Fossil Group, which manufactures wearables for some of the most famous fashion brands on the planet (including Michael Kors, Karl Lagerfeld, and Tory Burch), is in a tough spot financially.
The Richardson, Texas–based company posted disappointing second-quarter results on Tuesday, revealing that net sales decreased 13 percent compared to the second quarter of fiscal 2016, to $596.8 million. Sales of nonsmart watches declined 9 percent.
To mitigate the losses, the company will be closing 50 stores this year.
“We’re in an unprecedented disruption and decline in the watch business,” said CEO Kosta Kartsotis.
But though the verdict is still out on how popular wearable devices can become—and launches of fashion-focused (not fitness) wearables have slowed to a drip in the larger market—the CEO made it clear that the company still believes connected devices are the future.
“In the second quarter, the strength of our wearables product, particularly in key brands, once again demonstrated that wearables have the ability to help mitigate the ongoing softness in the traditional watch category and ultimately, we believe, turn current headwinds into tailwinds,” he said.
“We remain confident that technology in wrist wear is increasingly important for many consumers and the catalyst for stabilizing and growing our watch business over time.”
(Top: Fossil Q Wander watch, courtesy of Fossil Group)