Fossil Group Q1 Sales Drop 3.6% to $224.8M, Operating Income Hits $12M
Fossil Group reported Q1 net sales of $224.8 million, down 3.6% year-over-year, and gross margin fell 140 basis points to 59.9% despite a $4 million tariff refund. Operating income rose to $12 million (5.4% margin) from a $6.7 million loss, while adjusted EBITDA reached $14.5 million.
1. Q1 Net Sales and Margins
Fossil Group’s first quarter net sales reached $224.8 million, a 3.6% decrease from the prior year. Gross margin declined 140 basis points to 59.9%, reflecting higher tariffs partially offset by $4 million in tariff refunds.
2. Operating Income and Cost Reductions
Operating income turned positive at $12 million, a swing from a $6.7 million loss in Q1 2025, yielding a 5.4% operating margin. SG&A expenses decreased 9.9% to $120.6 million, and adjusted EBITDA rose to $14.5 million, or 6.5% of net sales.
3. Regional, Channel and Product Mix Trends
Constant currency sales fell 14% in Europe, 3% in the Americas and 1% in Asia. Wholesale channels grew 5% while direct-to-consumer sales dropped 29%, driven by a 15% comparable store sales decline, with traditional watches flat and leather goods down 41%.
4. Outlook Reaffirmation and Strategic Focus
Fossil Group reiterated its 2026 outlook, expecting a return to top-line growth in the fourth quarter. Management highlighted ongoing store rationalization and product innovation initiatives as key drivers for long-term profitable growth.