Fossil Group (FOSL) Q2 2026 earnings summary

Executive summary

• Q2 net sales were $209.7 million, down 4.9% year-over-year, with declines mainly in Europe and direct-to-consumer channels, but growth in Asia and stable performance in the Americas.

• Gross margin expanded to 62.4%, exceeding expectations due to full price selling, sourcing initiatives, and reduced tariffs.

• Constant currency adjusted operating income doubled year-over-year to $8.6 million (4.1% margin), while GAAP operating income was $3.2 million (1.5% margin), impacted by higher SG&A and lower asset sale gains.

• Net loss attributable to shareholders was $10.6 million ($0.18 per diluted share), compared to a $2.3 million loss in the prior year.

• Raised full-year 2026 outlook, expecting a return to top-line growth in Q4, improved profitability, and positive free cash flow.

Financial highlights

• Americas net sales rose 1.0% to $96.7 million, while Europe fell 17.0% to $55.8 million and Asia declined 1.0% to $56.8 million.

• Gross profit increased to $130.8 million, with gross margin up 490 basis points to 62.4% year-over-year.

• Adjusted EBITDA was $8.6 million (4.1% of net sales), up from $7.0 million (3.2%) year-over-year.

• Cash and cash equivalents at quarter-end were $79.0 million, with total liquidity of $96.6 million and total debt of $203.0 million.

• Inventory at quarter end was $178 million, flat year-over-year.

Outlook and guidance

• Full-year 2026 net sales expected to decline 3%-5%, improved from prior guidance of 4%-6% decline.

• Adjusted operating margin outlook raised to 4%-6% from 3%-5%.

• Anticipates return to top-line growth in Q4 and positive free cash flow for the full year.