Fossil Group (FOSL) Q4 2025 earnings summary

Executive summary

• 2025 marked a transformative year, exceeding financial and operational expectations through a turnaround plan focused on core business, cost structure, and balance sheet strength.

• Built a brand-led, consumer-focused model, assembled a new management team, and fostered a culture of accountability and innovation.

• Achieved strong execution in product innovation, marketing, and wholesale relationships, positioning for sustainable growth.

• Entered 2026 with momentum and unveiled the next phase of the Turnaround Plan, raising long-term financial targets.

Financial highlights

• Full-year 2025 net sales reached $1 billion, with Q4 net sales at $280.5 million, reflecting a 12.3% year-over-year decline and impact from store closures.

• Gross margin for 2025 expanded 390 basis points to 56.1%; Q4 gross margin was 57.4%.

• SG&A expenses reduced by over $100 million, down 16% year-over-year, with 49 store closures.

• Adjusted operating income for 2025 was $12 million, a significant improvement from prior losses.

• Ended 2025 with $95.8 million in cash, $66.9 million in revolver availability, and inventory down 15% to $151.8 million.

Outlook and guidance

• 2026 net sales expected at $945–$965 million, with a return to top-line growth in Q4.

• Adjusted operating margin guidance of 3%–5% for 2026; break-even free cash flow anticipated.

• 2026 projected as the sales low point, one year ahead of prior plan, with mid- to upper-50s gross margin expected.

• Three-year outlook rolled forward: mid-single-digit sales growth, high single-digit operating margins, and positive free cash flow by 2028.