Group 1 - The focus has shifted towards offshore drilling, supply industry, and shipping, including tankers, containers, and dry bulk [1] - The fuel cell industry is being monitored as it is still in its early stages of development [1] Group 2 - The individual has extensive experience in auditing with PricewaterhouseCoopers before transitioning to day trading nearly 20 years ago [2] - Successfully navigated significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2]

Financial Data and Key Metrics Changes - The company reported second quarter net sales of $219 million, down 16% in constant currency, which was in line with expectations [20] - Gross margin expanded by 480 basis points year-over-year, reaching 57.4%, marking the third consecutive quarter of gross margin improvement [21] - Adjusted operating income for Q2 was positive $4 million, compared to a loss of $17 million a year ago, resulting in an adjusted operating margin of 1.7% [25] Business Line Data and Key Metrics Changes - The wholesale channel showed continued improvement, with strong comparable sales trends in Fossil retail stores despite reduced promotional activity [5] - Traditional watch sales in the Americas increased by double digits in Q2, while India also showed strong momentum across brands and channels [13] - The company closed six underperforming retail locations in Q2, bringing total closures to 34 year-to-date, with plans to close 45 to 50 locations by year-end [24] Market Data and Key Metrics Changes - Performance in key markets such as the U.S., India, Germany, and the UK improved, while China remained under pressure due to the macro environment [12] - The company noted a resurgence in interest for traditional fashion watches among younger consumers, particularly in India and the Americas [48] Company Strategy and Development Direction - The company is focused on three key pillars: refocusing on core brands, rightsizing the cost structure, and strengthening the balance sheet [4][17] - A new Fossil brand platform is being developed to enhance design and storytelling, with a recent website redesign aimed at improving customer engagement [8] - The company is investing in upper funnel marketing initiatives and collaborations to drive brand awareness and cultural relevance [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a complex environment and emphasized the importance of operational and financial rigor [18] - The full-year guidance was raised, expecting breakeven to slightly positive adjusted operating margins, reflecting gross margin expansion and significant cost reductions [29] - Management highlighted the importance of maintaining strong relationships with wholesale partners and the positive feedback received from them [41] Other Important Information - The company successfully refinanced its revolving credit facility and entered into a transaction support agreement with bondholders to extend bond maturities into 2029, improving liquidity [26][27] - Year-to-date SG&A savings reached $48 million, with a target of $100 million for the full year [24] Q&A Session Summary Question: Impact of changes in promotional activity and price increases on gross margins - Management noted that the shift to a full-price model has led to improved gross margins, with consumers willing to pay for perceived value [34][35] Question: Trends and initiatives in the wholesale channel - Management highlighted strong relationships with wholesale partners and investments in store presentation and marketing activities [40][41] Question: Strength in the younger consumer category and collaboration initiatives - Management confirmed a resurgence in traditional watches among younger consumers, with successful limited edition collaborations driving brand momentum [46][48]

[Financial Performance Overview](index=1&type=section&id=FOSSIL%20GROUP%2C%20INC.%20REPORTS%20SECOND%20QUARTER%202025%20FINANCIAL%20RESULTS) Fossil Group reported strong Q2 2025 results with positive operating income and raised full-year guidance, driven by its successful turnaround plan [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Fossil Group reported positive operating income of $8 million for Q2 2025, a significant turnaround from the loss in the prior year. Despite a 15.2% decline in worldwide net sales to $220 million, gross margin expanded by 490 basis points to 57.5%. The company's strong performance led to an increase in its full-year 2025 guidance Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Worldwide Net Sales | $220 million | -15.2% | | Gross Margin | 57.5% | +490 bps | | Operating Income | $8 million | N/A (vs. loss in Q2 2024) | | Operating Margin | 3.9% | N/A (vs. negative margin in Q2 2024) | - The company has raised its financial guidance for the **full year 2025**[1](index=1&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Franco Fogliato attributed the outperformance to the company's turnaround plan, which has delivered a third consecutive quarter of positive adjusted operating income. He highlighted a comprehensive refinancing plan to strengthen the financial position and expressed confidence in the second half of the year, driven by key brand-building initiatives. This momentum supports the decision to raise the full-year 2025 outlook - The company's turnaround plan is showing strength, resulting in a **third consecutive quarter of positive adjusted operating income**[3](index=3&type=chunk) - A comprehensive refinancing plan was announced to strengthen the balance sheet and support growth plans[2](index=2&type=chunk)[3](index=3&type=chunk) - Focus for the second half of the year includes brand-building initiatives, such as a global campaign featuring celebrity brand ambassador Nick Jonas[3](index=3&type=chunk) [Detailed Financial Analysis](index=1&type=section&id=Detailed%20Financial%20Analysis) This section provides an in-depth analysis of Q2 2025 operating results, including sales performance, profitability, and key balance sheet metrics [Second Quarter 2025 Operating Results](index=1&type=section&id=Second%20Quarter%202025%20Operating%20Results) In Q2 2025, net sales fell 15.2% to $220.4 million, impacted by market softness, the exit from the smartwatch category, and store closures. Despite the sales decline, gross margin improved significantly to 57.5% from 52.6% YoY, driven by better product margins and lower freight costs. Operating expenses decreased by 30.8%, leading to an operating income of $8.5 million, a substantial improvement from a $34.0 million loss in Q2 2024. Net loss narrowed to $2.3 million from $38.8 million in the prior-year quarter Q2 2025 Net Sales Performance (Constant Currency) | Category | Change (YoY) | | :--- | :--- | | **By Region** | | | Americas | -19% | | Europe | -14% | | Asia | -12% | | **By Channel** | | | Wholesale | -6% | | Direct to Consumer | -30% | | **By Product** | | | Traditional Watches | -8% | | Leathers | -39% | | Jewelry | -22% | - The exit from the smartwatch category and store rationalization initiatives accounted for approximately **6 percentage points of the total sales decline**[4](index=4&type=chunk) Q2 2025 Profitability vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross Profit | $126.7M | $136.9M | | Gross Margin | 57.5% | 52.6% | | Operating Expenses | $118.2M | $170.9M | | Operating Income (Loss) | $8.5M | $(34.0)M | | Net Loss | $(2.3)M | $(38.8)M | | Diluted Loss Per Share | $(0.04) | $(0.73) | [Balance Sheet Summary](index=3&type=section&id=Balance%20Sheet%20Summary) As of July 5, 2025, Fossil Group maintained total liquidity of $110.6 million, primarily composed of $109.9 million in cash and cash equivalents. The company successfully reduced inventories by 11.9% year-over-year to $178.1 million. Total debt stood at $179.0 million Balance Sheet Highlights (as of July 5, 2025) | Metric | Amount | YoY Change | | :--- | :--- | :--- | | Total Liquidity | $110.6M | N/A | | Cash and Cash Equivalents | $109.9M | +4.8% | | Inventories | $178.1M | -11.9% | | Total Debt | $179.0M | +12.6% | [Outlook and Strategy](index=3&type=section&id=Outlook%20and%20Strategy) Fossil Group has raised its full-year 2025 financial guidance, reflecting improved sales decline forecasts and a positive adjusted operating margin outlook [Full Year 2025 Outlook](index=3&type=section&id=Full%20Year%202025%20Outlook) Reflecting strong year-to-date performance and progress on its turnaround plan, Fossil Group has raised its financial guidance for the full year 2025. The company now anticipates a smaller decline in net sales and has improved its adjusted operating margin forecast Updated Full Year 2025 Guidance | Metric | New Guidance | Prior Guidance | | :--- | :--- | :--- | | Worldwide Net Sales Decline | Mid-teens | Mid to high teens | | Adjusted Operating Margin | Break even to slightly positive | Negative low single digits | - The net sales guidance includes an expected negative impact of approximately **$45 million related to retail store closures**[9](index=9&type=chunk) [Supplemental Financial Data](index=5&type=section&id=Supplemental%20Financial%20Data) This section provides detailed consolidated financial statements, segment performance data, and reconciliations of GAAP to non-GAAP financial measures [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the detailed unaudited consolidated income statements and balance sheets for the periods ended July 5, 2025, and June 29, 2024, providing a comprehensive view of the company's financial position and performance [Consolidated Income Statement](index=5&type=section&id=Consolidated%20Income%20Statement) This statement details the company's revenues, expenses, and net loss for the 13-week periods ended July 5, 2025, and June 29, 2024 Income Statement Summary (13 Weeks Ended) | ($ in millions) | July 5, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Net sales | $220.4 | $260.0 | | Gross profit | $126.7 | $136.9 | | Operating income (loss) | $8.5 | $(34.0) | | Net loss attributable to Fossil Group, Inc. | $(2.3) | $(38.8) | | Diluted loss per share | $(0.04) | $(0.73) | [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheet) This statement provides a snapshot of the company's assets, liabilities, and equity as of July 5, 2025, and June 29, 2024 Balance Sheet Summary | ($ in millions) | July 5, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $109.9 | $104.9 | | Inventories | $178.1 | $202.1 | | Total assets | $704.5 | $785.7 | | Total debt (Short & Long-term) | $179.0 | $159.1 | | Stockholders' equity | $133.9 | $187.1 | | Total liabilities and stockholders' equity | $704.5 | $785.7 | [Segment and Product Performance (Constant Currency)](index=6&type=section&id=Segment%20and%20Product%20Performance%20(Constant%20Currency)) On a constant currency basis for Q2 2025, net sales declined across all geographic segments, with the Americas showing the largest decrease. By product, the exit from smartwatches is evident in its sharp decline, while the core traditional watch category saw a single-digit decrease. Leathers and jewelry categories experienced significant double-digit declines Q2 Net Sales by Segment (Constant Currency) | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Americas | $97.1 | $119.6 | -18.8% | | Europe | $64.2 | $74.8 | -14.2% | | Asia | $57.5 | $65.2 | -11.8% | | **Total** | **$218.9** | **$260.0** | **-15.8%** | Q2 Net Sales by Product (Constant Currency) | ($ in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Traditional watches | $177.9 | $194.1 | -8.3% | | Smartwatches | $1.4 | $8.4 | -83.3% | | Leathers | $16.7 | $27.2 | -38.6% | | Jewelry | $18.8 | $24.2 | -22.3% | [Reconciliation of GAAP to Non-GAAP Measures](index=7&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) The company provides reconciliations for non-GAAP measures to offer a clearer view of underlying business performance by excluding items like restructuring costs and asset impairments. For Q2 2025, Adjusted Operating Income was $3.8 million, and Adjusted EBITDA was $7.0 million, both marking significant improvements from losses of $17.0 million and $11.7 million, respectively, in the prior-year quarter Adjusted EBITDA Reconciliation Summary | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Income (loss) before income taxes | $4.1 | $(36.6) | | Adjustments (Interest, D&A, Restructuring, etc.) | +$2.9 | +$24.9 | | **Adjusted EBITDA** | **$7.0** | **$(11.7)** | Adjusted Operating Income Reconciliation Summary | ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating income (loss) (GAAP) | $8.5 | $(34.0) | | Restructuring Expenses | $7.3 | $16.7 | | Gains on Asset Divestitures | $(11.5) | - | | Other Long-Lived Asset Impairment | - | $0.6 | | **As Adjusted Operating Income (Loss)** | **$4.3** | **$(16.7)** | [Store Count Information](index=12&type=section&id=Store%20Count%20Information) As part of its store rationalization strategy, Fossil Group continued to reduce its physical retail footprint. The company closed 47 stores and opened 3, resulting in a net reduction of 44 stores. The total store count decreased from 258 at the end of Q2 2024 to 214 at the end of Q2 2025 Store Count by Region | Region | June 29, 2024 | Opened | Closed | July 5, 2025 | | :--- | :--- | :--- | :--- | :--- | | Americas | 120 | 0 | 19 | 101 | | Europe | 69 | 0 | 17 | 52 | | Asia | 69 | 3 | 11 | 61 | | **Total stores** | **258** | **3** | **47** | **214** |

Core Insights - Fossil Group, Inc. reported a second quarter 2025 net sales of $220 million, a decrease of 15.2% compared to the same period in 2024, primarily due to category softness and a decline in smartwatch sales [5][11] - The company achieved a gross margin of 57.5%, an increase of 490 basis points year-over-year, attributed to improved product margins and reduced freight costs [5][11] - Operating income for the second quarter was $8 million, with an operating margin of 3.9%, marking a significant improvement from a loss of $34 million in the prior year [11][12] - Fossil Group announced a comprehensive refinancing plan aimed at strengthening its balance sheet and increasing liquidity [3][4] Financial Performance - Net sales for the second quarter totaled $220.4 million, down from $260 million in Q2 2024, with declines across all major regions: 19% in the Americas, 14% in Europe, and 12% in Asia [5][11] - Gross profit was $126.7 million, a decline of 7.4% from $136.9 million in the previous year, but gross margin improved to 57.5% from 52.6% [5][11] - Operating expenses decreased by 30.8% to $118.2 million, representing 53.7% of net sales compared to 65.7% in the prior year [5][6] Outlook and Guidance - The company raised its full-year 2025 financial guidance, reflecting strong year-to-date results and ongoing progress in its turnaround strategy [8][12] - Worldwide net sales are expected to decline in the mid-teens, an improvement from previous guidance of a decline in the mid to high teens [12] - Adjusted operating margin is anticipated to be break-even to slightly positive, compared to prior guidance of negative low single digits [12] Balance Sheet and Liquidity - As of July 5, 2025, Fossil Group had total liquidity of $110.6 million, including $109.9 million in cash and cash equivalents [7] - Total debt stood at $179 million, with inventories decreasing by 11.9% to $178.1 million compared to the previous year [7][11]

Core Viewpoint - Fossil Group, Inc. has announced the refinancing of its asset-based lending (ABL) and entered into a Transaction Support Agreement to exchange its outstanding notes, positioning the company for future growth with a stronger balance sheet [1][2]. Group 1: Transaction Details - The Transaction Support Agreement allows holders of Unsecured Notes to participate in a New Money Investment, which is backed by Consenting Noteholders who own approximately 59% of Fossil's 7.00% Senior Notes due 2026 [2][7]. - The company has established a new $150 million asset-based revolving credit facility with Ares Management Credit funds, maturing on August 13, 2030, priced at SOFR plus 500 basis points [7]. - Noteholders can exchange their Unsecured Notes for new First-Out Senior Secured Notes or Second-Out Senior Secured Notes, along with warrants for common stock [8]. Group 2: Restructuring Conditions - If less than 90% of the outstanding principal amount of Unsecured Notes is tendered, the company may proceed with restructuring through the Companies Act 2006 of England and Wales, potentially eliminating all Unsecured Notes [3].

Core Viewpoint - Fossil Group, Inc. is set to report its second quarter 2025 financial results on August 13, 2025, after market close, followed by a conference call to discuss the results [1] Company Overview - Fossil Group, Inc. is a global company focused on design, marketing, distribution, and innovation in lifestyle accessories, including watches, jewelry, handbags, small leather goods, belts, and sunglasses [2] - The company operates a diverse portfolio of both owned and licensed brands, such as Fossil, Michele, Relic, Skagen, Zodiac, Armani Exchange, Diesel, Emporio Armani, kate spade new york, Michael Kors, Skechers, and Tory Burch [2] - Fossil Group is dedicated to delivering high-quality design and innovation across its brands, supported by an extensive distribution network across various geographies, categories, and channels [2]

Core Insights - Fossil Group, Inc. has been upgraded to an "Outperform" rating from "Neutral," indicating optimism regarding its transformation efforts and potential for profitable growth [1] Turnaround Strategy - The company is implementing a structured turnaround plan focused on three strategic pillars: refocusing on core brand assets, realigning its cost structure, and reinforcing its financial position [2] - In Q1 of fiscal 2025, gross margin increased to over 60%, an 890-basis-point improvement year-over-year, driven by operational streamlining and reduced promotional intensity [2] Cost Management - Fossil achieved a 12% year-over-year reduction in SG&A expenses, attributed to tighter marketing spending and the closure of underperforming stores [3] - The company closed 28 stores in Q1 and plans to close a total of 50 stores in 2025 to enhance profitability [3] Brand Strength and Innovation - Fossil was ranked fourth in the global watch market by Time Magazine in 2024, highlighting its strong market presence [4] - The Raquel Watch Ring won "Fashion Jewelry of the Year" at Inhorgenta in Munich, showcasing the company's design capabilities [4] Brand Initiatives - A global campaign featuring celebrity ambassador Nick Jonas is set to launch in summer 2025 to modernize the Fossil brand [5] - The company has renewed key licensing deals and is focusing on core markets such as the United States, France, Germany, and India [5] Market Focus and Distribution - Fossil is transitioning smaller, less profitable markets in Europe and Asia to a distributor-based model, which may lead to short-term sales dips but is expected to improve long-term margins [6] - Investments are being prioritized in scalable regions, enhancing wholesale presence through upgraded merchandising and strategic retail partnerships [6] E-commerce Strategy - E-commerce operations are being revamped to improve margin performance, with reduced promotional activity enhancing average unit retail [7] - Integration of features like Amazon's Buy with Prime is being implemented to elevate the customer experience on Fossil.com [7] Revenue Challenges - Despite positive developments, Fossil faced an 8.5% year-over-year decline in net sales for Q1 2025, totaling $233.3 million, due to store closures and exiting the connected watch business [8] Future Outlook - The upgraded rating reflects confidence in Fossil's ability to execute its restructuring plan and achieve sustainable profitability [9] - With $99.5 million in liquidity and improved margins, the company is better positioned for the evolving retail landscape [10]

Core Insights - Fossil Group, Inc. has appointed Laks Lakshmanan as the Chief Supply Chain Officer, effective June 16, 2025, to enhance its supply chain operations [1][3]. Company Overview - Fossil Group, Inc. specializes in design, marketing, distribution, and innovation of lifestyle accessories, including watches, jewelry, handbags, and more, under a diverse portfolio of owned and licensed brands [6]. Leadership Appointment - Laks Lakshmanan brings over 20 years of supply chain leadership experience, having previously served as Managing Director at Alvarez & Marsal and interim Head of Supply Chain for Fossil [2][4]. - His role will encompass overseeing Fossil's global end-to-end supply chain, including manufacturing, sourcing, distribution, and logistics [2]. Strategic Goals - The CEO of Fossil Group emphasized the importance of building a high-performing leadership team, highlighting Lakshmanan's operational expertise and strategic mindset as crucial for the company's turnaround [3]. - Lakshmanan expressed his commitment to modernizing Fossil's supply chain and enhancing its operational efficiency [3][4]. Previous Experience - Prior to joining Fossil, Lakshmanan held senior roles at Kearney and Target, focusing on supply chain optimization and transformational initiatives [5].

Core Insights - Fossil Group, Inc. (FOSL) shares have increased by 27.9% since the first-quarter earnings report for fiscal 2025, outperforming the S&P 500's 1.4% gain during the same period, and have surged 81.3% over the past month compared to the S&P 500's 15.4% increase, indicating renewed investor optimism in the company's turnaround strategy and improving fundamentals [1] Financial Performance - The company reported a first-quarter net loss per share of $0.33, an improvement from a loss of $0.46 in the prior-year quarter, while the adjusted net loss per share narrowed to $0.10 from $0.30 a year earlier [2] - Net sales were $233.3 million, down 8.5% from $254.9 million in the prior-year period, with a constant currency decline of 6.2% [2] - Gross profit increased to $143 million from $133.5 million a year earlier, with gross margin expanding to 61.3%, up 890 basis points, due to a favorable product mix, exiting the smartwatch category, and lower freight costs [3] Operating Metrics - Operating loss narrowed significantly to $6.7 million from $29.2 million in the year-ago quarter, with adjusted operating income of $10.3 million compared to an adjusted operating loss of $18.9 million in the first quarter of 2024 [4] Business Segment Highlights - Sales in the Americas and Asia declined by 9% and 10% respectively on a constant currency basis, while Europe saw a modest 1% increase; traditional watches grew by 2%, partially offsetting declines in leather goods (37%) and jewelry (13%) [5] - Wholesale sales rose by 6% on a constant currency basis, while direct-to-consumer (DTC) sales dropped by 24%, influenced by a 22% decrease in comparable retail sales [6] Management Commentary - CEO Franco Fogliato noted strong progress in operational and financial metrics, attributing improvements to restructuring initiatives and reduced promotional activity [7] - CFO Randy Greben highlighted an 8% year-over-year decline in operating expenses, reflecting cost discipline and reduced digital marketing spend [7] Strategic Initiatives - Successful product innovation was noted, particularly in the core Fossil line and collaborative launches, which generated social media traction and consumer engagement [8] - Margin expansion was driven by exiting the smartwatch segment, focusing on full-price sales, improving cost structures, and optimizing product assortments [9] Cost Management - SG&A expenses decreased to $133.8 million from $152.2 million, aided by lower compensation costs and fewer stores, while inventory declined by 19% year-over-year to $182.1 million [10] Guidance - Fossil reiterated its full-year 2025 guidance, projecting a worldwide net sales decline in the mid-to-high teens and an adjusted operating margin in the negative low single digits, factoring in a $45 million revenue hit from planned retail store closures [11] Other Developments - The company signed an agreement to sell its distribution center in Eckstedt, Germany, in a sale-leaseback transaction expected to close in the second quarter, projected to add $20 million in balance sheet cash [12]

Group 1 - The Fossil Group held its First Quarter 2025 Earnings Call, with key participants including CEO Franco Fogliato and CFO Randy Greben [1][2] - The call included forward-looking statements, with a reminder that actual results may differ materially from those discussed [3] - The company referred to constant currency results and non-GAAP financial measures, with reconciliations available in the earnings release [4]