Fossil Group, Inc. Reports First Quarter 2025 Financial Results

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]