Fossil returns to profitability after store closures and cost cuts
The company returned to profitability in the last quarter following a strategic retreat that included closing nearly 50 stores. Growth is now driven by classic watches and limited editions, though reliance on expiring licensed brands remains a risk.
Fossil has returned to profitability for the first time since 2022, driven by a strategy of cost reduction and brand refocusing under CEO Franco Fogliato. The company closed nearly 50 stores last year, saving $100 million in costs, and negotiated lower minimum fees with licensors. Revenue, which had dropped from over $3 billion in the mid-2010s to around $1 billion last year, is now being stabilized by a focus on classic watches, which account for 85% of revenue and grew 5% in the last quarter. The Fossil brand itself grew 14%, aided by limited editions with Minecraft and Spider-Man and a new Swiss premium line.
Growth is strongest in Asia, particularly India. However, nearly half of Fossil’s revenue comes from licensed brands, with Michael Kors representing about 20% and Armani 10%. Both contracts expire at the end of 2027, and negotiations are ongoing but unsigned. The company carries $200 million in debt against a $550 million market cap, and its stock has more than doubled this year. Fossil expects to be profitable for the full year, pending holiday sales.