Key Highlights

  • Net sales of USD 271.2 million beat the USD 248.66 million estimate, and adjusted Earnings Per Share were USD 0.23.
  • Gross Margin expanded 10.8 percentage points to 59.8%, and Operating Income was USD 25 million.
  • Net income was USD 11.7 million, or USD 0.19 per diluted share, against a net loss of USD 39.9 million.
  • Worldwide net sales guidance was raised to between USD 980 million and USD 990 million for 2026.

Fossil Group (NASDAQ:FOSL), a watch and accessories company, reported third quarter 2026 net sales of USD 271.2 million, above the USD 248.66 million estimate. Adjusted earnings per share were USD 0.23 against an estimated loss of USD 0.04, and GAAP Net Income per diluted share was USD 0.19 against a loss of USD 0.76 a year earlier. Net sales rose 0.4% as reported and 2.0% in constant currency from USD 270.2 million. Management said the results reflect momentum across brands, channels and geographies, and that the three strategic pillars of its turnaround plan are translating to Top Line growth.

Gross profit was USD 162.3 million against USD 132.4 million, and gross margin rose 10.8 percentage points to 59.8%. The company attributed the increase to reduced licensed Brand minimum royalties, the accelerated timing of minimum Royalty recognition, and improved product margins from full price selling, sourcing and reduced tariffs.

Regions, Channels and Categories

In constant currency, Asia net sales rose 15.1%, the Americas rose 0.1% and Europe fell 5.6%. Wholesale sales rose 4.4%, while direct to consumer sales fell 5.9% and comparable retail sales rose 0.1%. Traditional watch sales rose 6.4% and the Fossil brand rose 13.6%, while leathers fell 20.5% and jewelry fell 10.8%.

Expenses, Profit and Liquidity

Operating expenses were USD 137.0 million, down 11.1% from USD 154.1 million, or 50.5% of net sales against 57.0%. They included USD 2.9 million of restructuring costs against USD 6.8 million a year earlier. SG&A expenses were USD 133.9 million, down 8.8%. Operating income was USD 25 million, a 9% margin, and constant currency adjusted operating income was USD 30 million, an 11% margin.

Net income was USD 11.7 million against a net loss of USD 39.9 million, with the tax provision reflecting pre-tax income against a pre-tax loss a year earlier, shifts in the global mix of earnings and valuation allowance adjustments. Adjusted net income was USD 14.2 million against an adjusted net loss of USD 32.8 million. As of October 3, 2026, total Liquidity was USD 111.7 million, made up of USD 77.0 million in cash and USD 34.7 million of availability under its asset-based Credit facility. Inventories were USD 189.2 million, up 13.4%, and total Debt was USD 208.0 million.

Guidance and Items to Follow

The company raised 2026 guidance to worldwide net sales of USD 980 million to USD 990 million and adjusted Operating Margin of 5.5% to 6.5%, with positive free cash flow. The net sales and margin guidance excludes foreign currency effects.

The items to follow are direct to consumer trends, inventory levels, the timing of royalty recognition, the Europe region and fourth quarter results against the raised guidance.