Fossil Group Inc. (NASDAQ:FOSL) stock surged Wednesday after the watchmaker reported better-than-expected third-quarter results and raised its 2026 sales forecast above Wall Street estimates.
Fossil reported adjusted earnings of 23 cents per share, beating analysts' expectations for a loss of 4 cents per share.
Revenue reached $271.2 million, topping the $248.66 million consensus estimate.
Strong demand for new products supported sales. However, store closures reduced growth by about 190 basis points. A shift of approximately $10 million in wholesale shipments from the fourth quarter also boosted revenue.
Gross margin expanded 10.8 percentage points to 59.8%. Meanwhile, constant currency adjusted operating income improved by $44.6 million to $30.2 million.
Fossil ended the quarter with $77 million in cash.
Fossil Brand Drives Growth
In constant currency, wholesale sales rose 4.4%, while direct-to-consumer sales declined 5.9%. Comparable retail sales edged up 0.1%.
In constant currency, traditional watch sales increased 6.4%. However, leather goods and jewelry sales declined 20.5% and 10.8%, respectively.
In constant currency, sales increased 15.1% in Asia and 0.1% in the Americas. Meanwhile, European sales declined 5.6%.
Fossil brand sales rose 13.6% in constant currency, supported by strong demand in the U.S. and India, along with growth in online and comparable-store sales.
New Products and Cost Cuts Support Turnaround
Fossil launched its Machine X1 and Swiss-made Signature CS1 collections. It also extended its Diesel licensing agreement through 2032 and plans to expand its Nick Jonas partnership in 2027.
Meanwhile, the company completed its Dallas-area distribution center transition and expanded manufacturing capacity in Chandigarh, India.
Fossil also continued investing in automation, forecasting and agentic AI.
Its store optimization program is nearly complete, with 174 locations worldwide. Management is now focusing on improving store productivity and profitability.
Fossil Raises 2026 Sales Forecast
Fossil raised its full-year sales forecast to $980 million-$990 million from its previous forecast of $955 million-$975 million. The revised range exceeds analysts' consensus estimate of $965.51 million.
The company also increased its adjusted operating margin forecast to 5.5%-6.5% from 4%-6%.
Additionally, Fossil expects positive reported net income and earnings per share in 2026.
It maintained its forecast for positive free cash flow and gross margin in the upper 50% range.
FOSL Price Action: Fossil Group shares were up 26.18% at $9.93 at the time of publication on Wednesday. The stock is trading at a new 52-week high, according to market data.
