Fossil Posts 0.4% Sales Growth and Raises Its 2026 Outlook

Fossil Group returned to quarterly sales growth a quarter earlier than its prior forecast and raised its 2026 sales and adjusted-margin outlook after net sales edged up 0.4%.

Sales for the 13 weeks ended Oct. 3 totaled $271.2 million, compared with $270.2 million a year earlier. On a constant-currency basis, net sales increased 2.0%. Fossil’s latest formal forecast had projected growth to resume in the fourth quarter. In dollar terms, the reported increase was about $1 million year over year.

The company earned $11.7 million, or 19 cents per diluted share, reversing a loss of $39.9 million, or 76 cents per share, in the comparison period. Operating income reached $25.3 million after an operating loss of $21.7 million a year earlier.

Gross margin increased 10.8 percentage points to 59.8% as operating expenses declined 11.1% to $137 million. Fossil tied the margin improvement to lower minimum royalties on licensed brands, the timing of royalty recognition and stronger core-product margins. It linked the core-product gains to full-price sales, sourcing initiatives and reduced tariffs.

Sales trends differed across regions and channels. On a constant-currency basis, sales increased 15.1% in Asia and 0.1% in the Americas, while falling 5.6% in Europe. On a constant-currency basis, wholesale sales grew 4.4%, while direct-to-consumer sales fell 5.9%. Store rationalization reduced quarterly sales by about 190 basis points. Fossil had 174 stores on Oct. 3, down from 204 on Oct. 4, 2025.

“The three strategic pillars under our turnaround plan are translating to top line growth and accelerating profitability,” CEO Franco Fogliato said.

Fossil lifted its 2026 net sales outlook to $980 million to $990 million. The forecast also calls for an adjusted operating margin of 5.5% to 6.5% and positive free cash flow. Its earlier outlook projected a 3% to 5% sales decline and an adjusted margin of 4% to 6%, with growth expected in the fourth quarter. The sales and adjusted-margin forecasts exclude foreign-currency effects.

The new sales range remains below the $1.004 billion recorded in fiscal 2025, when sales fell 12.3%. At the end of the quarter, Fossil had $111.7 million in total liquidity and $208 million in total debt.