Fossil Group (NASDAQ:FOSL) executives used the company’s latest earnings call to outline what CEO Franco Fogliato described as a “transformative year,” highlighting progress on a multi-year turnaround plan and providing a 2026 outlook that management expects will mark a sales “low point” before a return to growth later in the year.
2025 results: higher margins, lower costs, and a return to adjusted operating profit
Management said 2025 performance exceeded expectations and came in above updated midyear guidance. For the full year, Fossil reported net sales of $1 billion. Gross margin expanded 380 basis points to 55.9%, while SG&A declined by more than $100 million, contributing to positive adjusted operating income of $11 million, which the company said was a $48 million year-over-year improvement.
Greben attributed 2025 gross margin improvement to several actions, including lowering the discount rate, strengthening the supply chain, negotiating better terms with suppliers, retooling “open to buy” processes, and implementing targeted price increases. He added that these actions helped Fossil “largely mitigate tariff headwinds” during 2025. Looking to 2026, he said guidance assumes the company continues to offset the current tariff rate structure through mitigation strategies and does not embed material rate changes or any tariff refunds.
Turnaround strategy: shift to full-price selling and rebuild brand momentum
Fogliato emphasized the company’s efforts to refocus on its core business, rightsize its cost structure, and strengthen the balance sheet. He said Fossil has worked to establish a “full price selling model” by “radically transforming” its promotional cadence across channels, with the goal of sustaining gross margin in the “mid-fifties” and improving profitability across wholesale and direct-to-consumer.
On the brand side, Fogliato said Fossil built a “brand platform for the future” through improvements in the customer journey, product innovation, and “heritage brand storytelling.” He also pointed to efforts to “re-energize” core licensed brands including Michael Kors, Emporio Armani, Armani Exchange, and Diesel, including investment in point-of-sale presentation and a renewed focus on specialty watch retail. Fossil also prioritized key wholesale markets such as the U.S. and India, which contributed to 2% global growth in wholesale traditional watch sales for core brands in 2025, according to management.
Product and marketing initiatives: Big Tic return, new premium platform, and more collaborations
Looking ahead, Fogliato said the next phase of the company’s plan is focused on “returning to profitable growth, optimizing our operating model, and building shareholder value.” Within the growth pillar, he detailed a product roadmap centered on watch icons and collaborations, alongside plans to reinvigorate jewelry and leather categories.
- Watch icons and extensions: The company plans innovation and expansion in the Everett, Harlow, Machine, and Raquel platforms, as well as watch rings, and said it will “double down” on its Minis collection across top women’s platforms.
- Collaborations: After collaborations in 2025 including Fantastic Four, Galactus, Minecraft, Shelby, and Superman, Fossil plans to continue “culturally relevant partnerships” in 2026 and focus on converting collaboration shoppers into longer-term customers.
- Big Tic: One of the most significant introductions is the return of Fossil Big Tic, a design originally introduced in the late 1990s. Fogliato said the company recently launched a limited-edition Y2K capsule followed by a “reinvention” of Big Tic Machine, and described early consumer response and press feedback as “tremendous.”
- Signature platform: Fossil plans to introduce Signature, described as the company’s “first premium platform in more than a decade,” later in the year, with an emphasis on craftsmanship and technical sophistication.
Fogliato also highlighted Fossil’s partnership with brand ambassador Nick Jonas, saying Jonas is anchoring campaigns across the Nick Jonas collection, Machine, and Big Tic.
On the marketing front, Greben clarified during Q&A that the company expects to spend slightly less on marketing in 2026 versus 2025, while aiming to deploy spending more efficiently through improved media mix modeling and ambassador usage.
Channel and geographic priorities: wholesale focus, e-commerce reset, store optimization, and India expansion
In wholesale, the company said it is concentrating on top customers in “must-win markets” including the U.S., France, Germany, and India, while expanding distribution to specialty retailers that can reach a younger demographic.
In e-commerce, Fogliato said Fossil cut its discount posture by more than 50% and redesigned its website to improve storytelling and the customer journey. He described the result as a “smaller but more profitable” channel with higher average unit retail (AUR).
In retail, management said it is optimizing its store portfolio and rolling out a “store of the future” concept in the U.S. and EMEA, which it said has improved metrics including AUR and conversion by shifting toward proactive clienteling and community focus.
India was a notable area of emphasis. Fogliato called it a strategic market with category leadership and strong momentum. In 2026, Fossil plans to broaden assortment, enter premium price points, introduce limited editions, expand wholesale doors, and open new Fossil retail stores in the region.
Balance sheet and 2026 outlook: sales guidance and profitability targets
Greben said Fossil ended 2025 with $96 million in cash and cash equivalents and $67 million of availability under its asset-based revolver, with no utilization of its ATM program. Year-end inventory was $152 million, down 15% from the prior year; Greben added inventory has been reduced by more than $200 million over the last three years and rebalanced toward “far more full-margin products.”
For 2026, Fossil guided to worldwide net sales of $945 million to $965 million, including approximately $21 million of impact related to store closures. Greben said that implies a 4% to 6% decline year over year, but a significant improvement in the rate of decline versus last year. Management expects 2026 to be second-half weighted, with year-over-year declines slowing and a return to top-line growth in the fourth quarter.
The company expects gross margins to remain “healthy” in the mid- to upper 50s and forecast adjusted operating margin of 3% to 5% with break-even free cash flow in 2026. Longer term, Greben said the company is “rolling forward” its three-year outlook by one year, targeting mid-single-digit sales growth, high single-digit adjusted operating margins, and positive free cash flow in 2028.
During Q&A, Fogliato said wholesale partners have responded positively to the company’s shift away from heavy promotions and to what he described as improved consistency and execution. He also said the company was surprised by the resilience of demand as it moved to a full-price model, noting it may have shed some deal-seeking customers while attracting consumers drawn to the brand’s current product and storytelling.
About Fossil Group (NASDAQ:FOSL)
Fossil Group, Inc designs, develops, markets and distributes consumer fashion accessories, focusing on lifestyle and wearable technology. The company offers a wide range of products including analog and digital watches, smartwatches, jewelry, handbags, small leather goods and wearable devices. It sells merchandise under its own Fossil brand and via license agreements with international labels such as Michael Kors, Armani Exchange, Burberry, Diesel, DKNY, Kate Spade and Tory Burch. Through its proprietary e-commerce platforms and global retail network, Fossil Group serves markets across North America, Europe, Asia and the Middle East.
The group’s wearable technology segment combines traditional timepieces with features such as fitness tracking, heart-rate monitoring and NFC payments.
