FOSL Incurs Narrower Y/Y Loss in Q2, Lifts 2025 Outlook

Shares of Fossil Group, Inc. FOSL have soared since its latest quarterly earnings release. The stock has surged 76.6% since the company reported results for the quarter ended July 5, 2025 compared with a 0.1% gain for the S&P 500 index. Over the past month, the rally has been even sharper, with Fossil advancing 94.4% compared with the S&P 500’s 2.5% rise. The steep climb reflects investor enthusiasm around the company’s turnaround progress and financial outlook.Fossil incurred a second-quarter 2025 adjusted net loss of 10 cents per share, narrower than a loss of 47 cents per share in the prior-year quarter. Net sales of $220.4 million denoted a 15.2% decline from $260 million in the prior-year period. The drop resulted from ongoing softness across product categories and channels, particularly from the exit of the smartwatch segment and store rationalizations, which accounted for about six percentage points of the decline. Despite weaker top-line results, profitability metrics improved meaningfully.The gross profit came in at $126.7 million, down 7.4% year over year. However, the gross margin expanded 490 basis points to 57.5% from 52.6% a year ago.Operating income reached $8.5 million, swinging from a $34 million loss in the second quarter of 2024. On an adjusted basis, operating income was $3.8 million compared to an adjusted operating loss of $17 million a year earlier. The net loss narrowed sharply to $2.3 million from $38.8 million in the year-ago quarter. The adjusted net loss was $5.6 million compared to $25.1 million in the prior year.Fossil Group, Inc. Price, Consensus and EPS Surprise Fossil Group, Inc. price-consensus-eps-surprise-chart | Fossil Group, Inc. QuoteOther Key Business Metrics of FOSLSales declines were broad-based across regions and categories. On a constant-currency basis, revenues fell 19% in the Americas, 14% in Europe and 12% in Asia. Wholesale sales dropped 6%, while direct-to-consumer revenues sank 30%, with comparable retail sales down 23%. Product-wise, traditional watch sales declined 8%, leather goods plummeted 39%, and jewelry fell 22%.The company closed 47 stores over the past year, reducing its global store base to 214 from 258. Inventories were down 11.9% year over year to $178.1 million, reflecting improved working capital management. Liquidity stood at $110.6 million, including nearly $110 million in cash.Fossil: Management CommentaryCEO Franco Fogliato emphasized that the quarter marked the third consecutive period of positive adjusted operating income, underscoring the effectiveness of its turnaround plan. He highlighted cost control, gross margin strength and a newly announced refinancing plan as key achievements. The company also pointed to upcoming brand-building initiatives, including a global campaign featuring celebrity ambassador Nick Jonas.Fogliato and CFO Randy Greben noted that marketing investments and new product launches in the second half of 2025 are expected to strengthen brand positioning. Executives highlighted traction in traditional watches and improvements in e-commerce profitability, supported by more disciplined promotional activity and cost optimization.Factors Influencing FOSL’s ResultsThe improvement in margins stemmed largely from sourcing initiatives, reduced freight costs and the exit from the lower-margin smartwatch business. Cost reductions from restructuring programs also played a role, with selling, general and administrative expenses falling nearly 28% year over year. A one-time $11 million gain from the sale of a European warehouse bolstered results.Still, consumer demand remained pressured, with softness across categories and geographies. Tariff increases partially offset the margin gains, and management acknowledged persistent challenges in retail traffic and category headwinds.Guidance by FossilEncouraged by year-to-date progress, Fossil raised its full-year 2025 outlook. The company now expects worldwide net sales to decline in the mid-teens compared with the prior guidance of a mid- to high-teens drop. The adjusted operating margin is projected to be breakeven to slightly positive against the earlier view of a negative, low single-digit outcome. Management added that the second half would benefit from product innovation, marketing campaigns and improved cost leverage.Other Developments at FOSLAlongside earnings, Fossil announced a comprehensive refinancing plan designed to strengthen liquidity and support its turnaround strategy. The company secured a new $150 million asset-based revolving credit facility with Ares Management Credit Fund, providing enhanced financial flexibility with a five-year maturity. 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Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fossil Group, Inc. (FOSL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks