American lifestyle accessories company Fossil Group, Inc. has raised its fiscal 2026 (FY26) outlook after third-quarter (Q3) momentum across brands, channels and geographies supported a return to profitability. The performance reflected consumer demand for product innovation and brand storytelling, alongside progress under its turnaround plan.
Net sales increased 0.4 per cent year on year (YoY) to $271.2 million in the 13 weeks ended October 3, 2026, and grew 2 per cent on a constant-currency basis. Net income was $11.7 million, or $0.19 per diluted share, compared with a net loss of $39.9 million, or $0.76 per diluted share, a year earlier. Operating income reached $25.3 million, compared with an operating loss of $21.7 million, while operating margin improved to 9.3 per cent from a negative 8 per cent.
“Our strong third quarter results reflect momentum across brands, channels and geographies and demonstrate that our product innovation and storytelling is connecting with consumers around the globe,” said Franco Fogliato, CEO, Fossil Group, Inc.
“The three strategic pillars under our turnaround plan are translating to top line growth and accelerating profitability. We are pleased that year-to-date results are outpacing our expectations, supporting an increase in our full year financial outlook on both the top and bottom line,” added Fogliato.
Asia and wholesale support sales growth
On a constant-currency basis, Asia net sales rose 15.1 per cent, while Americas sales edged up 0.1 per cent. Europe net sales declined 5.6 per cent. Wholesale sales increased 4.4 per cent, whereas direct-to-consumer sales fell 5.9 per cent, reflecting store rationalisation initiatives that reduced total sales by approximately 190 basis points. Comparable retail sales increased 0.1 per cent, Fossil Group said in its latest earnings release.
Traditional watch sales grew 6.4 per cent in constant currency, with the Fossil brand advancing 13.6 per cent. However, constant-currency sales in leathers declined 20.5 per cent and jewellery sales decreased 10.8 per cent. Reported traditional watch sales were $232.3 million, while leathers, jewellery and other products generated $12 million, $22 million and $4 million, respectively.
Margins and earnings recover sharply
Gross profit increased to $162.3 million from $132.4 million, lifting gross margin by 10.8 percentage points to 59.8 per cent. The improvement was driven by reduced minimum royalties for licensed brands, accelerated royalty recognition in the prior-year period, stronger core-product margins under the full-price selling model, sourcing initiatives and lower tariffs.
Operating expenses decreased 11.1 per cent to $137 million and represented 50.5 per cent of sales, compared with 57 per cent a year earlier. Selling, general and administrative expenses fell 8.8 per cent to $133.9 million. Restructuring costs were $2.9 million, down from $6.8 million in the previous-year quarter.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were $36.7 million, equivalent to 13.5 per cent of sales, compared with a loss of $15 million a year earlier. Constant-currency adjusted operating income was $30.2 million, with an 11 per cent margin, versus an adjusted operating loss of $14.4 million and a negative 5.3 per cent margin in the prior-year period. Adjusted net income was $14.2 million, or $0.23 per diluted share.
As of October 3, the company had liquidity of $111.7 million, comprising $77 million in cash and cash equivalents and $34.7 million available under its asset-based revolving credit facility. Inventory increased 13.4 per cent YoY to $189.2 million, while total debt stood at $208 million.
Fossil raises FY26 financial outlook
For FY26, Fossil now expects worldwide net sales of $980 million to $990 million, an adjusted operating margin of 5.5-6.5 per cent and positive free cash flow. The sales and adjusted operating margin outlook excludes foreign-exchange impacts.
Fibre2Fashion News Desk (SG)
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