Fossil Posts $11.7 Million Net Profit in Third Quarter

Key Facts

Fossil Group reported on November 10 results for its fiscal third quarter ended October 3, 2026, posting net income of $11.7 million, or $0.19 per diluted share, compared with a net loss of $39.9 million and a loss of $0.76 per share a year earlier. The results showed the company returned to profitability during the quarter, with earnings and revenue topping analyst estimates. Adjusted earnings were $0.19 per share, versus consensus estimates for a loss of $0.10 per share. Revenue reached $271.2 million, ahead of estimates of $248.88 million. The contrast between limited sales growth and the sharp swing in net results reflects improved margins and operating performance during the period.

Net sales rose to $271.2 million from $270.2 million in the year-earlier quarter, up 0.4% on a reported basis and 2.0% excluding the impact of foreign-exchange movements. Profitability improved much faster than revenue, with operating income turning to $25.3 million from an operating loss of $21.7 million a year earlier. The constant-currency adjusted operating margin was 11.0%, compared with negative 5.3% in the year-earlier period. Gross margin also rose 10.8 percentage points to 59.8% from 49.0%. The company attributed the margin expansion to lower minimum royalties on licensed brands, improved product margins driven by full-price selling and sourcing initiatives, and lower tariffs.

Performance varied across product categories: traditional watch sales rose 6.4% in constant currency, while sales of the Fossil brand increased 13.6%. By contrast, leather sales fell 20.5% and jewelry sales declined 10.8% year over year. The company said higher sales were tied to consumer response to product innovation and marketing storytelling. It also said store-network optimization initiatives weighed on quarterly sales by about 190 basis points. The figures show that sales growth did not extend across all categories, despite improvement in overall revenue and margins.

Across markets and sales channels, constant-currency sales rose 15.1% in Asia and 0.1% in the Americas, while falling 5.6% in Europe. Wholesale sales increased 4.4%, while direct-to-consumer sales declined 5.9%. Chief Executive Franco Fogliato said the quarter’s results reflected momentum across brands, channels and regions. He added that year-to-date results had exceeded the company’s expectations, supporting an increase to its full-year financial outlook. The divergence across regions and channels shows that the overall improvement was concentrated in parts of the business, with direct-to-consumer sales still weak and sales in Europe contracting.

Fossil raised its fiscal 2026 outlook to global sales of between $980 million and $990 million, an adjusted operating margin of between 5.5% and 6.5%, and positive free cash flow. In its second-quarter update, the company had expected global sales to decline 3% to 5% in 2026 and an adjusted operating margin of between 4% and 6%. Moving from a forecast of contraction to a defined annual sales range marks a change in the company’s assessment of the year’s trajectory. At the quarter’s end on October 3, total liquidity was $111.7 million, including $77.0 million in cash and $34.7 million available under a revolving credit facility. Total debt was $208.0 million, while inventory stood at $189.2 million, up 13.4% from a year earlier; the company said the increase reflected investments to support product innovation and demand.

The stock moved in stages around the results announcement. It closed regular trading on November 10 down 2.36% at $7.87, then rose 18.81% in extended trading to $9.35 after the results were released, surpassing its then 52-week high of $8.25. In a separate report published on November 11, Investing.com said the stock was up 20.2% in after-hours trading; that figure reflects a different timing and session. Fossil said its year-to-date results had exceeded expectations and linked that performance to its higher annual outlook. The key figures the company set for the remainder of the year are its sales range, adjusted operating margin and expectation of positive free cash flow.