorded $11.6 million of unrecognized tax benefits, excluding interest and penalties, for positions that are expected to be settled within the next twelve months. Consistent with its past practice, the Company recognizes interest and/or penalties related to income tax overpayments and income tax underpayments in income tax expense and income taxes receivable/payable. At October 1, 2022, the total amount of accrued income tax-related interest included in the condensed consolidated balance sheets was $9.4 million. There was no accrued tax-related penalties. For the Third Quarter, the Company accrued income tax-related interest expense of $0.5 million. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Oct. 01, 2022 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Common and Preferred Stock. The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 51,827,267 and 52,145,738 shares issued and outstanding at October 1, 2022 and January 1, 2022, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding at October 1, 2022 or January 1, 2022. Rights, preferences and other terms of preferred stock will be determined by the Board of Directors at the time of issuance. Common Stock Repurchase Programs. Purchases of the Company’s common stock are made from time to time pursuant to its repurchase programs, subject to market conditions and at prevailing market prices, through the open market. Repurchased shares of common stock are recorded at cost and become authorized but unissued shares which may be issued in the future for general corporate or other purposes. The Company may terminate or limit its stock repurchase program at any time. In the event the repurchased shares are cancelled, the Company accounts for retirements by allocating the repurchase price to common stock, additional paid-in capital and retained earnings. The repurchase price allocation is based upon the equity contribution associated with historical issuances. The repurchase programs are conducted pursuant to Rule 10b-18 of the Exchange Act. During the first quarter of fiscal year 2022, the Company effectively retired 1.0 million shares of common stock repurchased under its repurchase programs. The effective retirement of repurchased common stock decreased common stock by $10,000, additional paid-in capital by $0.5 million, retained earnings by $9.5 million and treasury stock by $10.0 million. At October 1, 2022 and January 1, 2022, all treasury stock had been effectively retired. As of October 1, 2022, the Company had $20.0 million of repurchase authorizations remaining under its repurchase program. The following table reflects the Company's common stock repurchase activity for the periods indicated (in millions): For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Fiscal Year Dollar Value Termination Date Number of Dollar Value Number of Dollar Value 2010 $ 30.0 None 1.0 $ 10.0 — $ — |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended |
Oct. 01, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Stock-Based Compensation Plans. The following table summarizes stock options and stock appreciation rights activity during the Third Quarter: Stock Appreciation Rights Shares Weighted- Weighted- Aggregate (in Thousands) (in Years) (in Thousands) Outstanding at July 2, 2022 199 $ 51.21 0.8 $ — Granted — — Exercised — — — Forfeited or expired (98) 46.98 Outstanding at October 1, 2022 101 55.31 1.1 — Exercisable at October 1, 2022 101 $ 55.31 1.1 $ — The aggregate intrinsic value shown in the table above is based on the exercise price for outstanding and exercisable options/rights at October 1, 2022. Stock Appreciation Rights Outstanding and Exercisable. The following tables summarize information with respect to stock options and stock appreciation rights outstanding and exercisable at October 1, 2022: Stock Appreciation Rights Outstanding Stock Appreciation Rights Exercisable Range of Number of Weighted- Weighted- Number of Weighted- (in Thousands) (in Years) (in Thousands) $36.73 - $80.22 101 $ 55.31 1.1 101 $ 55.31 Total 101 $ 55.31 1.1 101 $ 55.31 Restricted Stock Units and Performance Restricted Stock Units. The following table summarizes restricted stock unit and performance restricted stock unit activity during the Third Quarter: Restricted Stock Units Number of Shares Weighted-Average (in Thousands) Nonvested at July 2, 2022 2,016 $ 10.16 Granted — — Vested (23) 7.68 Forfeited (26) 9.95 Nonvested at October 1, 2022 1,967 $ 10.19 The total fair value of restricted stock units vested was $131,002 during the Third Quarter. Vesting of performance restricted stock units is based on achievement of operating margin growth and achievement of sales growth and operating margin targets in relation to the performance of a certain identified peer group. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Oct. 01, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following tables disclose changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes (in thousands): For the 13 Weeks Ended October 1, 2022 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (99,573) $ 8,512 $ 3,982 $ (87,079) Other comprehensive income (loss) before reclassifications (13,465) 7,950 — (5,515) Tax (expense) benefit — 261 — 261 Amounts reclassed from accumulated other comprehensive income (loss) — 4,310 — 4,310 Tax (expense) benefit — 233 — 233 Total other comprehensive income (loss) (13,465) 3,668 — (9,797) Ending balance $ (113,038) $ 12,180 $ 3,982 $ (96,876) For the 13 Weeks Ended October 2, 2021 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (70,234) $ 2,372 $ 1,428 $ (66,434) Other comprehensive income (loss) before reclassifications (3,237) 3,320 — 83 Tax (expense) benefit — (29) — (29) Amounts reclassed from accumulated other comprehensive income (loss) — 1,263 — 1,263 Tax (expense) benefit — (57) — (57) Total other comprehensive income (loss) (3,237) 2,085 — (1,152) Ending balance $ (73,471) $ 4,457 $ 1,428 $ (67,586) For the 39 Weeks Ended October 1, 2022 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (75,601) $ 4,344 $ 3,982 $ (67,275) Other comprehensive income (loss) before reclassifications (37,437) 16,151 — (21,286) Tax (expense) benefit — 790 — 790 Amounts reclassed from accumulated other comprehensive income — 8,512 — 8,512 Tax (expense) benefit — 593 — 593 Total other comprehensive income (loss) (37,437) 7,836 — (29,601) Ending balance $ (113,038) $ 12,180 $ 3,982 $ (96,876) For the 39 Weeks Ended October 2, 2021 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (61,178) $ 850 $ 1,428 $ (58,900) Other comprehensive income (loss) before reclassifications (12,293) 3,934 — (8,359) Tax (expense) benefit — (247) — (247) Amounts reclassed from accumulated other comprehensive income (loss) — 210 — 210 Tax (expense) benefit — (130) — (130) Total other comprehensive income (loss) (12,293) 3,607 — (8,686) Ending balance $ (73,471) $ 4,457 $ 1,428 $ (67,586) See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Oct. 01, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company reports segment information based on the “management approach.” The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments are comprised of (i) Americas, (ii) Europe and (iii) Asia. Each reportable operating segment includes sales to wholesale and distributor customers, and sales through Company-owned retail stores and e-commerce activities based on the location of the selling entity. The Americas segment primarily includes sales to customers based in Canada, Latin America and the United States. The Europe segment primarily includes sales to customers based in European countries, the Middle East and Africa. The Asia segment primarily includes sales to customers based in Australia, China (including Hong Kong, Macau and Taiwan), India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea and Thailand. Each reportable operating segment provides similar products and services. The Company evaluates the performance of its reportable segments based on net sales and operating income (loss). Net sales for geographic segments are based on the location of the selling entity. Operating income (loss) for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Corporate includes peripheral revenue generating activities from factories and intellectual property and general corporate expenses, including certain administrative, legal, accounting, technology support costs, equity compensation costs, payroll costs attributable to executive management, brand management, product development, art, creative/product design, marketing, strategy, compliance and back office supply chain expenses that are not allocated to the various segments because they are managed at the corporate level internally. The Company does not include intercompany transfers between segments for management reporting purposes. Summary information by operating segment was as follows (in thousands): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Americas $ 184,326 $ 33,403 $ 193,762 $ 46,589 Europe 143,679 31,076 165,887 40,549 Asia 100,212 17,515 129,494 23,996 Corporate 8,054 (59,512) 2,684 (63,328) Consolidated $ 436,271 $ 22,482 $ 491,827 $ 47,806 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Americas $ 514,525 $ 87,966 $ 522,983 $ 109,172 Europe 376,110 65,489 399,519 67,616 Asia 279,563 38,807 331,625 50,553 Corporate 13,094 (194,999) 11,681 (181,942) Consolidated $ 1,183,292 $ (2,737) $ 1,265,808 $ 45,399 Due to changes in the Company’s product types as discussed in Note 1 to the Condensed Consolidated Financial Statements, product results for the Prior Year Quarter and Prior Year YTD Period have been recast to present results on a comparable basis. The following table reflects net sales for each class of similar products in the periods presented (in thousands, except percentage data): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Net Sales Percentage of Total Net Sales Percentage of Total Watches: Traditional watches $ 310,198 71.1 % $ 345,764 70.3 % Smartwatches 33,306 7.6 54,085 11.0 Total watches $ 343,504 78.7 % $ 399,849 81.3 % Leathers 41,095 9.4 36,390 7.4 Jewelry 37,868 8.7 46,325 9.4 Other 13,804 3.2 9,263 1.9 Total $ 436,271 100.0 % $ 491,827 100.0 % For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Net Sales Percentage of Total Net Sales Percentage of Total Watches: Traditional watches $ 830,322 70.2 % $ 878,809 69.4 % Smartwatches 104,709 8.8 150,086 11.9 Total watches $ 935,031 79.0 % $ 1,028,895 81.3 % Leathers 111,226 9.4 103,841 8.2 Jewelry 106,495 9.0 105,040 8.3 Other 30,540 2.6 28,032 2.2 Total $ 1,183,292 100.0 % $ 1,265,808 100.0 % |
DERIVATIVES AND RISK MANAGEMENT
DERIVATIVES AND RISK MANAGEMENT | 9 Months Ended |
Oct. 01, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES AND RISK MANAGEMENT | DERIVATIVES AND RISK MANAGEMENT Cash Flow Hedges. The primary risks managed by using derivative instruments are the fluctuations in global currencies that will ultimately be used by non-U.S. dollar functional currency subsidiaries to settle future payments of intercompany inventory transactions denominated in U.S. dollars. Specifically, the Company projects future intercompany purchases by its non-U.S. dollar functional currency subsidiaries generally over a period of up to 24 months. The Company enters into forward contracts, generally for up to 85% of the forecasted purchases, to manage fluctuations in global currencies that will ultimately be used to settle such U.S. dollar denominated inventory purchases. Additionally, the Company enters into forward contracts to manage fluctuations in Japanese yen exchange rates that will be used to settle future third-party inventory component purchases by a U.S. dollar functional currency subsidiary. Forward contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon settlement date and exchange rate. These forward contracts are designated as single cash flow hedges. Fluctuations in exchange rates will either increase or decrease the Company’s U.S. dollar equivalent cash flows from these inventory transactions, which will affect the Company’s U.S. dollar earnings. Gains or losses on the forward contracts are expected to offset these fluctuations to the extent the cash flows are hedged by the forward contracts. For a derivative instrument that is designated and qualifies as a cash flow hedge, the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss), net of taxes and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of October 1, 2022, the Company had the following outstanding forward contracts designated as cash flow hedges that were entered into to hedge future payments of inventory transactions (in millions): Functional Currency Contract Currency Type Amount Type Amount Euro 105.1 U.S. dollar 113.6 Canadian dollar 44.7 U.S. dollar 34.9 Mexican peso 302.3 U.S. dollar 14.7 British pound 7.9 U.S. dollar 10.0 Japanese yen 847.6 U.S. dollar 7.0 Australian dollar 9.6 U.S. dollar 6.8 U.S. dollar 13.4 Japanese yen 1,730.0 Non-designated Hedges. The Company also periodically enters into forward contracts to manage exchange rate risks associated with certain intercompany transactions and for which the Company does not elect hedge accounting treatment. As of October 1, 2022, the Company did not have any non-designated forward contracts. Changes in the fair value of derivatives not designated as hedging instruments are recognized in earnings when they occur. The gains and losses on cash flow hedges that were recognized in other comprehensive income (loss), net of taxes are set forth below (in thousands): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Cash flow hedges: Forward contracts $ 8,211 $ 3,292 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 8,211 $ 3,292 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Cash flow hedges: Forward contracts $ 16,941 $ 3,687 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 16,941 $ 3,687 The following tables disclose the gains and losses on derivative instruments recorded in accumulated other comprehensive income (loss), net of taxes during the term of the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings (in thousands): Derivative Instruments Condensed Consolidated Effect of Derivative For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 3,158 $ 689 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 1,385 $ 518 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ (3) $ 61 Derivative Instruments Condensed Consolidated Effect of Derivative For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 6,198 $ 938 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 2,907 $ (858) Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 63 $ (12) The following table discloses the fair value amounts for the Company’s derivative instruments as separate asset and liability values, presents the fair value of derivative instruments on a gross basis, and identifies the line items in the condensed consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands): Asset Derivatives Liability Derivatives October 1, 2022 January 1, 2022 October 1, 2022 January 1, 2022 Derivative Instruments Condensed Fair Condensed Fair Condensed Fair Condensed Fair Forward contracts designated as cash flow hedging instruments Prepaid expenses and other current assets $ 13,418 Prepaid expenses and other current assets $ 3,452 Accrued expenses-other $ 1,290 Accrued expenses-other $ 177 Forward contracts designated as cash flow hedging instruments Intangible and other assets-net 1,171 Intangible and other assets-net — Other long-term liabilities — Other long-term liabilities — Total $ 14,589 $ 3,452 $ 1,290 $ 177 The following tables summarize the effects of the Company's derivative instruments on earnings (in thousands): Effect of Derivative Instruments For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Cost of Sales Other Income (Expense)-net Cost of Sales Other Income (Expense)-net Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded $ 216,651 $ (1,859) $ 232,305 $ (482) Gain (loss) on cash flow hedging relationships: Forward contracts designated as cash flow hedging instruments: Total gain (loss) reclassified from other comprehensive income (loss) $ 3,158 $ 1,385 $ 689 $ 518 Forward contracts not designated as hedging instruments: Total gain (loss) recognized in income $ — $ (3) $ — $ 61 Effect of Derivative Instruments For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Cost of Sales Other Income (Expense)-net Cost of Sales Other Income (Expense)-net Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded $ 588,010 $ (1,915) $ 601,857 $ 882 Gain (loss) on cash flow hedging relationships: Forward contracts designated as cash flow hedging instruments: Total gain (loss) reclassified from other comprehensive income (loss) $ 6,198 $ 2,907 $ 938 $ (858) Forward contracts not designated as hedging instruments: Total gain (loss) recognized in income $ — $ 63 $ — $ (12) At the end of the Third Quarter, the Company had forward contracts designated as cash flow hedges with maturities extending through March 2024. As of October 1, 2022, an estimated net gain of $12.3 million is expected to be reclassified into earnings within the next twelve months at prevailing foreign currency exchange rates. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Oct. 01, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. • Level 3 — Unobservable inputs based on the Company’s assumptions. ASC 820 requires the use of observable market data if such data is available without undue cost and effort. The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of October 1, 2022 (in thousands): Fair Value at October 1, 2022 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 14,589 $ — $ 14,589 Total $ — $ 14,589 $ — $ 14,589 Liabilities: Contingent consideration $ — $ — $ 2,063 $ 2,063 Forward contracts — 1,290 — 1,290 Total $ — $ 1,290 $ 2,063 $ 3,353 The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 1, 2022 (in thousands): Fair Value at January 1, 2022 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 3,452 $ — $ 3,452 Total $ — $ 3,452 $ — $ 3,452 Liabilities: Contingent consideration $ — $ — $ 1,840 $ 1,840 Forward contracts — 177 — 177 Total $ — $ 177 $ 1,840 $ 2,017 The fair values of the Company’s forward contracts are based on published quotations of spot currency rates and forward points, which are converted into implied forward currency rates. See Note 10—Derivatives and Risk Management, for additional disclosures about the forward contracts. As of October 1, 2022, debt, excluding unamortized debt issuance costs and capital leases, was recorded at cost and had a carrying value of $301.2 million and had a fair value of approximately $236.6 million. The fair value of debt was based on observable market inputs. During the Year to Date Period, operating lease right-of-use ("ROU") assets with a carrying amount of $3.3 million and property, plant and equipment-net with a carrying value of $0.3 million related to retail store leasehold improvements, fixturing and shop-in-shops were written down to a fair value of $2.3 million and $0.2 million, respectively, resulting in impairment charges of $1.1 million. During the Prior Year YTD Period, ROU assets with carrying amount of $14.0 million and property, plant and equipment-net with a carrying value of $2.5 million related to retail store leasehold improvements, fixturing and shop-in-shops were written down to a fair value of $7.4 million and $1.0 million, respectively, resulting in impairment charges of $8.1 million. The fair values of operating lease ROU assets and fixed assets related to retail stores were determined using Level 3 inputs, including forecasted cash flows and discount rates. Of the $1.1 million impairment expense in the Year to Date Period, $0.6 million, $0.3 million and $0.2 million was recorded in other long-lived asset impairments in the Americas, Europe and Asia segments, respectively. Of the $8.1 million impairment expense in the Prior Year Quarter, $3.1 million, $2.2 million and $1.0 million was recorded in other long-lived asset impairments in the Americas, Europe and Asia segments, respectively, and $1.8 million was recorded in restructuring charges in the Europe segment. |
INTANGIBLE AND OTHER ASSETS
INTANGIBLE AND OTHER ASSETS | 9 Months Ended |
Oct. 01, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE AND OTHER ASSETS | INTANGIBLE AND OTHER ASSETS The following table summarizes intangible and other assets (in thousands): October 1, 2022 January 1, 2022 Useful Gross Accumulated Gross Accumulated Lives Amount Amortization Amount Amortization Intangibles-subject to amortization: Trademarks 10 yrs. $ 3,775 $ 3,366 $ 3,775 $ 3,310 Customer lists 5 - 10 yrs. 37,778 37,521 41,403 40,353 Patents 3 - 20 yrs. 2,371 2,039 2,371 2,013 Developed technology 7 yrs. 2,193 2,056 2,193 1,645 Trade name 6 yrs. 4,502 2,251 4,502 1,688 Other 7 - 20 yrs. 523 367 537 352 Total intangibles-subject to amortization 51,142 47,600 54,781 49,361 Intangibles-not subject to amortization: Trade names 8,850 8,881 Other assets: Deposits 16,683 19,418 Deferred tax asset-net 19,806 24,552 Restricted cash 10,963 13,611 Forward contracts 1,171 — Investments 327 327 Debt issuance costs 3,330 4,578 Other 1,177 1,813 Total other assets 53,457 64,299 Total intangible and other assets $ 113,449 $ 47,600 $ 127,961 $ 49,361 Total intangible and other assets-net $ 65,849 $ 78,600 Amortization expense for intangible assets was approximately $0.6 million and $0.7 million for the Third Quarter and the Prior Year Quarter, respectively, and $1.9 million and $2.7 million for the Year To Date Period and Prior Year YTD Period, respectively. Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands): Fiscal Year Amortization 2022 (remaining) $ 610 2023 $ 901 2024 $ 884 2025 $ 693 2026 $ 102 Thereafter $ 352 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Oct. 01, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIESLitigation. The Company is occasionally subject to litigation or other legal proceedings in the normal course of its business. The Company does not believe that the outcome of any currently pending legal matters, individually or collectively, will have a material effect on the business or financial condition of the Company. |
LEASES
LEASES | 9 Months Ended |
Oct. 01, 2022 | |
Leases [Abstract] | |
LEASES | LEASES The Company's leases consist primarily of retail space, offices, warehouses, distribution centers, equipment and vehicles. The Company determines if an agreement contains a lease at inception based on the Company's right to the economic benefits of the leased assets and its right to direct the use of the leased asset. ROU assets represent the Company's right to use an underlying asset, and ROU liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at the commencement date adjusted for the lease term and lease country to determine the present value of the lease payments. Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from approximately one ten The components of lease expense were as follows (in thousands): Lease Cost Condensed Consolidated For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Operating lease cost (1) SG&A $ 18,445 $ 21,356 $ 58,001 $ 66,450 Short-term lease cost SG&A $ 170 $ 153 $ 570 $ 472 Variable lease cost SG&A $ 7,166 $ 6,252 $ 21,817 $ 17,032 _______________________________________________ (1) Includes sublease income, which was immaterial. The following table discloses supplemental balance sheet information for the Company’s leases (in thousands): Leases Condensed October 1, 2022 January 1, 2022 Assets Operating Operating lease ROU assets $ 156,448 $ 177,597 Liabilities Current: Operating Current operating lease liabilities $ 48,238 $ 58,721 Noncurrent: Operating Long-term operating lease liabilities $ 151,928 $ 174,520 The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases: Lease Term and Discount Rate October 1, 2022 January 1, 2022 Weighted-average remaining lease term: Operating leases 5.7 years 5.7 years Weighted-average discount rate: Operating leases 14.2 % 14.1 % Future minimum lease payments by year as of October 1, 2022 were as follows (in thousands): Fiscal Year Operating Leases 2022 (remaining) $ 21,708 2023 73,629 2024 50,214 2025 35,551 2026 28,772 Thereafter 94,674 Total lease payments $ 304,548 Less: Interest 104,382 Total lease obligations $ 200,166 Supplemental cash flow information related to leases was as follows (in thousands): For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 68,182 $ 83,189 Leased assets obtained in exchange for new operating lease liabilities 22,775 11,319 |
LEASES | LEASES The Company's leases consist primarily of retail space, offices, warehouses, distribution centers, equipment and vehicles. The Company determines if an agreement contains a lease at inception based on the Company's right to the economic benefits of the leased assets and its right to direct the use of the leased asset. ROU assets represent the Company's right to use an underlying asset, and ROU liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at the commencement date adjusted for the lease term and lease country to determine the present value of the lease payments. Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from approximately one ten The components of lease expense were as follows (in thousands): Lease Cost Condensed Consolidated For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Operating lease cost (1) SG&A $ 18,445 $ 21,356 $ 58,001 $ 66,450 Short-term lease cost SG&A $ 170 $ 153 $ 570 $ 472 Variable lease cost SG&A $ 7,166 $ 6,252 $ 21,817 $ 17,032 _______________________________________________ (1) Includes sublease income, which was immaterial. The following table discloses supplemental balance sheet information for the Company’s leases (in thousands): Leases Condensed October 1, 2022 January 1, 2022 Assets Operating Operating lease ROU assets $ 156,448 $ 177,597 Liabilities Current: Operating Current operating lease liabilities $ 48,238 $ 58,721 Noncurrent: Operating Long-term operating lease liabilities $ 151,928 $ 174,520 The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases: Lease Term and Discount Rate October 1, 2022 January 1, 2022 Weighted-average remaining lease term: Operating leases 5.7 years 5.7 years Weighted-average discount rate: Operating leases 14.2 % 14.1 % Future minimum lease payments by year as of October 1, 2022 were as follows (in thousands): Fiscal Year Operating Leases 2022 (remaining) $ 21,708 2023 73,629 2024 50,214 2025 35,551 2026 28,772 Thereafter 94,674 Total lease payments $ 304,548 Less: Interest 104,382 Total lease obligations $ 200,166 Supplemental cash flow information related to leases was as follows (in thousands): For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 68,182 $ 83,189 Leased assets obtained in exchange for new operating lease liabilities 22,775 11,319 |
DEBT ACTIVITY
DEBT ACTIVITY | 9 Months Ended |
Oct. 01, 2022 | |
Debt Disclosure [Abstract] | |
DEBT ACTIVITY | DEBT ACTIVITY On September 26, 2019, the Company and Fossil Partners L.P., as the U.S. borrowers, and Fossil Group Europe GmbH, Fossil Asia Pacific Limited, Fossil (Europe) GmbH, Fossil (UK) Limited and Fossil Canada Inc., as the non-U.S. borrowers, certain other subsidiaries of the Company from time to time party thereto designated as borrowers, and certain subsidiaries of the Company from time to time party thereto as guarantors, entered into a $275.0 million secured asset-based revolving credit agreement (the “Revolving Facility”) with JPMorgan Chase Bank, N.A. as administrative agent (the "ABL Agent"), J.P. Morgan AG, as French collateral agent, JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Wells Fargo Bank, National Association as joint bookrunners and joint lead arrangers, and Citizens Bank, N.A. and Wells Fargo Bank, National Association, as co-syndication agents and each of the lenders from time to time party thereto (the "ABL Lenders"). The Revolving Facility was most recently amended on November 8, 2022. In addition, on September 26, 2019, the Company, as borrower, entered into a term credit agreement (the "Term Credit Agreement"). In November 2021, the Company sold $150.0 million aggregate principal amount of 7.00% senior notes due 2026 (the “Notes”), generating net proceeds of approximately $141.7 million. The Notes were issued pursuant to an indenture (the Base Indenture) and a first supplemental indenture (the First Supplemental Indenture and, together with the Base Indenture, the Indenture) with The Bank of New York Mellon Trust Company, N.A., as trustee (the Trustee). The Notes are general unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness, and will rank senior in right of payment to the Company’s future subordinated indebtedness, if any. The Notes are effectively subordinated to all of the Company’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and the Notes are structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries (excluding any amounts owed by such subsidiaries to the Company). The Notes bear interest at the rate of 7.00% per annum. Interest on the Notes is payable quarterly in arrears on February 28, May 31, August 31 and November 30 of each year, commencing on February 28, 2022. The Notes mature on November 30, 2026. The Company may redeem the Notes for cash in whole or in part at any time at its option. Prior to November 30, 2023, the redemption price will be $25.00 per $25.00 principal amount of Notes, plus a "make-whole” premium consisting of the greater of (1) 1.0% of the principal amount of the Note and (2) the excess of (a) the present value at such redemption date of (i) the redemption price of the Note at November 30, 2023 plus (ii) all required interest payments due on the Note through November 30, 2023 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points discounted to the redemption date on a semi-annual basis (assuming a 360- day year consisting of twelve 30-day months), over (b) the principal amount of the Note, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. On and after November 30, 2023, the Company may redeem the Notes (i) on or after November 30, 2023 and prior to November 30, 2024, at a price equal to $25.50 per $25.00 principal amount of Notes, (ii) on or after November 30, 2024 and prior to November 30, 2025, at a price equal to $25.25 per $25.00 principal amount of Notes and (iii) on or after November 30, 2025, at a price equal to $25.00 per $25.00 principal amount of Notes, plus (in each case noted above) accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Indenture contains customary events of default and cure provisions. If an event of default (other than an event of default of the type described in the following sentence) occurs and is continuing with respect to the Notes, the Trustee may, and at the direction of the registered holders of at least 25% in aggregate principal amount of the outstanding debt securities of the Notes shall, declare the principal amount plus accrued and unpaid interest, premium and additional amounts, if any, on the Notes to be due and payable immediately. If an event of default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal amount plus accrued and unpaid interest, and premium, if any, on the Notes will become immediately due and payable without any action on the part of the Trustee or any holder of the Notes. On November 8, 2021, the Company used the majority of the net proceeds from the Notes offering to repay the outstanding borrowings under the Term Credit Agreement. In connection with the repayment of the outstanding borrowings under the Term Credit Agreement, the Company incurred prepayment fees and accrued interest costs of $2.6 million and wrote off $7.1 million of debt issuance costs and $4.6 million of original issuance discount related to the Term Credit Agreement. The remaining net proceeds were used for general corporate purposes. The Revolving Facility provides that the ABL Lenders may extend revolving loans in an aggregate principal amount not to exceed $225.0 million at any time outstanding (the “Revolving Credit Commitment”), of which up to $125.0 million is available under a U.S. facility, an aggregate of $80.0 million is available under a European facility, $10.0 million is available under a Hong Kong facility, $5.0 million is available under a French facility, and $5.0 million is available under a Canadian facility, in each case, subject to the borrowing base availability limitations described below. The Revolving Facility also includes an up to $45.0 million subfacility for the issuance of letters of credit (the “Letters of Credit”). The Revolving Facility expires and is due and payable on November 8, 2027 (provided, that if the Company has any indebtedness in an amount in excess of $35.0 million that matures prior to November 8, 2027, the maturity date of the Revolving Facility shall be the 91st day prior to the maturity date of such other indebtedness). The French facility includes a $1.0 million subfacility for swingline loans, and the European facility includes a $7.0 million subfacility for swingline loans. The Revolving Facility is subject to a line cap equal to the lesser of the total Revolving Credit Commitment and the aggregate borrowing bases under the U.S. facility, the European facility, the Hong Kong facility, the French facility and the Canadian facility. Loans under the Revolving Facility may be made in U.S. dollars, Canadian dollars, euros, Hong Kong dollars or pounds sterling. The Revolving Facility is an asset-based facility, in which borrowing availability is subject to a borrowing base equal to:(a) with respect to the Company, the sum of (i) the lesser of (x) 90% of the appraised net orderly liquidation value of eligible U.S. finished goods inventory and (y) 65% of the lower of cost or market value of eligible U.S. finished goods inventory, plus (ii) 85% of the eligible U.S. accounts receivable, plus (iii) 90% of eligible U.S. credit card accounts receivable, plus (iv) the lesser of (x) 40% of the appraised net orderly liquidation value of eligible U.S. intellectual property and (y) $20.0 million, minus (v) the aggregate amount of reserves, if any, established by the ABL Agent; (b) with respect to each non-U.S. borrower (except for the French Borrower), the sum of (i) the lesser of (x) 90% of the appraised net orderly liquidation value of eligible foreign finished goods inventory of such non-U.S. borrower and (y) 65% of the lower of cost or market value of eligible foreign finished goods inventory of such non-U.S. borrower, plus (ii) 85% of the eligible foreign accounts receivable of such non-U.S. borrower, minus (iii) the aggregate amount of reserves, if any, established by the ABL Agent; and (c) with respect to the French Borrower, (i) 85% of eligible French accounts receivable minus (ii) the aggregate amount of reserves, if any, established by the ABL Agent. Not more than 60% of the aggregate borrowing base under the Revolving Facility may consist of the non-U.S. borrowing bases. The above advance rates (other than the advance rates with respect to intellectual property) are seasonally increased by 5% (e.g. from 90% to 95%) during the period commencing on the date of delivery of the borrowing base certificate with respect to the second fiscal month of the Company and ending on the last day of the period covered by the borrowing base certificate delivered with respect to the fifth fiscal month of the Company. The Revolving Facility also includes a commitment fee, payable quarterly in arrears, of 0.250% or 0.375% determined by reference to the average daily unused portion of the overall commitment under the Revolving Facility. The ABL Borrowers will pay the ABL Agent, on the account of the issuing ABL Lenders, an issuance fee of 0.125% for any issued Letters of Credit. The ABL Borrowers have the right to request an increase to the commitments under the Revolving Facility or any subfacility in an aggregate principal amount not to exceed $75.0 million in increments no less than $10.0 million, subject to certain terms and conditions as defined in the Revolving Facility. The Revolving Facility is secured by guarantees by the Company and certain of its domestic subsidiaries. Additionally, the Company and such subsidiaries have granted liens on all or substantially all of their assets in order to secure the obligations under the Revolving Facility. In addition, the Swiss Borrower, the Hong Kong Borrower, the French Borrower, the German Borrower and the Canadian Borrower, and the other non-U.S. borrowers from time to time party to the Revolving Facility are required to enter into security instruments with respect to all or substantially all of their assets that can be pledged under applicable local law, and certain of their respective subsidiaries may guarantee the respective non-U.S. obligations under the Revolving Facility. The Revolving Facility contains customary affirmative and negative covenants and events of default, such as compliance with annual audited and quarterly unaudited financial statements disclosures. Upon an event of default, the ABL Agent will have the right to declare the revolving loans and other obligations outstanding immediately due and payable and all commitments immediately terminated or reduced, subject to cure periods and grace periods set forth in the Revolving Facility. As of October 1, 2022, the Company had $150.0 million and $151.0 million outstanding under the Notes and Revolving Facility, respectively. The Company had net borrowings of $44.2 million and $151.0 million under the Revolving Facility during the Third Quarter and Year To Date Period, respectively. Amounts available under the Revolving Facility were reduced by any amounts outstanding under standby Letters of Credit. As of October 1, 2022, the Company had available borrowing capacity of $50.4 million under the Revolving Facility. The Company incurred approximately $2.6 million and $7.9 million of interest expense related to the Notes during the Third Quarter and Year To Date Period, respectively. The Company incurred approximately $0.9 million and $1.1 million of interest expense related to the Revolving Facility during the Third Quarter and Year To Date Period, respectively. The Company incurred approximately $0.9 million and $2.6 million of interest expense related to the amortization of debt issuance costs during the Third Quarter and Year To Date Period, respectively. At October 1, 2022, the Company was in compliance with all debt covenants related to its credit facilities. |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Oct. 01, 2022 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING In fiscal year 2019, the Company launched New World Fossil 2.0 - Transform to Grow Program (“NWF 2.0”), which was focused on optimizing the Company’s operating structure to be more efficient, with faster decision-making and a more customer-centric focus. In addition to optimizing the way the Company goes to market, the Company pursued additional gross margin expansion opportunities. The Company has taken a zero-based budgeting approach to adjust its business model to enable more investment in digital capabilities and marketing, move closer to the consumer and react more quickly to the ever-evolving consumer shopping patterns. The Company also changed its overall business processes and resources, creating a more centrally directed operating model, reducing complexity and redundancy, and operating at a lower cost base. The NWF 2.0 restructuring program was expanded to address additional challenges posed by COVID-19, including a number of cost saving measures such as store closures. The Company estimates NWF 2.0 total charges of $6.0 million for fiscal year 2022, which will conclude this program. The following table shows a rollforward of the accrued liability related to the Company’s NWF 2.0 restructuring plan (in thousands): For the 13 Weeks Ended October 1, 2022 Liabilities Liabilities July 2, 2022 Charges Cash Payments Non-cash Items October 1, 2022 Store closures $ — $ — $ — $ — $ — Professional services 130 — 43 — 87 Severance and employee-related benefits 3,616 — 885 — 2,731 Total $ 3,746 $ — $ 928 $ — $ 2,818 For the 13 Weeks Ended October 2, 2021 Liabilities Liabilities July 3, 2021 Charges Cash Payments Non-cash Items October 2, 2021 Store closures $ 19 $ 244 $ 201 $ 47 $ 15 Professional services 2,076 1,405 2,264 — 1,217 Severance and employee-related benefits 5,756 3,798 4,667 — 4,887 Total $ 7,851 $ 5,447 $ 7,132 $ 47 $ 6,119 For the 39 Weeks Ended October 1, 2022 Liabilities Liabilities January 1, 2022 Charges Cash Payments Non-cash Items October 1, 2022 Store closures $ 300 $ 405 $ 613 $ 92 $ — Professional services 643 135 691 — 87 Severance and employee-related benefits 4,388 4,898 5,770 785 2,731 Total $ 5,331 $ 5,438 $ 7,074 $ 877 $ 2,818 For the 39 Weeks Ended October 2, 2021 Liabilities Liabilities January 2, 2021 Charges Cash Payments Non-cash Items October 2, 2021 Store closures $ 240 $ 1,913 $ 391 $ 1,747 $ 15 Professional services 2,280 4,812 5,875 — 1,217 Severance and employee-related benefits 7,741 11,991 14,845 — 4,887 Total $ 10,261 $ 18,716 $ 21,111 $ 1,747 $ 6,119 NWF 2.0 restructuring charges by operating segment were as follows (in thousands): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Americas $ — $ 737 $ 83 $ 2,116 Europe — 1,828 1,531 8,872 Asia — 1,484 1,204 3,289 Corporate — 1,398 2,620 4,439 Consolidated $ — $ 5,447 $ 5,438 $ 18,716 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Oct. 01, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT Credit Agreement . On November 8, 2022, the Company and its subsidiaries party to the Revolving Facility as borrowers and guarantors entered into Amendment No. 4 (the “Amendment”) to the Revolving Facility. The Amendment, among other things, (i) extended the maturity date of the Revolving Facility to November 8, 2027 (provided, that if the Company has any indebtedness in an amount in excess of $35.0 million that matures prior to November 8, 2027, the maturity date of the Revolving Facility shall be the 91st day prior to the maturity date of such other indebtedness) and (ii) changed the calculation methodology of the borrowing base to include the value of certain of the Company’s intellectual property in such methodology and to provide for seasonal increases to certain advance rates. |
FINANCIAL STATEMENT POLICIES (P
FINANCIAL STATEMENT POLICIES (Policies) | 9 Months Ended |
Oct. 01, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation. The condensed consolidated financial statements include the accounts of Fossil Group, Inc., a Delaware corporation, and its wholly and majority-owned subsidiaries (the “Company”). The information presented herein includes the thirteen-week period ended October 1, 2022 (“Third Quarter”) as compared to the thirteen-week period ended October 2, 2021 (“Prior Year Quarter”), and the thirty-nine week period ended October 1, 2022 ("Year To Date Period") as compared to the thirty-nine week period ended October 2, 2021 ("Prior Year YTD Period"). The condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s financial position as of October 1, 2022, and the results of operations for the Third Quarter, Prior Year Quarter, Year To Date Period and Prior Year YTD Period. All adjustments are of a normal, recurring nature. Effective during fiscal year 2021, the Company made a change to the presentation of product net sales to include third-party smartwatch bands within the smartwatch product type. Third-party smartwatch bands were previously reported within the jewelry product type. The Company's historical disclosures have been recast to be consistent with its current presentation. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the fiscal year ended January 1, 2022 (the “2021 Form 10-K”). Operating results for the Third Quarter are not necessarily indicative of the results to be achieved for the full fiscal year. |
Business | Business. The Company is a global design, marketing and distribution company that specializes in consumer fashion accessories. Its principal offerings include an extensive line of men's and women's fashion watches and jewelry, handbags, small leather goods, belts and sunglasses. In the watch and jewelry product categories, the Company has a diverse portfolio of globally recognized owned and licensed brand names under which its products are marketed. The Company's products are distributed globally through various distribution channels, including wholesale in countries where it has a physical presence, direct to the consumer through its retail stores and commercial websites and through third-party distributors in countries where the Company does not maintain a physical presence. The Company's products are offered at varying price points to meet the needs of its customers, whether they are value-conscious or luxury oriented. Based on its extensive range of accessory products, brands, distribution channels and price points, the Company is able to target style-conscious consumers across a wide age spectrum on a global basis. |
Operating Expenses | Operating Expenses. Operating expenses include selling, general and administrative ("SG&A"), other long-lived asset impairments and restructuring charges. SG&A expenses include selling and distribution expenses primarily consisting of sales and distribution labor costs, sales distribution center and warehouse facility costs, depreciation expense related to sales distribution and warehouse facilities, the four-wall operating costs of the Company's retail stores, point-of-sale expenses, advertising expenses and art, and design and product development labor costs. SG&A also includes general and administrative expenses primarily consisting of administrative support labor and support costs such as treasury, legal, information services, accounting, internal audit, human resources, executive management costs and costs associated with stock-based compensation. Restructuring charges include costs to reorganize, refine and optimize the Company’s infrastructure and store closures. See Note 16—Restructuring for additional information on the Company’s restructuring plan. |
Earnings (Loss) Per Share ("EPS") | Earnings (Loss) Per Share (“EPS”). Basic EPS is based on the weighted average number of common shares outstanding during each period. Diluted EPS adjusts basic EPS for the effects of dilutive common stock equivalents outstanding during each period using the treasury stock method. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash. Restricted cash included in intangible and other-assets net was comprised primarily of restricted cash balances for appealed tax assessments held in escrow and for pledged collateral to secure bank guarantees for the purpose of obtaining retail space. |
Recently Issued and Adopted Accounting Standards | Recently Issued Accounting Standards In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance ("ASU 2021-10"). The new standard increases transparency of government assistance by focusing on the types of assistance given, an entity's accounting for the assistance, and the effect of the assistance on the entity's financial statements to allow for more comparable information for investors and other financial statement users. This standard is effective for financial statements issued for annual periods beginning after December 15, 2021, but early adoption is permitted. This standard will not have a material impact on the Company's consolidated financial statements or related disclosures. In October 2021, FASB issued ASU 2021-08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). The guidance is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. The guidance requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606 as if they had originated the contracts, as opposed to at fair value on the acquisition date. The standard will be effective for business combinations that occur after January 1, 2023. Early adoption is permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. While the impact of this amendment is dependent on the nature of any future transactions, the Company currently does not expect this standard to have a material impact on the Company's consolidated financial statements or related disclosures. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04") and subsequent guidance that clarified the scope and application of its original guidance. ASU 2020-04 provides optional expedients and exceptions to the current guidance on contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts and hedging relationships that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company will adopt these standards when LIBOR is discontinued and does not expect it to have a material impact on its consolidated financial statements or related disclosures. Recently Adopted Accounting Standards In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Income Taxes (Topic 740) . It also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 at the beginning of fiscal year 2022, and it did not have a material effect on the Company's condensed consolidated financial statements. |
Fair Value Measurements | The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. • Level 3 — Unobservable inputs based on the Company’s assumptions. ASC 820 requires the use of observable market data if such data is available without undue cost and effort. |
FINANCIAL STATEMENT POLICIES (T
FINANCIAL STATEMENT POLICIES (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Numerators and denominators used in the computations of both basic and diluted EPS | The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS (in thousands, except per share data): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Numerator: Net income (loss) attributable to Fossil Group, Inc. $ 5,849 $ 31,420 $ (34,739) $ 5,788 Denominator: Basic EPS computation: Basic weighted average common shares outstanding 51,825 52,141 51,843 51,900 Basic EPS $ 0.11 $ 0.60 $ (0.67) $ 0.11 Diluted EPS computation: Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units 227 625 — 838 Diluted weighted average common shares outstanding 52,052 52,766 51,843 52,738 Diluted EPS $ 0.11 $ 0.60 $ (0.67) $ 0.11 |
Schedule of cash, cash equivalents and restricted cash | The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of October 1, 2022 and October 2, 2021 that are presented in the condensed consolidated statement of cash flows (in thousands): October 1, 2022 October 2, 2021 Cash and cash equivalents $ 162,612 $ 181,782 Restricted cash included in prepaid expenses and other current assets 106 118 Restricted cash included in intangible and other assets-net 10,964 13,858 Cash, cash equivalents and restricted cash $ 173,682 $ 195,758 |
Schedule of cash, cash equivalents and restricted cash | The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of October 1, 2022 and October 2, 2021 that are presented in the condensed consolidated statement of cash flows (in thousands): October 1, 2022 October 2, 2021 Cash and cash equivalents $ 162,612 $ 181,782 Restricted cash included in prepaid expenses and other current assets 106 118 Restricted cash included in intangible and other assets-net 10,964 13,858 Cash, cash equivalents and restricted cash $ 173,682 $ 195,758 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The Company's revenue disaggregated by major product category and timing of revenue recognition was as follows (in thousands): For the 13 Weeks Ended October 1, 2022 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 132,077 $ 102,142 $ 75,970 $ 9 $ 310,198 Smartwatches 14,578 10,401 8,327 — 33,306 Total watches $ 146,655 $ 112,543 $ 84,297 $ 9 $ 343,504 Leathers 27,262 5,683 8,150 — 41,095 Jewelry 8,353 22,955 6,560 — 37,868 Other 2,056 2,498 1,205 8,045 13,804 Consolidated $ 184,326 $ 143,679 $ 100,212 $ 8,054 $ 436,271 Timing of revenue recognition Revenue recognized at a point in time $ 183,900 $ 143,453 $ 100,076 $ 800 $ 428,229 Revenue recognized over time 426 226 136 7,254 8,042 Consolidated $ 184,326 $ 143,679 $ 100,212 $ 8,054 $ 436,271 For the 13 Weeks Ended October 2, 2021 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 130,988 $ 113,501 $ 101,275 $ — $ 345,764 Smartwatches 25,205 16,344 12,528 8 54,085 Total watches $ 156,193 $ 129,845 $ 113,803 $ 8 $ 399,849 Leathers 23,389 7,231 5,770 — 36,390 Jewelry 12,285 25,554 8,486 — 46,325 Other 1,895 3,257 1,435 2,676 9,263 Consolidated $ 193,762 $ 165,887 $ 129,494 $ 2,684 $ 491,827 Timing of revenue recognition Revenue recognized at a point in time $ 193,367 $ 165,598 $ 129,313 $ 1,004 $ 489,282 Revenue recognized over time 395 289 181 1,680 2,545 Consolidated $ 193,762 $ 165,887 $ 129,494 $ 2,684 $ 491,827 For the 39 Weeks Ended October 1, 2022 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 366,714 $ 253,728 $ 209,857 $ 23 $ 830,322 Smartwatches 47,228 33,347 24,134 — 104,709 Total watches $ 413,942 $ 287,075 $ 233,991 $ 23 $ 935,031 Leathers 69,091 18,372 23,763 — 111,226 Jewelry 25,548 62,730 18,217 — 106,495 Other 5,944 7,933 3,592 13,071 30,540 Consolidated $ 514,525 $ 376,110 $ 279,563 $ 13,094 $ 1,183,292 Timing of revenue recognition Revenue recognized at a point in time $ 513,393 $ 375,433 $ 279,193 $ 3,032 $ 1,171,051 Revenue recognized over time 1,132 677 370 10,062 12,241 Consolidated $ 514,525 $ 376,110 $ 279,563 $ 13,094 $ 1,183,292 For the 39 Weeks Ended October 2, 2021 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 349,024 $ 266,316 $ 262,416 $ 1,053 $ 878,809 Smartwatches 78,308 43,277 28,477 24 150,086 Total watches $ 427,332 $ 309,593 $ 290,893 $ 1,077 $ 1,028,895 Leathers 63,851 19,933 20,057 — 103,841 Jewelry 26,506 61,974 16,560 — 105,040 Other 5,294 8,019 4,115 10,604 28,032 Consolidated $ 522,983 $ 399,519 $ 331,625 $ 11,681 $ 1,265,808 Timing of revenue recognition Revenue recognized at a point in time $ 521,702 $ 398,533 $ 331,180 $ 6,490 $ 1,257,905 Revenue recognized over time 1,281 986 445 5,191 7,903 Consolidated $ 522,983 $ 399,519 $ 331,625 $ 11,681 $ 1,265,808 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consisted of the following (in thousands): October 1, 2022 January 1, 2022 Components and parts $ 22,546 $ 23,668 Work-in-process 4 2 Finished goods 430,197 323,180 Inventories $ 452,747 $ 346,850 |
WARRANTY LIABILITIES (Tables)
WARRANTY LIABILITIES (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Product Warranties Disclosures [Abstract] | |
Schedule of warranty liability activity | Warranty liability activity consisted of the following (in thousands): For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Beginning balance $ 19,159 $ 21,916 Settlements in cash or kind (5,465) (8,096) Warranties issued and adjustments to preexisting warranties (1) (148) 5,296 Ending balance $ 13,546 $ 19,116 _______________________________________________ (1) Changes in cost estimates related to preexisting warranties are aggregated with accruals for new standard warranties issued and foreign currency changes. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense and related effective rate | The Company’s income tax expense and related effective rates were as follows (in thousands, except percentage data): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Income tax (benefit) expense $ 9,214 $ 8,978 $ 15,904 $ 19,177 Effective tax rate 59.5 % 22.0 % (87.9) % 73.8 % |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of company's common stock repurchase activity | The following table reflects the Company's common stock repurchase activity for the periods indicated (in millions): For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Fiscal Year Dollar Value Termination Date Number of Dollar Value Number of Dollar Value 2010 $ 30.0 None 1.0 $ 10.0 — $ — |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of stock options and stock appreciation rights activity | The following table summarizes stock options and stock appreciation rights activity during the Third Quarter: Stock Appreciation Rights Shares Weighted- Weighted- Aggregate (in Thousands) (in Years) (in Thousands) Outstanding at July 2, 2022 199 $ 51.21 0.8 $ — Granted — — Exercised — — — Forfeited or expired (98) 46.98 Outstanding at October 1, 2022 101 55.31 1.1 — Exercisable at October 1, 2022 101 $ 55.31 1.1 $ — |
Summary of stock options and stock appreciation rights outstanding and exercisable | The following tables summarize information with respect to stock options and stock appreciation rights outstanding and exercisable at October 1, 2022: Stock Appreciation Rights Outstanding Stock Appreciation Rights Exercisable Range of Number of Weighted- Weighted- Number of Weighted- (in Thousands) (in Years) (in Thousands) $36.73 - $80.22 101 $ 55.31 1.1 101 $ 55.31 Total 101 $ 55.31 1.1 101 $ 55.31 |
Summary of restricted stock, restricted stock units and performance restricted stock units activity | The following table summarizes restricted stock unit and performance restricted stock unit activity during the Third Quarter: Restricted Stock Units Number of Shares Weighted-Average (in Thousands) Nonvested at July 2, 2022 2,016 $ 10.16 Granted — — Vested (23) 7.68 Forfeited (26) 9.95 Nonvested at October 1, 2022 1,967 $ 10.19 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes | The following tables disclose changes in the balances of each component of accumulated other comprehensive income (loss), net of taxes (in thousands): For the 13 Weeks Ended October 1, 2022 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (99,573) $ 8,512 $ 3,982 $ (87,079) Other comprehensive income (loss) before reclassifications (13,465) 7,950 — (5,515) Tax (expense) benefit — 261 — 261 Amounts reclassed from accumulated other comprehensive income (loss) — 4,310 — 4,310 Tax (expense) benefit — 233 — 233 Total other comprehensive income (loss) (13,465) 3,668 — (9,797) Ending balance $ (113,038) $ 12,180 $ 3,982 $ (96,876) For the 13 Weeks Ended October 2, 2021 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (70,234) $ 2,372 $ 1,428 $ (66,434) Other comprehensive income (loss) before reclassifications (3,237) 3,320 — 83 Tax (expense) benefit — (29) — (29) Amounts reclassed from accumulated other comprehensive income (loss) — 1,263 — 1,263 Tax (expense) benefit — (57) — (57) Total other comprehensive income (loss) (3,237) 2,085 — (1,152) Ending balance $ (73,471) $ 4,457 $ 1,428 $ (67,586) For the 39 Weeks Ended October 1, 2022 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (75,601) $ 4,344 $ 3,982 $ (67,275) Other comprehensive income (loss) before reclassifications (37,437) 16,151 — (21,286) Tax (expense) benefit — 790 — 790 Amounts reclassed from accumulated other comprehensive income — 8,512 — 8,512 Tax (expense) benefit — 593 — 593 Total other comprehensive income (loss) (37,437) 7,836 — (29,601) Ending balance $ (113,038) $ 12,180 $ 3,982 $ (96,876) For the 39 Weeks Ended October 2, 2021 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (61,178) $ 850 $ 1,428 $ (58,900) Other comprehensive income (loss) before reclassifications (12,293) 3,934 — (8,359) Tax (expense) benefit — (247) — (247) Amounts reclassed from accumulated other comprehensive income (loss) — 210 — 210 Tax (expense) benefit — (130) — (130) Total other comprehensive income (loss) (12,293) 3,607 — (8,686) Ending balance $ (73,471) $ 4,457 $ 1,428 $ (67,586) See “Note 10—Derivatives and Risk Management” for additional disclosures about the Company’s use of derivatives. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Segment Reporting [Abstract] | |
Summary information by operating segment | Summary information by operating segment was as follows (in thousands): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Americas $ 184,326 $ 33,403 $ 193,762 $ 46,589 Europe 143,679 31,076 165,887 40,549 Asia 100,212 17,515 129,494 23,996 Corporate 8,054 (59,512) 2,684 (63,328) Consolidated $ 436,271 $ 22,482 $ 491,827 $ 47,806 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Americas $ 514,525 $ 87,966 $ 522,983 $ 109,172 Europe 376,110 65,489 399,519 67,616 Asia 279,563 38,807 331,625 50,553 Corporate 13,094 (194,999) 11,681 (181,942) Consolidated $ 1,183,292 $ (2,737) $ 1,265,808 $ 45,399 |
Schedule of net sales for each class of similar products | The following table reflects net sales for each class of similar products in the periods presented (in thousands, except percentage data): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Net Sales Percentage of Total Net Sales Percentage of Total Watches: Traditional watches $ 310,198 71.1 % $ 345,764 70.3 % Smartwatches 33,306 7.6 54,085 11.0 Total watches $ 343,504 78.7 % $ 399,849 81.3 % Leathers 41,095 9.4 36,390 7.4 Jewelry 37,868 8.7 46,325 9.4 Other 13,804 3.2 9,263 1.9 Total $ 436,271 100.0 % $ 491,827 100.0 % For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Net Sales Percentage of Total Net Sales Percentage of Total Watches: Traditional watches $ 830,322 70.2 % $ 878,809 69.4 % Smartwatches 104,709 8.8 150,086 11.9 Total watches $ 935,031 79.0 % $ 1,028,895 81.3 % Leathers 111,226 9.4 103,841 8.2 Jewelry 106,495 9.0 105,040 8.3 Other 30,540 2.6 28,032 2.2 Total $ 1,183,292 100.0 % $ 1,265,808 100.0 % |
DERIVATIVES AND RISK MANAGEME_2
DERIVATIVES AND RISK MANAGEMENT (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of outstanding forward contracts | As of October 1, 2022, the Company had the following outstanding forward contracts designated as cash flow hedges that were entered into to hedge future payments of inventory transactions (in millions): Functional Currency Contract Currency Type Amount Type Amount Euro 105.1 U.S. dollar 113.6 Canadian dollar 44.7 U.S. dollar 34.9 Mexican peso 302.3 U.S. dollar 14.7 British pound 7.9 U.S. dollar 10.0 Japanese yen 847.6 U.S. dollar 7.0 Australian dollar 9.6 U.S. dollar 6.8 U.S. dollar 13.4 Japanese yen 1,730.0 |
Schedule of effective portion of gains and losses on derivative instruments recognized in other comprehensive income (loss), net of taxes | The gains and losses on cash flow hedges that were recognized in other comprehensive income (loss), net of taxes are set forth below (in thousands): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Cash flow hedges: Forward contracts $ 8,211 $ 3,292 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 8,211 $ 3,292 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Cash flow hedges: Forward contracts $ 16,941 $ 3,687 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 16,941 $ 3,687 |
Schedule of effective portion of gains and losses on derivative instruments recognized in other comprehensive income (loss), net of taxes reclassified into earnings and derivatives not designated as hedging instruments recorded directly to earnings | The following tables disclose the gains and losses on derivative instruments recorded in accumulated other comprehensive income (loss), net of taxes during the term of the hedging relationship and reclassified into earnings, and gains and losses on derivatives not designated as hedging instruments recorded directly to earnings (in thousands): Derivative Instruments Condensed Consolidated Effect of Derivative For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 3,158 $ 689 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 1,385 $ 518 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ (3) $ 61 Derivative Instruments Condensed Consolidated Effect of Derivative For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 6,198 $ 938 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 2,907 $ (858) Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 63 $ (12) |
Schedule of fair value amounts for derivative instruments as separate asset and liability values on a gross basis and their location on condensed consolidated balance sheets | The following table discloses the fair value amounts for the Company’s derivative instruments as separate asset and liability values, presents the fair value of derivative instruments on a gross basis, and identifies the line items in the condensed consolidated balance sheets in which the fair value amounts for these categories of derivative instruments are included (in thousands): Asset Derivatives Liability Derivatives October 1, 2022 January 1, 2022 October 1, 2022 January 1, 2022 Derivative Instruments Condensed Fair Condensed Fair Condensed Fair Condensed Fair Forward contracts designated as cash flow hedging instruments Prepaid expenses and other current assets $ 13,418 Prepaid expenses and other current assets $ 3,452 Accrued expenses-other $ 1,290 Accrued expenses-other $ 177 Forward contracts designated as cash flow hedging instruments Intangible and other assets-net 1,171 Intangible and other assets-net — Other long-term liabilities — Other long-term liabilities — Total $ 14,589 $ 3,452 $ 1,290 $ 177 The following tables summarize the effects of the Company's derivative instruments on earnings (in thousands): Effect of Derivative Instruments For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 Cost of Sales Other Income (Expense)-net Cost of Sales Other Income (Expense)-net Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded $ 216,651 $ (1,859) $ 232,305 $ (482) Gain (loss) on cash flow hedging relationships: Forward contracts designated as cash flow hedging instruments: Total gain (loss) reclassified from other comprehensive income (loss) $ 3,158 $ 1,385 $ 689 $ 518 Forward contracts not designated as hedging instruments: Total gain (loss) recognized in income $ — $ (3) $ — $ 61 Effect of Derivative Instruments For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Cost of Sales Other Income (Expense)-net Cost of Sales Other Income (Expense)-net Total amounts of income and expense line items presented in the condensed consolidated statements of income (loss) and comprehensive income (loss) in which the effects of cash flow hedges are recorded $ 588,010 $ (1,915) $ 601,857 $ 882 Gain (loss) on cash flow hedging relationships: Forward contracts designated as cash flow hedging instruments: Total gain (loss) reclassified from other comprehensive income (loss) $ 6,198 $ 2,907 $ 938 $ (858) Forward contracts not designated as hedging instruments: Total gain (loss) recognized in income $ — $ 63 $ — $ (12) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of the fair value hierarchy of assets and liabilities measured at fair value on a recurring basis | The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of October 1, 2022 (in thousands): Fair Value at October 1, 2022 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 14,589 $ — $ 14,589 Total $ — $ 14,589 $ — $ 14,589 Liabilities: Contingent consideration $ — $ — $ 2,063 $ 2,063 Forward contracts — 1,290 — 1,290 Total $ — $ 1,290 $ 2,063 $ 3,353 The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 1, 2022 (in thousands): Fair Value at January 1, 2022 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 3,452 $ — $ 3,452 Total $ — $ 3,452 $ — $ 3,452 Liabilities: Contingent consideration $ — $ — $ 1,840 $ 1,840 Forward contracts — 177 — 177 Total $ — $ 177 $ 1,840 $ 2,017 |
INTANGIBLE AND OTHER ASSETS (Ta
INTANGIBLE AND OTHER ASSETS (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible and other assets-net | The following table summarizes intangible and other assets (in thousands): October 1, 2022 January 1, 2022 Useful Gross Accumulated Gross Accumulated Lives Amount Amortization Amount Amortization Intangibles-subject to amortization: Trademarks 10 yrs. $ 3,775 $ 3,366 $ 3,775 $ 3,310 Customer lists 5 - 10 yrs. 37,778 37,521 41,403 40,353 Patents 3 - 20 yrs. 2,371 2,039 2,371 2,013 Developed technology 7 yrs. 2,193 2,056 2,193 1,645 Trade name 6 yrs. 4,502 2,251 4,502 1,688 Other 7 - 20 yrs. 523 367 537 352 Total intangibles-subject to amortization 51,142 47,600 54,781 49,361 Intangibles-not subject to amortization: Trade names 8,850 8,881 Other assets: Deposits 16,683 19,418 Deferred tax asset-net 19,806 24,552 Restricted cash 10,963 13,611 Forward contracts 1,171 — Investments 327 327 Debt issuance costs 3,330 4,578 Other 1,177 1,813 Total other assets 53,457 64,299 Total intangible and other assets $ 113,449 $ 47,600 $ 127,961 $ 49,361 Total intangible and other assets-net $ 65,849 $ 78,600 |
Schedule of estimated aggregate future amortization expense by fiscal year for intangible assets | Estimated aggregate future amortization expense by fiscal year for intangible assets is as follows (in thousands): Fiscal Year Amortization 2022 (remaining) $ 610 2023 $ 901 2024 $ 884 2025 $ 693 2026 $ 102 Thereafter $ 352 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Leases [Abstract] | |
Components of leases | The components of lease expense were as follows (in thousands): Lease Cost Condensed Consolidated For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Operating lease cost (1) SG&A $ 18,445 $ 21,356 $ 58,001 $ 66,450 Short-term lease cost SG&A $ 170 $ 153 $ 570 $ 472 Variable lease cost SG&A $ 7,166 $ 6,252 $ 21,817 $ 17,032 _______________________________________________ (1) Includes sublease income, which was immaterial. The following table discloses supplemental balance sheet information for the Company’s leases (in thousands): Leases Condensed October 1, 2022 January 1, 2022 Assets Operating Operating lease ROU assets $ 156,448 $ 177,597 Liabilities Current: Operating Current operating lease liabilities $ 48,238 $ 58,721 Noncurrent: Operating Long-term operating lease liabilities $ 151,928 $ 174,520 The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases: Lease Term and Discount Rate October 1, 2022 January 1, 2022 Weighted-average remaining lease term: Operating leases 5.7 years 5.7 years Weighted-average discount rate: Operating leases 14.2 % 14.1 % |
Maturity of lease liabilities | Future minimum lease payments by year as of October 1, 2022 were as follows (in thousands): Fiscal Year Operating Leases 2022 (remaining) $ 21,708 2023 73,629 2024 50,214 2025 35,551 2026 28,772 Thereafter 94,674 Total lease payments $ 304,548 Less: Interest 104,382 Total lease obligations $ 200,166 |
Maturity of lease liabilities | Future minimum lease payments by year as of October 1, 2022 were as follows (in thousands): Fiscal Year Operating Leases 2022 (remaining) $ 21,708 2023 73,629 2024 50,214 2025 35,551 2026 28,772 Thereafter 94,674 Total lease payments $ 304,548 Less: Interest 104,382 Total lease obligations $ 200,166 |
Supplemental cash flow information | Supplemental cash flow information related to leases was as follows (in thousands): For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 68,182 $ 83,189 Leased assets obtained in exchange for new operating lease liabilities 22,775 11,319 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Restructuring and Related Activities [Abstract] | |
Rollforward of liability incurred on restructuring plan | The following table shows a rollforward of the accrued liability related to the Company’s NWF 2.0 restructuring plan (in thousands): For the 13 Weeks Ended October 1, 2022 Liabilities Liabilities July 2, 2022 Charges Cash Payments Non-cash Items October 1, 2022 Store closures $ — $ — $ — $ — $ — Professional services 130 — 43 — 87 Severance and employee-related benefits 3,616 — 885 — 2,731 Total $ 3,746 $ — $ 928 $ — $ 2,818 For the 13 Weeks Ended October 2, 2021 Liabilities Liabilities July 3, 2021 Charges Cash Payments Non-cash Items October 2, 2021 Store closures $ 19 $ 244 $ 201 $ 47 $ 15 Professional services 2,076 1,405 2,264 — 1,217 Severance and employee-related benefits 5,756 3,798 4,667 — 4,887 Total $ 7,851 $ 5,447 $ 7,132 $ 47 $ 6,119 For the 39 Weeks Ended October 1, 2022 Liabilities Liabilities January 1, 2022 Charges Cash Payments Non-cash Items October 1, 2022 Store closures $ 300 $ 405 $ 613 $ 92 $ — Professional services 643 135 691 — 87 Severance and employee-related benefits 4,388 4,898 5,770 785 2,731 Total $ 5,331 $ 5,438 $ 7,074 $ 877 $ 2,818 For the 39 Weeks Ended October 2, 2021 Liabilities Liabilities January 2, 2021 Charges Cash Payments Non-cash Items October 2, 2021 Store closures $ 240 $ 1,913 $ 391 $ 1,747 $ 15 Professional services 2,280 4,812 5,875 — 1,217 Severance and employee-related benefits 7,741 11,991 14,845 — 4,887 Total $ 10,261 $ 18,716 $ 21,111 $ 1,747 $ 6,119 |
Schedule of restructuring charges by operating segment | NWF 2.0 restructuring charges by operating segment were as follows (in thousands): For the 13 Weeks Ended October 1, 2022 For the 13 Weeks Ended October 2, 2021 For the 39 Weeks Ended October 1, 2022 For the 39 Weeks Ended October 2, 2021 Americas $ — $ 737 $ 83 $ 2,116 Europe — 1,828 1,531 8,872 Asia — 1,484 1,204 3,289 Corporate — 1,398 2,620 4,439 Consolidated $ — $ 5,447 $ 5,438 $ 18,716 |
FINANCIAL STATEMENT POLICIES -
FINANCIAL STATEMENT POLICIES - Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Numerator: | ||||
Net income (loss) attributable to Fossil Group, Inc. | $ 5,849 | $ 31,420 | $ (34,739) | $ 5,788 |
Basic EPS computation: | ||||
Basic weighted average common shares outstanding (in shares) | 51,825,000 | 52,141,000 | 51,843,000 | 51,900,000 |
Basic EPS (in dollars per share) | $ 0.11 | $ 0.60 | $ (0.67) | $ 0.11 |
Diluted EPS computation: | ||||
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units (in shares) | 227,000 | 625,000 | 0 | 838,000 |
Diluted weighted average common shares outstanding (in shares) | 52,052,000 | 52,766,000 | 51,843,000 | 52,738,000 |
Diluted EPS (in dollars per share) | $ 0.11 | $ 0.60 | $ (0.67) | $ 0.11 |
Stock Compensation Plan | ||||
Other EPS Disclosures | ||||
Weighted shares issuable under stock-based awards not included in the diluted EPS calculation (in shares) | 1,700,000 | 300,000 | 2,200,000 | |
Performance Shares | ||||
Diluted EPS computation: | ||||
Diluted weighted average common shares outstanding (in shares) | 73,500 | 48,400 | 30,300 | |
Other EPS Disclosures | ||||
Weighted shares issuable under stock-based awards not included in the diluted EPS calculation (in shares) | 12,900,000 | 12,900 | 26,100,000 | 12,900 |
FINANCIAL STATEMENT POLICIES _2
FINANCIAL STATEMENT POLICIES - Schedule Of Cash And Restricted Cash Equivalents (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 | Oct. 02, 2021 | Jan. 02, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 162,612 | $ 250,844 | $ 181,782 | |
Restricted cash included in prepaid expenses and other current assets | 106 | 118 | ||
Restricted cash included in intangible and other assets-net | 10,964 | 13,858 | ||
Cash, cash equivalents and restricted cash | $ 173,682 | $ 264,572 | $ 195,758 | $ 324,246 |
REVENUE - Disaggregation Of Rev
REVENUE - Disaggregation Of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 436,271 | $ 491,827 | $ 1,183,292 | $ 1,265,808 |
Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 310,198 | 345,764 | 830,322 | 878,809 |
Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 33,306 | 54,085 | 104,709 | 150,086 |
Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 343,504 | 399,849 | 935,031 | 1,028,895 |
Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 41,095 | 36,390 | 111,226 | 103,841 |
Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 37,868 | 46,325 | 106,495 | 105,040 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 13,804 | 9,263 | 30,540 | 28,032 |
Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 428,229 | 489,282 | 1,171,051 | 1,257,905 |
Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,042 | 2,545 | 12,241 | 7,903 |
Operating segments | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 184,326 | 193,762 | 514,525 | 522,983 |
Operating segments | Americas | Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 132,077 | 130,988 | 366,714 | 349,024 |
Operating segments | Americas | Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 14,578 | 25,205 | 47,228 | 78,308 |
Operating segments | Americas | Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 146,655 | 156,193 | 413,942 | 427,332 |
Operating segments | Americas | Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 27,262 | 23,389 | 69,091 | 63,851 |
Operating segments | Americas | Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,353 | 12,285 | 25,548 | 26,506 |
Operating segments | Americas | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2,056 | 1,895 | 5,944 | 5,294 |
Operating segments | Americas | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 183,900 | 193,367 | 513,393 | 521,702 |
Operating segments | Americas | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 426 | 395 | 1,132 | 1,281 |
Operating segments | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 143,679 | 165,887 | 376,110 | 399,519 |
Operating segments | Europe | Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 102,142 | 113,501 | 253,728 | 266,316 |
Operating segments | Europe | Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 10,401 | 16,344 | 33,347 | 43,277 |
Operating segments | Europe | Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 112,543 | 129,845 | 287,075 | 309,593 |
Operating segments | Europe | Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 5,683 | 7,231 | 18,372 | 19,933 |
Operating segments | Europe | Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 22,955 | 25,554 | 62,730 | 61,974 |
Operating segments | Europe | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2,498 | 3,257 | 7,933 | 8,019 |
Operating segments | Europe | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 143,453 | 165,598 | 375,433 | 398,533 |
Operating segments | Europe | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 226 | 289 | 677 | 986 |
Operating segments | Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 100,212 | 129,494 | 279,563 | 331,625 |
Operating segments | Asia | Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 75,970 | 101,275 | 209,857 | 262,416 |
Operating segments | Asia | Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,327 | 12,528 | 24,134 | 28,477 |
Operating segments | Asia | Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 84,297 | 113,803 | 233,991 | 290,893 |
Operating segments | Asia | Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,150 | 5,770 | 23,763 | 20,057 |
Operating segments | Asia | Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 6,560 | 8,486 | 18,217 | 16,560 |
Operating segments | Asia | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,205 | 1,435 | 3,592 | 4,115 |
Operating segments | Asia | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 100,076 | 129,313 | 279,193 | 331,180 |
Operating segments | Asia | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 136 | 181 | 370 | 445 |
Corporate | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,054 | 2,684 | 13,094 | 11,681 |
Corporate | Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 9 | 0 | 23 | 1,053 |
Corporate | Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 8 | 0 | 24 |
Corporate | Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 9 | 8 | 23 | 1,077 |
Corporate | Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Corporate | Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Corporate | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,045 | 2,676 | 13,071 | 10,604 |
Corporate | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 800 | 1,004 | 3,032 | 6,490 |
Corporate | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 7,254 | $ 1,680 | $ 10,062 | $ 5,191 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) | Oct. 01, 2022 | Jan. 01, 2022 |
Disaggregation of Revenue [Line Items] | ||
Contract assets | $ 0 | |
Deferred contract costs | 0 | |
Licensing Income | ||
Disaggregation of Revenue [Line Items] | ||
Contract liabilities | 900,000 | $ 4,900,000 |
Wearable technology | ||
Disaggregation of Revenue [Line Items] | ||
Contract liabilities | 3,400,000 | 3,000,000 |
Gift Cards | ||
Disaggregation of Revenue [Line Items] | ||
Contract liabilities | $ 2,800,000 | $ 3,600,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Inventory Disclosure [Abstract] | ||
Components and parts | $ 22,546 | $ 23,668 |
Work-in-process | 4 | 2 |
Finished goods | 430,197 | 323,180 |
Inventories | $ 452,747 | $ 346,850 |
WARRANTY LIABILITIES (Details)
WARRANTY LIABILITIES (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Warranty liability activity | ||
Beginning balance | $ 19,159 | $ 21,916 |
Settlements in cash or kind | (5,465) | (8,096) |
Warranties issued and adjustments to preexisting warranties | (148) | 5,296 |
Ending balance | $ 13,546 | $ 19,116 |
INCOME TAXES - Schedule of Inco
INCOME TAXES - Schedule of Income Tax Expense and Related Effective Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (benefit) expense | $ 9,214 | $ 8,978 | $ 15,904 | $ 19,177 |
Effective tax rate | 59.50% | 22% | (87.90%) | 73.80% |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) $ in Millions | 3 Months Ended |
Oct. 01, 2022 USD ($) | |
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits, excluding interest and penalties | $ 28.9 |
Unrecognized tax benefits that would favorably impact effective tax rate in future periods | 23.9 |
Unrecognized tax benefits, excluding interest and penalties, that are expected to be settled within the next twelve months | 11.6 |
Accrued income tax-related interest | 9.4 |
Income tax related interest expense | $ 0.5 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Apr. 02, 2022 | Oct. 01, 2022 | Jan. 01, 2022 | |
Stockholders' Equity Note [Abstract] | |||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 51,827,267 | 52,145,738 | |
Common stock, shares outstanding (in shares) | 51,827,267 | 52,145,738 | |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Common stock retired (in shares) | 1,000,000 | ||
Repurchase of common stock which decreased common stock | $ 10 | ||
Repurchase of common stock which decreased additional paid-in capital | 500 | ||
Repurchase of common stock which decreased retained earnings | 9,500 | ||
Repurchase of common stock which decreased treasury stock | $ 10,000 | ||
Repurchase agreement, authorizations remaining | $ 20,000 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock Repurchase Activity (Details) - USD ($) shares in Millions | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Stockholders' Equity Note [Abstract] | ||
Dollar Value Authorized | $ 30,000,000 | |
Number of Shares Repurchased (in shares) | 1 | 0 |
Dollar Value Repurchased | $ 10,000,000 | $ 0 |
EMPLOYEE BENEFIT PLANS - Summar
EMPLOYEE BENEFIT PLANS - Summary of Stock Options and Stock Appreciation Rights Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Oct. 01, 2022 | Jul. 02, 2022 | |
Shares | ||
Outstanding at beginning of period (in shares) | 199 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Forfeited or expired (in shares) | (98) | |
Outstanding at end of period (in shares) | 101 | 199 |
Exercisable at end of period (in shares) | 101 | |
Weighted- Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 51.21 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 0 | |
Forfeited or expired (in dollars per share) | 46.98 | |
Outstanding at end of period (in dollars per share) | 55.31 | $ 51.21 |
Exercisable at end of period (in dollars per share) | $ 55.31 | |
Weighted- Average Remaining Contractual Term | ||
Outstanding | 1 year 1 month 6 days | 9 months 18 days |
Exercisable at end of period | 1 year 1 month 6 days | |
Aggregate Intrinsic Value | ||
Outstanding at beginning of period | $ 0 | |
Exercised | 0 | |
Outstanding at end of period | 0 | $ 0 |
Exercisable at end of period | $ 0 |
EMPLOYEE BENEFIT PLANS - Summ_2
EMPLOYEE BENEFIT PLANS - Summary of Stock Options and Stock Appreciation Rights Outstanding and Exercisable (Details) - Stock appreciation rights shares in Thousands | 9 Months Ended |
Oct. 01, 2022 $ / shares shares | |
Stock-based compensation plans disclosures | |
Stock appreciation rights outstanding, number of shares (in shares) | shares | 101 |
Stock appreciation rights outstanding, weighted-average exercise price (in dollars per share) | $ 55.31 |
Stock appreciation rights outstanding, weighted-average remaining contractual term | 1 year 1 month 6 days |
Stock appreciation rights exercisable, number of shares (in shares) | shares | 101 |
Stock appreciation rights exercisable, weighted-average exercise price (in dollars per share) | $ 55.31 |
Range One Of Exercise Prices | |
Stock-based compensation plans disclosures | |
Stock appreciation rights outstanding, number of shares (in shares) | shares | 101 |
Stock appreciation rights outstanding, weighted-average exercise price (in dollars per share) | $ 55.31 |
Stock appreciation rights outstanding, weighted-average remaining contractual term | 1 year 1 month 6 days |
Stock appreciation rights exercisable, number of shares (in shares) | shares | 101 |
Stock appreciation rights exercisable, weighted-average exercise price (in dollars per share) | $ 55.31 |
Range One Of Exercise Prices | Minimum | |
Stock-based compensation plans disclosures | |
Outstanding, lower range (in dollars per share) | 36.73 |
Range One Of Exercise Prices | Maximum | |
Stock-based compensation plans disclosures | |
Outstanding, upper range (in dollars per share) | $ 80.22 |
EMPLOYEE BENEFIT PLANS - Summ_3
EMPLOYEE BENEFIT PLANS - Summary of Restricted Stock Units and Performance Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands | 3 Months Ended |
Oct. 01, 2022 $ / shares shares | |
Number of Shares | |
Nonvested (in shares) | shares | 2,016 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | (23) |
Forfeited (in shares) | shares | (26) |
Nonvested (in shares) | shares | 1,967 |
Weighted-Average Grant Date Fair Value Per Share | |
Nonvested (in dollars per share) | $ / shares | $ 10.16 |
Granted (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 7.68 |
Forfeited (in dollars per share) | $ / shares | 9.95 |
Nonvested (in dollars per share) | $ / shares | $ 10.19 |
EMPLOYEE BENEFIT PLANS - Narrat
EMPLOYEE BENEFIT PLANS - Narrative (Details) - Restricted Stock Units (RSUs) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended |
Oct. 01, 2022 USD ($) shares | Oct. 01, 2022 USD ($) shares | |
Stock-based compensation plans disclosures | ||
Fair value of restricted stock units vested | $ 131,002 | |
Non Employee Director | ||
Stock-based compensation plans disclosures | ||
Value of awards granted | $ 130 | $ 130 |
Vesting percentage of awards granted | 100% | |
Vested and deferred (in shares) | shares | 30 | 30 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | $ 394,025 | $ 409,327 | $ 465,358 | $ 440,032 |
Other comprehensive income (loss) before reclassifications | (5,515) | 83 | (21,286) | (8,359) |
Tax (expense) benefit | 261 | (29) | 790 | (247) |
Amounts reclassed from accumulated other comprehensive income (loss) | 4,310 | 1,263 | 8,512 | 210 |
Tax (expense) benefit | 233 | (57) | 593 | (130) |
Total other comprehensive income (loss) | (9,797) | (1,152) | (29,601) | (8,686) |
Ending balance | 390,233 | 442,900 | 390,233 | 442,900 |
Total | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (87,079) | (66,434) | (67,275) | (58,900) |
Total other comprehensive income (loss) | (9,797) | (1,152) | (29,601) | (8,686) |
Ending balance | (96,876) | (67,586) | (96,876) | (67,586) |
Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (99,573) | (70,234) | (75,601) | (61,178) |
Other comprehensive income (loss) before reclassifications | (13,465) | (3,237) | (37,437) | (12,293) |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Amounts reclassed from accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss) | (13,465) | (3,237) | (37,437) | (12,293) |
Ending balance | (113,038) | (73,471) | (113,038) | (73,471) |
Cash Flow Hedges | Forward Contracts | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | 8,512 | 2,372 | 4,344 | 850 |
Other comprehensive income (loss) before reclassifications | 7,950 | 3,320 | 16,151 | 3,934 |
Tax (expense) benefit | 261 | (29) | 790 | (247) |
Amounts reclassed from accumulated other comprehensive income (loss) | 4,310 | 1,263 | 8,512 | 210 |
Tax (expense) benefit | 233 | (57) | 593 | (130) |
Total other comprehensive income (loss) | 3,668 | 2,085 | 7,836 | 3,607 |
Ending balance | 12,180 | 4,457 | 12,180 | 4,457 |
Pension Plan | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | 3,982 | 1,428 | 3,982 | 1,428 |
Other comprehensive income (loss) before reclassifications | 0 | 0 | 0 | 0 |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Amounts reclassed from accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Tax (expense) benefit | 0 | 0 | 0 | 0 |
Total other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Ending balance | $ 3,982 | $ 1,428 | $ 3,982 | $ 1,428 |
SEGMENT INFORMATION - Summary I
SEGMENT INFORMATION - Summary Information by Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Summary information by operating segment | ||||
Net sales | $ 436,271 | $ 491,827 | $ 1,183,292 | $ 1,265,808 |
Operating Income (Loss) | 22,482 | 47,806 | (2,737) | 45,399 |
Operating segments | Americas | ||||
Summary information by operating segment | ||||
Net sales | 184,326 | 193,762 | 514,525 | 522,983 |
Operating Income (Loss) | 33,403 | 46,589 | 87,966 | 109,172 |
Operating segments | Europe | ||||
Summary information by operating segment | ||||
Net sales | 143,679 | 165,887 | 376,110 | 399,519 |
Operating Income (Loss) | 31,076 | 40,549 | 65,489 | 67,616 |
Operating segments | Asia | ||||
Summary information by operating segment | ||||
Net sales | 100,212 | 129,494 | 279,563 | 331,625 |
Operating Income (Loss) | 17,515 | 23,996 | 38,807 | 50,553 |
Corporate | ||||
Summary information by operating segment | ||||
Net sales | 8,054 | 2,684 | 13,094 | 11,681 |
Operating Income (Loss) | $ (59,512) | $ (63,328) | $ (194,999) | $ (181,942) |
SEGMENT INFORMATION - Schedule
SEGMENT INFORMATION - Schedule of Net Sales for Each Class of Similar Products (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Net sales for each class of similar products | ||||
Net sales | $ 436,271 | $ 491,827 | $ 1,183,292 | $ 1,265,808 |
Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 100% | 100% | 100% | 100% |
Traditional watches | ||||
Net sales for each class of similar products | ||||
Net sales | $ 310,198 | $ 345,764 | $ 830,322 | $ 878,809 |
Traditional watches | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 71.10% | 70.30% | 70.20% | 69.40% |
Smartwatches | ||||
Net sales for each class of similar products | ||||
Net sales | $ 33,306 | $ 54,085 | $ 104,709 | $ 150,086 |
Smartwatches | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 7.60% | 11% | 8.80% | 11.90% |
Total watches | ||||
Net sales for each class of similar products | ||||
Net sales | $ 343,504 | $ 399,849 | $ 935,031 | $ 1,028,895 |
Total watches | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 78.70% | 81.30% | 79% | 81.30% |
Leathers | ||||
Net sales for each class of similar products | ||||
Net sales | $ 41,095 | $ 36,390 | $ 111,226 | $ 103,841 |
Leathers | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 9.40% | 7.40% | 9.40% | 8.20% |
Jewelry | ||||
Net sales for each class of similar products | ||||
Net sales | $ 37,868 | $ 46,325 | $ 106,495 | $ 105,040 |
Jewelry | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 8.70% | 9.40% | 9% | 8.30% |
Other | ||||
Net sales for each class of similar products | ||||
Net sales | $ 13,804 | $ 9,263 | $ 30,540 | $ 28,032 |
Other | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 3.20% | 1.90% | 2.60% | 2.20% |
DERIVATIVES AND RISK MANAGEME_3
DERIVATIVES AND RISK MANAGEMENT - Cash Flow Hedges (Details) € in Millions, ¥ in Millions, £ in Millions, $ in Millions, $ in Millions, $ in Millions, $ in Millions | 9 Months Ended | ||||||
Oct. 01, 2022 EUR (€) | Oct. 01, 2022 USD ($) | Oct. 01, 2022 CAD ($) | Oct. 01, 2022 MXN ($) | Oct. 01, 2022 GBP (£) | Oct. 01, 2022 JPY (¥) | Oct. 01, 2022 AUD ($) | |
Derivative [Line Items] | |||||||
Foreign currency cash flow hedge maximum length of projection term | 24 months | ||||||
Forecasted purchases to manage fluctuations (as a percent) (up to) | 85% | 85% | 85% | 85% | 85% | 85% | 85% |
Forward Contracts | Designated as cash flow hedges | Euro | |||||||
Derivative [Line Items] | |||||||
Notional amount | € 105.1 | $ 113.6 | |||||
Forward Contracts | Designated as cash flow hedges | Canadian dollar | |||||||
Derivative [Line Items] | |||||||
Notional amount | 34.9 | $ 44.7 | |||||
Forward Contracts | Designated as cash flow hedges | Mexican peso | |||||||
Derivative [Line Items] | |||||||
Notional amount | 14.7 | $ 302.3 | |||||
Forward Contracts | Designated as cash flow hedges | British pound | |||||||
Derivative [Line Items] | |||||||
Notional amount | 10 | £ 7.9 | |||||
Forward Contracts | Designated as cash flow hedges | Japanese yen | |||||||
Derivative [Line Items] | |||||||
Notional amount | 7 | ¥ 847.6 | |||||
Forward Contracts | Designated as cash flow hedges | Australian dollar | |||||||
Derivative [Line Items] | |||||||
Notional amount | 6.8 | $ 9.6 | |||||
Forward Contracts | Designated as cash flow hedges | U.S. dollar | |||||||
Derivative [Line Items] | |||||||
Notional amount | $ 13.4 | ¥ 1,730 |
DERIVATIVES AND RISK MANAGEME_4
DERIVATIVES AND RISK MANAGEMENT - Derivative Instruments Recognized in Other Comprehensive Income (Loss) (Details) - Cash flow hedges - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Derivative [Line Items] | ||||
Total gain (loss) recognized in other comprehensive income (loss), net of taxes | $ 8,211 | $ 3,292 | $ 16,941 | $ 3,687 |
Forward Contracts | ||||
Derivative [Line Items] | ||||
Total gain (loss) recognized in other comprehensive income (loss), net of taxes | $ 8,211 | $ 3,292 | $ 16,941 | $ 3,687 |
DERIVATIVES AND RISK MANAGEME_5
DERIVATIVES AND RISK MANAGEMENT - Derivative Instruments Designated and Qualifying as Cash Flow Hedges (Details) - Forward Contracts - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Cost of sales | Designated as cash flow hedges | Cash flow hedges | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) reclassified from accumulated other comprehensive income (loss) | $ 3,158 | $ 689 | $ 6,198 | $ 938 |
Cost of sales | Not designated as hedging instruments | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) recognized in income | 0 | 0 | 0 | 0 |
Other income (expense)-net | Designated as cash flow hedges | Cash flow hedges | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) reclassified from accumulated other comprehensive income (loss) | 1,385 | 518 | 2,907 | (858) |
Other income (expense)-net | Not designated as hedging instruments | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) recognized in income | $ (3) | $ 61 | $ 63 | $ (12) |
DERIVATIVES AND RISK MANAGEME_6
DERIVATIVES AND RISK MANAGEMENT - Fair Value Amounts for Derivative Instruments (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Fair value of derivative instruments | ||
Asset derivatives, fair value | $ 14,589 | $ 3,452 |
Liability derivatives, fair value | 1,290 | 177 |
Forward Contracts | Designated as cash flow hedges | Cash flow hedges | Prepaid expenses and other current assets | ||
Fair value of derivative instruments | ||
Asset derivatives, fair value | 13,418 | 3,452 |
Forward Contracts | Designated as cash flow hedges | Cash flow hedges | Accrued expenses-other | ||
Fair value of derivative instruments | ||
Liability derivatives, fair value | 1,290 | 177 |
Forward Contracts | Designated as cash flow hedges | Cash flow hedges | Intangible and other assets-net | ||
Fair value of derivative instruments | ||
Asset derivatives, fair value | 1,171 | 0 |
Forward Contracts | Designated as cash flow hedges | Cash flow hedges | Other long-term liabilities | ||
Fair value of derivative instruments | ||
Liability derivatives, fair value | $ 0 | $ 0 |
DERIVATIVES AND RISK MANAGEME_7
DERIVATIVES AND RISK MANAGEMENT - Effect of Derivative Instruments on Earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Derivative [Line Items] | ||||
Cost of Sales | $ 216,651 | $ 232,305 | $ 588,010 | $ 601,857 |
Other Income (Expense)-net | (1,859) | (482) | (1,915) | 882 |
Net gain expected to be reclassified into earnings within the next twelve months | 12,300 | 12,300 | ||
Designated as cash flow hedges | Cash flow hedges | Forward Contracts | Cost of Sales | ||||
Derivative [Line Items] | ||||
Total gain (loss) reclassified from other comprehensive income (loss) | 3,158 | 689 | 6,198 | 938 |
Designated as cash flow hedges | Cash flow hedges | Forward Contracts | Other income (expense)-net | ||||
Derivative [Line Items] | ||||
Total gain (loss) reclassified from other comprehensive income (loss) | 1,385 | 518 | 2,907 | (858) |
Not designated as hedging instruments | Forward Contracts | Cost of Sales | ||||
Derivative [Line Items] | ||||
Total gain (loss) recognized in income | 0 | 0 | 0 | 0 |
Not designated as hedging instruments | Forward Contracts | Other income (expense)-net | ||||
Derivative [Line Items] | ||||
Total gain (loss) recognized in income | $ (3) | $ 61 | $ 63 | $ (12) |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value Hierarchy of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value Measurement, Recurring Basis - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Assets: | ||
Forward contracts | $ 14,589 | $ 3,452 |
Total | 14,589 | 3,452 |
Liabilities: | ||
Contingent consideration | 2,063 | 1,840 |
Forward contracts | 1,290 | 177 |
Total | 3,353 | 2,017 |
Level 1 | ||
Assets: | ||
Forward contracts | 0 | 0 |
Total | 0 | 0 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Forward contracts | 0 | 0 |
Total | 0 | 0 |
Level 2 | ||
Assets: | ||
Forward contracts | 14,589 | 3,452 |
Total | 14,589 | 3,452 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Forward contracts | 1,290 | 177 |
Total | 1,290 | 177 |
Level 3 | ||
Assets: | ||
Forward contracts | 0 | 0 |
Total | 0 | 0 |
Liabilities: | ||
Contingent consideration | 2,063 | 1,840 |
Forward contracts | 0 | 0 |
Total | $ 2,063 | $ 1,840 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | Jan. 01, 2022 | |
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||||
Debt, carrying value | $ 301,200 | $ 301,200 | |||
Fair value of debt | 236,600 | 236,600 | |||
Operating lease assets | 156,448 | 156,448 | $ 177,597 | ||
Impairment charges | 1,060 | $ 6,322 | |||
Restructuring charges | 0 | $ 5,447 | 5,438 | 18,716 | |
Specific Company Owned Stores | |||||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||||
Operating lease assets | 3,300 | 14,000 | 3,300 | 14,000 | |
Property, plant and equipment - net | 300 | 2,500 | 300 | 2,500 | |
Fair value of operating lease assets | 2,300 | 7,400 | 2,300 | 7,400 | |
Fair value of property, plant and equipment - net | $ 200 | 1,000 | 200 | 1,000 | |
Impairment charges | 8,100 | 1,100 | $ 8,100 | ||
Specific Company Owned Stores | Americas | |||||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||||
Impairment charges | 3,100 | 600 | |||
Specific Company Owned Stores | Europe | |||||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||||
Impairment charges | 2,200 | 300 | |||
Restructuring charges | 1,800 | ||||
Specific Company Owned Stores | Asia | |||||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||||
Impairment charges | $ 1,000 | $ 200 |
INTANGIBLE AND OTHER ASSETS - I
INTANGIBLE AND OTHER ASSETS - Intangible and Other Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Jan. 01, 2022 | |
Intangibles-subject to amortization: | ||
Gross Amount | $ 51,142 | $ 54,781 |
Accumulated Amortization | 47,600 | 49,361 |
Intangibles-not subject to amortization: | ||
Gross Amount | 8,850 | 8,881 |
Other assets: | ||
Gross Amount | 53,457 | 64,299 |
Total Gross Amount | 113,449 | 127,961 |
Total Accumulated Amortization | 47,600 | 49,361 |
Total intangible and other assets-net | 65,849 | 78,600 |
Deposits | ||
Other assets: | ||
Gross Amount | 16,683 | 19,418 |
Deferred tax asset-net | ||
Other assets: | ||
Gross Amount | 19,806 | 24,552 |
Restricted cash | ||
Other assets: | ||
Gross Amount | 10,963 | 13,611 |
Forward contracts | ||
Other assets: | ||
Gross Amount | 1,171 | 0 |
Investments | ||
Other assets: | ||
Gross Amount | 327 | 327 |
Debt issuance costs | ||
Other assets: | ||
Gross Amount | 3,330 | 4,578 |
Other | ||
Other assets: | ||
Gross Amount | $ 1,177 | 1,813 |
Trademarks | ||
Intangibles-subject to amortization: | ||
Useful Lives | 10 years | |
Gross Amount | $ 3,775 | 3,775 |
Accumulated Amortization | 3,366 | 3,310 |
Customer lists | ||
Intangibles-subject to amortization: | ||
Gross Amount | 37,778 | 41,403 |
Accumulated Amortization | $ 37,521 | 40,353 |
Customer lists | Minimum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 5 years | |
Customer lists | Maximum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 10 years | |
Patents | ||
Intangibles-subject to amortization: | ||
Gross Amount | $ 2,371 | 2,371 |
Accumulated Amortization | $ 2,039 | 2,013 |
Patents | Minimum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 3 years | |
Patents | Maximum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 20 years | |
Developed technology | ||
Intangibles-subject to amortization: | ||
Useful Lives | 7 years | |
Gross Amount | $ 2,193 | 2,193 |
Accumulated Amortization | $ 2,056 | 1,645 |
Trade name | ||
Intangibles-subject to amortization: | ||
Useful Lives | 6 years | |
Gross Amount | $ 4,502 | 4,502 |
Accumulated Amortization | 2,251 | 1,688 |
Other | ||
Intangibles-subject to amortization: | ||
Gross Amount | 523 | 537 |
Accumulated Amortization | $ 367 | $ 352 |
Other | Minimum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 7 years | |
Other | Maximum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 20 years |
INTANGIBLE AND OTHER ASSETS - N
INTANGIBLE AND OTHER ASSETS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense for intangible assets | $ 0.6 | $ 0.7 | $ 1.9 | $ 2.7 |
INTANGIBLE AND OTHER ASSETS - A
INTANGIBLE AND OTHER ASSETS - Amortization Expense (Details) $ in Thousands | Oct. 01, 2022 USD ($) |
Amortization Expense | |
2022 (remaining) | $ 610 |
2023 | 901 |
2024 | 884 |
2025 | 693 |
2026 | 102 |
Thereafter | $ 352 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Oct. 01, 2022 option |
Lessee, Lease, Description [Line Items] | |
Number of renewals (or more) | 1 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 10 years |
LEASES - Components of Lease Ex
LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 18,445 | $ 21,356 | $ 58,001 | $ 66,450 |
Short-term lease cost | 170 | 153 | 570 | 472 |
Variable lease cost | $ 7,166 | $ 6,252 | $ 21,817 | $ 17,032 |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Assets | ||
Operating lease right-of-use assets | $ 156,448 | $ 177,597 |
Current: | ||
Current operating lease liabilities | 48,238 | 58,721 |
Noncurrent: | ||
Long-term operating lease liabilities | $ 151,928 | $ 174,520 |
LEASES - Weighted-Average Remai
LEASES - Weighted-Average Remaining Lease Term and Discount Rate (Details) | Oct. 01, 2022 | Jan. 01, 2022 |
Weighted-average remaining lease term: | ||
Operating leases | 5 years 8 months 12 days | 5 years 8 months 12 days |
Weighted-average discount rate: | ||
Operating leases | 14.20% | 14.10% |
LEASES - Maturity of Lease Liab
LEASES - Maturity of Lease Liabilities (Details) $ in Thousands | Oct. 01, 2022 USD ($) |
Operating Leases | |
2022 (remaining) | $ 21,708 |
2023 | 73,629 |
2024 | 50,214 |
2025 | 35,551 |
2026 | 28,772 |
Thereafter | 94,674 |
Total lease payments | 304,548 |
Less: Interest | 104,382 |
Total lease obligations | $ 200,166 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 68,182 | $ 83,189 |
Leased assets obtained in exchange for new operating lease liabilities | $ 22,775 | $ 11,319 |
DEBT ACTIVITY (Details)
DEBT ACTIVITY (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Nov. 08, 2021 | Sep. 26, 2019 | Nov. 30, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | Nov. 08, 2022 | |
Debt Instrument [Line Items] | ||||||||
Total debt outstanding | $ 301,200,000 | $ 301,200,000 | ||||||
Interest expense | 5,127,000 | $ 6,422,000 | 13,445,000 | $ 20,284,000 | ||||
7.00 Percent Senior Notes | Senior Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 150,000,000 | |||||||
Stated interest percentage | 7% | |||||||
Net proceeds | $ 141,700,000 | |||||||
Redemption price per increment of principal | 25 | |||||||
Principal amount, increment used to calculate redemption price | $ 25 | |||||||
Debt instrument, premium to be paid upon redemption, percent | 1% | |||||||
Debt securities, ownership percentage by registered holders | 25% | |||||||
7.00 Percent Senior Notes | Senior Notes | Debt Instrument, Redemption, Period One | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price per increment of principal | $ 25.50 | |||||||
Principal amount, increment used to calculate redemption price | 25 | |||||||
7.00 Percent Senior Notes | Senior Notes | Debt Instrument, Redemption, Period Two | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price per increment of principal | 25.25 | |||||||
Principal amount, increment used to calculate redemption price | 25 | |||||||
7.00 Percent Senior Notes | Senior Notes | Debt Instrument, Redemption, Period Three | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price per increment of principal | 25 | |||||||
Principal amount, increment used to calculate redemption price | $ 25 | |||||||
7.00 Percent Senior Notes | US Treasury (UST) Interest Rate | Senior Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on base rate | 0.50% | |||||||
Term Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issuance amortization | 900,000 | $ 2,600,000 | ||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing amount | $ 275,000,000 | |||||||
Increase limit | $ 225,000,000 | |||||||
Line of credit facility, issuance fee percentage | 0.125% | |||||||
Line of credit facility, increase in maximum borrowing capacity | 75,000,000 | $ 75,000,000 | ||||||
Line of credit facility, increase in maximum borrowing capacity minimum increment | 10,000,000 | $ 10,000,000 | ||||||
Revolving Credit Facility | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, commitment fee percentage | 0.25% | |||||||
Revolving Credit Facility | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, commitment fee percentage | 0.375% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 60% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | Net Liquidation Value | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 90% | |||||||
Increase in percentage of assets | 5% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | Net Liquidation Value | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 95% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | United States Finished Goods Inventory | Net Liquidation Value | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 90% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | United States Finished Goods Inventory | Lower Of Cost Or Market Value | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 65% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | United States Accounts Receivable | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 85% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | United States Credit Card Accounts Receivable | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 90% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | United States Intellectual Property | Net Liquidation Value | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing amount | $ 20,000,000 | |||||||
Remaining borrowing capacity as a percentage of accounts receivable | 40% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | Foreign Finished Goods Inventory | Net Liquidation Value | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 90% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | Foreign Finished Goods Inventory | Lower Of Cost Or Market Value | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 65% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | Foreign Accounts Receivable | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 85% | |||||||
Revolving Credit Facility | Second A&R Credit Agreement | French Accounts Receivable | ||||||||
Debt Instrument [Line Items] | ||||||||
Remaining borrowing capacity as a percentage of accounts receivable | 85% | |||||||
Revolving Credit Facility | Term Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Total debt outstanding | 151,000,000 | $ 151,000,000 | ||||||
Net borrowings (repayments) of debt | 44,200,000 | 151,000,000 | ||||||
Line of credit facility, remaining borrowing capacity | 50,400,000 | 50,400,000 | ||||||
Interest expense | 900,000 | 1,100,000 | ||||||
Revolving Credit Facility | Fourth A&R Credit Agreement | Subsequent Event | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount available | $ 35,000,000 | |||||||
Term Loan Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Payment fees and accrued interest | $ 2,600,000 | |||||||
Debt issuance cost write off | 7,100,000 | |||||||
Write off of deferred debt discounts | $ 4,600,000 | |||||||
Term Loan Facility | Term Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Total debt outstanding | 150,000,000 | 150,000,000 | ||||||
Interest expense | $ 2,600,000 | $ 7,900,000 | ||||||
US Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount available | $ 125,000,000 | |||||||
European Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing amount | 80,000,000 | |||||||
Subfacility for swingline loans | 7,000,000 | |||||||
Hong Kong Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing amount | 10,000,000 | |||||||
French Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing amount | 5,000,000 | |||||||
Subfacility for swingline loans | 1,000,000 | |||||||
Canadian Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing amount | 5,000,000 | |||||||
Letter of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term line of credit | $ 45,000,000 |
RESTRUCTURING - Narrative (Deta
RESTRUCTURING - Narrative (Details) $ in Millions | Oct. 01, 2022 USD ($) |
COVID-19 | NWF 2.0 | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring charges | $ 6 |
RESTRUCTURING - Liability Incur
RESTRUCTURING - Liability Incurred for Restructuring Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Restructuring Reserve | ||||
Charges | $ 0 | $ 5,447 | $ 5,438 | $ 18,716 |
NWF 2.0 | ||||
Restructuring Reserve | ||||
Beginning balance | 3,746 | 7,851 | 5,331 | 10,261 |
Charges | 0 | 5,447 | 5,438 | 18,716 |
Cash Payments | 928 | 7,132 | 7,074 | 21,111 |
Non-cash Items | 0 | 47 | 877 | 1,747 |
Ending balance | 2,818 | 6,119 | 2,818 | 6,119 |
NWF 2.0 | Store closures | ||||
Restructuring Reserve | ||||
Beginning balance | 0 | 19 | 300 | 240 |
Charges | 0 | 244 | 405 | 1,913 |
Cash Payments | 0 | 201 | 613 | 391 |
Non-cash Items | 0 | 47 | 92 | 1,747 |
Ending balance | 0 | 15 | 0 | 15 |
NWF 2.0 | Professional services | ||||
Restructuring Reserve | ||||
Beginning balance | 130 | 2,076 | 643 | 2,280 |
Charges | 0 | 1,405 | 135 | 4,812 |
Cash Payments | 43 | 2,264 | 691 | 5,875 |
Non-cash Items | 0 | 0 | 0 | 0 |
Ending balance | 87 | 1,217 | 87 | 1,217 |
NWF 2.0 | Severance and employee-related benefits | ||||
Restructuring Reserve | ||||
Beginning balance | 3,616 | 5,756 | 4,388 | 7,741 |
Charges | 0 | 3,798 | 4,898 | 11,991 |
Cash Payments | 885 | 4,667 | 5,770 | 14,845 |
Non-cash Items | 0 | 0 | 785 | 0 |
Ending balance | $ 2,731 | $ 4,887 | $ 2,731 | $ 4,887 |
RESTRUCTURING - Restructuring C
RESTRUCTURING - Restructuring Charges by Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 0 | $ 5,447 | $ 5,438 | $ 18,716 |
NWF 2.0 | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 0 | 5,447 | 5,438 | 18,716 |
NWF 2.0 | Operating segments | Americas | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 0 | 737 | 83 | 2,116 |
NWF 2.0 | Operating segments | Europe | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 0 | 1,828 | 1,531 | 8,872 |
NWF 2.0 | Operating segments | Asia | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 0 | 1,484 | 1,204 | 3,289 |
NWF 2.0 | Corporate | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 0 | $ 1,398 | $ 2,620 | $ 4,439 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) | Nov. 08, 2022 USD ($) |
Subsequent Event | Revolving Credit Facility | Fourth A&R Credit Agreement | |
Subsequent Event [Line Items] | |
Aggregate principal amount available | $ 35,000,000 |