Fossil Group 2025 Q3 Earnings Wider Loss Amid Revenue Decline

Fossil Group (FOSL) reported mixed third-quarter results, with revenue exceeding estimates but a significantly wider-than-expected loss. The company reiterated full-year guidance, projecting mid-teens sales declines and breakeven operating margins, while addressing structural challenges through debt restructuring and cost discipline.

Revenue

Fossil Group’s total revenue fell 6.1% year-over-year to $270.20 million in Q3 2025, driven by a 7% drop in net sales. Watches remained the core driver, contributing $226.04 million, while leathers and jewelry segments posted declines of 37% and 23%, respectively. The company attributed the revenue contraction to intentional e-commerce reductions and ongoing challenges in China, offset by improved average unit retail prices and lower promotional activity.

Earnings/Net Income

The company’s losses widened to $0.76 per share in Q3, a 26.7% deterioration from the $0.60 loss in the prior-year period. Net income turned negative at $-40.04 million, representing a 25.4% increase in losses compared to $-31.93 million in 2024 Q3. The EPS miss of $0.27 below estimates highlighted structural pressures, despite revenue outperforming expectations.

Post-Earnings Price Action Review

The strategy of buying Fossil Group shares on earnings announcements has shown inconsistent returns over three years. While 2023 saw sustained price gains post-announcement, 2024’s momentum faded quickly, and 2025’s results led to immediate declines. Market reactions varied with broader economic conditions and investor sentiment, underscoring the strategy’s dependence on contextual factors.

CEO Commentary

CEO Franco Fogliato emphasized progress in the turnaround plan, including a $32.5 million bond restructuring extending debt to 2029 and cost savings exceeding $60 million. Strategic initiatives like the Nick Jonas campaign and “Store of the Future” concept are driving higher average unit retail and improved conversion rates, with leadership confident in breakeven operating margins for 2025.

Guidance

Fossil Group reaffirmed full-year 2025 guidance: mid-teens sales declines (including $40 million from store closures) and breakeven to slightly positive adjusted operating margins. Q4 gross margins are expected to align with 2024 levels, with cost discipline supporting positive adjusted operating margins.

Additional News

1. Debt Restructuring: Fossil Group completed a $32.5 million bond exchange, extending debt maturity to 2029 and securing access to a $150 million asset-based credit facility.

2. Strategic Partnerships: The company signed a new distribution agreement with Italy’s Morellato Group, effective January 2026, to expand market reach in key European regions.

3. Credit Rating Downgrade: S&P Global downgraded Fossil’s credit rating to SD from CC, citing risks from the restructuring and insufficient compensation to noteholders for the maturity extension.

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