10-Q · May 14, 2026
Fossil Group, Inc. reported a strong Q1 2026 with revenues of $224.8 million, exceeding estimates of $204.8 million and reflecting a 21.5% increase from the prior quarter. Gross margin improved to 53.7%, and the company…
Earnings analysis · 10-Q
FOSL earnings analysis
Filed August 13, 2026 · Our reading of the company's report
The latest report
Fossil delivered meaningful gross-margin and year-to-date operating improvements, supported by full-price selling, sourcing actions, lower restructuring charges and tariff refunds. However, second-quarter revenue…
Read full summary
Fossil delivered meaningful gross-margin and year-to-date operating improvements, supported by full-price selling, sourcing actions, lower restructuring charges and tariff refunds. However, second-quarter revenue declined 4.9%, GAAP diluted EPS worsened to $(0.18), Europe sales and profitability fell sharply, and liquidity remains constrained with $79.0 million of cash, $203.0 million of long-term debt and $17.6 million of revolver availability. The turnaround is progressing, but weak consumer demand, renewed tariff exposure and elevated debt costs keep the outlook balanced rather than clearly bullish.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.18
What stood out
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Gross margin expanded despite sales decline
Second-quarter revenue was $209.7 million, down $10.7 million or 4.9% year over year, while gross profit increased 3.2% to $130.8 million. Gross margin expanded to 62.4% from 57.5%, driven by full-price selling, sourcing initiatives and reduced tariffs.
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Year-to-date operating profitability improved
Year-to-date operating income improved to $15.2 million from $1.7 million, and operating margin increased to 3.5% from 0.4%. The improvement reflected $17.6 million of lower restructuring expense, with year-to-date charges of $5.5 million versus $23.1 million.
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Americas and Asia profitability strengthened
Americas revenue increased 1.0% to $96.7 million, with segment operating income rising 45.0% to $27.4 million and operating margin expanding to 28.3% from 19.8%. Asia operating income also increased 33.3% to $19.6 million.
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Adjusted earnings beat GAAP loss
Second-quarter adjusted diluted EPS was $(0.13), compared with GAAP diluted EPS of $(0.18); GAAP EPS was $(0.04) in the prior-year quarter. Adjusted EBITDA increased to $8.6 million, or 4.1% of sales, from $7.0 million, or 3.2%.
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Cash burn improved year over year
Operating cash used year to date improved to $31.0 million from $50.9 million in the prior-year period. Capital expenditures were $1.8 million year to date versus $1.1 million, implying low reported capex intensity relative to $434.4 million of year-to-date sales.
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Tariff refunds supported gross profit
The company recorded $5.9 million of IEEPA tariff refund claims year to date, including $4.9 million as a reduction of cost of sales and $1.0 million as a reduction of SG&A. Management also reported $4.9 million of cash claims received under Phase I.
What to watch
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Europe and geopolitical weakness
Europe revenue fell 17.0% to $55.8 million in the quarter, and management attributed the decline to the increasingly challenging geopolitical environment in the Middle East. Europe operating income declined 67.9% to $7.5 million, with operating margin falling to 13.4% from 34.9%.
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Tight liquidity and rising debt costs
Cash and cash equivalents declined to $79.0 million from $95.8 million at fiscal year-end, while total debt rose to $203.0 million of long-term debt from $173.8 million. Second-quarter interest expense increased to $8.3 million from $4.3 million, and revolver availability was only $17.6 million.
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Renewed China tariff exposure
The updated tariff risk factor states that imports from China were subject to new Section 301 tariffs of 10% or 12.5% beginning July 24, 2026, after a 10% Section 122 duty applied from February 24 through July 24. Management said additional tariff actions could increase supply-chain costs, disruptions or prices and materially harm revenue or operating results.
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Inventory and demand risk
Inventory increased to $177.9 million from $151.8 million at fiscal year-end, including finished goods of $162.3 million versus $136.2 million. Operating cash flow included a $29.2 million inventory use, and management expects customers to maintain leaner inventory levels because of slower discretionary demand.
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Store rationalization pressures sales
Direct-to-consumer sales declined 14.6% year over year, global comparable retail sales fell 8.0%, and the store footprint was reduced 17.8% to 176 stores. Management also reported that the leathers category declined 30.8% to $11.7 million.
Management's outlook
The 10-Q does not provide numeric full-year revenue or EPS guidance. Management expects approximately $9.0 million of fiscal-year 2026 capital expenditures, approximately $15 million of fiscal-year 2026 Turnaround Plan charges, and states that operating cash flows, cash on hand and credit facilities should fund cash needs for at least the next twelve months. The filing says the evolving turnaround strategy is expected to generate top-line growth, improved operating margins and free cash flow over the next three years.
Earlier filings 2
10-K · April 30, 2026
Fossil Group Inc. continues to struggle with financial performance amid reorganization efforts, highlighted by significant EPS misses and a strategic leadership change following the resignation of the Chief Commercial…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.