Fossil Group Q1: operating income up, net sales down

US accessories company Fossil Group has reported its financial results for the first quarter ended April 10, 2026, revealing an improved operating performance despite a slight contraction in net sales. The group achieved an operating income of 12 million dollars, a significant recovery from the 6.70 million dollar loss recorded during the same period in 2025.

Net sales for the quarter totaled 224.80 million dollars, representing a 3.6 percent decrease on a reported basis and a 6.5 percent decline in constant currency. The results were impacted by a shorter fiscal calendar, as the first quarter of 2026 included 13 weeks compared to 14 weeks in the prior year.

Fossil Group chief executive officer, Franco Fogliato, stated that the company outperformed top and bottom line expectations due to the execution of its turnaround strategy. Fogliato noted that strong consumer response to product innovation drove performance across core brands and key geographies. He expressed confidence in the full year outlook, anticipating a return to top line growth in the fourth quarter.

Regional and brand performance

On a constant currency basis, net sales declined 14 percent in Europe, 3 percent in the Americas, and 1 percent in Asia. Performance varied significantly by channel, as wholesale sales increased 5 percent while direct-to-consumer (D2C) sales decreased 29 percent. Within D2C channels, comparable retail sales fell 15 percent.

The traditional watch category remained approximately flat in constant currency, while leathers decreased 41 percent and jewelry declined 14 percent. From a brand perspective, Fossil Group reported growth for Armani Exchange, Michael Kors, and Diesel. However, sales for the Fossil brand decreased 17 percent in constant currency during the quarter.

The company indicated that store rationalization initiatives and declining smartwatch sales contributed approximately 280 basis points to the overall sales decline. Gross profit reached 134.70 million dollars, with gross margin narrowing by 140 basis points to 59.9 percent. This compression was primarily attributed to increased tariffs and the timing of licensed brand royalty recognition. These costs were partially offset by 4 million dollars in tariff refund claims.

Financial outlook

The group reported a net loss of 0.80 million dollars, an improvement over the 17.60 million dollar loss seen in the first quarter of 2025. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) stood at 14.50 million dollars, or 6.5 percent of net sales.

For the full year 2026, the company reiterated its guidance. It expects worldwide net sales to decline between 4 percent and 6 percent, with an adjusted operating margin in the range of 3 percent to 5 percent.