Watchmaking specialist Fossil Group has reported “another quarter of progress” under its ongoing turnaround plan, according to chief executive officer Franco Fogliato.
Fogliato’s comments come despite the company posting a sales decrease of 8.5 percent on a reported basis for the quarter ended April 5, 2025. This amounted to net sales of 233.3 million dollars, a decline that was “largely driven by overall category, consumer and channel softness”.
Fogliato noted, however, that this reflected a trend of narrowing sales declines over a certain period. His confidence was further boosted by an increase in gross profit to 143 million dollars, alongside a gross margin increase of 890 basis points to 61.3 percent, compared to 52.4 percent in the same period last year. Fossil credited its recent exit from the smartwatch category as one of the benefactors in this regard.
Losses also narrowed for the group. Operating loss over the period fell from 29.2 million dollars to 6.7 million dollars, with an operating margin of minus 2.9 percent. The company’s adjusted EBITDA, meanwhile, sat at 9.1 million dollars, or 3.9 percent of net sales, up from a loss of 10.7 million dollars in the year prior. Net loss as a whole fell from 24.2 million dollars to 17.6 million dollars.
‘Diverse global footprint limits our tariff exposure’
In terms of business divisions, direct-to-consumer sales reported the sharpest year-on-year decline of 24 percent, while wholesale welcomed an increase of 6 percent. The drop in D2C was largely attributed to a 22 percent drop in comparable retail sales. Leather was the poorest performing product category, posting a drop in sales of 37 percent. This was followed by jewellery, for which sales fell 13 percent in constant currency.
While some issues were raised, Fogliato reaffirmed that Fossil Group’s turnaround strategies were “gaining traction and fueling momentum across our business despite the challenging macroeconomic environment”. “Notably, our diverse global footprint limits our tariff exposure and we have a number of levers and mitigation strategies that are expected to help offset impacts and protect our healthy gross margin profile in 2025,” he added.
Looking ahead, Fogliato said that with the strong performance in Q1, he believed the group was “on the right path to driving long-term profitable growth”. As such, Fossil reaffirmed its financial guidance for the full year 2025, which include consideration of retail store closures that are said to impact global net sales by 45 million dollars, putting it in the range of mid to high teens. Adjusted operating income margin is anticipated to be in the negative low single digits.