Fossil Group 2025 Q3 Earnings Revenue Beats, Wider Losses Overshadow Outlook

Fossil Group (FOSL) reported mixed Q3 2025 results, with revenue exceeding expectations but a wider-than-anticipated loss driving a sharp stock decline. The company reiterated full-year guidance for mid-teens sales declines and a break-even operating margin, signaling ongoing challenges despite strategic debt restructuring and cost-cutting efforts.

Revenue

Total revenue fell 6.1% year-over-year to $270.20 million, with watches remaining the core driver at $226.04 million. Leathers and jewelry segments reported declines of 37% and 23%, respectively, to $15.09 million and $25.06 million. The “other” category contributed $4.01 million, reflecting a broader shift toward core watch offerings. Wholesale performance offset weaker direct-to-consumer sales, which dropped 27%.

Earnings/Net Income

The company’s net loss widened to $40.04 million, or $0.76 per share, representing a 25.4% increase in losses compared to Q3 2024. This marked a 38-cent miss relative to analyst estimates and underscored margin pressures from royalty deficits and cost overruns. The EPS shortfall highlights the challenge of balancing revenue growth with profitability.

Post-Earnings Price Action Review

The strategy of buying Fossil Group shares on revenue beats and holding for 30 days yielded mixed results over the past three years. While revenue exceeded expectations in 33% of quarters, the stock’s short-term gains were often eroded by subsequent declines. For instance, a 14% post-Q3 drop overshadowed the revenue beat, driven by a wider-than-expected loss. Long-term volatility and structural sales erosion limited the strategy’s consistency, with two of four quarters ending in net losses. The success of such trades remains contingent on broader market conditions and the company’s ability to stabilize operations.

CEO Commentary

CEO Franco Fogliato emphasized progress in the turnaround plan, including a completed balance sheet transformation and gross margin stabilization. However, he acknowledged ongoing challenges in DTC sales (-27%) and underperforming categories like leathers (-37%). The CEO expressed confidence in the company’s post-restructuring foundation for “profitable growth,” though risks like economic uncertainty and Chinese market contraction remain.

Guidance

Fossil Group reaffirmed its 2025 outlook, projecting mid-teens net sales declines (excluding $45 million from store closures) and an adjusted operating margin near break-even. The guidance excludes foreign currency impacts, with liquidity and cost discipline cited as key enablers.

Additional News

Fossil Group completed a strategic debt restructuring, extending maturity to 2029 and securing $32.5 million in new capital. The company also received recognition on Time’s list of the world’s best brands for the second consecutive year. Meanwhile, store closures accelerated, with 44 locations shuttered in 2025 to streamline operations and reduce costs.