Fossil Group's Q2 net loss narrows, raises outlook

Fossil Group, Inc. has announced its financial results for the fiscal second quarter ended July 5, 2025, revealing a third consecutive quarter of positive adjusted operating income. The company also unveiled a comprehensive refinancing plan aimed at strengthening its balance sheet and enhancing liquidity.

For the second quarter, net sales totalled 220.4 million dollars, a 15.2 percent decrease on a reported basis compared to the same period in the prior year. This decline was attributed to overall softness in the market, consumer demand, and retail channels.

Despite the drop in sales, gross profit was 126.7 million dollars, with the gross margin improving significantly by 490 basis points to 57.5 percent, driven by better product margins, reduced freight costs, and the exit from smartwatches. Net loss for the quarter narrowed to 2.3 million dollars with net loss per diluted share of 4 cents and adjusted net loss also contracted to 5.6 million dollars with adjusted net loss per diluted share of 10 cents compared to loss of 25.1 million dollars with adjusted net loss per diluted share of 47 cents in the prior year second quarter.

CEO Franco Fogliato expressed satisfaction with the company's "outperformance and continuing momentum," noting that the results are a testament to the strength of its turnaround plan.

Operating expenses were reduced by 30.8 percent to 118.2 million dollars, which contributed to an operating income of 8.5 million dollars, a substantial improvement from a loss of 34 million dollars in the second quarter of 2024. The company's adjusted operating income was 3.8 million dollars, compared to an adjusted operating loss of 17 million dollars a year ago.

Following these positive results, Fossil Group is raising its financial guidance for the full year 2025, now expecting a mid-teens decline in worldwide net sales and a break-even to slightly positive adjusted operating margin. The company plans to focus on brand-building initiatives and is preparing for the launch of a global campaign featuring its brand ambassador, Nick Jonas, in the second half of the year.