[Executive Summary & Q1 2025 Highlights](index=1&type=section&id=FOSSIL%20GROUP%2C%20INC.%20REPORTS%20FIRST%20QUARTER%202025%20FINANCIAL%20RESULTS) Fossil Group reported Q1 2025 progress with narrowed sales declines, significant gross margin expansion, and positive adjusted operating profit, reiterating full-year guidance [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Franco Fogliato noted Q1 2025 turnaround progress with narrowed sales declines, increased gross margin, and positive adjusted operating profit, expressing confidence in long-term growth - Turnaround plan showing progress with **narrowed sales declines** and **increased gross margin**[2](index=2&type=chunk) - Achieved second consecutive quarter of **positive adjusted operating profit**[2](index=2&type=chunk) - Global footprint and mitigation strategies are expected to offset tariff impacts and protect **gross margin**[2](index=2&type=chunk) [Key Financial Highlights (Q1 2025)](index=1&type=section&id=Key%20Financial%20Highlights%20%28Q1%202025%29) Q1 2025 saw worldwide net sales of **$233 million** (down 8.5%), significant gross margin expansion to **61.3%**, and **$10 million** in constant currency adjusted operating income Key Financial Highlights | Metric | Q1 2025 Value | Change YoY | | :----- | :------------ | :--------- | | Worldwide Net Sales | $233 million | -8.5% (reported) | | Gross Margin | 61.3% | +890 bps | | Operating Loss | $(7) million | Improved from $(29.2) million loss | | Constant Currency Adjusted Operating Income | $10 million | Improved from $(18.9) million loss | | Constant Currency Adjusted Operating Margin | 4.3% | Improved from (7.5)% | | Total Liquidity | $100 million | | [First Quarter 2025 Operating Results](index=1&type=section&id=First%20Quarter%202025%20Operating%20Results) Q1 2025 operating results showed an 8.5% net sales decline, significant gross margin expansion to 61.3%, reduced operating expenses, and a narrowed net loss [Net Sales Performance](index=1&type=section&id=Net%20Sales%20Performance) Net sales decreased **8.5%** (reported) to **$233.3 million** due to market softness and smartwatch declines, partially offset by a favorable 14-week quarter Net Sales Performance | Metric | Q1 2025 (Reported) | Q1 2025 (Constant Currency) | Q1 2024 | YoY Change (Reported) | YoY Change (Constant Currency) | | :----- | :----------------- | :-------------------------- | :------ | :-------------------- | :----------------------------- | | Net Sales | $233.3 million | $239.1 million | $254.9 million | -8.5% | -6.2% | - Sales decline largely driven by overall category, consumer, and channel softness[3](index=3&type=chunk) - Declines in smartwatch sales and store rationalization initiatives comprised approximately **520 basis points** of the sales decline[3](index=3&type=chunk) - Fiscal 2025 Q1 included **14 weeks**, favorably impacting sales by **700 basis points** compared to **13 weeks** in prior year[3](index=3&type=chunk) [Geographic Performance (Constant Currency)](index=1&type=section&id=Geographic%20Performance) Constant currency sales declined **9%** in Americas and **10%** in Asia, while Europe experienced a **1%** increase Geographic Performance (Constant Currency) | Region | Q1 2025 Net Sales (Constant Currency) | Q1 2024 Net Sales | YoY Change (Constant Currency) | | :----- | :------------------------------------ | :---------------- | :----------------------------- | | Americas | $100.3 million | $110.0 million | -9% | | Europe | $79.1 million | $78.7 million | +1% | | Asia | $58.8 million | $65.6 million | -10% | [Channel Performance (Constant Currency)](index=1&type=section&id=Channel%20Performance) Wholesale sales grew **6.0%** in constant currency, while direct-to-consumer sales fell **24%**, with comparable retail sales down **22%** - Wholesale sales increased **6.0%** in constant currency[3](index=3&type=chunk) - Direct-to-consumer sales decreased **24%** in constant currency[3](index=3&type=chunk) - Comparable retail sales declined **22%**[3](index=3&type=chunk) [Product Category Performance (Constant Currency)](index=1&type=section&id=Product%20Category%20Performance) Traditional watch sales rose **2%** in constant currency, while leathers decreased **37%**, jewelry declined **13%**, and smartwatch sales fell significantly Product Category Performance (Constant Currency) | Product Category | Q1 2025 Net Sales (Constant Currency) | Q1 2024 Net Sales | YoY Change (Constant Currency) | | :--------------- | :------------------------------------ | :---------------- | :----------------------------- | | Traditional Watches | $189.5 million | $186.5 million | +2% | | Smartwatches | $4.1 million | $8.9 million | -54% | | Leathers | $17.4 million | $27.6 million | -37% | | Jewelry | $22.8 million | $26.3 million | -13% | [Brand Performance (Constant Currency)](index=1&type=section&id=Brand%20Performance) MICHAEL KORS sales increased **12%** in constant currency, while FOSSIL brand sales decreased **8%** due to leathers and jewelry, partially offset by watch growth - MICHAEL KORS sales increased **12%** in constant currency[3](index=3&type=chunk) - FOSSIL brand sales decreased **8%** in constant currency, driven by leathers and jewelry, partially offset by a **3%** increase in watches[4](index=4&type=chunk) [Gross Profit & Margin](index=2&type=section&id=Gross%20Profit%20%26%20Margin) Gross profit increased to **$143.0 million**, with gross margin expanding **890 basis points** to **61.3%** due to improved product margins and favorable mix Gross Profit & Margin | Metric | Q1 2025 | Q1 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Gross Profit | $143.0 million | $133.5 million | +$9.5 million | | Gross Margin | 61.3% | 52.4% | +890 bps | - Increase primarily reflects improved product margins in core categories, exiting the smartwatch category, favorable product mix, and reduced freight costs[6](index=6&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Total operating expenses decreased **8.0%** to **$149.7 million**, with SG&A down **12.1%** to **$133.8 million** due to restructuring efficiencies Operating Expenses | Metric | Q1 2025 | Q1 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Total Operating Expenses | $149.7 million | $162.7 million | -8.0% | | Total Operating Expenses (% of Net Sales) | 64.2% | 63.8% | +0.4 ppt | | SG&A Expenses | $133.8 million | $152.2 million | -12.1% | | SG&A Expenses (% of Net Sales) | 57.4% | 59.7% | -2.3 ppt | | Restructuring Charges | $15.8 million | $10.1 million | +$5.7 million | - SG&A decrease largely driven by cost reductions and efficiencies gained through restructuring programs[6](index=6&type=chunk) [Operating Income (Loss)](index=2&type=section&id=Operating%20Income%20%28Loss%29) Operating loss narrowed to **$6.7 million**, and constant currency adjusted operating income turned positive at **$10.3 million** with a **4.3%** margin Operating Income (Loss) | Metric | Q1 2025 | Q1 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Operating Loss | $(6.7) million | $(29.2) million | Improved by $22.5 million | | Operating Margin | (2.9)% | (11.5)% | +8.6 ppt | | Constant Currency Adjusted Operating Income | $10.3 million | $(18.9) million | Improved by $29.2 million | | Constant Currency Adjusted Operating Margin | 4.3% | (7.5)% | +11.8 ppt | [Other Income/Expense & Net Loss](index=2&type=section&id=Other%20Income%2FExpense%20%26%20Net%20Loss) Net loss narrowed to **$17.6 million** (or **$0.33** per diluted share), with adjusted net loss at **$5.0 million**, primarily due to improved operating results and currency shifts Other Income/Expense & Net Loss | Metric | Q1 2025 | Q1 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Interest Expense | $4.5 million | $5.1 million | -$0.6 million | | Other Income (Expense) - net | $(3.3) million | $3.9 million | Shift of $7.2 million | | Income (Loss) before Income Taxes | $(14.5) million | $(30.4) million | Improved by $15.9 million | | Net Loss | $(17.6) million | $(24.3) million | Improved by $6.7 million | | Net Loss per Diluted Share | $(0.33) | $(0.46) | Improved by $0.13 | | Adjusted Net Loss | $(5.0) million | $(16.2) million | Improved by $11.2 million | | Adjusted Net Loss per Diluted Share | $(0.10) | $(0.30) | Improved by $0.20 | - Other income (expense) shifted due to net currency losses in Q1 2025 compared to net currency gains in Q1 2024[6](index=6&type=chunk) - Currencies unfavorably affected net loss per diluted share by approximately **$0.13** in Q1 2025[6](index=6&type=chunk) [Adjusted EBITDA](index=2&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for Q1 2025 was **$9.1 million** (**3.9%** of net sales), a significant improvement from a **$10.7 million** loss in the prior year Adjusted EBITDA | Metric | Q1 2025 | Q1 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Adjusted EBITDA | $9.1 million | $(10.7) million | Improved by $19.8 million | | Adjusted EBITDA (% of Net Sales) | 3.9% | (4.2)% | +8.1 ppt | [Balance Sheet Summary](index=2&type=section&id=Balance%20Sheet%20Summary) As of April 5, 2025, total liquidity was **$99.5 million**, with inventories decreasing **19%** and total debt at **$180 million** [Liquidity and Cash Position](index=2&type=section&id=Liquidity%20and%20Cash%20Position) Total liquidity as of April 5, 2025, was **$99.5 million**, including **$78.3 million** in cash and **$21.2 million** from the credit facility Liquidity and Cash Position | Metric | As of April 5, 2025 | As of March 30, 2024 | YoY Change | | :----- | :------------------ | :------------------- | :--------- | | Total Liquidity | $99.5 million | N/A | N/A | | Cash and Cash Equivalents | $78.3 million | $112.9 million | -$34.6 million | | Revolving Credit Facility Availability | $21.2 million | N/A | N/A | [Inventories and Debt](index=2&type=section&id=Inventories%20and%20Debt) Inventories decreased **19%** year-over-year to **$182.1 million**, with total debt recorded at **$180 million** Inventories and Debt | Metric | As of April 5, 2025 | As of March 30, 2024 | YoY Change | | :----- | :------------------ | :------------------- | :--------- | | Inventories | $182.1 million | $224.1 million | -19% | | Total Debt | $180 million | $203.4 million | -$23.4 million | [Full Year 2025 Outlook](index=3&type=section&id=Outlook) The company reiterated its full-year 2025 guidance, projecting mid to high teens net sales decline and negative low single-digit adjusted operating income margin [Financial Guidance](index=3&type=section&id=Financial%20Guidance) Full-year 2025 guidance projects worldwide net sales decline in the **mid to high teens** and a negative low single-digit adjusted operating income margin - Reiterates full year 2025 guidance, assuming no material change in macroeconomic environment or consumer demand[7](index=7&type=chunk) - Worldwide net sales guidance includes an expected impact of approximately **$45 million** related to retail store closures and excludes potential asset sales[7](index=7&type=chunk) Full Year 2025 Guidance | Metric | Full Year 2025 Guidance | | :----- | :---------------------- | | Worldwide Net Sales Decline | Mid to high teens | | Adjusted Operating Income Margin | Negative low single digits | [Company Overview](index=3&type=section&id=About%20Fossil%20Group%2C%20Inc.) Fossil Group, Inc. is a global company specializing in lifestyle accessories, offering watches, jewelry, and leather goods under owned and licensed brands [Business Description](index=3&type=section&id=Business%20Description) Fossil Group is a global design and distribution company specializing in lifestyle accessories, including watches, jewelry, and leather goods, under owned and licensed brands - Global design, marketing, distribution, and innovation company specializing in lifestyle accessories[9](index=9&type=chunk) - Offerings include watches, jewelry, handbags, small leather goods, belts, and sunglasses[9](index=9&type=chunk) - Operates under a diverse portfolio of owned brands (Fossil, Michele, Relic, Skagen, Zodiac) and licensed brands (Armani Exchange, Diesel, Emporio Armani, kate spade new york, Michael Kors, Tory Burch)[9](index=9&type=chunk) [Detailed Financial Statements (GAAP)](index=5&type=section&id=Consolidated%20Income%20Statement%20Data) This section presents the GAAP consolidated income statement and balance sheet, detailing Q1 2025 financial performance and position [Consolidated Income Statement](index=5&type=section&id=Consolidated%20Income%20Statement) Q1 2025 consolidated income statement shows **$233.3 million** net sales, **$143.0 million** gross profit, and a **$17.6 million** net loss Consolidated Income Statement | Metric | Q1 2025 (14 Weeks) | Q1 2024 (13 Weeks) | | :----- | :----------------- | :----------------- | | Net Sales | $233.3 million | $254.9 million | | Cost of Sales | $90.3 million | $121.4 million | | Gross Profit | $143.0 million | $133.5 million | | Gross Margin | 61.3% | 52.4% | | Total Operating Expenses | $149.7 million | $162.7 million | | Operating Income (Loss) | $(6.7) million | $(29.2) million | | Income (Loss) before Income Taxes | $(14.5) million | $(30.4) million | | Net Income (Loss) attributable to Fossil Group, Inc. | $(17.6) million | $(24.3) million | | Diluted EPS | $(0.33) | $(0.46) | [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheet%20Data) As of April 5, 2025, total assets were **$686.0 million**, total liabilities **$561.6 million**, and stockholders' equity **$124.4 million** Consolidated Balance Sheet | Metric | As of April 5, 2025 | As of March 30, 2024 | | :----- | :------------------ | :------------------- | | Cash and Cash Equivalents | $78.3 million | $112.9 million | | Accounts Receivable - net | $124.6 million | $134.4 million | | Inventories | $182.1 million | $224.1 million | | Total Current Assets | $482.5 million | $637.3 million | | Total Assets | $686.0 million | $891.0 million | | Total Current Liabilities | $262.6 million | $295.4 million | | Long-term Debt | $167.2 million | $202.9 million | | Total Liabilities | $561.6 million | $664.4 million | | Stockholders' Equity | $124.4 million | $226.6 million | [Non-GAAP Financial Measures & Reconciliations](index=6&type=section&id=Constant%20Currency%20Financial%20Information) This section defines and reconciles non-GAAP measures like constant currency, adjusted EBITDA, and adjusted operating income for clearer performance evaluation [Explanation of Non-GAAP Measures](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Measures) This section defines non-GAAP measures like constant currency, adjusted EBITDA, and adjusted operating income, used to evaluate underlying business performance by excluding specific items - Constant currency measures translate current fiscal year period net sales and SG&A for non-USD reporting entities into USD at prior fiscal year average rates to exclude foreign currency exchange rate fluctuations[14](index=14&type=chunk) - Adjusted EBITDA excludes income tax, interest, amortization, depreciation, impairment, non-cash charges, stock-based compensation, restructuring, and unamortized debt issuance costs[16](index=16&type=chunk) - Adjusted operating income (loss) excludes impairment and restructuring expense[16](index=16&type=chunk) - Adjusted net income (loss) and EPS exclude impairment expense, restructuring expense, and unamortized debt issuance costs[16](index=16&type=chunk) [Constant Currency Net Sales & SG&A](index=7&type=section&id=Constant%20Currency%20Net%20Sales%20%26%20SG%26A) Q1 2025 constant currency net sales were **$239.1 million**, with a **$5.8 million** favorable currency impact, and SG&A expenses were **$135.7 million** Constant Currency Net Sales & SG&A | Metric | Q1 2025 (As Reported) | Impact of Foreign Currency Exchange Rates | Q1 2025 (Constant Currency) | Q1 2024 (As Reported) | | :----- | :-------------------- | :---------------------------------------- | :-------------------------- | :-------------------- | | Total Net Sales | $233.3 million | $5.8 million | $239.1 million | $254.9 million | | Selling, General and Administrative Expenses | $133.8 million | $1.9 million | $135.7 million | $152.2 million | [Adjusted EBITDA Reconciliation](index=9&type=section&id=Adjusted%20EBITDA%20Reconciliation) Q1 2025 Adjusted EBITDA was **$9.1 million**, derived by adjusting income loss before taxes for various non-operating and non-cash items Adjusted EBITDA Reconciliation | Metric | Q1 2025 | Q1 2024 | | :----- | :------ | :------ | | Income (Loss) before Income Taxes | $(14.5) million | $(30.4) million | | Plus: Interest expense | $4.5 million | $5.1 million | | Plus: Amortization and depreciation | $3.4 million | $4.5 million | | Plus: Impairment expense | $0.1 million | $0.4 million | | Plus: Other non-cash charges | $0.2 million | $(0.1) million | | Plus: Stock-based compensation | $0.6 million | $1.0 million | | Plus: Restructuring expense | $15.8 million | $10.1 million | | Less: Interest Income | $1.0 million | $1.1 million | | Adjusted EBITDA | $9.1 million | $(10.7) million | [Adjusted Operating Income & Net Loss Reconciliation](index=10&type=section&id=Adjusted%20Operating%20Income%20%26%20Net%20Loss%20Reconciliation) Q1 2025 reported operating loss of **$(6.7) million** was adjusted to **$9.2 million** operating income, and net loss of **$(17.6) million** was adjusted to **$(5.0) million** Adjusted Operating Income & Net Loss Reconciliation (Q1 2025) | Metric | Q1 2025 (As Reported) | Adjustments | Q1 2025 (As Adjusted) | Q1 2025 (Constant Currency Adjusted) | | :----- | :-------------------- | :---------- | :-------------------- | :----------------------------------- | | Operating Income (Loss) | $(6.7) million | $15.9 million | $9.2 million | $10.3 million | | Operating Margin (% of net sales) | (2.9)% | | 3.9% | 4.3% | | Net Income (Loss) attributable to Fossil Group, Inc. | $(17.6) million | $12.6 million | $(5.0) million | N/A | | Diluted EPS | $(0.33) | $0.23 | $(0.10) | N/A | Adjusted Operating Income & Net Loss Reconciliation (Q1 2024) | Metric | Q1 2024 (As Reported) | Adjustments | Q1 2024 (As Adjusted) | Q1 2024 (Constant Currency Adjusted) | | :----- | :-------------------- | :---------- | :-------------------- | :----------------------------------- | | Operating Income (Loss) | $(29.2) million | $10.3 million | $(18.9) million | $(19.5) million | | Operating Margin (% of net sales) | (11.5)% | | (7.5)% | (7.6)% | | Net Income (Loss) attributable to Fossil Group, Inc. | $(24.3) million | $8.1 million | $(16.2) million | N/A | | Diluted EPS | $(0.46) | $0.16 | $(0.30) | N/A | [Store Count Information](index=11&type=section&id=Store%20Count%20Information) This section details the global store count changes, showing a net reduction of **57** stores from March 2024 to April 2025 [Store Openings and Closures](index=11&type=section&id=Store%20Openings%20and%20Closures) From March 2024 to April 2025, Fossil Group closed a net of **57** stores globally, reducing the total count from **277** to **220** Store Openings and Closures | Region | Stores as of March 30, 2024 | Opened | Closed | Stores as of April 5, 2025 | Net Change | | :----- | :-------------------------- | :----- | :----- | :------------------------- | :--------- | | Americas | 135 | 0 | 33 | 102 | -33 | | Europe | 73 | 0 | 18 | 55 | -18 | | Asia | 69 | 5 | 11 | 63 | -6 | | Total Stores | 277 | 5 | 62 | 220 | -57 | [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor) This section provides a standard disclaimer for forward-looking statements, highlighting risks and uncertainties that could cause actual results to differ [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This disclaimer warns that forward-looking statements involve risks and uncertainties, with actual results potentially differing materially, and the company assumes no obligation to update them - Statements are forward-looking and involve risks and uncertainties, with actual results potentially differing materially from expectations[8](index=8&type=chunk) - Key risk factors include success of Turnaround Plan, balance sheet and liquidity, non-core asset sales, economic conditions, consumer spending, supply chain, foreign currency, competition, and debt covenants[8](index=8&type=chunk) - Company assumes no obligation to publicly update or revise any forward-looking statements, except as required by law[8](index=8&type=chunk)

Core Insights - Fossil Group, Inc. reported a first quarter net sales of $233 million, reflecting an 8.5% decrease compared to the previous year, primarily due to category softness and declines in smartwatch sales [5][12] - The company achieved a gross margin of 61.3%, an increase of 890 basis points year-over-year, attributed to improved product margins and reduced freight costs [5][6] - Despite an operating loss of $7 million, the adjusted operating income was $10 million, indicating a positive trend in operational performance [2][6] Financial Performance - First quarter net sales were $233.3 million, down from $254.9 million in the same quarter last year, with a constant currency decline of 6.2% [5][15] - Gross profit increased to $143 million from $133.5 million, with a gross margin improvement to 61.3% from 52.4% [5][15] - Operating expenses decreased by 8% to $149.7 million, with selling, general and administrative expenses down 12.1% to $133.8 million [5][15] Operational Highlights - The company reported a total liquidity of $100 million, including $78.3 million in cash and cash equivalents [2][7] - Inventory levels decreased by 19% year-over-year to $182.1 million, indicating improved inventory management [7] - The company closed 62 stores, reducing the total store count to 220, with significant closures in the Americas and Europe [28] Market Trends - Sales in the Americas declined by 9% and by 10% in Asia, while Europe saw a slight increase of 1% [5] - Direct-to-consumer sales decreased by 24%, while wholesale sales increased by 6% on a constant currency basis [5] - The traditional watch category saw a 2% increase in sales, contrasting with a 37% decline in the leathers category [5] Future Outlook - The company reiterated its full-year guidance for 2025, anticipating a worldwide net sales impact of approximately $45 million due to retail store closures [8] - The management expressed confidence in the turnaround plan, aiming for long-term profitable growth despite current challenges [4][8]

Group 1 - Fossil Group, Inc. will report its first quarter 2025 financial results after market close on May 14, 2025 [1] - A conference call to discuss the financial results will take place at 5:00 p.m. ET on the same day, accessible via the company's investor relations website [1] - The call will also be archived for replay, providing investors with ongoing access to the information [1] Group 2 - Fossil Group, Inc. specializes in lifestyle accessories, including watches, jewelry, handbags, small leather goods, belts, and sunglasses [2] - The company operates a diverse portfolio of 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 committed to design and innovation, supported by an extensive distribution network across various geographies, categories, and channels [2]

Core Points - Fossil Group, Inc. announced the granting of equity awards as a material inducement for the employment of newly-hired executives [1] - The appointed executives include Chief Digital Information Officer Antonio Carriero, Chief Commercial Officer Joe Martin, and Chief Financial Officer Randy Greben [2] - The equity awards consist of time-based restricted stock units (RSUs) with specific quantities for each executive [2][3] - The RSUs will vest over three years, contingent on the executives' continuous employment [3] - The awards were approved by the Company's Compensation and Talent Management Committee and granted outside the Company's equity incentive plan [4] Company Overview - Fossil Group, Inc. specializes in design, marketing, distribution, and innovation of lifestyle accessories [5] - The company offers a diverse portfolio of owned and licensed brands, including watches, jewelry, handbags, and more [5] - Fossil Group is committed to delivering high-quality design and innovation across its brands through an extensive distribution network [5]

Group 1 - Exxon Mobil Corporation and NextEra Energy are key players in the U.S. energy sector, addressing the essential market need for energy to power industries, businesses, and households [1] - Grassroots Trading focuses on providing objective and unbiased research, particularly on small- to mid-cap companies, while also identifying opportunities in larger companies [2]

Core Viewpoint - Fossil Group, Inc. reported a mixed performance in its fourth-quarter earnings, with a narrower net loss compared to the previous year, but significant declines in net sales driven by weak consumer demand and strategic exits from certain product categories [2][3][15]. Financial Performance - The company incurred a fourth-quarter net loss of $0.14 per share, an improvement from a loss of $0.54 per share in the prior year [2]. - Net sales totaled $342.3 million, an 18.8% decline from $421.3 million in the prior-year period [3]. - For the full year 2024, net sales were $1.1 billion, down 18.9% from $1.4 billion in 2023 [15]. Gross Margin and Operating Income - Despite the sales decline, gross margin expanded by 630 basis points year over year to 53.9% [4]. - The company reported an operating loss of $16.3 million, improved from a $24 million loss in the prior-year quarter [5]. Regional and Segment Performance - Sales declined by 21% in Europe, 18% in the Americas, and 13% in Asia on a constant currency basis [6]. - Direct-to-consumer sales fell 27%, driven by a 20% drop in comparable retail sales [6]. Product Category Performance - Traditional watch sales declined 10% in constant currency, while leather goods and jewelry sales dropped 37% and 19%, respectively [7]. Cost Management and Efficiency - Operating expenses decreased 10.5% year over year to $200.9 million, with SG&A expenses falling 17% to $172.1 million [8]. - The company aims to achieve $100 million in SG&A savings through various restructuring initiatives [17]. Turnaround Strategy - CEO Franco Fogliato outlined a three-pronged turnaround strategy focusing on core business refocusing, cost reduction, and balance sheet strengthening [10]. - The plan includes closing approximately 50 retail stores in 2025 and transitioning select international markets to a distributor model [11]. Leadership Changes - Fossil announced the hiring of Randy Greben as CFO, effective March 17, 2025, as part of its efforts to return to profitable growth [12]. Future Outlook - The company provided a cautious outlook for fiscal 2025, expecting net sales to decline in the mid-to-high teens and anticipating a $45 million revenue impact from store closures [16].

Financial Performance - Total net sales for fiscal year 2024 were $1,144,990, a decrease of 19% compared to $1,412,384 in 2023[341]. - Gross profit for 2024 was $597,151, down from $679,581 in 2023, reflecting a gross margin decline[341]. - Operating loss for 2024 was $(103,947), an improvement from $(143,024) in 2023[341]. - Net loss attributable to Fossil Group, Inc. for 2024 was $(102,671), compared to $(157,088) in 2023, indicating a reduction in losses[341]. - Total current assets decreased to $554,515 in 2024 from $710,690 in 2023, a decline of approximately 22%[338]. - Total assets decreased to $763,567 in 2024 from $978,030 in 2023, representing a decline of about 22%[338]. - Total stockholders' equity fell to $136,724 in 2024 from $251,738 in 2023, a decrease of approximately 46%[338]. - Cash and cash equivalents increased to $123,598 in 2024 from $117,197 in 2023, showing a growth of about 5.5%[338]. - The company reported a restructuring expense of $59,781 in 2024, up from $43,279 in 2023, indicating increased costs related to restructuring efforts[341]. - Net income for fiscal year 2024 was a loss of $106.276 million, an improvement from a loss of $156.659 million in fiscal year 2023[347]. - Total consolidated revenue for Fiscal Year 2024 was $1,144.99 million, a decrease of 19% from $1,412.38 million in Fiscal Year 2023[388]. - Traditional watches revenue decreased to $872.65 million in Fiscal Year 2024 from $1,015.08 million in Fiscal Year 2023, representing a decline of 14%[388]. - Smartwatches revenue dropped significantly to $24.88 million in Fiscal Year 2024 from $80.95 million in Fiscal Year 2023, a decrease of 69%[388]. Operational Risks - The company faces numerous operational risks, including potential supply chain disruptions and the ability to develop innovative products[19]. - The company is highly leveraged, which may adversely affect its financial condition and ability to meet debt obligations[24]. - The company has experienced challenges related to inventory valuation, requiring significant management judgment regarding future demand and market conditions[331]. - The company is subject to risks related to competition from both traditional and online-only retailers, impacting its market position[24]. - The company’s operations are influenced by changing regulatory requirements and political scrutiny, particularly regarding ESG matters[19]. - The company’s financial performance may be impacted by fluctuations in raw material prices and inflation[24]. Cash Flow and Debt Management - Net cash provided by operating activities was $46.680 million in fiscal year 2024, compared to a cash used of $59.459 million in fiscal year 2023[347]. - Total debt borrowings in fiscal year 2024 amounted to $115.702 million, while debt payments were $159.495 million[347]. - Cash and cash equivalents at the end of fiscal year 2024 were $126.592 million, up from $121.583 million at the end of fiscal year 2023[347]. - The Company had net payments of $46.1 million under the Revolving Facility during fiscal year 2024, with available borrowing capacity of approximately $53.4 million as of December 28, 2024[424]. - Total debt decreased from $212.6 million as of December 30, 2023, to $168.1 million as of December 28, 2024, representing a reduction of approximately 21%[410]. - The Company’s long-term debt as of December 28, 2024, was $165.9 million, down from $212.1 million in the previous year[410]. - Interest expense related to the Notes and Revolving Facility amounted to $10.4 million and $2.3 million, respectively, during fiscal year 2024[424]. Restructuring and Strategic Plans - The Turnaround Plan aims to achieve approximately $100 million in SG&A cost savings in fiscal 2025 compared to fiscal 2024, with $50 million in total charges expected, of which $7 million was incurred in fiscal 2024[484]. - The TAG plan achieved annualized operating income benefits of $280 million over fiscal years 2023 and 2024, with $125 million in fiscal 2023 and $155 million in fiscal 2024[488]. - In fiscal year 2024, the Company incurred restructuring charges of $60,542 million under the TAG plan, compared to $48,816 million in fiscal year 2023[489]. - The Company plans to close approximately 50 retail stores as part of its restructuring efforts[484]. - The Turnaround Plan focuses on refocusing on core operations, rightsizing the cost structure, and strengthening the balance sheet[484]. - The Company expects to identify additional cost-reduction opportunities that may generate incremental savings in 2025[484]. Tax and Deferred Tax Assets - The provision for income taxes for fiscal year 2024 was $(11.8) million, a significant decrease from a provision of $522,000 in 2023[430]. - The effective tax rate for fiscal year 2024 was 10.0%, influenced by the release of reserves for uncertain tax positions[431]. - The total valuation allowance against deferred tax assets was $226.5 million, with $149.6 million related to U.S. operations and $76.8 million to foreign operations[432]. - The Company has $460.5 million of undistributed earnings and profits from foreign subsidiaries that are planned to be reinvested outside the U.S.[433]. - Unrecognized tax benefits totaled $6.8 million for fiscal year 2024, down from $23.6 million in 2023[434]. - The Company recorded $2.1 million of unrecognized tax benefits that could be settled within the next twelve months as of December 28, 2024[436]. Inventory and Asset Management - The company reported a decrease in inventories to $58.638 million in fiscal year 2024 from $125.766 million in fiscal year 2023[347]. - Total inventories decreased to $178.58 million in Fiscal Year 2024 from $252.83 million in Fiscal Year 2023, reflecting a reduction of 29%[391]. - Prepaid expenses and other current assets decreased to $90.18 million in Fiscal Year 2024 from $152.72 million in Fiscal Year 2023, a decline of 41%[393]. - Property, plant, and equipment-net decreased to $41.57 million in Fiscal Year 2024 from $57.24 million in Fiscal Year 2023, a reduction of 27%[394]. - The company had no material contract assets and reported contract liabilities of $2.1 million related to gift cards as of December 28, 2024[388]. Shareholder and Stock Information - The Company had $20.0 million of repurchase authorizations remaining under its common stock repurchase plan as of December 28, 2024[450]. - The Company did not issue stock options, stock appreciation rights, and performance stock appreciation rights in fiscal years 2024, 2023, and 2022[457]. - The total fair value of shares/units vested during fiscal years 2024, 2023, and 2022 was $0.9 million, $2.6 million, and $9.4 million, respectively[458].

Financial Performance - Fourth quarter worldwide net sales were $342 million, down 19% on a reported basis and 18% in constant currency compared to $421.3 million in Q4 2023[5]. - Full year 2024 net sales totaled $1.1 billion, a decrease of 18.9% on a reported basis compared to $1.4 billion in 2023[12]. - For the 13 weeks ended December 28, 2024, net sales were $342.3 million, a decrease of 18.7% compared to $421.3 million for the same period in 2023[21]. - The Americas segment reported net sales of $164.2 million for the 13 weeks ended December 28, 2024, down from $203.7 million in the prior year[24]. Profitability and Loss - Fourth quarter adjusted operating income was $20.1 million, or 5.9% of net sales, compared to an adjusted operating loss of $8.5 million in Q4 2023[12]. - Full year 2024 net loss totaled $102.7 million with loss per diluted share of $1.94, compared to a net loss of $157.0 million and loss per diluted share of $3.00 in the prior year[16]. - Operating income for the 13 weeks ended December 28, 2024, was a loss of $16.3 million, compared to a loss of $24.0 million for the same period in 2023[21]. - Fiscal 2024 total income (loss) before income taxes was $(118.1) million, compared to $(156.1) million in Fiscal 2023, showing an improvement of 24.4%[27]. - Adjusted EBITDA for Fiscal 2024 was $(11.6) million, while Fiscal 2023 reported $(62.6) million, indicating a significant improvement[27]. - Operating income (loss) for the 52 weeks ended December 28, 2024, was $(34.3) million, compared to $(92.0) million for the same period in 2023, reflecting a 62.7% improvement[30]. - The company reported a diluted earnings (loss) per share of $(1.94) for the 52 weeks ended December 28, 2024, compared to $(3.00) for the same period in 2023, indicating a reduction in losses[30]. Cost Management and Savings - The company expects SG&A savings of approximately $100 million in 2025 versus 2024, driven by workforce reduction and store closures[6]. - The company incurred restructuring expenses totaling $59.8 million in Fiscal 2024, compared to $43.3 million in Fiscal 2023[27]. - Interest expense for Fiscal 2024 was $19.0 million, slightly lower than $21.8 million in Fiscal 2023[27]. Inventory and Assets - Inventory at year-end was $178.6 million, representing a decrease of 29.4% versus a year ago[5]. - Total current assets decreased to $554.5 million in 2024 from $710.7 million in 2023, primarily due to a reduction in inventories[22]. - Total assets decreased to $763.6 million in 2024 from $978.0 million in 2023, reflecting a decline in both current and long-term assets[22]. Future Outlook - The company anticipates worldwide net sales decline in the range of mid to high teens for 2025[17]. - Adjusted operating income margin for 2025 is expected to be in the negative low single digits[17]. - The company is focusing on enhancing its product offerings, particularly in smartwatches, which saw a notable increase in sales[24]. - The company plans to continue its market expansion efforts despite the store closures, focusing on strategic locations and new product development[31]. Store Operations - The total number of stores decreased from 302 on December 30, 2023, to 248 on December 28, 2024, with 59 stores closed during the year[31]. - The Americas region saw a reduction of 29 stores, ending with 114 stores by December 28, 2024[31]. Margin Improvement - Fourth quarter gross margin expanded 630 basis points to 53.9% due to improved product margins and exit from the smartwatch category[5]. - Gross profit for the 13 weeks ended December 28, 2024, was $184.6 million, resulting in a gross margin of 53.9%, up from 47.6% in the prior year[21]. - The operating margin for the 52 weeks ended December 28, 2024, was (3.0)%, an improvement from (10.1)% in the previous year[30].

Core Insights - Fossil Group, Inc. reported better-than-expected fourth quarter results, achieving an adjusted operating profit of $20 million, indicating that business performance improvement initiatives are gaining traction [4] - The company has introduced a comprehensive turnaround plan focusing on refocusing on core initiatives, rightsizing the cost structure, and strengthening the balance sheet [5] - For 2025, the company expects to achieve SG&A savings of approximately $100 million compared to 2024, alongside a strategic review of its business model and capital structure [5][6] Financial Performance - Fourth quarter worldwide net sales were $342 million, down 19% on a reported basis and 18% in constant currency, with declines across all regions and channels [6][10] - The fourth quarter gross margin expanded by 630 basis points to 53.9%, primarily due to improved product margins and the exit from the smartwatch category [6][10] - Fourth quarter SG&A expenses were $172.1 million, down 17% compared to the same quarter in 2023, reflecting efficiencies from the TAG Plan [6][10] - The company reported a fourth quarter operating loss of $16.3 million, with an adjusted operating income of $20.1 million, translating to an adjusted operating margin of 5.9% [6][10] Long-Term Financial Targets - For the full year 2027, the company aims for worldwide net sales exceeding $800 million and an adjusted operating income margin in the mid-single-digit range [9][18] - The company anticipates a continued decline in worldwide net sales in the mid to high teens for 2025, with an adjusted operating income margin expected to be in the negative low single digits [18] Balance Sheet and Liquidity - As of December 28, 2024, the company had total liquidity of $177 million, including cash and cash equivalents of $124 million [6][14] - Year-end inventory was $178.6 million, representing a decrease of 29.4% compared to the previous year [6][14] Strategic Initiatives - The turnaround plan includes launching a new FOSSIL brand platform, optimizing the global wholesale footprint, and closing approximately 50 retail stores [5] - The company is concluding its TAG Plan, which generated annualized operating income benefits of $280 million over two years [5]

Group 1 - Fossil Group, Inc. will report its fourth quarter and full year 2024 financial results on March 12, 2025, after market close [1] - A conference call to discuss the financial results will take place at 5:00 p.m. ET on the same day, accessible via the company's investor relations website [1] - The call will be archived for replay after the live session [1] Group 2 - Fossil Group, Inc. specializes in lifestyle accessories, including watches, jewelry, handbags, small leather goods, belts, and sunglasses [2] - The company operates a diverse portfolio of 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 committed to design and innovation, supported by an extensive distribution network across various geographies and channels [2]