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Fossil Group (FOSL)
NASDAQ:FOSL
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Fossil Group
(NASDAQ:FOSL)
Rating:55Neutral
Price Target:
$3.00
▼(-7.69% Downside)
Positive Factors
Financial Performance
Fossil reported 2Q25 results beating top- and bottom-line estimates, which indicates strong performance.
Marketing Strategy
Nick Jonas is well suited as its brand ambassador, given his global appeal and popularity with younger consumers.
Profitability
Fossil's gross margin expanded impressively to 57.5%, suggesting improved profitability and cost management.
Negative Factors
Debt Obligations
A capital raise will likely be required to address Fossil's financial obligations, as it had $78.3M in cash and $179.5M in debt, including $150M in senior notes due in November 2026.
Financial Strategy
The turnaround plan is centered around refocusing on core analog watches, cutting $100M in SG&A, and strengthening the balance sheet.
Market Valuation
Shares currently trade at an EV/sales multiple of 0.2x our 2026 estimate, below its peer average of 0.5x.
Fossil Group (FOSL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$175.34M
Dividend YieldN/A
Average Volume (3M)892.47K
Price to Earnings (P/E)―
Beta (1Y)1.36
Revenue Growth-15.35%
EPS Growth61.40%
CountryUS
Employees5,200
SectorConsumer Cyclical
Sector Strength82
IndustryLuxury Goods
Share Statistics
EPS (TTM)-0.10
Shares Outstanding53,785,370
10 Day Avg. Volume682,539
30 Day Avg. Volume892,465
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.67
Enterprise Value/Revenue0.26
Enterprise Value/Gross Profit0.48
Enterprise Value/Ebitda-4.24
Forecast
1Y Price Target
$5.00Price Target Upside53.85% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Fossil Group Business Overview & Revenue Model
Company DescriptionFossil Group, Inc. is a global design, marketing, and distribution company that specializes in consumer lifestyle and accessories. Founded in 1984 and headquartered in Richardson, Texas, Fossil operates primarily in the watch and jewelry sectors, offering a diverse range of products that include watches, handbags, wallets, and other fashion accessories. The company is known for its innovative designs that blend vintage aesthetics with modern technology, catering to a wide array of consumers through its well-known brands such as Fossil, Skagen, and Misfit, as well as licensed brands like Michael Kors and Armani Exchange.
How the Company Makes MoneyFossil Group generates revenue through multiple streams, primarily by selling watches and fashion accessories both directly to consumers and through wholesale distribution channels. The company's revenue model includes retail sales from its own branded stores and e-commerce platforms, as well as sales through third-party retailers and department stores. Key revenue streams include the sale of traditional and smartwatches, jewelry, and leather goods. Fossil also benefits from partnerships with luxury brands, which allow it to produce and distribute licensed products, further diversifying its offerings. Seasonal promotions, collaborations, and limited-edition releases contribute to sales spikes, while ongoing investments in digital marketing and online sales platforms help to enhance brand visibility and reach.
Fossil Group Earnings Call Summary
Earnings Call Date:Aug 13, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive outlook with significant operational improvements and strategic initiatives driving improved financial performance. Although there are challenges like sales decline and pressures in China, the positive aspects such as gross margin expansion, successful brand collaborations, and effective cost management contribute to a predominantly positive sentiment.Q2-2025 Updates
Positive Updates
Above Expectation Financial Performance
Fossil Group delivered second quarter financial performance above expectations, raised full-year guidance, and announced a comprehensive debt refinancing. The company achieved a third consecutive quarter of both gross margin expansion and positive adjusted operating income.
Strong Gross Margin and Cost Reduction
Gross margin expanded to more than 57%, with significant cost reduction delivering positive adjusted operating income of $4 million. SG&A savings of $48 million year-to-date, with a target of $100 million for the full year, were achieved.
Successful Brand Collaborations
Collaborations like Fossil per Shelby, Superman, and Fantastic Four drew significant media attention and delivered outsized performance. The launch of Nick Jonas as a global brand ambassador is expected to drive further brand awareness.
Effective Cost Management
Cost-cutting actions have generated nearly $50 million of savings in the first half of 2025, with SG&A savings projected to reach $100 million for the full year.
Successful Debt Refinancing
Fossil Group successfully refinanced its revolving credit facility and entered into a transaction support agreement to extend bond maturities to 2029, improving liquidity and financial flexibility.
Negative Updates
Net Sales Decline
Second quarter net sales totaled $220 million, down 16% in constant currency, reflecting ongoing challenges in the retail environment and store closures.
Challenges in China
Performance in China remained under pressure due to the macro environment, affecting brands like Armani, despite growth in other key markets.
Retail Store Closures
Fossil continued to close underperforming stores, with 34 closures year-to-date and expectations to close 45 to 50 locations by the end of the year.
Minimum Royalty Guarantee Shortfalls
Minimum royalty guarantees are impacting the business, with significant impacts expected in Q3 due to a smaller sales base.
Company Guidance
During the Fossil Group's second-quarter 2025 earnings call, the company reported a significant improvement in financial performance, surpassing expectations. Key metrics highlighted included a gross margin of over 57.5% and a positive adjusted operating income of $4 million, marking the third consecutive quarter of gross margin expansion. The company also achieved a cost reduction of nearly $50 million in the first half of 2025, targeting $100 million in full-year SG&A savings. Additionally, Fossil Group raised its full-year guidance, expecting net sales to decline in the mid-teens and adjusted operating margins to be breakeven to slightly positive. The company successfully refinanced its revolving credit facility and extended bond maturities, significantly enhancing its liquidity position. The discussion also covered strategic initiatives such as a focus on full-price selling, digital enhancements, and the launch of new collaborations, which have contributed to the brand's strong consumer engagement and improved top-line trends.Fossil Group Financial Statement Overview
Summary
Fossil Group is facing significant financial challenges, with declining revenues, negative net income, and high leverage. The company's financial health is under pressure due to persistent negative cash flows and a shrinking asset base relative to equity.Income Statement
Fossil Group has been experiencing declining revenues over the past few years, with a significant drop in Gross Profit and persistent negative EBIT and Net Income. The TTM data shows a Gross Profit Margin of 54.85% and a Net Profit Margin of -10.29%, indicating operational challenges. Revenue growth has been negative, reflecting struggles in maintaining sales levels.38
Negative
Balance Sheet
The company's balance sheet reveals a high Debt-to-Equity ratio, as total debt exceeds stockholders' equity, indicating high leverage. The Equity Ratio stands at 69.06% in TTM, a decrease from previous years, suggesting a shrinking asset base relative to equity. Return on Equity is negative due to consistent net losses.47
Neutral
Cash Flow
Fossil Group's cash flow statement highlights significant challenges. The Free Cash Flow is negative, with a decline in Operating Cash Flow over time. The Free Cash Flow to Net Income ratio is unfavorable, and the Operating Cash Flow to Net Income ratio indicates inefficiencies in converting sales to cash.32
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.12B | 1.14B | 1.41B | 1.68B | 1.87B | 1.61B |
| Gross Profit | 606.65M | 597.15M | 679.58M | 830.68M | 966.37M | 770.36M |
| EBITDA | -68.80M | -83.07M | -115.26M | 20.44M | 107.74M | -97.01M |
| Net Income | -95.95M | -102.67M | -157.09M | -44.16M | 25.43M | -96.09M |
Balance Sheet | ||||||
| Total Assets | 686.02M | 763.57M | 978.03M | 1.24B | 1.37B | 1.48B |
| Cash, Cash Equivalents and Short-Term Investments | 78.29M | 123.60M | 117.77M | 198.70M | 250.80M | 316.00M |
| Total Debt | 322.21M | 315.83M | 388.67M | 416.36M | 375.15M | 522.90M |
| Total Liabilities | 561.61M | 626.84M | 726.29M | 835.10M | 903.30M | 1.04B |
| Stockholders Equity | 140.58M | 148.70M | 254.23M | 405.93M | 465.40M | 440.00M |
Cash Flow | ||||||
| Free Cash Flow | -19.66M | 39.93M | -69.35M | -124.12M | 39.74M | 90.54M |
| Operating Cash Flow | -14.30M | 46.68M | -59.46M | -110.86M | 50.03M | 101.24M |
| Investing Cash Flow | 6.08M | 4.04M | -9.87M | -8.55M | 7.11M | -10.62M |
| Financing Cash Flow | -35.27M | -50.21M | -13.63M | 52.99M | -112.57M | 10.75M |
Fossil Group Technical Analysis
Positive
3.25
Price Trends
2.03
Positive
1.65
Positive
1.61
Positive
Market Momentum
0.37
Negative
76.10
Negative
69.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FOSL, the sentiment is Positive. The current price of 3.25 is above the 20-day moving average (MA) of 2.62, above the 50-day MA of 2.03, and above the 200-day MA of 1.61, indicating a bullish trend. The MACD of 0.37 indicates Negative momentum. The RSI at 76.10 is Negative, neither overbought nor oversold. The STOCH value of 69.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FOSL.
Fossil Group Risk Analysis
Fossil Group disclosed 56 risk factors in its most recent earnings report. Fossil Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Fossil Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $193.96M | 22.96 | 15.81% | ― | 25.43% | 33.93% | |
71 Outperform | $286.51M | 24.27 | 3.52% | 7.51% | -0.65% | -51.59% | |
66 Neutral | $178.37M | ― | -2.83% | 17.15% | -4.32% | -144.96% | |
61 Neutral | $17.59B | 13.29 | -5.28% | 3.05% | 1.25% | -14.67% | |
55 Neutral | $175.34M | ― | -35.01% | ― | -15.35% | 61.40% | |
45 Neutral | $2.40M | ― | -47.86% | ― | -33.51% | 36.29% | |
40 Underperform | $15.90M | ― | 89.94% | ― | -7.08% | -162.35% |
* Consumer Cyclical Sector Average
Performance Comparison
FOSL
Fossil Group
3.25
2.23
218.63%
BGI
Birks & Mayors
0.81
-2.00
-71.17%
CTHR
Charles & Colvard
0.32
-1.37
-81.07%
MOV
Movado Group
19.30
1.58
8.92%
ELA
Envela
7.32
2.07
39.43%
BRLT
Brilliant Earth Group
2.92
1.32
82.50%
Fossil Group Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Fossil Group Announces Debt Exchange Agreement
Positive
Aug 14, 2025
On August 13, 2025, Fossil Group, Inc. announced a Transaction Support Agreement with holders of 59% of its 7.00% Senior Notes due 2026, facilitating a debt exchange and new financing. This agreement includes a $32.5 million investment in new 9.5% First-Out Senior Secured Notes due 2029 and a $150 million asset-based revolving credit facility, enhancing Fossil’s financial stability and supporting its growth strategy. The restructuring may proceed through the Companies Act 2006 if less than 90% of noteholders participate, impacting the company’s debt structure and market positioning.
Regulatory Filings and Compliance
Fossil Group Files Current Report on Form 8-K
Neutral
Aug 13, 2025
Fossil Group has filed a Current Report on Form 8-K, which includes information incorporated by reference under Item 3.02. The report clarifies that it is not an offer to sell or solicit the purchase of securities described within.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.