Ask Matt: Is Fossil extinct?

Q: Is Fossil extinct?

A: When watches were just about fashion and time telling, Fossil carved out a niche for itself. But the battle over the wrist is intensifying as consumers demand more from their watches.

Fossil, a maker of watches and other accessories, is now finding itself in direct competition with new rivals ranging from Fitbit (FIT) to Apple (AAPL) and Samsung and Microsoft (MSFT). Many consumers who were in the market for watches costing about $100 or less are now wearing devices that track sleep, count steps and display smartphone notifications. Fossil is attempting to adapt. Last year, it paid $236 million for Misfit, a maker of smart home devices including wearables. But the watch market is being disrupted so quickly it’s difficult for Fossil to morph itself fast enough. Shares of Fossil dropped more than $10, or 25%, to roughly $30 a share on Wednsday after reporting another quarter of lower profit. Adjusted profit during the quarter dropped 87% to 12 cents a share, which was 25% lower than expected. Revenue also dropped 9% to $660 million. Analysts aren’t all that optimistic things will turn around anytime soon. Analysts seem to think the stock has bottomed, but profit is seen dropping further. Adjusted profit is expected to drop in half this fiscal year.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.