Texas-based Fossil Group, parent company of Fossil Corporate Markets (asi/55145), reported a net income loss of $48.3 million for the first quarter of 2018. Net sales were also down 2.2%, dropping to $569.2 million compared to $581.8 million in the same quarter last year.

Despite the losses, CEO and Chairman Kosta Kartsosis said first-quarter sales were stronger than expected. “We believe we have the right strategies, brands and balance sheet strength to continue to transform our company and ultimately return to long-term profitable growth,” he added.

In the first quarter of 2018, Fossil’s stake in wearable technology continued to grow, with connected watch sales nearly doubling, according to Kartsosis. He also announced a new licensing partner, sharing that Fossil would begin distributing Puma watches in 2019. “We are excited to add this global brand to our portfolio,” Kartsosis said.

In its earnings report, Fossil said it would continue to transform its business model to address changes in consumer behavior, and “their purchases of traditional watches and connected devices, as well as jewelry and leathers.” Fossil is predicting a drop in net sales of 5% to 12% for fiscal 2018. Income (before income taxes) will range from a loss of $40 million to a gain of $50 million, according to guidance provided by Fossil.