Fossil Group, Inc. (NASDAQ:FOSL) Q2 2020 Earnings Conference Call - Final Transcript

Aug 12, 2020 • 05:00 pm ET

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Fossil Group, Inc. (NASDAQ:FOSL) Q2 2020 Earnings Conference Call - Final Transcript

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Operator
Operator

Welcome to the Q2 2020 Fossil Group Earnings Conference Call. My name is Adrian, and I'll be your operator for today's call. [Operator Instructions]

I'll now turn the call over to Christine Greany of The Blueshirt Group. Christine, you may begin.

Executive
Christine Greany

Hello, everyone, and thank you for joining us. With us today on the call are Kosta Kartsotis, Chairman and CEO; Jeff Boyer, Chief Operating Officer and CFO; and Greg McKelvey, EVP and Chief Commercial Officer.

I would like to remind you that information made available during this conference call contains forward-looking information, and actual results could differ materially from those that will be discussed during this call. Fossil Group's policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in the company's Form 8-K and 10-Q reports filed with the SEC. In addition, Fossil assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Please note that you can find a reconciliation and other information regarding non-GAAP financial measures discussed on this call in Fossil's earnings release, which was filed today on Form 8-K and is available in the Investors section of fossilgroup.com.

With that, I will turn the call over to Kosta to begin the formal remarks.

Executive
Kosta N. Kartsotis

Good afternoon, everyone, and thanks for joining us today. We hope you're all safe and doing well during these unprecedented times. As the pandemic continues to have devastating effects all over the world, we remain committed to prioritizing the health and safety of our employees, customers and the communities where we operate. At the same time, we are disheartened by the racial tragedies we've seen and the underlying systemic bias that exists in our country. As an organization, we are doing our part to foster positive change. We are committed to leading by example and doing good for the planet, for our communities and for our people.

Since we spoke to you in early June, we have remained focused on navigating the highly dynamic environment, reopening our Fossil stores and executing the 4 strategic priorities we outlined at the beginning of this year. Those include: delivering exceptional storytelling and innovation; driving commercial transformation, most notably increasing our digital business; expanding on our opportunity in China and India; and continuing to implement our New World Fossil 2.0 program.

The current operating landscape has caused us to accelerate the expansion of our digital business and to increase the size of our New World Fossil program this year. More on these strategies shortly. In Q2, broad-based store closures persisted within the wholesale channel and across our Fossil retail locations throughout much of the quarter, resulting in a net sales decline of 47% on a constant currency basis.

We did see, however, sequential improvement in top line trends across all regions during the period as many economies began reopening in the latter part