Fossil Group reported a fiscal third-quarter operating income of $25.3 million, a notable recovery from an operating loss of $21.7 million in the same quarter last year. The company's net sales increased by 0.4% to $271.2 million, marking its first year-over-year sales growth since early 2022.
CEO Franco Fogliato highlighted the company's disciplined management of full-price sales and cost reductions as key factors in this turnaround. Fossil's net income reached $11.7 million, or 19 cents per share, compared to a net loss of $39.9 million, or 76 cents per share, a year earlier. Operating expenses also decreased by 11.1% to $137 million.
Despite raising its full-year sales outlook to between $980 million and $990 million, which still reflects a decline from over $1 billion last year, the company is optimistic about achieving positive free cash flow by year-end. The report comes after a challenging period for Fossil, which faced declining sales due to competition from smartwatches and reduced mall traffic.
The company has been restructuring under Fogliato's leadership, focusing on closing stores, enhancing marketing efforts, and expanding its product range. Notably, while direct-to-consumer sales fell by 5.9% due to aggressive downsizing, Fossil saw a 15.1% increase in net sales in Asia, particularly driven by growth in India.
Fogliato emphasized that the company's priority remains to strengthen its home market while also investing in traditional watches, which constitute about 86% of its sales, rather than competing directly with smartwatches. This strategic pivot appears to be generating positive momentum, as reflected in both sales figures and customer feedback