Fossil Group returns to profitability in Q3 as turnaround strategy gains traction

US accessories and watch company Fossil Group, Inc. (Fossil) reported net sales of 271.20 million dollars for the fiscal third quarter ended October 3, 2026. Net sales rose 0.4 percent on a reported basis and 2 percent in constant currency, compared to 270.20 million dollars in the third quarter of fiscal 2025. Store rationalisation initiatives unfavourably impacted revenue by approximately 190 basis points during the period.

Wholesale sales in constant currency increased 4.4 percent, while direct-to-consumer (D2C) sales decreased 5.9 percent. Within D2C channels, which encompass e-commerce and retail stores, comparable retail sales increased 0.1 percent. Core traditional watch sales advanced 6.4 percent in constant currency; the leathers category contracted 20.5 percent; jewellery revenue declined 10.8 percent.

The flagship Fossil brand generated a 13.6 percent sales increase in constant currency compared to the prior-year period. Across geographical regions in constant currency, net sales in Asia grew 15.1 percent and the Americas edged up 0.1 percent, whereas Europe decreased 5.6 percent.

Expansion in gross margin and turnaround momentum

Gross profit reached 162.30 million dollars compared to 132.40 million dollars in the prior-year period. Gross margin expanded 10.8 percentage points to 59.8 percent from 49 percent in the third quarter of 2025. The year-over-year (YoY) increase stemmed from lower licensed brand minimum royalties, accelerated royalty timing, sourcing efficiencies, reduced tariffs and full-price selling.

Fossil generated an operating income of 25.30 million dollars, turning around an operating loss of 21.70 million dollars in the prior-year period. Operating margin rose to 9.3 percent from negative 8 percent. Constant currency adjusted operating income reached 30.20 million dollars, delivering an adjusted operating margin of 11 percent.

Adjusted EBITDA stood at 36.70 million dollars, representing 13.5 percent of net sales, compared to negative 15 million dollars in the third quarter of 2025. Net income totalled 11.70 million dollars with diluted earnings per share of 0.19 dollars, up from a net loss of 39.90 million dollars in the comparative period. Adjusted net income reached 14.20 million dollars, compared to an adjusted net loss of 32.80 million dollars a year prior.

Raised full-year outlook across top and bottom line

“Our strong third quarter results reflect momentum across brands, channels and geographies and demonstrate that our product innovation and storytelling is connecting with consumers around the globe,” said Fossil chief executive officer Franco Fogliato.

Fogliato stated that the three strategic pillars under the turnaround plan are translating to top-line growth and accelerating profitability. Management noted that year-to-date execution has outpaced internal expectations, providing confidence in long-term performance.

Following the third-quarter results, Fossil raised its financial guidance for the full year 2026. The group expects worldwide net sales in the range of 980 million dollars to 990 million dollars. Adjusted operating margin is projected between 5.5 percent and 6.5 percent, alongside positive free cash flow.