FOSSIL GROUP, INC. REPORTS THIRD QUARTER 2026 FINANCIAL RESULTS
Fossil Group, Inc. (FOSL) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 FOSSIL GROUP, INC. REPORTS THIRD QUARTER 2026 FINANCIAL RESULTS Reported worldwide net sales of $271 million increase 0.4%; Constant currency worldwide net sales up 2.0% Gross margin expands 10.8 percentage points to 59.8% Third quarter operating income of $25 millio
How this was made
The 30-second read
Why it matters
The raised guidance reflects stronger consumer response to product innovation and improved margins, which may attract growth‑oriented investors.
Market read
The earnings beat and raised outlook could trigger short‑term buying pressure in FOSL and modestly lift the broader consumer discretionary space.
What to watch
Higher operating expenses and a weak jewelry segment could offset margin gains if trends reverse.
Fossil Q3 2026 net sales of $271.2 million rose 0.4% reported and 2.0% in constant currency; GAAP operating income was $25.3 million versus a $(21.7) million loss; full-year 2026 outlook raised
Reported sales were nearly flat (+0.4%), but gross margin rose 10.8 percentage points to 59.8%, operating expenses fell 11.1%, GAAP operating income turned positive at $25.3 million, and the company raised its full-year 2026 outlook. Offsetting this are declines in Europe (-5.6% constant currency), leathers (-20.5%), jewelry (-10.8%) and direct-to-consumer (-5.9%), higher interest expense ($8.9 million versus $4.2 million), a 44.6% effective tax rate, lower stockholders' equity ($80.7 million versus $96.1 million) and a 39-week net sales total below the prior comparison period.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, reported (13 weeks ended Oct 3, 2026)GAAP | $271.2M | – | +0.4% reported |
| Net sales, constant currency (13 weeks ended Oct 3, 2026)non-GAAP | $275.6M | – | +2.0% constant currency |
| Gross profit (13 weeks)GAAP | $162.3M | – | – |
| Gross margin (13 weeks)GAAP | 59.8% | – | +10.8 percentage points |
| Cost of sales (13 weeks)GAAP | $108.9M | – | – |
| Total operating expenses (13 weeks)GAAP | $137M | – | -11.1% |
| Total operating expenses as % of net sales (13 weeks)GAAP | 50.5% | – | – |
| Selling, general and administrative expenses (13 weeks)GAAP | $133.9M | – | -8.8% |
| Restructuring charges (13 weeks)GAAP | $2.9M | – | – |
| Other long-lived asset impairments (13 weeks)GAAP | $200K | – | – |
| Operating income (loss) (13 weeks)GAAP | $25.3M | – | – |
| Operating margin (13 weeks)GAAP | 9.3% | – | – |
| Constant currency adjusted operating income (13 weeks)non-GAAP | $30.2M | – | – |
| Constant currency adjusted operating margin (13 weeks)non-GAAP | 11.0% | – | – |
| Interest expense (13 weeks)GAAP | $8.9M | – | – |
| Other income (expense) - net (13 weeks)GAAP | $4.2 million of income | – | – |
| Income (loss) before income taxes (13 weeks)GAAP | $20.6M | – | – |
| Provision for income taxes (13 weeks)GAAP | $9.2M | – | – |
| Effective income tax rate (13 weeks)GAAP | 44.6% | – | – |
| Net income (loss) attributable to Fossil Group, Inc. (13 weeks)GAAP | $11.7M | – | – |
| Basic earnings per share (13 weeks)GAAP | $0.20 | – | – |
| Diluted earnings per share (13 weeks)GAAP | $0.19 | – | – |
| Adjusted net income (13 weeks)non-GAAP | $14.2M | – | – |
| Adjusted earnings per diluted share (13 weeks)non-GAAP | $0.23 | – | – |
| Adjusted EBITDA (13 weeks)non-GAAP | $36.7M | – | – |
| Adjusted EBITDA as % of net sales (13 weeks)non-GAAP | 13.5% | – | – |
| Net sales (39 weeks ended Oct 3, 2026)GAAP | $705.7M | – | – |
| Gross profit (39 weeks ended Oct 3, 2026)GAAP | $427.8M | – | – |
| Gross margin (39 weeks ended Oct 3, 2026)GAAP | 60.6% | – | – |
| Total operating expenses (39 weeks ended Oct 3, 2026)GAAP | $387.2M | – | – |
| Restructuring charges (39 weeks ended Oct 3, 2026)GAAP | $8.4M | – | – |
| Operating income (loss) (39 weeks ended Oct 3, 2026)GAAP | $40.6M | – | – |
| Operating margin (39 weeks ended Oct 3, 2026)GAAP | 5.8% | – | – |
| Interest expense (39 weeks ended Oct 3, 2026)GAAP | $25.7M | – | – |
| Net income (loss) attributable to Fossil Group, Inc. (39 weeks ended Oct 3, 2026)GAAP | $200K | – | – |
| Diluted earnings per share (39 weeks ended Oct 3, 2026)GAAP | $0.00 | – | – |
| Adjusted operating income before FX impact (39 weeks ended Oct 3, 2026)non-GAAP | $46.3M | – | – |
| Constant currency adjusted operating income (39 weeks ended Oct 3, 2026)non-GAAP | $48.3M | – | – |
| Constant currency adjusted operating margin (39 weeks ended Oct 3, 2026)non-GAAP | 6.9% | – | – |
| Total liquidity (as of Oct 3, 2026)other | $111.7M | – | – |
| Cash and cash equivalents (as of Oct 3, 2026)GAAP | $77M | – | – |
| Availability under ABL revolving credit facility (as of Oct 3, 2026)other | $34.7M | – | – |
| Inventories (as of Oct 3, 2026)GAAP | $189.2M | – | +13.4% |
| Total debt (as of Oct 3, 2026)GAAP | $208M | – | – |
| Total assets (as of Oct 3, 2026)GAAP | $723.4M | – | – |
| Stockholders' equity (as of Oct 3, 2026)GAAP | $80.7M | – | – |
| Total stores (as of Oct 3, 2026)other | 174 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Americas (geography)Constant currency net sales were $109.8 million after a $(0.2) million FX impact, per the constant currency table. The release gives the constant currency percentage change only. | $110.0 million (13 weeks ended Oct 3, 2026; prior year $109.7 million) | – | +0.1% constant currency |
| Europe (geography)Constant currency net sales were $86.1 million after a $0.9 million FX impact. The release states Europe decreased 5.6% in constant currency. | $85.2 million (13 weeks ended Oct 3, 2026; prior year $91.2 million) | – | -5.6% constant currency |
| Asia (geography)Constant currency net sales were $79.4 million after a $3.7 million FX impact. The release states Asia increased 15.1% in constant currency. | $75.7 million (13 weeks ended Oct 3, 2026; prior year $69.0 million) | – | +15.1% constant currency |
| CorporateCorporate net sales line as printed in the segment table. No change is printed. | $0.3 million (13 weeks ended Oct 3, 2026; prior year $0.3 million) | – | – |
| Traditional watches (product category)The release states traditional watch sales increased 6.4% in constant currency. Constant currency sales were $236.4 million after a $4.1 million FX impact. | $232.3 million (13 weeks ended Oct 3, 2026; prior year $222.2 million) | – | +6.4% constant currency |
| Smartwatches (product category)No percentage change is printed for smartwatches. Constant currency sales were $0.8 million. | $0.9 million (13 weeks ended Oct 3, 2026; prior year $3.8 million) | – | – |
| Total watches (product category)Total watches including traditional and smartwatches. Constant currency total is $237.2 million. No percentage change is printed. | $233.2 million (13 weeks ended Oct 3, 2026; prior year $226.0 million) | – | – |
| Leathers (product category)The release states the leathers category decreased 20.5% in constant currency during the third quarter. | $12.0 million (13 weeks ended Oct 3, 2026; prior year $15.1 million) | – | -20.5% constant currency |
| Jewelry (product category)The release states jewelry sales declined 10.8% in constant currency during the third quarter. | $22.0 million (13 weeks ended Oct 3, 2026; prior year $25.1 million) | – | -10.8% constant currency |
| Other (product category)Other product category line as printed. No change is printed. | $4.0 million (13 weeks ended Oct 3, 2026; prior year $4.0 million) | – | – |
Full year 2026 outlook
- RevenueWorldwide net sales in the range of $980 million to $990 million (excludes foreign currency impacts)
- NoteAdjusted operating margin in the range of 5.5% to 6.5% (non-GAAP; excludes foreign currency impacts; no GAAP reconciliation provided on a forward-looking basis)
- NotePositive free cash flow (non-GAAP, defined as net cash from operating activities less net cash used in investing activities; no GAAP reconciliation provided on a forward-looking basis)
- NoteThe release states the company is raising 2026 financial guidance
Capital returns
- No share repurchases or dividends are reported in the documents provided.
- Weighted average diluted shares were 61.2 million for the 13 weeks ended Oct 3, 2026, versus 52.4 million in the prior year period (printed share count, not a capital return).
What drove it
- The company attributes the sales increase to strong consumer response to its product innovation and storytelling.
- The company states that store rationalization initiatives unfavorably impacted third quarter sales by approximately 190 basis points.
- Gross margin rose 10.8 percentage points. The company states this primarily reflects reduced licensed brand minimum royalties, the accelerated timing of minimum royalty recognition compared with the prior year, and improved product margins in core categories driven by its full price selling model, sourcing initiatives and reduced tariffs.
- Operating expenses fell 11.1%. The company states SG&A declined largely because of cost reductions and efficiencies gained through its restructuring programs.
- Restructuring charges were $2.9 million in the third quarter of 2026 versus $6.8 million in the prior year quarter, primarily related to professional services and employee costs according to the release.
- Interest expense rose to $8.9 million from $4.2 million. The company attributes this to increased debt issuance cost amortization, higher debt balances and increased interest rates.
- Other income (expense) of $4.2 million of income compared with $6.2 million of expense. The company states this primarily reflects net currency gains in 2026 versus net currency losses in the prior year quarter, which also included a $1.7 million loss on extinguishment of debt.
- The effective tax rate was 44.6% versus (24.8)%. The company states the change is primarily due to pre-tax income in 2026 versus a pre-tax loss in the prior year quarter, as well as shifts in the global mix of earnings and valuation allowance adjustments.
- Asia constant currency sales rose 15.1%, the Americas rose 0.1% and Europe fell 5.6%.
- Wholesale constant currency sales rose 4.4%, while direct to consumer sales fell 5.9%. Comparable retail sales rose 0.1%.
- The Fossil brand rose 13.6% in constant currency during the third quarter according to the release.
Concerns
- Reported net sales were up only 0.4%, and the 39-week net sales total of $705.7 million compares with $723.9 million for the 40 weeks ended Oct 4, 2025.
- Europe fell 5.6% in constant currency, and direct to consumer sales fell 5.9% in constant currency.
- Leathers fell 20.5% and jewelry fell 10.8%, both in constant currency.
- Store count fell from 204 to 174 year over year.
- Interest expense of $8.9 million more than doubled from $4.2 million, and 39-week interest expense was $25.7 million versus $13.0 million.
- The effective income tax rate was 44.6% on a $20.6 million pre-tax income base, with a $9.2 million tax provision.
- Stockholders' equity fell to $80.7 million from $96.1 million while total debt is $208.0 million.
- Inventories rose 13.4% year over year to $189.2 million.
- The gross margin improvement includes effects the company itself names as reduced licensed brand minimum royalties and the timing of minimum royalty recognition.
What to watch
- Delivery against the raised full year 2026 guidance of $980 million to $990 million in net sales and a 5.5% to 6.5% adjusted operating margin. The 39-week adjusted operating margin printed in the reconciliation is 6.6%.
- Whether the Europe and direct to consumer declines persist, and whether Asia growth of 15.1% in constant currency continues.
- Leathers (-20.5%) and jewelry (-10.8%) constant currency trends in the fourth quarter.
- Inventory levels of $189.2 million relative to sales, given the 13.4% year over year increase.
- Interest expense trajectory following the increase to $8.9 million in the quarter, and the company's ability to generate the positive free cash flow it guides to.
- Sustainability of gross margin after the release cites reduced licensed brand minimum royalties and timing of minimum royalty recognition as contributors.
- Effective tax rate normalization after the 44.6% quarterly rate.
Balance sheet and cash flow
- Total liquidity of $111.7 million at Oct 3, 2026, consisting of $77.0 million of cash and cash equivalents and $34.7 million of ABL availability.
- Inventories of $189.2 million, an increase of 13.4% versus a year ago. The company attributes this to investments to support product innovation and demand pipeline.
- Total debt of $208.0 million, shown as long-term debt of $208.0 million with no short-term debt at Oct 3, 2026, versus $7.0 million of short-term debt and $169.1 million of long-term debt a year earlier.
- Total assets of $723.4 million versus $701.0 million; stockholders' equity of $80.7 million versus $96.1 million.
- Operating cash flow and the free cash flow amount for the period are not printed in the documents provided. The company guides to positive free cash flow for full year 2026.
Analysis
Fossil reported third quarter 2026 net sales of $271.2 million, up 0.4% on a reported basis and 2.0% in constant currency from $270.2 million a year earlier. The company attributes the sales growth to consumer response to product innovation and storytelling, and says store rationalization reduced sales by about 190 basis points. Demand is uneven by region and category. Asia grew 15.1% in constant currency, the Americas 0.1% and Europe fell 5.6%. Traditional watches grew 6.4% in constant currency and the Fossil brand 13.6%, while leathers fell 20.5% and jewelry 10.8%. Wholesale rose 4.4% in constant currency and direct to consumer fell 5.9%, with comparable retail sales up 0.1%.
Profitability moved sharply. Gross margin rose 10.8 percentage points to 59.8% from 49.0%, and gross profit was $162.3 million versus $132.4 million. The company says this reflects reduced licensed brand minimum royalties, the accelerated timing of minimum royalty recognition versus the prior year, and better core category product margins from full price selling, sourcing and lower tariffs. Total operating expenses fell 11.1% to $137.0 million, with SG&A down 8.8% to $133.9 million, which the company attributes to restructuring-related cost reductions. GAAP operating income was $25.3 million, a 9.3% margin, against an operating loss of $(21.7) million a year earlier. Constant currency adjusted operating income was $30.2 million, an 11.0% margin.
Below the operating line, interest expense more than doubled to $8.9 million from $4.2 million, which the company attributes to debt issuance cost amortization, higher debt and higher rates. Other income was $4.2 million on net currency gains, against a $6.2 million expense in the prior year. Income before taxes was $20.6 million and net income attributable to Fossil was $11.7 million, or $0.19 per diluted share, versus a $(0.76) loss. Adjusted net income was $14.2 million, or $0.23 per diluted share. The effective tax rate of 44.6% is high relative to pre-tax income, and the company cites its global earnings mix and valuation allowance adjustments.
On the balance sheet, total liquidity was $111.7 million, with $77.0 million of cash and $34.7 million of ABL availability. Total debt is $208.0 million. Inventories rose 13.4% to $189.2 million, which the company links to investment in innovation and its demand pipeline. Stockholders' equity fell to $80.7 million from $96.1 million. The release does not print operating cash flow, free cash flow or capital return amounts for the period.
Management raised full year 2026 guidance to worldwide net sales of $980 million to $990 million, an adjusted operating margin of 5.5% to 6.5%, and positive free cash flow. The 39-week figures show the turnaround is still early against the base period: net sales were $705.7 million against $723.9 million for 40 weeks a year earlier, while 39-week operating income of $40.6 million compares with $(20.0) million. The quarter's margin gains, the largest driver being lower and differently timed royalty costs, need to hold for the guidance to be met, and the Q4 trend in Europe, direct to consumer and leathers and jewelry will show whether the top line growth is broadening.
Management, verbatim
The three strategic pillars under our turnaround plan are translating to top line growth and accelerating profitability.
Franco Fogliato, CEO
We are pleased that year-to-date results are outpacing our expectations, supporting an increase in our full year financial outlook on both the top and bottom line.
Franco Fogliato, CEO
Not in the filing
stated, not guessed- Prior full year 2026 guidance: the previous outlook was not provided, so no guidance comparison or guidance-change figures were made.
- Operating cash flow and free cash flow amounts for the quarter and year to date are not printed.
- Share repurchase and dividend amounts are not printed.
- Prior-year figure and percentage change for gross profit (13 weeks) are not printed.
- Prior-year percentage change for net sales constant currency is not printed as a dollar figure; the prior-year column is blank for the constant currency row.
- Prior-year constant currency adjusted operating income and margin: the prior year is printed as adjusted (not constant currency), so no like-for-like change is given.
- Year-over-year change for constant currency adjusted operating income and margin is not printed.
- Wholesale and direct to consumer sales dollar values are not printed; only constant currency percentage changes are given.
- Comparable retail sales dollar value is not printed; only the +0.1% percentage change is given.
- Fossil brand sales dollar value is not printed; only the +13.6% constant currency change is given.
- The 39-week 2026 comparison is against a 40-week 2025 period, so the year-to-date prior-year figures are not on the same period length. This is printed in the release as the 40 weeks ended October 4, 2025.
- Operating loss for 40 weeks ended Oct 4, 2025 is printed as $(20.0) million on the income statement and $(19.9) million in the reconciliation table. Both are printed; the income statement figure is used.
- Quarter-over-quarter percentage changes are not printed for most lines; only fiscal Q2 2026 adjusted EBITDA ($8.6 million) is available from the reconciliation table.
- Full year 2026 guidance for gross margin, operating expenses and tax rate is not printed.
- Consensus estimates, analyst expectations and share price reaction are not provided in the documents.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Fossil Group, a U.S. fashion accessories maker, filed a Form 8‑K with its Q3 2026 earnings and updated guidance.
Ticker impact
Fossil Group reported Q3 2026 results and raised its full‑year 2026 outlook, including higher net sales and operating margin.
likely upward pressure as investors price in higher sales and margin expectations
The company posted a swing to operating income and expanded gross margin, then explicitly raised its full‑year outlook, which typically drives buying interest.
Market effects
Positive for the consumer accessories and fashion apparel sector as Fossil's turnaround may signal demand recovery.
Modest uplift for U.S. consumer discretionary equities.
Limited, primarily affecting investors tracking small‑cap consumer brands.
Counterpoint
If the sales growth is driven by one‑off inventory adjustments, the raised outlook may be unsustainable.
Key entities
- companyFossil Group, Inc.
U.S. consumer accessories manufacturer reporting Q3 2026 results.
