Wearables may not be the future of fashion as a whole but they’re the future of the watch sector, right? Hmmm. Like any bold new future, it’s one that’s getting off to a fitful start and that means companies can struggle to make money from it until it’s become completely mainstream.
We all assume Apple would love to sell more of its smart watch than it appears to have done (despite selling millions of them, it’s still not up to iPhone/iPad standards). Now watch specialist Fossil, which has nailed its colour firmly to the wearables mast, has come out with an unimpressive set of quarterly results and admitted that times are tough for wearables.
Its shares fell over 30% late yesterday after it reported Q1 earnings of $5.8m/12 cents a share, a shockingly large drop from the $38m/75 cents of a year ago.
Revenue was down 9% to $659.8m. Americas sales fell 7%, and Europe sales dropped 8%. Asia was down 4%. CEO Kosta Kartsotis said he was “disappointed”.
Now Fossil has already said that it sees itself as a “fashion gateway” to wearables. But consumers don’t quite see it the same way … yet. Sales of its Misfit wearables in Q1 were hurt by intense competition from Apple’s watch.
But Fossil remains convinced about wearables and will still launch a slew of new products this year. Whether it actually makes much money from them (for now) is open to question!