Miller Value Partners LLC on Fossil Group, Inc.
Thesis
Fossil management is executing a turnaround that has started reversing more than a decade of decline in its traditional watch business through new products. Miller Value expects additional product launches and the completion of store closures to help total revenue return to growth. The firm anticipates share gains and incremental long-term growth despite consumer weakness. If the transformation succeeds, it sees the potential for more than $100 million in normalized free cash flow.
“New product introductions have reversed a decade plus decline”
Key risks
- A weakening consumer could depress watch demand.
- The turnaround and product pipeline may fail to sustain market-share gains.
- Remaining store-closure effects and execution challenges could delay normalized free-cash-flow generation.