Fossil Group 2025 Q1 Earnings Narrowed Losses by 26.3%

Fossil Group (FOSL) reported its fiscal 2025 Q1 earnings on May 14th, 2025. The company posted a reduction in net loss and improved gross margins, driven by its ongoing turnaround strategies. Despite an 8.5% decline in revenue to $233.30 million compared to the previous year, Fossil managed to narrow its net loss significantly. The company reiterated its full-year guidance, showing confidence in its ability to achieve long-term profitable growth. However, the results fell short of expectations, and guidance was maintained in line with previous projections.

Revenue

Fossil Group's total revenue for Q1 2025 was $233.30 million, marking an 8.5% decrease from Q1 2024. The watches segment contributed $188.60 million, while leather goods generated $17.20 million. Jewelry sales accounted for $22.30 million, and other segments added $5.20 million. This decline reflects challenges across various product categories and markets.

Earnings/Net Income

Fossil Group reduced its losses to $0.33 per share in Q1 2025, an improvement from the $0.46 per share loss in Q1 2024. The net loss narrowed to $17.90 million, a 26.3% reduction from the $24.30 million loss in the previous year. The improvement in EPS indicates progress, but the company remains in a loss position.

Price Action

The stock price of Fossil Group fell by 3.08% on the day of the earnings report, increased by 0.80% over the trading week, and rose 29.46% month-to-date.

Post-Earnings Price Action Review

The strategy of buying Fossil Group shares after a revenue drop on the earnings release date and holding for 30 days has resulted in significant losses over the past five years, totaling a 52.4% decline. This approach has consistently underperformed the NASDAQ Composite, which achieved a 19.4% return in the same period. The strategy failed to capitalize on brief recovery periods, such as a 12% growth in the luxury segment in Q1 2025, as ongoing challenges in the leathers and jewelry categories hindered potential recoveries. Market sentiment did not align with this strategy, as share prices occasionally surged following revenue drops but failed to sustain gains. Overall, this investment approach proved ineffective, and investors should consider alternative strategies.

CEO Commentary

"We are pleased to deliver another quarter of progress under our turnaround plan," said Franco Fogliato, CEO. The company narrowed its sales declines, increased gross margin by 890 basis points, and achieved a second consecutive quarter of positive adjusted operating profit. Despite a challenging macro environment, Fossil's diverse global footprint mitigates tariff exposure, with strategies in place to protect its gross margin profile. Fogliato expressed confidence in the turnaround plan, stating that strong first-quarter performance indicates the company is on the right path to achieving long-term profitable growth.

Guidance

Fossil Group reiterates its full-year 2025 guidance, emphasizing its belief in driving long-term profitable growth based on the strong performance in the first quarter. The company is optimistic that its turnaround strategies will continue to gain traction, supporting its outlook for improved financial results throughout the year.

Additional News

Fossil Group announced notable leadership changes, appointing Pamela Edwards and Wendy Schoppert to its Board of Directors on May 14, 2025. These appointments aim to strengthen the company's governance and strategic direction as it continues its turnaround efforts. In addition, Randy Greben was appointed as Chief Financial Officer, effective March 17, 2025, further enhancing the executive team with his expertise. These developments reflect the company’s commitment to revitalizing its leadership and driving long-term growth.