- Fossil Group (FOSL, Financial) reports a net sales decline of 8.5% to $233.3 million in Q1 2025.
- Gross margin improved significantly, expanding by 890 basis points to reach 61.3%.
- The company recorded a net loss of $17.6 million, or $0.33 per share.
Fossil Group, Inc. (FOSL) announced its financial results for the first quarter of 2025, revealing a decline in net sales by 8.5% from the previous year to $233.3 million. Despite the reduction in sales, the company's gross margin improved considerably, rising by 890 basis points to 61.3%. This progress is attributed to exiting the underperforming smartwatch category, optimized product margins, and decreased freight costs.
During the quarter, traditional watch sales increased by 2% in constant currency, while the MICHAEL KORS brand experienced a notable 12% growth. Conversely, the leathers category saw a steep decline of 37%, and jewelry sales fell by 13%. The company's operating loss was reduced to $6.7 million, a significant improvement from the $29.2 million loss reported in the same period last year. Adjusted operating income, on a constant currency basis, was $10.3 million.
Fossil's liquidity position at the end of the quarter showed $78.3 million in cash and cash equivalents, contributing to its total liquidity of $99.5 million. Inventory management improvements were evident, with a 19% year-over-year reduction in inventory levels to $182.1 million. However, the company's debt remains high at $180 million.
Looking ahead, Fossil Group continues to anticipate a mid to high teens percentage decline in worldwide net sales for the full year 2025, with adjusted operating income margins expected to remain in the negative low single digits. Despite the challenges, the company expressed confidence in its turnaround strategies, aimed at achieving long-term profitable growth.
