Fossil Swings to Profit, Raises 2026 Sales Outlook

US watchmaker Fossil Group swung to a third-quarter profit and raised its full-year outlook, as sharply higher margins offset flat sales, the company reported. Net income attributable to the Richardson, Texas-based company came to US$11.7 million in the quarter ended October 3, against a net loss of US$39.9 million a year earlier.

Diluted earnings were 19 cents a share, compared with a loss of 76 cents, according to the results release filed with the US Securities and Exchange Commission. On an adjusted basis, Fossil earned 23 cents a share.

Margins drive the turnaround

Net sales edged up 0.4% to US$271.2 million from US$270.2 million, or 2.0% in constant currency. Fossil said closing stores weighed on sales by about 190 basis points.

Gross margin jumped 10.8 percentage points to 59.8%. The company credited lower minimum royalties on licensed brands, earlier timing of royalty recognition, and better product margins from full-price selling, sourcing efforts and reduced tariffs.

Operating expenses fell 11.1% to US$137.0 million. That turned an operating loss of US$21.7 million a year ago into operating income of US$25.3 million, a margin of 9.3%. Adjusted EBITDA reached US$36.7 million, or 13.5% of sales, a figure also cited by FashionUnited.

Watches and Asia lead sales

Traditional watch sales rose 6.4% in constant currency to US$232.3 million, while leathers dropped 20.5% and jewellery fell 10.8%. Smartwatch sales shrank to US$0.9 million from US$3.8 million. The Fossil brand itself grew 13.6% in constant currency.

By region, constant-currency sales climbed 15.1% in Asia and were flat in the Americas, up 0.1%, while Europe slipped 5.6%. Wholesale sales rose 4.4%, but direct-to-consumer sales fell 5.9%.

Chief executive Franco Fogliato said the results “reflect momentum across brands, channels and geographies”.

What’s next

Fossil now expects 2026 worldwide net sales of US$980 million to US$990 million and an adjusted operating margin of 5.5% to 6.5%, both excluding currency effects, along with positive free cash flow. It said year-to-date results were running ahead of its expectations.

The company ended the quarter with total liquidity of US$111.7 million, including US$77.0 million in cash, and total debt of US$208.0 million. Its shares were up more than 23% in pre-market trading on Wednesday, according to StockTitan.

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