Investors eager to profit from the recent wristwatch craze should take a moment to check the batteries.

Timepieces adorned with names of fashion designers have surged in popularity since the financial crisis, as the brand-conscious crowd looked for affordable status symbols. One big beneficiary has been Fossil Group, which has licenses to sell watches under labels including Burberry, Marc Jacobs and Michael Kors .

Sales of Michael Kors watches, in particular, have driven Fossil's growth in the past couple of years as the separately listed fashion company, known for its handbags, opened new stores and boosted the brand's profile. While Michael Kors purses and ready-to-wear clothing can cost hundreds or thousands of dollars, the Fossil-produced watches cost as little as $120.

Unfortunately, it may be tough to keep Fossil ticking. One problem is the arrival of a new set of nimble, deep-pocketed competitors: technology companies producing so-called smartwatches with features similar to smartphones.

Samsung Electronics on Wednesday unveiled its Galaxy Gear Smartwatch, which has voice and email features and plugs its owners into social media. Qualcomm also joined the fray, announcing it would release a smartwatch later this year. And there are rumors Apple has a watch on the way, though the ultra-secretive company hasn't confirmed that.

Given the rivalry between Apple and Samsung in the smartphone market, they will probably market smartwatches aggressively to win over consumers, likely diverting attention from fashion-forward timepieces. That will be critical in the next few months as consumers plan gifts for the holidays.

Traditional competition is also heating up. Rival Movado, which has the license to sell Coach -branded watches, said in late August it plans to expand its range of price points. At the moment, Coach watches tend to be more expensive, but it appears there will be more direct competition with Michael Kors.

Michael Kors watches may already be losing steam. In the July quarter, Fossil's sales in the U.S. wholesalechannel rose a solid 11%. But sales at Fossil stores open at least at year were flat from a year earlier, the first time in 20 quarters they didn't rise. If sales were flat at other retailers that sell Michael Kors watches, there would be a serious inventory buildup going into the third quarter.

Indeed, the sales slowdown is visible outside Fossil stores. Macy's, a major seller of Michael Kors timepieces, said in mid-August that watches were weak in the quarter through July. That was the first time in several quarters that Macy's didn't single out watches as a category of strength.

Investors may be taken by surprise. Shares of Fossil have risen 25% this year and are within 20% of their all-time high. The stock also trades at 17 times forward consensus earnings, suggesting hopes for continued growth.