Fossil returns to sales growth and raises its full-year outlook

Fossil reported net sales of $271.2 million, up 0.4%, and operating income of $25.3 million, compared with an operating loss of $21.7 million a year earlier. Net income was $11.7 million, or 19 cents per share, versus a net loss of $39.9 million, or 76 cents per share. Operating expenses fell 11.1% to $137 million. Fossil last recorded quarterly net income in the third fiscal quarter of 2022.

The company now expects full-year net sales of $980 million to $990 million, a slight decline from just over $1 billion the prior year. Its previous forecast called for a 3% to 5% sales decline. Fossil also expects positive free cash flow by year-end. Fogliato told CNBC the company had not anticipated sales growth for another year and a half.

Fossil has faced years of falling sales and losses amid competition from smartwatches, debt and reduced mall traffic. Fogliato, who joined in 2024, said his strategy has included closing stores, reducing promotions in favor of full-price sales, improving marketing and expanding the product range. Direct-to-consumer sales fell 5.9% in the quarter, which he attributed to the company’s “aggressive” downsizing.

Asia was the quarter’s main growth engine, with net sales up 15.1%, led in large part by India, Fogliato said. Traditional watches, about 86% of Fossil’s sales, grew 6.4%; smartwatch sales were below $1 million. Fogliato said growing the U.S. home market remained the top priority and described the company as entering 2027 with opportunities as it builds from a smaller, more profitable retail base.