Fossil reports Q3 sales growth and profit as CEO says turnaround is ahead
Fossil posted its first year-over-year sales gain since 2022 and raised its outlook, though full-year sales are still expected to fall.
By Dev Ramirez · Crypto Correspondent
· 3 min read
Fossil Q3 2026 earnings showed a return to both year-over-year sales growth and profit, giving the watchmaker an earlier-than-expected milestone in its restructuring effort. For investors, the result shows improvement in the latest quarter, while Fossil still expects its full-year sales to finish below the prior year.
For the quarter ended Oct. 3, Fossil reported net sales of $271.2 million, up 0.4% from a year earlier. Operating income was $25.3 million, compared with an operating loss of $21.7 million in the prior-year quarter, CNBC reported. Net income was $11.7 million, or 19 cents a share, versus a $39.9 million loss, or 76 cents a share, a year earlier.
Sales measure the money a company brings in before expenses, while net income measures what remains after costs, interest and taxes. Readers can find a fuller guide to revenue versus earnings.
CEO Franco Fogliato told CNBC that Fossil had not expected to return to sales growth for another year and a half. He joined the company in 2024, when it was dealing with declining sales and losses, and has pursued a plan to make the business smaller before rebuilding growth.
What drove Fossil’s Q3 2026 earnings improvement?
Fogliato attributed the progress to store closures, fewer promotions, more sales at full price, tighter cost control, changes to marketing and a broader product range. The company’s operating expenses fell 11.1% to $137 million in the quarter, according to CNBC.
That approach also had a cost. Direct-to-consumer sales, which include Fossil’s own stores and online channels, fell 5.9% in the third quarter. Fogliato attributed the decline to what he called aggressive downsizing.
Growth was not evenly distributed. Asia net sales rose 15.1%, with India a major contributor, Fogliato said. Traditional-watch sales increased 6.4% and accounted for about 86% of Fossil’s sales, while smartwatch sales were under $1 million.
The timing differs from Fossil’s prior forecast. In August, the company reported second-quarter sales of $209.7 million, down 4.9% from a year earlier, and said it expected a return to growth in the fourth quarter. The company said store-rationalization efforts represented about 220 basis points, or 2.2 percentage points, of that second-quarter sales decline.
What is Fossil’s updated 2026 outlook?
Fossil raised its full-year net-sales outlook to $980 million to $990 million, replacing its prior expectation for a 3% to 5% decline, CNBC reported. Even at the new range, annual sales would be slightly below the more than $1 billion reported in the prior year.
The company also expects positive free cash flow by year-end. Free cash flow is cash generated by operations minus cash spent on investments. Fossil’s third-quarter results support management’s claim that its plan is moving faster than expected, but its outlook and the decline in direct-to-consumer sales show that the recovery remains in progress.
This story draws on original reporting from CNBC.
