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- **Balance Sheet Transformation**: $32.5M new capital and 3-year debt extension completed, marking a major turnaround milestone.
- **Revenue Resilience**: Q3 net sales down 7% YoY, but full price selling lifted AUR and narrowed sales decline.
- **Gross Margin Recovery**: Mid-50s target for 2025, with Q3 margin at 48.7% despite royalty headwinds.
- **Cost Efficiency**: $60M year-to-date savings, SG&A down 10% YoY, and adjusted operating loss narrowed to $15M Q3.
- **Asia Growth**: India up double digits, Japan improving, and Diesel brand strong in EMEA.
- **Inventory Tightening**: 26% YoY decline, supporting higher AUR and margin recovery.

**【CEO Summary Section】**
- **Balance Sheet Restructuring**: Completed bond exchange, extending debt maturity to 2029 and securing $32.5 million new capital, marking a major turnaround milestone.
- **Revenue Performance**: Q3 net sales down 7% YoY (constant currency), driven by improved wholesale channel and Fossil retail stores. Full price selling strategy narrowed sales decline and lifted AUR.
- **Gross Margin Strength**: Mid-50s gross margin target for 2025, with Q3 margin at 48.7%, despite offsetting minimum royalty deficits. Full price selling reduced discount rate by over 50% YoY.
- **Strategic Initiatives**: Nick Jonas collaboration exceeded expectations, with best-selling items at $300-$400 price points. Store of the Future concept rolled out to U.S. and EMEA locations, driving traffic and higher AOV.
- **Cost Optimization**: Year-to-date cost savings of $60 million, SG&A reduced 10% YoY, and adjusted operating loss narrowed to $15 million Q3 vs. $22 million YoY.
- **Regional Growth**: India and Japan leading DTC performance, with India up double digits and Japan showing improvement. China remains challenging but less promotional, supporting margin recovery.

**【CFO Financial Commentary】**
- **Net Sales**: Q3 $267 million, down 7% YoY (constant currency), with wholesale growth offsetting DTC decline. Inventory down 26% YoY to $167 million, reflecting tighter working capital management.
- **Gross Margin Dynamics**: 48.7% Q3, down 70bps YoY due to minimum royalty true-ups. 2026 license agreements expected to reduce royalty impact, supporting mid-50s margin target.
- **Expense Control**: SG&A at 54.3% of sales (down 160bps YoY), driven by store closures (44 net closures YTD) and cost restructuring. Adjusted operating loss narrowed to $15 million Q3 vs. $22 million YoY.
- **Liquidity & Balance Sheet**: $102 million liquidity (including $80 million cash), supported by new ABL facility. Inventory turnover and receivables management improved cash conversion.
- **Tariff Mitigation**: Sourcing initiatives and supply chain optimization offset tariff headwinds, with no meaningful volume shifts from price increases.

**【Q&A Highlights】**
- **Channel Performance**: Wholesale +3% YoY (constant currency), while DTC comps down 22% due to reduced e-commerce promotions. Stores performing well with AUR lift, e-commerce scaled back to focus on full price sales.
- **Asia Regional Insights**: India leading growth (double digits), Japan improving, China cautious but less promotional. Diesel brand strong in EMEA.
- **Inventory Strategy**: 26% YoY decline driven by SKU rationalization and open-to-buy discipline. Tighter inventory aligns with full price strategy, enabling higher AUR and margin recovery.
- **Balance Sheet Confidence**: CFO highlights $32 million new capital and extended maturity, positioning for positive free cash flow and durable growth.


Fossil Group, Inc. (FOSL) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

FOSL

FOSL fundamentals

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