• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Fossil's Stock Is a Dog With Fleas -- Here's One Retailer to Trade

An after-Christmas shopping excursion turns up an empty Fossil store but a relatively crowded Vera Bradley outlet.
By JONATHAN HELLER
Dec 27, 2017 Updated Dec 27, 2017 | 11:15 AM EST
Stocks quotes in this article: TPR, FOSL, VRA

While I generally refuse to take part in Black Friday shopping of the brick-and-mortar variety, I am not opposed to the same on the day after Christmas. If there ever was a fun day to shop, that has to be it. I'm not sure why. Maybe it's because there is no pressure to buy anything and you are apt to see some bargains. I also view it as a way to do some channel checks, as unscientific as they may be.

My after-Christmas shopping extravaganza took place at a very popular outlet mall in western Pennsylvania, the very same one that cured me of Black Friday shopping years ago. It has been difficult in years past to find a parking space the day after Christmas, but that was not the case this year, and it was not because consumers are not in a shopping mood. Instead, it was the 14-degree temperatures and the 34 or more inches of snow that were dumped just north of us over the past few days that kept folks from venturing out. 

I was very keen to see what was happening at several of the publicly traded stores within the vast outlet center. Chief among them was Fossil Group Inc. (FOSL) , which perhaps is best-known for its watches but is a name that has had the stuffing beaten out of it in 2017, with the shares down nearly 70% year to date. Fossil's earnings results have been mixed during the past year, but guidance has been continually lowered, and that has been the tale for this company that the Street now hates.

It's no wonder the name has fallen out of favor, as lowered guidance suggests a terrible fourth quarter that may be just marginally profitable. Prior estimates of $1.33 per share for the quarter have given way to a new consensus of just 37 cents, losses for 2018, and not much above breakeven for 2019. 

This is an ugly story for a solid brand name, which arguably has beautiful stores and nice merchandise. That's what I saw today upon entering the store, although there literally were no other customers in the store at the time. For once, I somewhat accepted the bad-weather defense. While I am new to the Fossil story, I find it intriguing in a dumpster-diving, bottom-fishing way. The company's total enterprise value is a rather small $680 million for what has been a solid, well-known brand name in the past. 

However, Fossil's debt is a concern. While the company reduced it by about $160 million in the third quarter, it remains at about $485 million. Cash stands at about $167 million, or $3.45 per share. Fossil is not for the faint of heart for sure, as it's a struggling specialty retailer. However, it is one I'll be following and may be compelled to nibble at sooner or later. 

Vera Bradley Inc. (VRA) was the other store I was most interested in; in this case I sent my wife and daughters to do the recon for me. I was surprised by their findings; a store that was relatively crowded under the circumstances and my girls actually made some purchases. 

Vera Bradley had been yesterday's news to them for quite a while, but today's visit was a positive. VRA has made a nice recovery since bottoming at around $7 in early November and is now up 7% year to date, at around $12.50. It is another solid brand name with a tiny enterprise value -- just $360 million in this case. The balance sheet is fairly solid, with no debt and about $3 per share in cash. 

One thing I expected to see today, but did not, was a long line outside the door of the Coach store (the company recently was renamed Tapestry Inc. (TPR) ). It is usually at least a couple dozen deep, but not today. I'll accept the weather defense for that one, too.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller was long VRA.

TAGS: Investing | U.S. Equity | Consumer Discretionary | Consumer | How-to | Risk Management | Stocks

More from Consumer Discretionary

Penn National: Should Investors Put Their Chips Down?

Bruce Kamich
Jun 28, 2022 12:13 PM EDT

Let's check out the charts and indicators on this operator of casinos and racetracks.

I'm Warming Up to Carnival, but Not Ready to Climb Aboard Yet

Jonathan Heller
Jun 27, 2022 10:00 AM EDT

The stock price of a cruise line operator is becoming more reasonable, but its heavy debt load remains a huge concern.

There's No Clear Sailing Ahead for Carnival: Here's How to Play It

Stephen Guilfoyle
Jun 24, 2022 11:32 AM EDT

CCL did lose a lot of money, much more than anticipated, but there are positives.

Bearish Bets: 3 Well-Known Stocks You Should Consider Shorting This Week

Bob Lang
Jun 19, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Beyond Meat Gives Investors Something to Chew On

Bruce Kamich
Jun 15, 2022 1:50 PM EDT

This veggie name is rallying sharply after a summer promotion announcement, but here's my beef with the charts.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 07:59 PM EDT PAUL PRICE

    Very good quarterly numbers from Bassett Furniture (BSET)

    Bassett Furniture (BSET) blew right through analys...
  • 04:41 PM EDT PAUL PRICE

    First Half Results - Putrid Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 marked...
  • 04:51 PM EDT PAUL PRICE

    We Should Be in for Better Starting Soon

    Window dressing Thursday, the last day of the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login