Fossil Group reported third-quarter financial results on Tuesday showing signs of recovery after years of declining performance. The watchmaker posted operating income of $25.3 million compared with an operating loss of $21.7 million in the prior year, while net sales increased 0.4% to $271.2 million. This marks the company’s return to profitability and sales growth for the first time since the first fiscal quarter of 2022.
CEO Franco Fogliato, who joined the company in 2024, attributed the improvement to disciplined management practices focused on full-price sales strategies and cost reduction. Operating expenses declined 11.1% to $137 million during the period ended October 3. Net income reached $11.7 million, or 19 cents per share, a substantial turnaround from a net loss of $39.9 million the prior year. Fogliato stated in an exclusive interview that the company had not previously expected to achieve sales growth for another year and a half.
The company raised its full-year outlook, now guiding for net sales between $980 million and $990 million, compared with a previous projection of a 3% to 5% decline. Management also indicated expectations for positive free cash flow by year-end. The revised guidance reflects confidence in the turnaround strategy, though full-year sales would still represent a slight decline from just over $1 billion in the prior year.
Fogliato emphasized that the recovery strategy involved restructuring operations through store closures, reducing promotional activity in favor of full-price positioning, enhancing marketing efforts, and expanding product offerings. Direct-to-consumer sales declined 5.9% in the quarter, which Fogliato attributed to the company’s downsizing efforts. Asia emerged as a key growth driver with net sales increasing 15.1%, particularly in the India market.
The company has also shifted focus back toward traditional analog watches, which comprise approximately 86% of sales and grew 6.4% in the quarter, rather than pursuing aggressive expansion in the smartwatch segment. Fossil’s stock, which has declined significantly from early-to-mid 2010s peaks, was trading under $8 per share on Tuesday despite recent gains.
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