Fossil Group released third-quarter financial results that demonstrated signs of progress in its ongoing business turnaround. The legacy watchmaker posted operating income of $25.3 million, a significant reversal from an operating loss of $21.7 million in the prior-year period. Net sales rose 0.4% to $271.2 million, marking the company’s first year-over-year sales increase since the first fiscal quarter of 2022.
The company also achieved profitability on a net income basis, reporting $11.7 million in net income, or 19 cents per share, compared with a net loss of $39.9 million, or 76 cents per share, one year earlier. Operating expenses declined 11.1% to $137 million. CEO Franco Fogliato attributed the improvements to disciplined management of full-price sales and cost controls implemented since joining the company in 2024.
Based on the stronger quarterly performance, Fossil raised its full-year net sales guidance to a range of $980 million to $990 million, a slight decline from just over $1 billion in the prior year but better than the company’s previous forecast of a 3% to 5% decline. The company also expects to achieve positive free cash flow before the end of the year. Fogliato noted that the company had previously not anticipated sales growth for at least another year and a half.
Fogliato’s restructuring strategy has included store closures, a shift away from promotional pricing toward full-price sales, enhanced marketing efforts, and expansion of the product range. Asia emerged as a key growth driver, with net sales in that region rising 15.1%, led primarily by the India market. Traditional analog watches, which represent approximately 86% of Fossil’s sales, grew 6.4%, while smartwatch sales remained minimal at under $1 million for the quarter.
Despite the positive quarterly results, Fossil stock remained under $8 per share on Tuesday, reflecting substantial losses in value since the early-to-mid 2010s when the company experienced its peak performance. The company faced considerable headwinds from the rise of smartwatches, accumulated debt, and declining mall foot traffic over recent years.
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