Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 31, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 52,477,538 | |
Entity Central Index Key | 0000883569 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
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 | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 116,132 | $ 198,726 |
Accounts receivable - net of allowances for doubtful accounts of $13,857 and $14,647, respectively | 193,975 | 206,133 |
Inventories | 326,718 | 376,028 |
Prepaid expenses and other current assets | 148,114 | 164,413 |
Total current assets | 784,939 | 945,300 |
Property, plant and equipment - net of accumulated depreciation of $406,365 and $415,172, respectively | 68,582 | 79,882 |
Operating lease right-of-use assets | 154,479 | 156,947 |
Intangible and other assets-net | 55,244 | 55,999 |
Total long-term assets | 278,305 | 292,828 |
Total assets | 1,063,244 | 1,238,128 |
Current liabilities: | ||
Accounts payable | 158,028 | 191,141 |
Short-term debt | 455 | 342 |
Accrued expenses: | ||
Current operating lease liabilities | 43,762 | 49,702 |
Compensation | 41,067 | 44,259 |
Royalties | 13,628 | 20,875 |
Customer liabilities | 40,505 | 41,996 |
Transaction taxes | 7,395 | 14,303 |
Other | 35,161 | 40,424 |
Income taxes payable | 8,588 | 22,878 |
Total current liabilities | 348,589 | 425,920 |
Long-term income taxes payable | 21,126 | 22,603 |
Deferred income tax liabilities | 600 | 616 |
Long-term debt | 255,935 | 216,132 |
Long-term operating lease liabilities | 142,128 | 150,188 |
Other long-term liabilities | 16,115 | 19,660 |
Total long-term liabilities | 435,904 | 409,199 |
Commitments and contingencies (Note 13) | ||
Stockholders’ equity: | ||
Common stock, 52,472 and 51,836 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 525 | 518 |
Additional paid-in capital | 310,603 | 306,241 |
Retained earnings | 46,638 | 175,491 |
Accumulated other comprehensive income (loss) | (76,666) | (76,318) |
Total Fossil Group, Inc. stockholders’ equity | 281,100 | 405,932 |
Noncontrolling interests | (2,349) | (2,923) |
Total stockholders’ equity | 278,751 | 403,009 |
Total liabilities and stockholders’ equity | $ 1,063,244 | $ 1,238,128 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 13,857 | $ 14,647 |
Property, plant and equipment, accumulated depreciation | $ 406,365 | $ 415,172 |
Common stock, shares issued (in shares) | 52,472,039 | 51,836,456 |
Common stock, shares outstanding (in shares) | 52,472,039 | 51,836,456 |
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 | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Income Statement [Abstract] | ||||
Net sales | $ 344,121 | $ 436,271 | $ 991,123 | $ 1,183,292 |
Cost of sales | 182,458 | 216,651 | 512,076 | 588,010 |
Gross profit | 161,663 | 219,620 | 479,047 | 595,282 |
Operating expenses: | ||||
Selling, general and administrative expenses | 191,433 | 196,530 | 569,493 | 591,521 |
Other long-lived asset impairments | 622 | 608 | 838 | 1,060 |
Restructuring expenses | 16,003 | 0 | 27,732 | 5,438 |
Total operating expenses | 208,058 | 197,138 | 598,063 | 598,019 |
Operating income (loss) | (46,395) | 22,482 | (119,016) | (2,737) |
Interest expense | 5,760 | 5,127 | 16,110 | 13,445 |
Other income (expense) - net | (3,093) | (1,859) | 6,813 | (1,915) |
Income (loss) before income taxes | (55,248) | 15,496 | (128,313) | (18,097) |
Provision (benefit) for income taxes | 5,561 | 9,214 | (34) | 15,904 |
Net income (loss) | (60,809) | 6,282 | (128,279) | (34,001) |
Less: Net income (loss) attributable to noncontrolling interests | 253 | 433 | 574 | 738 |
Net income (loss) attributable to Fossil Group, Inc. | (61,062) | 5,849 | (128,853) | (34,739) |
Other comprehensive income (loss), net of taxes: | ||||
Currency translation adjustment | (3,801) | (13,465) | (1,994) | (37,437) |
Cash flow hedges - net change | 4,623 | 3,668 | 1,646 | 7,836 |
Total other comprehensive income (loss) | 822 | (9,797) | (348) | (29,601) |
Total comprehensive income (loss) | (59,987) | (3,515) | (128,627) | (63,602) |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 253 | 432 | 574 | 738 |
Comprehensive income (loss) attributable to Fossil Group, Inc. | $ (60,240) | $ (3,947) | $ (129,201) | $ (64,340) |
Earnings (loss) per share: | ||||
Basic (in dollars per share) | $ (1.16) | $ 0.11 | $ (2.47) | $ (0.67) |
Diluted (in dollars per share) | $ (1.16) | $ 0.11 | $ (2.47) | $ (0.67) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 52,466 | 51,825 | 52,219 | 51,843 |
Diluted (in shares) | 52,466 | 52,052 | 52,219 | 51,843 |
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. 01, 2022 | 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 | 51,827,000 | |||||||
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 | 51,827,000 | |||||||
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 Dec. 31, 2022 | 51,836,456 | 51,836,000 | ||||||
Beginning balance at Dec. 31, 2022 | $ 403,009 | 405,932 | $ 518 | 306,241 | 0 | 175,491 | (76,318) | (2,923) |
Increase (Decrease) in Shareholders' Equity | ||||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units (in shares) | 800,000 | |||||||
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 | (529) | (529) | (529) | |||||
Retirement of common stock (in shares) | (164,000) | |||||||
Retirement of common stock | 0 | 0 | $ (1) | (528) | 529 | |||
Stock-based compensation | 4,898 | 4,898 | 4,898 | |||||
Net income (loss) | (128,279) | (128,853) | (128,853) | 574 | ||||
Other comprehensive income (loss) | $ (348) | (348) | (348) | |||||
Ending balance (in shares) at Sep. 30, 2023 | 52,472,039 | 52,472,000 | ||||||
Ending balance at Sep. 30, 2023 | $ 278,751 | 281,100 | $ 525 | 310,603 | 0 | 46,638 | (76,666) | (2,349) |
Beginning balance (in shares) at Jul. 01, 2023 | 52,446,000 | |||||||
Beginning balance at Jul. 01, 2023 | 336,902 | 339,504 | $ 524 | 308,768 | 0 | 107,700 | (77,488) | (2,602) |
Increase (Decrease) in Shareholders' Equity | ||||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units (in shares) | 31,000 | |||||||
Common stock issued upon exercise of stock options, stock appreciation rights and restricted stock units | 1 | 1 | $ 1 | |||||
Acquisition of common stock for employee tax withholding | (14) | (14) | (14) | |||||
Retirement of common stock (in shares) | (5,000) | |||||||
Retirement of common stock | 0 | (14) | 14 | |||||
Stock-based compensation | 1,849 | 1,849 | 1,849 | |||||
Net income (loss) | (60,809) | (61,062) | (61,062) | 253 | ||||
Other comprehensive income (loss) | $ 822 | 822 | 822 | |||||
Ending balance (in shares) at Sep. 30, 2023 | 52,472,039 | 52,472,000 | ||||||
Ending balance at Sep. 30, 2023 | $ 278,751 | $ 281,100 | $ 525 | $ 310,603 | $ 0 | $ 46,638 | $ (76,666) | $ (2,349) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Operating Activities: | ||
Net income (loss) | $ (128,279) | $ (34,001) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, amortization and accretion | 14,487 | 17,587 |
Non-cash lease expense | 56,515 | 60,073 |
Stock-based compensation | 4,580 | 5,821 |
Decrease in allowance for returns and markdowns | (231) | (8,519) |
Gain on disposal of assets | (3,258) | (448) |
Property, plant and equipment and other long-lived asset impairment losses | 838 | 1,060 |
Non-cash restructuring charges | 5,048 | 876 |
Bad debt expense | 2,986 | 5,611 |
Other non-cash items | 1,385 | 9,973 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 11,228 | 22,677 |
Inventories | 45,879 | (137,244) |
Prepaid expenses and other current assets | 16,490 | (16,091) |
Accounts payable | (31,124) | (19,151) |
Accrued expenses | (23,732) | (56,944) |
Income taxes | (15,535) | 2,470 |
Operating lease liabilities | (65,239) | (68,533) |
Net cash used in operating activities | (107,962) | (214,783) |
Investing Activities: | ||
Additions to property, plant and equipment and other | (7,149) | (8,689) |
(Increase) decrease in intangible and other assets | (1,247) | 993 |
Net cash used in investing activities | (8,396) | (7,696) |
Financing Activities: | ||
Acquisition of common stock | (529) | (12,444) |
Distribution of noncontrolling interest earnings and other | 0 | (6,069) |
Debt borrowings | 162,615 | 261,983 |
Debt payments | (124,013) | (111,237) |
Payment for shares of Fossil Accessories South Africa Pty. Ltd. | (2,316) | 0 |
Net cash provided by financing activities | 35,757 | 132,233 |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (2,751) | (644) |
Net decrease in cash, cash equivalents, and restricted cash | (83,352) | (90,890) |
Cash, cash equivalents, and restricted cash: | ||
Beginning of period | 204,075 | 264,572 |
End of period | $ 120,723 | $ 173,682 |
FINANCIAL STATEMENT POLICIES
FINANCIAL STATEMENT POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 (“Third Quarter”) as compared to the thirteen-week period ended October 1, 2022 (“Prior Year Quarter”), and the thirty-nine week period ended September 30, 2023 ("Year To Date Period") as compared to the thirty-nine week period ended October 1, 2022 ("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 September 30, 2023, 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. 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 December 31, 2022 (the “2022 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. Actual results could differ from those estimates. The Company has not made any changes in its significant accounting policies from those disclosed in the 2022 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 reduce 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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Numerator: Net income (loss) attributable to Fossil Group, Inc. $ (61,062) $ 5,849 $ (128,853) $ (34,739) Denominator: Basic EPS computation: Basic weighted average common shares outstanding 52,466 51,825 52,219 51,843 Basic EPS $ (1.16) $ 0.11 $ (2.47) $ (0.67) Diluted EPS computation: Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units — 227 — — Diluted weighted average common shares outstanding 52,466 52,052 52,219 51,843 Diluted EPS $ (1.16) $ 0.11 $ (2.47) $ (0.67) At the end of the Third Quarter and Year To Date Period, approximately 2.2 million and 2.1 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 0.3 million and 0.3 million weighted average performance-based shares at the end of the Third Quarter and Year To Date Period, respectively. At the end of each of the Prior Year Quarter and Prior Year YTD 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 Prior Year Quarter and Prior Year YTD Period, respectively. Additionally, 73,500 weighted average performance-based shares were not included in the diluted EPS calculation at the end of the Prior Year Quarter 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 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 September 30, 2023 and October 1, 2022 that are presented in the condensed consolidated statement of cash flows (in thousands): September 30, 2023 October 1, 2022 Cash and cash equivalents $ 116,132 $ 162,612 Restricted cash included in prepaid expenses and other current assets 106 106 Restricted cash included in intangible and other assets-net 4,485 10,964 Cash, cash equivalents and restricted cash $ 120,723 $ 173,682 Recently Issued Accounting Standards In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06"). The amendments in ASU 2023-06 modify the disclosure or presentation requirements of a variety of topics in the FASB Accounting Standards Codification (the "Codification"), with the intention of clarifying or improving them and to align the requirements in the Codification with the regulations of the U.S. Securities and Exchange Commission (the “SEC”). The effective date for ASU 2023-06 varies and is determined for each individual disclosure based on the effective date of the SEC's removal of the related disclosure. ASU 2023-06 will not have an impact on the Company's financial position or results of operation. Recently Adopted Accounting Standards In October 2021, the FASB issued ASU 2021-08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . The guidance requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination as if they had originated the contracts, as opposed to at fair value on the acquisition date. The standard is effective for business combinations after January 1, 2023. The adoption of this standard did not have an impact on the Company's consolidated financial statements or related disclosures. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE 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 September 30, 2023 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 113,611 $ 72,941 $ 66,103 $ 28 $ 252,683 Smartwatches 7,352 5,927 4,034 — 17,313 Total watches $ 120,963 $ 78,868 $ 70,137 $ 28 $ 269,996 Leathers 20,815 6,201 5,993 — 33,009 Jewelry 8,797 19,892 5,928 — 34,617 Other 2,034 2,705 995 765 6,499 Consolidated $ 152,609 $ 107,666 $ 83,053 $ 793 $ 344,121 Timing of revenue recognition Revenue recognized at a point in time $ 152,469 $ 107,479 $ 82,936 $ 518 $ 343,402 Revenue recognized over time 140 187 117 275 719 Consolidated $ 152,609 $ 107,666 $ 83,053 $ 793 $ 344,121 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 39 Weeks Ended September 30, 2023 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 313,842 $ 204,156 $ 194,259 $ 1,955 $ 714,212 Smartwatches 28,285 17,812 13,395 — 59,492 Total watches $ 342,127 $ 221,968 $ 207,654 $ 1,955 $ 773,704 Leathers 68,889 17,959 19,746 — 106,594 Jewelry 20,439 53,773 16,808 — 91,020 Other 5,736 7,918 3,104 3,047 19,805 Consolidated $ 437,191 $ 301,618 $ 247,312 $ 5,002 $ 991,123 Timing of revenue recognition Revenue recognized at a point in time $ 436,727 $ 301,047 $ 246,971 $ 4,177 $ 988,922 Revenue recognized over time 464 571 341 825 2,201 Consolidated $ 437,191 $ 301,618 $ 247,312 $ 5,002 $ 991,123 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 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following (in thousands): September 30, 2023 December 31, 2022 Components and parts $ 14,137 $ 20,998 Work-in-process 211 — Finished goods 312,370 355,030 Inventories $ 326,718 $ 376,028 |
WARRANTY LIABILITIES
WARRANTY LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 For the 39 Weeks Ended October 1, 2022 Beginning balance $ 13,623 $ 19,159 Settlements in cash or kind (5,266) (5,465) Warranties issued and adjustments to preexisting warranties (1) 1,879 (148) Ending balance $ 10,236 $ 13,546 _______________________________________________ (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 |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s income tax (benefit) expense and related effective rates were as follows (in thousands, except percentage data): For the 13 Weeks Ended September 30, 2023 For the 13 Weeks Ended October 1, 2022 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Income tax (benefit) expense $ 5,561 $ 9,214 $ (34) $ 15,904 Effective tax rate (10.1) % 59.5 % — % (87.9) % The effective tax rate in the Third Quarter differed from the Prior Year Quarter primarily due to a change in the Company’s global mix of earnings. In addition, income taxes were accrued on certain income in foreign jurisdictions and no tax benefit has been accrued on the US tax losses and on certain losses in other foreign jurisdictions due to valuation allowances previously recorded. The effective tax rate can also vary from quarter-to-quarter due to changes in the resolution of income tax audits, changes in uncertain tax positions, and changes in tax law. As of September 30, 2023, the Company's total amount of unrecognized tax benefits, excluding interest and penalties, was $23.3 million, of which $23.3 million would favorably impact the effective tax rate in future periods, if recognized. The Company is subject to examinations in various state and foreign jurisdictions for its 2013-2022 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. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
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 52,472,039 and 51,836,456 shares issued and outstanding at September 30, 2023 and December 31, 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 September 30, 2023 or December 31, 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. At September 30, 2023 and December 31, 2022, all treasury stock had been effectively retired. As of September 30, 2023, 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 September 30, 2023 For the 39 Weeks Ended October 1, 2022 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 |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Stock-Based Compensation Plans. The following table summarizes stock appreciation rights activity during the Third Quarter: Stock Appreciation Rights Shares Weighted- Weighted- Aggregate (in Thousands) (in Years) (in Thousands) Outstanding at July 1, 2023 75 $ 46.55 0.6 $ — Outstanding at September 30, 2023 75 46.55 0.3 — Exercisable at September 30, 2023 75 $ 46.55 0.3 $ — The aggregate intrinsic value shown in the table above is based on the exercise price for outstanding and exercisable rights at September 30, 2023. Stock Appreciation Rights Outstanding and Exercisable. The following table summarizes information with respect to stock appreciation rights outstanding and exercisable at September 30, 2023: 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 - $55.09 75 $ 46.55 0.3 75 $ 46.55 Total 75 $ 46.55 0.3 75 $ 46.55 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 1, 2023 2,235 $ 6.25 Vested (31) 7.72 Forfeited (191) 6.31 Nonvested at September 30, 2023 2,013 $ 6.21 The total fair value of restricted stock units vested was $0.1 million 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 |
Sep. 30, 2023 | |
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 September 30, 2023 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (88,874) $ (580) $ 11,966 $ (77,488) Other comprehensive income (loss) before reclassifications (3,801) 3,881 — 80 Tax (expense) benefit — 59 — 59 Amounts reclassed from accumulated other comprehensive income (loss) — (882) — (882) Tax (expense) benefit — 199 — 199 Total other comprehensive income (loss) (3,801) 4,623 — 822 Ending balance $ (92,675) $ 4,043 $ 11,966 $ (76,666) 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 39 Weeks Ended September 30, 2023 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (90,681) $ 2,397 $ 11,966 $ (76,318) Other comprehensive income (loss) before reclassifications (1,994) 130 — (1,864) Tax (expense) benefit — 687 — 687 Amounts reclassed from accumulated other comprehensive income — (1,568) — (1,568) Tax (expense) benefit — 739 — 739 Total other comprehensive income (loss) (1,994) 1,646 — (348) Ending balance $ (92,675) $ 4,043 $ 11,966 $ (76,666) 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 (loss) — 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) See Note—10 Derivatives and Risk Management for additional disclosures about the Company’s use of derivatives. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Americas $ 152,609 $ 25,818 $ 184,326 $ 33,403 Europe 107,666 13,290 143,679 31,076 Asia 83,053 15,951 100,212 17,515 Corporate 793 (101,454) 8,054 (59,512) Consolidated $ 344,121 $ (46,395) $ 436,271 $ 22,482 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Americas $ 437,191 $ 61,817 $ 514,525 $ 87,966 Europe 301,618 19,572 376,110 65,489 Asia 247,312 30,555 279,563 38,807 Corporate 5,002 (230,960) 13,094 (194,999) Consolidated $ 991,123 $ (119,016) $ 1,183,292 $ (2,737) 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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 Net Sales Percentage of Total Net Sales Percentage of Total Watches: Traditional watches $ 252,683 73.4 % $ 310,198 71.1 % Smartwatches 17,313 5.0 33,306 7.6 Total watches $ 269,996 78.4 % $ 343,504 78.7 % Leathers 33,009 9.6 41,095 9.4 Jewelry 34,617 10.1 37,868 8.7 Other 6,499 1.9 13,804 3.2 Total $ 344,121 100.0 % $ 436,271 100.0 % For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Net Sales Percentage of Total Net Sales Percentage of Total Watches: Traditional watches $ 714,212 72.1 % $ 830,322 70.2 % Smartwatches 59,492 6.0 104,709 8.8 Total watches $ 773,704 78.1 % $ 935,031 79.0 % Leathers 106,594 10.8 111,226 9.4 Jewelry 91,020 9.2 106,495 9.0 Other 19,805 1.9 30,540 2.6 Total $ 991,123 100.0 % $ 1,183,292 100.0 % |
DERIVATIVES AND RISK MANAGEMENT
DERIVATIVES AND RISK MANAGEMENT | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023, 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 91.3 U.S. dollar 100.2 Canadian dollar 41.2 U.S. dollar 31.0 Mexican peso 220.3 U.S. dollar 12.5 British pound 8.1 U.S. dollar 10.2 Australian dollar 7.8 U.S. dollar 5.2 Japanese yen 602.6 U.S. dollar 4.6 U.S. dollar 7.7 Japanese yen 1,040.0 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 September 30, 2023, the Company had non-designated forward contracts of $0.1 million on 1.8 million rand associated with a South African rand-denominated foreign subsidiary. 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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 Cash flow hedges: Forward contracts $ 3,940 $ 8,211 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 3,940 $ 8,211 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Cash flow hedges: Forward contracts $ 817 $ 16,941 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 817 $ 16,941 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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ (1,368) $ 3,158 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 685 $ 1,385 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 29 $ (3) Derivative Instruments Condensed Consolidated Effect of Derivative For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ (1,387) $ 6,198 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 558 $ 2,907 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 92 $ 63 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 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 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 $ 3,781 Prepaid expenses and other current assets $ 2,783 Accrued expenses-other $ 698 Accrued expenses-other $ 2,659 Forward contracts not designated as cash flow hedging instruments Prepaid expenses and other current assets 6 Prepaid expenses and other current assets — Accrued expenses-other — Accrued expenses-other 16 Forward contracts designated as cash flow hedging instruments Intangible and other assets-net 680 Intangible and other assets-net 112 Other long-term liabilities — Other long-term liabilities 318 Total $ 4,467 $ 2,895 $ 698 $ 2,993 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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 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 $ 182,458 $ (3,093) $ 216,651 $ (1,859) Gain (loss) on cash flow hedging relationships: Forward contracts designated as cash flow hedging instruments: Total gain (loss) reclassified from other comprehensive income (loss) $ (1,368) $ 685 $ 3,158 $ 1,385 Forward contracts not designated as hedging instruments: Total gain (loss) recognized in income $ — $ 29 $ — $ (3) Effect of Derivative Instruments For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 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 $ 512,076 $ 6,813 $ 588,010 $ (1,915) Gain (loss) on cash flow hedging relationships: Forward contracts designated as cash flow hedging instruments: Total gain (loss) reclassified from other comprehensive income (loss) $ (1,387) $ 558 $ 6,198 $ 2,907 Forward contracts not designated as hedging instruments: Total gain (loss) recognized in income $ — $ 92 $ — $ 63 At the end of the Third Quarter, the Company had forward contracts designated as cash flow hedges with maturities extending through March 2025. As of September 30, 2023, a $3.1 million gain 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 |
Sep. 30, 2023 | |
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 September 30, 2023 (in thousands): Fair Value at September 30, 2023 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 4,467 $ — $ 4,467 Total $ — $ 4,467 $ — $ 4,467 Liabilities: Contingent consideration $ — $ — $ 593 $ 593 Forward contracts — 698 — 698 Total $ — $ 698 $ 593 $ 1,291 The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 (in thousands): Fair Value at December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 2,895 $ — $ 2,895 Total $ — $ 2,895 $ — $ 2,895 Liabilities: Contingent consideration $ — $ — $ 3,630 $ 3,630 Forward contracts — 2,993 — 2,993 Total $ — $ 2,993 $ 3,630 $ 6,623 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 September 30, 2023, debt, excluding unamortized debt issuance costs and capital leases, was recorded at cost and had a carrying value of $261.9 million and had a fair value of approximately $195.8 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 $2.0 million and property, plant and equipment-net with a carrying value of $0.3 million were written down to a fair value of $1.3 million and $0.2 million, respectively, resulting in impairment charges of $0.8 million. During the Prior Year YTD Period, ROU assets with 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. 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 $0.8 million impairment expense in the Year to Date Period, $0.6 million and $0.2 million was recorded in other long-lived asset impairments in the Europe and Americas segments, respectively. Of the $1.1 million impairment expense in the Prior Year YTD 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. |
INTANGIBLE AND OTHER ASSETS
INTANGIBLE AND OTHER ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE AND OTHER ASSETS | INTANGIBLE AND OTHER ASSETS The following table summarizes intangible and other assets (in thousands): September 30, 2023 December 31, 2022 Useful Gross Accumulated Gross Accumulated Lives Amount Amortization Amount Amortization Intangibles-subject to amortization: Trademarks 10 yrs. $ 4,051 $ 3,316 $ 3,728 $ 3,243 Customer lists 5 - 10 yrs. — — 279 266 Patents 3 - 20 yrs. 909 559 867 537 Trade name 6 yrs. 4,502 3,001 4,502 2,439 Other 7 - 20 yrs. 342 227 342 195 Total intangibles-subject to amortization 9,804 7,103 9,718 6,680 Intangibles-not subject to amortization: Trade names 8,880 8,876 Other assets: Deposits 16,144 16,487 Deferred tax asset-net 16,859 17,262 Restricted cash 4,485 5,243 Debt issuance costs 2,649 3,124 Other 3,526 1,969 Total other assets 43,663 44,085 Total intangible and other assets $ 62,347 $ 7,103 $ 62,679 $ 6,680 Total intangible and other assets-net $ 55,244 $ 55,999 Amortization expense for intangible assets was $0.2 million and $0.6 million for the Third Quarter and the Prior Year Quarter, respectively, and $0.7 million and $1.9 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 2023 (remaining) $ 232 2024 $ 928 2025 $ 737 2026 $ 146 2027 $ 128 Thereafter $ 530 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
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 |
Sep. 30, 2023 | |
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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Operating lease cost (1) SG&A $ 18,108 $ 18,445 $ 54,599 $ 58,001 Short-term lease cost SG&A $ 302 $ 170 $ 812 $ 570 Variable lease cost SG&A $ 4,684 $ 7,166 $ 16,337 $ 21,817 _______________________________________________ (1) Includes sublease income, which was immaterial. The following table discloses supplemental balance sheet information for the Company’s leases (in thousands): Leases Condensed September 30, 2023 December 31, 2022 Assets Operating Operating lease ROU assets $ 154,479 $ 156,947 Liabilities Current: Operating Current operating lease liabilities $ 43,762 $ 49,702 Noncurrent: Operating Long-term operating lease liabilities $ 142,128 $ 150,188 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 September 30, 2023 December 31, 2022 Weighted-average remaining lease term: Operating leases 6.4 years 5.6 years Weighted-average discount rate: Operating leases 14.8 % 14.1 % Future minimum lease payments by year as of September 30, 2023 were as follows (in thousands): Fiscal Year Operating Leases 2023 (remaining) $ 19,821 2024 65,741 2025 48,230 2026 37,191 2027 26,782 Thereafter 101,945 Total lease payments $ 299,710 Less: Interest 113,820 Total lease obligations $ 185,890 Supplemental cash flow information related to leases was as follows (in thousands): For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 65,239 $ 68,182 Leased assets obtained in exchange for new operating lease liabilities 35,507 22,775 |
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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Operating lease cost (1) SG&A $ 18,108 $ 18,445 $ 54,599 $ 58,001 Short-term lease cost SG&A $ 302 $ 170 $ 812 $ 570 Variable lease cost SG&A $ 4,684 $ 7,166 $ 16,337 $ 21,817 _______________________________________________ (1) Includes sublease income, which was immaterial. The following table discloses supplemental balance sheet information for the Company’s leases (in thousands): Leases Condensed September 30, 2023 December 31, 2022 Assets Operating Operating lease ROU assets $ 154,479 $ 156,947 Liabilities Current: Operating Current operating lease liabilities $ 43,762 $ 49,702 Noncurrent: Operating Long-term operating lease liabilities $ 142,128 $ 150,188 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 September 30, 2023 December 31, 2022 Weighted-average remaining lease term: Operating leases 6.4 years 5.6 years Weighted-average discount rate: Operating leases 14.8 % 14.1 % Future minimum lease payments by year as of September 30, 2023 were as follows (in thousands): Fiscal Year Operating Leases 2023 (remaining) $ 19,821 2024 65,741 2025 48,230 2026 37,191 2027 26,782 Thereafter 101,945 Total lease payments $ 299,710 Less: Interest 113,820 Total lease obligations $ 185,890 Supplemental cash flow information related to leases was as follows (in thousands): For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 65,239 $ 68,182 Leased assets obtained in exchange for new operating lease liabilities 35,507 22,775 |
DEBT ACTIVITY
DEBT ACTIVITY | 9 Months Ended |
Sep. 30, 2023 | |
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"). On November 8, 2022, the Company entered into Amendment No. 4 (the "Amendment") to the Revolving Facility. The Amendment, among other things, (i) extended the maturity date of the credit facility to November 8, 2027 (provided, that if the Company has any indebtedness in an amount in excess of $35 million that matures prior to November 8, 2027, the maturity date of the credit 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. 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. 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. 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 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 September 30, 2023, the Company had $150.0 million and $111.5 million outstanding under the Notes and Revolving Facility, respectively. The Company had net borrowings of $12.5 million and $38.5 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 September 30, 2023, the Company had available borrowing capacity of $23.4 million under the Revolving Facility. As of September 30, 2023, the Company had unamortized debt issuance costs of $5.5 million recorded in long-term debt and $2.6 million recorded in intangible and other assets-net on the Company's consolidated balance sheets. The Company incurred $2.6 million and $7.8 million of interest expense related to the Notes during the Third Quarter and Year To Date Period, respectively. The Company incurred $1.6 million and $3.8 million of interest expense related to the Revolving Facility during the Third Quarter and Year To Date Period, respectively. The Company incurred $0.6 million and $1.8 million of interest expense related to the amortization of debt issuance costs during the Third Quarter and Year To Date Period, respectively. At September 30, 2023, the Company was in compliance with all debt covenants related to its credit facilities. |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING In the first quarter of fiscal year 2023, the Company announced its Transform and Grow plan ("TAG") designed to reduce operating costs, improve operating margins, and advance the Company’s commitment to profitable growth. The Company has now expanded the scope and duration of TAG to focus on a more comprehensive review of its global business operations. The expansion of TAG will put greater emphasis on initiatives to exit or minimize certain product offerings, brands and distribution, and to strengthen gross margin and increase the level of operating expense efficiencies. TAG is estimated to generate approximately $300 million of annualized operating income benefits by the end of 2025. The previously announced TAG plan was expected to generate $100 million of annualized cost savings by the end of 2024. The Company estimates approximately $100 million to $120 million in total charges over the duration of TAG and estimates approximately $50 million of charges in fiscal year 2023. Aided by these measures, the Company's long-term goal is to achieve adjusted gross margins in the low to mid 50% range and adjusted operating margins of approximately 10%. The following table shows a summary of TAG plan charges (in thousands): For the 13 Weeks Ended September 30, 2023 For the 39 Weeks Ended September 30, 2023 Cost of sales $ (1,347) $ 6,827 Selling, general and administrative expenses 16,003 27,732 Consolidated $ 14,656 $ 34,559 The following table shows a rollforward of the accrued liability related to the Company’s TAG plan (in thousands): For the 13 Weeks Ended September 30, 2023 Liabilities Liabilities July 1, 2023 Charges Cash Payments Non-cash Items September 30, 2023 Stores and facilities closures $ — $ 4,730 $ — $ 4,730 $ — Professional services 898 3,298 2,268 — 1,928 Severance and employee-related benefits 4,813 7,975 6,424 318 6,046 Charges related to exits of certain product offerings 7,474 (1,347) — — 6,127 Total $ 13,185 $ 14,656 $ 8,692 $ 5,048 $ 14,101 For the 39 Weeks Ended September 30, 2023 Liabilities Liabilities December 31, 2022 Charges Cash Payments Non-cash Items September 30, 2023 Stores and facilities closures $ — $ 4,730 $ — $ 4,730 $ — Professional services — 4,300 2,372 — 1,928 Severance and employee-related benefits — 18,702 12,338 318 6,046 Charges related to exits of certain product offerings — 6,827 700 — 6,127 Total $ — $ 34,559 $ 15,410 $ 5,048 $ 14,101 TAG plan restructuring charges by operating segment were as follows (in thousands): For the 13 Weeks Ended September 30, 2023 For the 39 Weeks Ended September 30, 2023 Americas $ (488) $ 4,005 Europe (368) 6,973 Asia 2,556 8,510 Corporate 12,956 15,071 Consolidated $ 14,656 $ 34,559 In fiscal year 2022, the Company completed its New World Fossil 2.0 (“NWF 2.0”) restructuring program it launched in 2019. 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 September 30, 2023 Liabilities Liabilities July 1, 2023 Cash Payments September 30, 2023 Professional services 47 47 — Severance and employee-related benefits 260 124 136 Total $ 307 $ 171 $ 136 For the 13 Weeks Ended October 1, 2022 Liabilities Liabilities July 2, 2022 Cash Payments October 1, 2022 Professional services 130 43 87 Severance and employee-related benefits 3,616 885 2,731 Total $ 3,746 $ 928 $ 2,818 For the 39 Weeks Ended September 30, 2023 Liabilities Liabilities December 31, 2022 Cash Payments September 30, 2023 Professional services 74 74 — Severance and employee-related benefits 2,821 2,685 136 Total $ 2,895 $ 2,759 $ 136 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 NWF 2.0 restructuring charges by operating segment were as follows (in thousands): For the 39 Weeks Ended October 1, 2022 Americas $ 83 Europe 1,531 Asia 1,204 Corporate 2,620 Consolidated $ 5,438 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
FINANCIAL STATEMENT POLICIES (P
FINANCIAL STATEMENT POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 (“Third Quarter”) as compared to the thirteen-week period ended October 1, 2022 (“Prior Year Quarter”), and the thirty-nine week period ended September 30, 2023 ("Year To Date Period") as compared to the thirty-nine week period ended October 1, 2022 ("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 September 30, 2023, 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. 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 December 31, 2022 (the “2022 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 reduce 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 pledged collateral to secure bank guarantees for the purpose of obtaining retail space. |
Recently Issued Accounting Standards and Recently Adopted Accounting Standards | Recently Issued Accounting Standards In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06"). The amendments in ASU 2023-06 modify the disclosure or presentation requirements of a variety of topics in the FASB Accounting Standards Codification (the "Codification"), with the intention of clarifying or improving them and to align the requirements in the Codification with the regulations of the U.S. Securities and Exchange Commission (the “SEC”). The effective date for ASU 2023-06 varies and is determined for each individual disclosure based on the effective date of the SEC's removal of the related disclosure. ASU 2023-06 will not have an impact on the Company's financial position or results of operation. Recently Adopted Accounting Standards In October 2021, the FASB issued ASU 2021-08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . The guidance requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination as if they had originated the contracts, as opposed to at fair value on the acquisition date. The standard is effective for business combinations after January 1, 2023. The adoption of this standard did not have an impact on the Company's consolidated financial statements or related disclosures. |
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 |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | 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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Numerator: Net income (loss) attributable to Fossil Group, Inc. $ (61,062) $ 5,849 $ (128,853) $ (34,739) Denominator: Basic EPS computation: Basic weighted average common shares outstanding 52,466 51,825 52,219 51,843 Basic EPS $ (1.16) $ 0.11 $ (2.47) $ (0.67) Diluted EPS computation: Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units — 227 — — Diluted weighted average common shares outstanding 52,466 52,052 52,219 51,843 Diluted EPS $ (1.16) $ 0.11 $ (2.47) $ (0.67) |
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 September 30, 2023 and October 1, 2022 that are presented in the condensed consolidated statement of cash flows (in thousands): September 30, 2023 October 1, 2022 Cash and cash equivalents $ 116,132 $ 162,612 Restricted cash included in prepaid expenses and other current assets 106 106 Restricted cash included in intangible and other assets-net 4,485 10,964 Cash, cash equivalents and restricted cash $ 120,723 $ 173,682 |
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 September 30, 2023 and October 1, 2022 that are presented in the condensed consolidated statement of cash flows (in thousands): September 30, 2023 October 1, 2022 Cash and cash equivalents $ 116,132 $ 162,612 Restricted cash included in prepaid expenses and other current assets 106 106 Restricted cash included in intangible and other assets-net 4,485 10,964 Cash, cash equivalents and restricted cash $ 120,723 $ 173,682 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of 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 September 30, 2023 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 113,611 $ 72,941 $ 66,103 $ 28 $ 252,683 Smartwatches 7,352 5,927 4,034 — 17,313 Total watches $ 120,963 $ 78,868 $ 70,137 $ 28 $ 269,996 Leathers 20,815 6,201 5,993 — 33,009 Jewelry 8,797 19,892 5,928 — 34,617 Other 2,034 2,705 995 765 6,499 Consolidated $ 152,609 $ 107,666 $ 83,053 $ 793 $ 344,121 Timing of revenue recognition Revenue recognized at a point in time $ 152,469 $ 107,479 $ 82,936 $ 518 $ 343,402 Revenue recognized over time 140 187 117 275 719 Consolidated $ 152,609 $ 107,666 $ 83,053 $ 793 $ 344,121 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 39 Weeks Ended September 30, 2023 Americas Europe Asia Corporate Total Product type Watches: Traditional watches $ 313,842 $ 204,156 $ 194,259 $ 1,955 $ 714,212 Smartwatches 28,285 17,812 13,395 — 59,492 Total watches $ 342,127 $ 221,968 $ 207,654 $ 1,955 $ 773,704 Leathers 68,889 17,959 19,746 — 106,594 Jewelry 20,439 53,773 16,808 — 91,020 Other 5,736 7,918 3,104 3,047 19,805 Consolidated $ 437,191 $ 301,618 $ 247,312 $ 5,002 $ 991,123 Timing of revenue recognition Revenue recognized at a point in time $ 436,727 $ 301,047 $ 246,971 $ 4,177 $ 988,922 Revenue recognized over time 464 571 341 825 2,201 Consolidated $ 437,191 $ 301,618 $ 247,312 $ 5,002 $ 991,123 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 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): September 30, 2023 December 31, 2022 Components and parts $ 14,137 $ 20,998 Work-in-process 211 — Finished goods 312,370 355,030 Inventories $ 326,718 $ 376,028 |
WARRANTY LIABILITIES (Tables)
WARRANTY LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Warranty Liability Activity | Warranty liability activity consisted of the following (in thousands): For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Beginning balance $ 13,623 $ 19,159 Settlements in cash or kind (5,266) (5,465) Warranties issued and adjustments to preexisting warranties (1) 1,879 (148) Ending balance $ 10,236 $ 13,546 _______________________________________________ (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 |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense and Related Effective Rate | The Company’s income tax (benefit) expense and related effective rates were as follows (in thousands, except percentage data): For the 13 Weeks Ended September 30, 2023 For the 13 Weeks Ended October 1, 2022 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Income tax (benefit) expense $ 5,561 $ 9,214 $ (34) $ 15,904 Effective tax rate (10.1) % 59.5 % — % (87.9) % |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 For the 39 Weeks Ended October 1, 2022 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 |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Appreciation Rights Activity | The following table summarizes stock appreciation rights activity during the Third Quarter: Stock Appreciation Rights Shares Weighted- Weighted- Aggregate (in Thousands) (in Years) (in Thousands) Outstanding at July 1, 2023 75 $ 46.55 0.6 $ — Outstanding at September 30, 2023 75 46.55 0.3 — Exercisable at September 30, 2023 75 $ 46.55 0.3 $ — |
Schedule of Stock Appreciation Rights Outstanding and Exercisable | The following table summarizes information with respect to stock appreciation rights outstanding and exercisable at September 30, 2023: 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 - $55.09 75 $ 46.55 0.3 75 $ 46.55 Total 75 $ 46.55 0.3 75 $ 46.55 |
Schedule 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 1, 2023 2,235 $ 6.25 Vested (31) 7.72 Forfeited (191) 6.31 Nonvested at September 30, 2023 2,013 $ 6.21 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of 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 September 30, 2023 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (88,874) $ (580) $ 11,966 $ (77,488) Other comprehensive income (loss) before reclassifications (3,801) 3,881 — 80 Tax (expense) benefit — 59 — 59 Amounts reclassed from accumulated other comprehensive income (loss) — (882) — (882) Tax (expense) benefit — 199 — 199 Total other comprehensive income (loss) (3,801) 4,623 — 822 Ending balance $ (92,675) $ 4,043 $ 11,966 $ (76,666) 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 39 Weeks Ended September 30, 2023 Currency Cash Flow Hedges Forward Pension Total Beginning balance $ (90,681) $ 2,397 $ 11,966 $ (76,318) Other comprehensive income (loss) before reclassifications (1,994) 130 — (1,864) Tax (expense) benefit — 687 — 687 Amounts reclassed from accumulated other comprehensive income — (1,568) — (1,568) Tax (expense) benefit — 739 — 739 Total other comprehensive income (loss) (1,994) 1,646 — (348) Ending balance $ (92,675) $ 4,043 $ 11,966 $ (76,666) 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 (loss) — 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) 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 |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Information by Operating Segment | Summary information by operating segment was as follows (in thousands): For the 13 Weeks Ended September 30, 2023 For the 13 Weeks Ended October 1, 2022 Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Americas $ 152,609 $ 25,818 $ 184,326 $ 33,403 Europe 107,666 13,290 143,679 31,076 Asia 83,053 15,951 100,212 17,515 Corporate 793 (101,454) 8,054 (59,512) Consolidated $ 344,121 $ (46,395) $ 436,271 $ 22,482 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Americas $ 437,191 $ 61,817 $ 514,525 $ 87,966 Europe 301,618 19,572 376,110 65,489 Asia 247,312 30,555 279,563 38,807 Corporate 5,002 (230,960) 13,094 (194,999) Consolidated $ 991,123 $ (119,016) $ 1,183,292 $ (2,737) |
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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 Net Sales Percentage of Total Net Sales Percentage of Total Watches: Traditional watches $ 252,683 73.4 % $ 310,198 71.1 % Smartwatches 17,313 5.0 33,306 7.6 Total watches $ 269,996 78.4 % $ 343,504 78.7 % Leathers 33,009 9.6 41,095 9.4 Jewelry 34,617 10.1 37,868 8.7 Other 6,499 1.9 13,804 3.2 Total $ 344,121 100.0 % $ 436,271 100.0 % For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Net Sales Percentage of Total Net Sales Percentage of Total Watches: Traditional watches $ 714,212 72.1 % $ 830,322 70.2 % Smartwatches 59,492 6.0 104,709 8.8 Total watches $ 773,704 78.1 % $ 935,031 79.0 % Leathers 106,594 10.8 111,226 9.4 Jewelry 91,020 9.2 106,495 9.0 Other 19,805 1.9 30,540 2.6 Total $ 991,123 100.0 % $ 1,183,292 100.0 % |
DERIVATIVES AND RISK MANAGEME_2
DERIVATIVES AND RISK MANAGEMENT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Outstanding Forward Contracts | As of September 30, 2023, 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 91.3 U.S. dollar 100.2 Canadian dollar 41.2 U.S. dollar 31.0 Mexican peso 220.3 U.S. dollar 12.5 British pound 8.1 U.S. dollar 10.2 Australian dollar 7.8 U.S. dollar 5.2 Japanese yen 602.6 U.S. dollar 4.6 U.S. dollar 7.7 Japanese yen 1,040.0 |
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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 Cash flow hedges: Forward contracts $ 3,940 $ 8,211 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 3,940 $ 8,211 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Cash flow hedges: Forward contracts $ 817 $ 16,941 Total gain (loss) recognized in other comprehensive income (loss), net of taxes $ 817 $ 16,941 |
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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ (1,368) $ 3,158 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 685 $ 1,385 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 29 $ (3) Derivative Instruments Condensed Consolidated Effect of Derivative For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Forward contracts designated as cash flow hedging instruments Cost of sales Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ (1,387) $ 6,198 Forward contracts designated as cash flow hedging instruments Other income (expense)-net Total gain (loss) reclassified from accumulated other comprehensive income (loss) $ 558 $ 2,907 Forward contracts not designated as hedging instruments Other income (expense)-net Total gain (loss) recognized in income $ 92 $ 63 |
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 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 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 $ 3,781 Prepaid expenses and other current assets $ 2,783 Accrued expenses-other $ 698 Accrued expenses-other $ 2,659 Forward contracts not designated as cash flow hedging instruments Prepaid expenses and other current assets 6 Prepaid expenses and other current assets — Accrued expenses-other — Accrued expenses-other 16 Forward contracts designated as cash flow hedging instruments Intangible and other assets-net 680 Intangible and other assets-net 112 Other long-term liabilities — Other long-term liabilities 318 Total $ 4,467 $ 2,895 $ 698 $ 2,993 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 September 30, 2023 For the 13 Weeks Ended October 1, 2022 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 $ 182,458 $ (3,093) $ 216,651 $ (1,859) Gain (loss) on cash flow hedging relationships: Forward contracts designated as cash flow hedging instruments: Total gain (loss) reclassified from other comprehensive income (loss) $ (1,368) $ 685 $ 3,158 $ 1,385 Forward contracts not designated as hedging instruments: Total gain (loss) recognized in income $ — $ 29 $ — $ (3) Effect of Derivative Instruments For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 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 $ 512,076 $ 6,813 $ 588,010 $ (1,915) Gain (loss) on cash flow hedging relationships: Forward contracts designated as cash flow hedging instruments: Total gain (loss) reclassified from other comprehensive income (loss) $ (1,387) $ 558 $ 6,198 $ 2,907 Forward contracts not designated as hedging instruments: Total gain (loss) recognized in income $ — $ 92 $ — $ 63 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 (in thousands): Fair Value at September 30, 2023 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 4,467 $ — $ 4,467 Total $ — $ 4,467 $ — $ 4,467 Liabilities: Contingent consideration $ — $ — $ 593 $ 593 Forward contracts — 698 — 698 Total $ — $ 698 $ 593 $ 1,291 The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 (in thousands): Fair Value at December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Forward contracts $ — $ 2,895 $ — $ 2,895 Total $ — $ 2,895 $ — $ 2,895 Liabilities: Contingent consideration $ — $ — $ 3,630 $ 3,630 Forward contracts — 2,993 — 2,993 Total $ — $ 2,993 $ 3,630 $ 6,623 |
INTANGIBLE AND OTHER ASSETS (Ta
INTANGIBLE AND OTHER ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible and Other Assets-net | The following table summarizes intangible and other assets (in thousands): September 30, 2023 December 31, 2022 Useful Gross Accumulated Gross Accumulated Lives Amount Amortization Amount Amortization Intangibles-subject to amortization: Trademarks 10 yrs. $ 4,051 $ 3,316 $ 3,728 $ 3,243 Customer lists 5 - 10 yrs. — — 279 266 Patents 3 - 20 yrs. 909 559 867 537 Trade name 6 yrs. 4,502 3,001 4,502 2,439 Other 7 - 20 yrs. 342 227 342 195 Total intangibles-subject to amortization 9,804 7,103 9,718 6,680 Intangibles-not subject to amortization: Trade names 8,880 8,876 Other assets: Deposits 16,144 16,487 Deferred tax asset-net 16,859 17,262 Restricted cash 4,485 5,243 Debt issuance costs 2,649 3,124 Other 3,526 1,969 Total other assets 43,663 44,085 Total intangible and other assets $ 62,347 $ 7,103 $ 62,679 $ 6,680 Total intangible and other assets-net $ 55,244 $ 55,999 |
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 2023 (remaining) $ 232 2024 $ 928 2025 $ 737 2026 $ 146 2027 $ 128 Thereafter $ 530 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Components of Leases | The components of lease expense were as follows (in thousands): Lease Cost Condensed Consolidated For the 13 Weeks Ended September 30, 2023 For the 13 Weeks Ended October 1, 2022 For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Operating lease cost (1) SG&A $ 18,108 $ 18,445 $ 54,599 $ 58,001 Short-term lease cost SG&A $ 302 $ 170 $ 812 $ 570 Variable lease cost SG&A $ 4,684 $ 7,166 $ 16,337 $ 21,817 _______________________________________________ (1) Includes sublease income, which was immaterial. The following table discloses supplemental balance sheet information for the Company’s leases (in thousands): Leases Condensed September 30, 2023 December 31, 2022 Assets Operating Operating lease ROU assets $ 154,479 $ 156,947 Liabilities Current: Operating Current operating lease liabilities $ 43,762 $ 49,702 Noncurrent: Operating Long-term operating lease liabilities $ 142,128 $ 150,188 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 September 30, 2023 December 31, 2022 Weighted-average remaining lease term: Operating leases 6.4 years 5.6 years Weighted-average discount rate: Operating leases 14.8 % 14.1 % |
Schedule of Finance Lease, Liability, to be Paid, Maturity | Future minimum lease payments by year as of September 30, 2023 were as follows (in thousands): Fiscal Year Operating Leases 2023 (remaining) $ 19,821 2024 65,741 2025 48,230 2026 37,191 2027 26,782 Thereafter 101,945 Total lease payments $ 299,710 Less: Interest 113,820 Total lease obligations $ 185,890 |
Schedule of Lessee, Operating Lease, Liability, to be Paid, Maturity | Future minimum lease payments by year as of September 30, 2023 were as follows (in thousands): Fiscal Year Operating Leases 2023 (remaining) $ 19,821 2024 65,741 2025 48,230 2026 37,191 2027 26,782 Thereafter 101,945 Total lease payments $ 299,710 Less: Interest 113,820 Total lease obligations $ 185,890 |
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information related to leases was as follows (in thousands): For the 39 Weeks Ended September 30, 2023 For the 39 Weeks Ended October 1, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 65,239 $ 68,182 Leased assets obtained in exchange for new operating lease liabilities 35,507 22,775 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Charges by Operating Segment | The following table shows a summary of TAG plan charges (in thousands): For the 13 Weeks Ended September 30, 2023 For the 39 Weeks Ended September 30, 2023 Cost of sales $ (1,347) $ 6,827 Selling, general and administrative expenses 16,003 27,732 Consolidated $ 14,656 $ 34,559 TAG plan restructuring charges by operating segment were as follows (in thousands): For the 13 Weeks Ended September 30, 2023 For the 39 Weeks Ended September 30, 2023 Americas $ (488) $ 4,005 Europe (368) 6,973 Asia 2,556 8,510 Corporate 12,956 15,071 Consolidated $ 14,656 $ 34,559 For the 39 Weeks Ended October 1, 2022 Americas $ 83 Europe 1,531 Asia 1,204 Corporate 2,620 Consolidated $ 5,438 |
Schedule of Liability Incurred On Restructuring Plan | The following table shows a rollforward of the accrued liability related to the Company’s TAG plan (in thousands): For the 13 Weeks Ended September 30, 2023 Liabilities Liabilities July 1, 2023 Charges Cash Payments Non-cash Items September 30, 2023 Stores and facilities closures $ — $ 4,730 $ — $ 4,730 $ — Professional services 898 3,298 2,268 — 1,928 Severance and employee-related benefits 4,813 7,975 6,424 318 6,046 Charges related to exits of certain product offerings 7,474 (1,347) — — 6,127 Total $ 13,185 $ 14,656 $ 8,692 $ 5,048 $ 14,101 For the 39 Weeks Ended September 30, 2023 Liabilities Liabilities December 31, 2022 Charges Cash Payments Non-cash Items September 30, 2023 Stores and facilities closures $ — $ 4,730 $ — $ 4,730 $ — Professional services — 4,300 2,372 — 1,928 Severance and employee-related benefits — 18,702 12,338 318 6,046 Charges related to exits of certain product offerings — 6,827 700 — 6,127 Total $ — $ 34,559 $ 15,410 $ 5,048 $ 14,101 For the 13 Weeks Ended September 30, 2023 Liabilities Liabilities July 1, 2023 Cash Payments September 30, 2023 Professional services 47 47 — Severance and employee-related benefits 260 124 136 Total $ 307 $ 171 $ 136 For the 13 Weeks Ended October 1, 2022 Liabilities Liabilities July 2, 2022 Cash Payments October 1, 2022 Professional services 130 43 87 Severance and employee-related benefits 3,616 885 2,731 Total $ 3,746 $ 928 $ 2,818 For the 39 Weeks Ended September 30, 2023 Liabilities Liabilities December 31, 2022 Cash Payments September 30, 2023 Professional services 74 74 — Severance and employee-related benefits 2,821 2,685 136 Total $ 2,895 $ 2,759 $ 136 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 |
FINANCIAL STATEMENT POLICIES -
FINANCIAL STATEMENT POLICIES - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Numerator: | ||||
Net income (loss) attributable to Fossil Group, Inc. | $ (61,062) | $ 5,849 | $ (128,853) | $ (34,739) |
Basic EPS computation: | ||||
Basic weighted average common shares outstanding (in shares) | 52,466,000 | 51,825,000 | 52,219,000 | 51,843,000 |
Basic EPS (in dollars per share) | $ (1.16) | $ 0.11 | $ (2.47) | $ (0.67) |
Effect of stock options, stock appreciation rights, restricted stock units and performance restricted stock units (in shares) | 0 | 227,000 | 0 | 0 |
Diluted EPS computation: | ||||
Diluted weighted average common shares outstanding (in shares) | 52,466,000 | 52,052,000 | 52,219,000 | 51,843,000 |
Diluted EPS (in dollars per share) | $ (1.16) | $ 0.11 | $ (2.47) | $ (0.67) |
Other EPS Disclosures | ||||
Diluted (in shares) | 52,466,000 | 52,052,000 | 52,219,000 | 51,843,000 |
Stock Compensation Plan | ||||
Other EPS Disclosures | ||||
Weighted shares issuable under stock-based awards not included in the diluted EPS calculation (in shares) | 2,200,000 | 1,700,000 | 2,100,000 | 2,200,000 |
Performance Shares | ||||
Other EPS Disclosures | ||||
Weighted shares issuable under stock-based awards not included in the diluted EPS calculation (in shares) | 300,000 | 12,900,000 | 300,000 | 26,100,000 |
Performance Shares, Target Not Met | ||||
Diluted EPS computation: | ||||
Diluted weighted average common shares outstanding (in shares) | 73,500 | |||
Other EPS Disclosures | ||||
Diluted (in shares) | 73,500 |
FINANCIAL STATEMENT POLICIES _2
FINANCIAL STATEMENT POLICIES - Schedule Of Cash And Restricted Cash Equivalents (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Oct. 01, 2022 | Jan. 01, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 116,132 | $ 198,726 | $ 162,612 | |
Restricted cash included in prepaid expenses and other current assets | 106 | 106 | ||
Restricted cash included in intangible and other assets-net | 4,485 | 10,964 | ||
Cash, cash equivalents and restricted cash | $ 120,723 | $ 204,075 | $ 173,682 | $ 264,572 |
REVENUE - Schedule of Disaggreg
REVENUE - Schedule of Disaggregation Of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 344,121 | $ 436,271 | $ 991,123 | $ 1,183,292 |
Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 252,683 | 310,198 | 714,212 | 830,322 |
Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 17,313 | 33,306 | 59,492 | 104,709 |
Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 269,996 | 343,504 | 773,704 | 935,031 |
Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 33,009 | 41,095 | 106,594 | 111,226 |
Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 34,617 | 37,868 | 91,020 | 106,495 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 6,499 | 13,804 | 19,805 | 30,540 |
Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 343,402 | 428,229 | 988,922 | 1,171,051 |
Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 719 | 8,042 | 2,201 | 12,241 |
Operating Segments | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 152,609 | 184,326 | 437,191 | 514,525 |
Operating Segments | Americas | Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 113,611 | 132,077 | 313,842 | 366,714 |
Operating Segments | Americas | Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 7,352 | 14,578 | 28,285 | 47,228 |
Operating Segments | Americas | Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 120,963 | 146,655 | 342,127 | 413,942 |
Operating Segments | Americas | Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 20,815 | 27,262 | 68,889 | 69,091 |
Operating Segments | Americas | Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 8,797 | 8,353 | 20,439 | 25,548 |
Operating Segments | Americas | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2,034 | 2,056 | 5,736 | 5,944 |
Operating Segments | Americas | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 152,469 | 183,900 | 436,727 | 513,393 |
Operating Segments | Americas | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 140 | 426 | 464 | 1,132 |
Operating Segments | Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 107,666 | 143,679 | 301,618 | 376,110 |
Operating Segments | Europe | Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 72,941 | 102,142 | 204,156 | 253,728 |
Operating Segments | Europe | Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 5,927 | 10,401 | 17,812 | 33,347 |
Operating Segments | Europe | Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 78,868 | 112,543 | 221,968 | 287,075 |
Operating Segments | Europe | Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 6,201 | 5,683 | 17,959 | 18,372 |
Operating Segments | Europe | Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 19,892 | 22,955 | 53,773 | 62,730 |
Operating Segments | Europe | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 2,705 | 2,498 | 7,918 | 7,933 |
Operating Segments | Europe | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 107,479 | 143,453 | 301,047 | 375,433 |
Operating Segments | Europe | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 187 | 226 | 571 | 677 |
Operating Segments | Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 83,053 | 100,212 | 247,312 | 279,563 |
Operating Segments | Asia | Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 66,103 | 75,970 | 194,259 | 209,857 |
Operating Segments | Asia | Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 4,034 | 8,327 | 13,395 | 24,134 |
Operating Segments | Asia | Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 70,137 | 84,297 | 207,654 | 233,991 |
Operating Segments | Asia | Leathers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 5,993 | 8,150 | 19,746 | 23,763 |
Operating Segments | Asia | Jewelry | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 5,928 | 6,560 | 16,808 | 18,217 |
Operating Segments | Asia | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 995 | 1,205 | 3,104 | 3,592 |
Operating Segments | Asia | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 82,936 | 100,076 | 246,971 | 279,193 |
Operating Segments | Asia | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 117 | 136 | 341 | 370 |
Corporate | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 793 | 8,054 | 5,002 | 13,094 |
Corporate | Traditional watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 28 | 9 | 1,955 | 23 |
Corporate | Smartwatches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Corporate | Total watches | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 28 | 9 | 1,955 | 23 |
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 | 765 | 8,045 | 3,047 | 13,071 |
Corporate | Revenue recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 518 | 800 | 4,177 | 3,032 |
Corporate | Revenue recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 275 | $ 7,254 | $ 825 | $ 10,062 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Disaggregation of Revenue [Line Items] | ||
Contract assets | $ 0 | |
Deferred contract costs | 0 | |
Licensing Income | ||
Disaggregation of Revenue [Line Items] | ||
Contract liabilities | 500,000 | $ 800,000 |
Wearable technology | ||
Disaggregation of Revenue [Line Items] | ||
Contract liabilities | 1,600,000 | 3,700,000 |
Gift Cards | ||
Disaggregation of Revenue [Line Items] | ||
Contract liabilities | $ 2,600,000 | $ 3,100,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Components and parts | $ 14,137 | $ 20,998 |
Work-in-process | 211 | 0 |
Finished goods | 312,370 | 355,030 |
Inventories | $ 326,718 | $ 376,028 |
WARRANTY LIABILITIES (Details)
WARRANTY LIABILITIES (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Warranty liability activity | ||
Beginning balance | $ 13,623 | $ 19,159 |
Settlements in cash or kind | (5,266) | (5,465) |
Warranties issued and adjustments to preexisting warranties | 1,879 | (148) |
Ending balance | $ 10,236 | $ 13,546 |
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 | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (benefit) expense | $ 5,561 | $ 9,214 | $ (34) | $ 15,904 |
Effective tax rate | (10.10%) | 59.50% | 0% | (87.90%) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits, excluding interest and penalties | $ 23.3 |
Unrecognized tax benefits that would favorably impact effective tax rate in future periods | 23.3 |
Unrecognized tax benefits, excluding interest and penalties, that are expected to be settled within the next twelve months | 8.5 |
Accrued income tax-related interest | $ 5.7 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Sep. 30, 2023 | Dec. 31, 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) | 52,472,039 | 51,836,456 |
Common stock, shares outstanding (in shares) | 52,472,039 | 51,836,456 |
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 |
Repurchase agreement, authorizations remaining | $ 20 |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Company's Common Stock Repurchase Activity (Details) - USD ($) shares in Millions | 9 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Stockholders' Equity Note [Abstract] | ||
Dollar Value Authorized | $ 30,000,000 | |
Number of Shares Repurchased (in shares) | 0 | 1 |
Dollar Value Repurchased | $ 0 | $ 10,000,000 |
EMPLOYEE BENEFIT PLANS - Schedu
EMPLOYEE BENEFIT PLANS - Schedule of Stock Appreciation Rights Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2023 | Jul. 01, 2023 | |
Shares | ||
Outstanding at beginning of period (in shares) | 75 | |
Outstanding at end of period (in shares) | 75 | 75 |
Exercisable at end of period (in shares) | 75 | |
Weighted- Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 46.55 | |
Outstanding at end of period (in dollars per share) | 46.55 | $ 46.55 |
Exercisable at end of period (in dollars per share) | $ 46.55 | |
Weighted- Average Remaining Contractual Term | ||
Outstanding | 3 months 18 days | 7 months 6 days |
Exercisable at end of period | 3 months 18 days | |
Aggregate Intrinsic Value | ||
Outstanding at beginning of period | $ 0 | |
Outstanding at end of period | 0 | $ 0 |
Exercisable at end of period | $ 0 |
EMPLOYEE BENEFIT PLANS - Sche_2
EMPLOYEE BENEFIT PLANS - Schedule of Stock Appreciation Rights Outstanding and Exercisable (Details) - Stock Appreciation Rights shares in Thousands | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Stock-based compensation plans disclosures | |
Stock appreciation rights outstanding, number of shares (in shares) | shares | 75 |
Stock appreciation rights outstanding, weighted-average exercise price (in dollars per share) | $ 46.55 |
Stock appreciation rights outstanding, weighted-average remaining contractual term | 3 months 18 days |
Stock appreciation rights exercisable, number of shares (in shares) | shares | 75 |
Stock appreciation rights exercisable, weighted-average exercise price (in dollars per share) | $ 46.55 |
Range One Of Exercise Prices | |
Stock-based compensation plans disclosures | |
Stock appreciation rights outstanding, number of shares (in shares) | shares | 75 |
Stock appreciation rights outstanding, weighted-average exercise price (in dollars per share) | $ 46.55 |
Stock appreciation rights outstanding, weighted-average remaining contractual term | 3 months 18 days |
Stock appreciation rights exercisable, number of shares (in shares) | shares | 75 |
Stock appreciation rights exercisable, weighted-average exercise price (in dollars per share) | $ 46.55 |
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) | $ 55.09 |
EMPLOYEE BENEFIT PLANS - Sche_3
EMPLOYEE BENEFIT PLANS - Schedule of Restricted Stock, Restricted Stock Units and Performance Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands | 3 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of Shares | |
Nonvested (in shares) | shares | 2,235 |
Vested (in shares) | shares | (31) |
Forfeited (in shares) | shares | (191) |
Nonvested (in shares) | shares | 2,013 |
Weighted-Average Grant Date Fair Value Per Share | |
Nonvested (in dollars per share) | $ / shares | $ 6.25 |
Vested (in dollars per share) | $ / shares | 7.72 |
Forfeited (in dollars per share) | $ / shares | 6.31 |
Nonvested (in dollars per share) | $ / shares | $ 6.21 |
EMPLOYEE BENEFIT PLANS - Narrat
EMPLOYEE BENEFIT PLANS - Narrative (Details) - Restricted Stock Units (RSUs) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Stock-based compensation plans disclosures | ||
Fair value of restricted stock units vested | $ 0.1 | |
Non Employee Director | ||
Stock-based compensation plans disclosures | ||
Vesting percentage of awards granted | 100% |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | $ 336,902 | $ 394,025 | $ 403,009 | $ 465,358 |
Other comprehensive income (loss) before reclassifications | 80 | (5,515) | (1,864) | (21,286) |
Tax (expense) benefit | 59 | 261 | 687 | 790 |
Amounts reclassed from accumulated other comprehensive income (loss) | (882) | 4,310 | (1,568) | 8,512 |
Tax (expense) benefit | 199 | 233 | 739 | 593 |
Total other comprehensive income (loss) | 822 | (9,797) | (348) | (29,601) |
Ending balance | 278,751 | 390,233 | 278,751 | 390,233 |
Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (88,874) | (99,573) | (90,681) | (75,601) |
Other comprehensive income (loss) before reclassifications | (3,801) | (13,465) | (1,994) | (37,437) |
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) | (3,801) | (13,465) | (1,994) | (37,437) |
Ending balance | (92,675) | (113,038) | (92,675) | (113,038) |
Cash Flow Hedges | Forward Contracts | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (580) | 8,512 | 2,397 | 4,344 |
Other comprehensive income (loss) before reclassifications | 3,881 | 7,950 | 130 | 16,151 |
Tax (expense) benefit | 59 | 261 | 687 | 790 |
Amounts reclassed from accumulated other comprehensive income (loss) | (882) | 4,310 | (1,568) | 8,512 |
Tax (expense) benefit | 199 | 233 | 739 | 593 |
Total other comprehensive income (loss) | 4,623 | 3,668 | 1,646 | 7,836 |
Ending balance | 4,043 | 12,180 | 4,043 | 12,180 |
Pension Plan | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | 11,966 | 3,982 | 11,966 | 3,982 |
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 | 11,966 | 3,982 | 11,966 | 3,982 |
Total | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | ||||
Beginning balance | (77,488) | (87,079) | (76,318) | (67,275) |
Total other comprehensive income (loss) | 822 | (9,797) | (348) | (29,601) |
Ending balance | $ (76,666) | $ (96,876) | $ (76,666) | $ (96,876) |
SEGMENT INFORMATION - Schedule
SEGMENT INFORMATION - Schedule of Information by Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Summary information by operating segment | ||||
Net sales | $ 344,121 | $ 436,271 | $ 991,123 | $ 1,183,292 |
Operating Income (Loss) | (46,395) | 22,482 | (119,016) | (2,737) |
Operating Segments | Americas | ||||
Summary information by operating segment | ||||
Net sales | 152,609 | 184,326 | 437,191 | 514,525 |
Operating Income (Loss) | 25,818 | 33,403 | 61,817 | 87,966 |
Operating Segments | Europe | ||||
Summary information by operating segment | ||||
Net sales | 107,666 | 143,679 | 301,618 | 376,110 |
Operating Income (Loss) | 13,290 | 31,076 | 19,572 | 65,489 |
Operating Segments | Asia | ||||
Summary information by operating segment | ||||
Net sales | 83,053 | 100,212 | 247,312 | 279,563 |
Operating Income (Loss) | 15,951 | 17,515 | 30,555 | 38,807 |
Corporate | ||||
Summary information by operating segment | ||||
Net sales | 793 | 8,054 | 5,002 | 13,094 |
Operating Income (Loss) | $ (101,454) | $ (59,512) | $ (230,960) | $ (194,999) |
SEGMENT INFORMATION - Schedul_2
SEGMENT INFORMATION - Schedule of Net Sales for each Class of Similar Products (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Net sales for each class of similar products | ||||
Net sales | $ 344,121 | $ 436,271 | $ 991,123 | $ 1,183,292 |
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 | $ 252,683 | $ 310,198 | $ 714,212 | $ 830,322 |
Traditional watches | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 73.40% | 71.10% | 72.10% | 70.20% |
Smartwatches | ||||
Net sales for each class of similar products | ||||
Net sales | $ 17,313 | $ 33,306 | $ 59,492 | $ 104,709 |
Smartwatches | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 5% | 7.60% | 6% | 8.80% |
Total watches | ||||
Net sales for each class of similar products | ||||
Net sales | $ 269,996 | $ 343,504 | $ 773,704 | $ 935,031 |
Total watches | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 78.40% | 78.70% | 78.10% | 79% |
Leathers | ||||
Net sales for each class of similar products | ||||
Net sales | $ 33,009 | $ 41,095 | $ 106,594 | $ 111,226 |
Leathers | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 9.60% | 9.40% | 10.80% | 9.40% |
Jewelry | ||||
Net sales for each class of similar products | ||||
Net sales | $ 34,617 | $ 37,868 | $ 91,020 | $ 106,495 |
Jewelry | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 10.10% | 8.70% | 9.20% | 9% |
Other | ||||
Net sales for each class of similar products | ||||
Net sales | $ 6,499 | $ 13,804 | $ 19,805 | $ 30,540 |
Other | Revenue Benchmark | Product Concentration Risk | ||||
Net sales for each class of similar products | ||||
Percentage of Total | 1.90% | 3.20% | 1.90% | 2.60% |
DERIVATIVES AND RISK MANAGEME_3
DERIVATIVES AND RISK MANAGEMENT - Cash Flow Hedges (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Foreign currency cash flow hedge maximum length of projection term | 24 months |
Forecasted purchases to manage fluctuations (as a percent) (up to) | 85% |
DERIVATIVES AND RISK MANAGEME_4
DERIVATIVES AND RISK MANAGEMENT - Schedule of Outstanding Forward Contracts (Details) - Sep. 30, 2023 - Forward Contracts - Designated as Cash Flow Hedges € in Millions, ¥ in Millions, £ in Millions, $ in Millions, $ in Millions, $ in Millions, $ in Millions | EUR (€) | USD ($) | CAD ($) | MXN ($) | GBP (£) | AUD ($) | JPY (¥) |
Euro | |||||||
Derivative [Line Items] | |||||||
Notional amount | € 91.3 | $ 100.2 | |||||
Canadian dollar | |||||||
Derivative [Line Items] | |||||||
Notional amount | 31 | $ 41.2 | |||||
Mexican peso | |||||||
Derivative [Line Items] | |||||||
Notional amount | 12.5 | $ 220.3 | |||||
British pound | |||||||
Derivative [Line Items] | |||||||
Notional amount | 10.2 | £ 8.1 | |||||
Australian dollar | |||||||
Derivative [Line Items] | |||||||
Notional amount | 5.2 | $ 7.8 | |||||
Japanese yen | |||||||
Derivative [Line Items] | |||||||
Notional amount | 4.6 | ¥ 602.6 | |||||
U.S. dollar | |||||||
Derivative [Line Items] | |||||||
Notional amount | $ 7.7 | ¥ 1,040 |
DERIVATIVES AND RISK MANAGEME_5
DERIVATIVES AND RISK MANAGEMENT - Non-designated Hedges (Details) - Sep. 30, 2023 - Forward Contracts - Not designated as hedging instruments R in Millions, $ in Millions | USD ($) | ZAR (R) |
Derivative [Line Items] | ||
Fair value of designated forward contracts | $ | $ 0.1 | |
Hedged amount | R | R 1.8 |
DERIVATIVES AND RISK MANAGEME_6
DERIVATIVES AND RISK MANAGEMENT - Schedule of Derivative Instruments Recognized in Other Comprehensive Income (Loss) (Details) - Cash flow hedges - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Derivative [Line Items] | ||||
Total gain (loss) recognized in other comprehensive income (loss), net of taxes | $ 3,940 | $ 8,211 | $ 817 | $ 16,941 |
Forward Contracts | ||||
Derivative [Line Items] | ||||
Total gain (loss) recognized in other comprehensive income (loss), net of taxes | $ 3,940 | $ 8,211 | $ 817 | $ 16,941 |
DERIVATIVES AND RISK MANAGEME_7
DERIVATIVES AND RISK MANAGEMENT - Schedule of Derivative Instruments Designated and Qualifying as Cash Flow Hedges (Details) - Forward Contracts - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
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) | $ (1,368) | $ 3,158 | $ (1,387) | $ 6,198 |
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) | 685 | 1,385 | 558 | 2,907 |
Other income (expense)-net | Not designated as hedging instruments | ||||
Effective portion of gains and losses on derivative instruments | ||||
Total gain (loss) recognized in income | $ 29 | $ (3) | $ 92 | $ 63 |
DERIVATIVES AND RISK MANAGEME_8
DERIVATIVES AND RISK MANAGEMENT - Schedule of Fair Value Amounts for Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair value of derivative instruments | ||
Asset derivatives, fair value | $ 4,467 | $ 2,895 |
Liability derivatives, fair value | 698 | 2,993 |
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 | 3,781 | 2,783 |
Forward Contracts | Designated as Cash Flow Hedges | Cash flow hedges | Accrued expenses-other | ||
Fair value of derivative instruments | ||
Liability derivatives, fair value | 698 | 2,659 |
Forward Contracts | Designated as Cash Flow Hedges | Cash flow hedges | Intangible and other assets-net | ||
Fair value of derivative instruments | ||
Asset derivatives, fair value | 680 | 112 |
Forward Contracts | Designated as Cash Flow Hedges | Cash flow hedges | Other long-term liabilities | ||
Fair value of derivative instruments | ||
Liability derivatives, fair value | 0 | 318 |
Forward Contracts | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | ||
Fair value of derivative instruments | ||
Asset derivatives, fair value | 6 | 0 |
Forward Contracts | Not Designated as Hedging Instrument | Accrued expenses-other | ||
Fair value of derivative instruments | ||
Liability derivatives, fair value | $ 0 | $ 16 |
DERIVATIVES AND RISK MANAGEME_9
DERIVATIVES AND RISK MANAGEMENT - Schedule of Effect of Derivative Instruments on Earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Derivative [Line Items] | ||||
Cost of Sales | $ 182,458 | $ 216,651 | $ 512,076 | $ 588,010 |
Other Income (Expense)-net | (3,093) | (1,859) | 6,813 | (1,915) |
Net gain expected to be reclassified into earnings within the next twelve months | 3,100 | 3,100 | ||
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) | (1,368) | 3,158 | (1,387) | 6,198 |
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) | 685 | 1,385 | 558 | 2,907 |
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 | $ 29 | $ (3) | $ 92 | $ 63 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Fair Value Hierarchy of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value Measurement, Recurring Basis - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Forward contracts | $ 4,467 | $ 2,895 |
Total | 4,467 | 2,895 |
Liabilities: | ||
Contingent consideration | 593 | 3,630 |
Forward contracts | 698 | 2,993 |
Total | 1,291 | 6,623 |
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 | 4,467 | 2,895 |
Total | 4,467 | 2,895 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Forward contracts | 698 | 2,993 |
Total | 698 | 2,993 |
Level 3 | ||
Assets: | ||
Forward contracts | 0 | 0 |
Total | 0 | 0 |
Liabilities: | ||
Contingent consideration | 593 | 3,630 |
Forward contracts | 0 | 0 |
Total | $ 593 | $ 3,630 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Dec. 31, 2022 | |
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Long-term debt, gross | $ 261,900 | ||
Fair value of debt | 195,800 | ||
Operating lease assets | 154,479 | $ 156,947 | |
Impairment charges | 838 | $ 1,060 | |
Specific Company Owned Stores | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Operating lease assets | 2,000 | 3,300 | |
Property, plant and equipment - net | 300 | 300 | |
Fair value of operating lease assets | 1,300 | 2,300 | |
Fair value of property, plant and equipment - net | 200 | 200 | |
Impairment charges | 800 | 1,100 | |
Specific Company Owned Stores | Europe | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Impairment charges | 600 | 300 | |
Specific Company Owned Stores | Americas | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Impairment charges | $ 200 | 600 | |
Specific Company Owned Stores | Asia | |||
Fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | |||
Impairment charges | $ 200 |
INTANGIBLE AND OTHER ASSETS - S
INTANGIBLE AND OTHER ASSETS - Schedule of Intangible and Other Assets-net (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Intangibles-subject to amortization: | ||
Gross Amount | $ 9,804 | $ 9,718 |
Accumulated Amortization | 7,103 | 6,680 |
Intangibles-not subject to amortization: | ||
Gross Amount | 8,880 | 8,876 |
Other assets: | ||
Gross Amount | 43,663 | 44,085 |
Total Gross Amount | 62,347 | 62,679 |
Total Accumulated Amortization | 7,103 | 6,680 |
Total intangible and other assets-net | 55,244 | 55,999 |
Deposits | ||
Other assets: | ||
Gross Amount | 16,144 | 16,487 |
Deferred tax asset-net | ||
Other assets: | ||
Gross Amount | 16,859 | 17,262 |
Restricted cash | ||
Other assets: | ||
Gross Amount | 4,485 | 5,243 |
Debt issuance costs | ||
Other assets: | ||
Gross Amount | 2,649 | 3,124 |
Other | ||
Other assets: | ||
Gross Amount | $ 3,526 | 1,969 |
Trademarks | ||
Intangibles-subject to amortization: | ||
Useful Lives | 10 years | |
Gross Amount | $ 4,051 | 3,728 |
Accumulated Amortization | 3,316 | 3,243 |
Customer lists | ||
Intangibles-subject to amortization: | ||
Gross Amount | 0 | 279 |
Accumulated Amortization | $ 0 | 266 |
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 | $ 909 | 867 |
Accumulated Amortization | $ 559 | 537 |
Patents | Minimum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 3 years | |
Patents | Maximum | ||
Intangibles-subject to amortization: | ||
Useful Lives | 20 years | |
Trade name | ||
Intangibles-subject to amortization: | ||
Useful Lives | 6 years | |
Gross Amount | $ 4,502 | 4,502 |
Accumulated Amortization | 3,001 | 2,439 |
Other | ||
Intangibles-subject to amortization: | ||
Gross Amount | 342 | 342 |
Accumulated Amortization | $ 227 | $ 195 |
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 | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense for intangible assets | $ 0.2 | $ 0.6 | $ 0.7 | $ 1.9 |
INTANGIBLE AND OTHER ASSETS -_2
INTANGIBLE AND OTHER ASSETS - Schedule of Estimated Aggregate Future Amortization Expense by Fiscal Year for Intangible Assets (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Amortization Expense | |
2023 (remaining) | $ 232 |
2024 | 928 |
2025 | 737 |
2026 | 146 |
2027 | 128 |
Thereafter | $ 530 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Sep. 30, 2023 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 - Schedule of Components
LEASES - Schedule of Components of Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Leases [Abstract] | ||||
Operating lease cost | $ 18,108 | $ 18,445 | $ 54,599 | $ 58,001 |
Short-term lease cost | 302 | 170 | 812 | 570 |
Variable lease cost | $ 4,684 | $ 7,166 | $ 16,337 | $ 21,817 |
LEASES - Schedule of Supplement
LEASES - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Operating lease right-of-use assets | $ 154,479 | $ 156,947 |
Current: | ||
Current operating lease liabilities | 43,762 | 49,702 |
Noncurrent: | ||
Long-term operating lease liabilities | $ 142,128 | $ 150,188 |
LEASES - Schedule of Weighted-A
LEASES - Schedule of Weighted-Average Remaining Lease Term and Discount Rate (Details) | Sep. 30, 2023 | Dec. 31, 2022 |
Weighted-average remaining lease term: | ||
Operating leases | 6 years 4 months 24 days | 5 years 7 months 6 days |
Weighted-average discount rate: | ||
Operating leases | 14.80% | 14.10% |
LEASES - Schedule of Future Min
LEASES - Schedule of Future Minimum Lease Payments (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Operating Leases | |
2023 (remaining) | $ 19,821 |
2024 | 65,741 |
2025 | 48,230 |
2026 | 37,191 |
2027 | 26,782 |
Thereafter | 101,945 |
Total lease payments | 299,710 |
Less: Interest | 113,820 |
Total lease obligations | $ 185,890 |
LEASES - Schedule of Suppleme_2
LEASES - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 65,239 | $ 68,182 |
Leased assets obtained in exchange for new operating lease liabilities | $ 35,507 | $ 22,775 |
DEBT ACTIVITY (Details)
DEBT ACTIVITY (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Sep. 26, 2019 | Nov. 30, 2021 | Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | Nov. 08, 2022 | |
Debt Instrument [Line Items] | |||||||
Interest expense | $ 5,760,000 | $ 5,127,000 | $ 16,110,000 | $ 13,445,000 | |||
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% | ||||||
Debt issuance costs | 5,500,000 | 5,500,000 | |||||
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 | Senior Notes | US Treasury (UST) Interest Rate | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on base rate | 0.50% | ||||||
Term Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance amortization | 600,000 | $ 1,800,000 | |||||
Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing amount | $ 275,000,000 | $ 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 | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, commitment fee percentage | 0.375% | ||||||
Revolving Credit Facility | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, commitment fee percentage | 0.25% | ||||||
Revolving Credit Facility | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs | 2,600,000 | $ 2,600,000 | |||||
Revolving Credit Facility | Fourth A&R Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount available | $ 35,000,000 | ||||||
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 | 111,500,000 | 111,500,000 | |||||
Net borrowings (repayments) of debt | 12,500,000 | 38,500,000 | |||||
Line of credit facility, remaining borrowing capacity | 23,400,000 | 23,400,000 | |||||
Revolving Credit Facility | Term Credit Agreement | Line of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Interest expense | 1,600,000 | 3,800,000 | |||||
Term Loan Facility | Term Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Total debt outstanding | 150,000,000 | 150,000,000 | |||||
Interest expense | $ 2,600,000 | $ 7,800,000 | |||||
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) - Forecast - TAG Plan - USD ($) $ in Millions | Dec. 27, 2025 | Dec. 30, 2023 |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and related cost, annualized benefits cost | $ 300 | $ 100 |
Expected restructuring charges | $ 50 | |
Adjusted gross margins achievement percentage | 50% | |
Adjusted operating margins achievement percentage | 10% | |
Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Expected restructuring charges | $ 100 | |
Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Expected restructuring charges | $ 120 |
RESTRUCTURING - Schedule of TAG
RESTRUCTURING - Schedule of TAG Plan charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | $ 16,003 | $ 0 | $ 27,732 | $ 5,438 |
TAG Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | 14,656 | 34,559 | ||
Cost of sales | TAG Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | (1,347) | 6,827 | ||
Selling, general and administrative expenses | TAG Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | $ 16,003 | $ 27,732 |
RESTRUCTURING - Schedule of Lia
RESTRUCTURING - Schedule of Liability Incurred On Restructuring Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Restructuring Reserve | ||||
Charges | $ 16,003 | $ 0 | $ 27,732 | $ 5,438 |
TAG Plan | ||||
Restructuring Reserve | ||||
Beginning balance | 13,185 | 0 | ||
Charges | 14,656 | 34,559 | ||
Cash Payments | 8,692 | 15,410 | ||
Non-cash Items | 5,048 | 5,048 | ||
Ending balance | 14,101 | 14,101 | ||
TAG Plan | Stores and facilities closures | ||||
Restructuring Reserve | ||||
Beginning balance | 0 | 0 | ||
Charges | 4,730 | 4,730 | ||
Cash Payments | 0 | 0 | ||
Non-cash Items | 4,730 | 4,730 | ||
Ending balance | 0 | 0 | ||
TAG Plan | Professional services | ||||
Restructuring Reserve | ||||
Beginning balance | 898 | 0 | ||
Charges | 3,298 | 4,300 | ||
Cash Payments | 2,268 | 2,372 | ||
Non-cash Items | 0 | 0 | ||
Ending balance | 1,928 | 1,928 | ||
TAG Plan | Severance and employee-related benefits | ||||
Restructuring Reserve | ||||
Beginning balance | 4,813 | 0 | ||
Charges | 7,975 | 18,702 | ||
Cash Payments | 6,424 | 12,338 | ||
Non-cash Items | 318 | 318 | ||
Ending balance | 6,046 | 6,046 | ||
TAG Plan | Charges related to exits of certain product offerings | ||||
Restructuring Reserve | ||||
Beginning balance | 7,474 | 0 | ||
Charges | (1,347) | 6,827 | ||
Cash Payments | 0 | 700 | ||
Non-cash Items | 0 | 0 | ||
Ending balance | 6,127 | 6,127 | ||
NWF 2.0 | ||||
Restructuring Reserve | ||||
Beginning balance | 307 | 3,746 | 2,895 | 5,331 |
Charges | 5,438 | |||
Cash Payments | 171 | 928 | 2,759 | 7,074 |
Non-cash Items | 877 | |||
Ending balance | 136 | 2,818 | 136 | 2,818 |
NWF 2.0 | Store closures | ||||
Restructuring Reserve | ||||
Beginning balance | 300 | |||
Charges | 405 | |||
Cash Payments | 613 | |||
Non-cash Items | 92 | |||
Ending balance | 0 | 0 | ||
NWF 2.0 | Professional services | ||||
Restructuring Reserve | ||||
Beginning balance | 47 | 130 | 74 | 643 |
Charges | 135 | |||
Cash Payments | 47 | 43 | 74 | 691 |
Non-cash Items | 0 | |||
Ending balance | 0 | 87 | 0 | 87 |
NWF 2.0 | Severance and employee-related benefits | ||||
Restructuring Reserve | ||||
Beginning balance | 260 | 3,616 | 2,821 | 4,388 |
Charges | 4,898 | |||
Cash Payments | 124 | 885 | 2,685 | 5,770 |
Non-cash Items | 785 | |||
Ending balance | $ 136 | $ 2,731 | $ 136 | $ 2,731 |
RESTRUCTURING - Schedule of Res
RESTRUCTURING - Schedule of Restructuring Charges by Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 16,003 | $ 0 | $ 27,732 | $ 5,438 |
TAG Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 14,656 | 34,559 | ||
TAG Plan | Operating Segments | Americas | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | (488) | 4,005 | ||
TAG Plan | Operating Segments | Europe | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | (368) | 6,973 | ||
TAG Plan | Operating Segments | Asia | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 2,556 | 8,510 | ||
TAG Plan | Corporate | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 12,956 | $ 15,071 | ||
NWF 2.0 | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 5,438 | |||
NWF 2.0 | Operating Segments | Americas | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 83 | |||
NWF 2.0 | Operating Segments | Europe | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 1,531 | |||
NWF 2.0 | Operating Segments | Asia | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 1,204 | |||
NWF 2.0 | Corporate | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 2,620 |