Fossil Group Reports $17.6 Million Net Loss and 8.5% Sales Decline in Latest Quarter

Fossil Group, Inc. reported a net loss of $17.6 million, or $0.33 per diluted share, for the fiscal quarter ending April 5, 2025, compared to a net loss of $24.3 million, or $0.46 per diluted share, in the same period last year. The company's net sales decreased by 8.5% to $233.3 million from $254.9 million in the prior year, with declines across all geographic segments. The Americas segment saw a decrease of 11.2%, while Europe and Asia reported declines of 1.8% and 12.5%, respectively. The decline in sales was attributed to overall category softness, particularly in smartwatches, which saw a 55.1% drop as the company exited the category.

Fossil's gross profit increased to $143 million, resulting in a gross margin of 61.3%, up from 52.4% in the prior year. This improvement was driven by better product margins in core categories, a favorable product mix, and reduced freight costs. Operating expenses decreased to $149.7 million, or 64.2% of net sales, down from $162.7 million, or 63.8% of net sales, in the previous year. The reduction in operating expenses was primarily due to cost-saving measures implemented as part of the company's restructuring efforts, which included $15.8 million in restructuring costs during the quarter.

In terms of strategic developments, Fossil Group is undergoing a Turnaround Plan aimed at returning to profitable growth. This plan focuses on refocusing on core businesses, rightsizing the cost structure, and strengthening the balance sheet. The company anticipates achieving approximately $100 million in selling, general, and administrative cost savings in fiscal 2025 compared to fiscal 2024. As part of this initiative, Fossil has closed 57 stores, representing a 20.6% reduction in its retail footprint since the end of the prior year.

Operationally, Fossil's total liquidity at the end of the quarter was $99.5 million, down from $122.8 million a year earlier. The company had $78.3 million in cash and cash equivalents, with $76.4 million held by foreign subsidiaries. Fossil's total debt stood at $182.3 million, including $150 million in senior notes and $20 million under its revolving credit facility. The company is actively pursuing initiatives to improve working capital and strengthen liquidity, particularly in light of upcoming debt maturities in late 2026.

Looking ahead, Fossil Group remains cautious about the economic environment, particularly regarding consumer spending and potential impacts from tariffs on imports from China. The company is monitoring these factors closely and is prepared to implement further cost-reduction strategies if necessary. The management's outlook emphasizes the importance of executing the Turnaround Plan effectively to achieve positive adjusted operating margins and improve overall financial performance in the coming quarters.