Fossil CEO Says Turnaround Is Ahead of Plan as Sales Return to Growth

Fossil Group is showing early signs of recovery, with sales returning to growth and profitability improving under its ongoing turnaround strategy. CEO Franco Fogliato says the company is approximately 18 months ahead of its original recovery timeline following stronger-than-expected third-quarter results.

Sales and Profitability Improve

For the fiscal third quarter ended October 3, 2026, Fossil reported net sales of $271.2 million, up 0.4% from $270.2 million a year earlier. Sales increased 2% on a constant-currency basis.

The company also reported operating income of $25.3 million, compared with an operating loss of $21.7 million in the same period last year. Net income reached $11.7 million, reversing a $39.9 million net loss recorded a year earlier.

Gross margin improved by 10.8 percentage points to 59.8%, reflecting stronger business performance and cost-management efforts.

Strategy Focuses on Core Watch Business

Fossil's recovery plan has involved closing underperforming stores, reducing promotional activity, improving marketing and strengthening its product offering. The company is also placing greater emphasis on traditional watches rather than competing aggressively in the smartwatch market.

Traditional watches account for approximately 86% of Fossil's sales and recorded 6.4% growth during the quarter. Asia was another important growth driver, with regional sales increasing 15.1%, supported by strong performance in India.

Full-Year Outlook Raised

Following its improved performance, Fossil raised its 2026 financial outlook. The company now expects worldwide net sales between $980 million and $990 million, alongside an adjusted operating margin of 5.5% to 6.5%. It also expects to generate positive free cash flow for the year.

Fogliato said the latest results reflect progress across the company's brands, sales channels and international markets. While challenges remain, Fossil's return to sales growth and improved profitability indicate that its turnaround strategy is beginning to deliver results.

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