Fossil Group, Inc. reported financial results for the fiscal third quarter ended October 3, 2026, showing a modest increase in net sales and significant improvements in profitability metrics. The company announced worldwide net sales of $271.2 million, representing a 0.4% increase on a reported basis and a 2.0% increase in constant currency compared to the prior year's third quarter.
Gross profit for the quarter totaled $162.3 million, resulting in a gross margin of 59.8%. This marked a substantial expansion of 10.8 percentage points from the 49.0% gross margin recorded in the third quarter of fiscal 2025. The company attributed the margin improvement to reduced licensed brand minimum royalties, the accelerated timing of royalty recognition, and improved product margins driven by a full-price selling model and sourcing initiatives.
Operating income for the third quarter of 2026 was $25.3 million, with an operating margin of 9.3%. This compares to an operating loss of $21.7 million and a margin of (8.0)% in the prior year period. Adjusted operating income was $30.2 million, with a constant currency adjusted operating margin of 11.0%. Net income for the quarter was $11.7 million, or $0.19 per diluted share, a significant turnaround from the net loss of $39.9 million ($0.76 per share) reported in the same period last year.
On the balance sheet, as of October 3, 2026, the company reported total liquidity of $111.7 million, consisting of $77.0 million in cash and cash equivalents and $34.7 million of availability under its asset-based revolving credit facility. Total debt stood at $208.0 million. Inventories increased by 13.4% year-over-year to $189.2 million, reflecting investments to support product innovation and the demand pipeline.
Based on the strength of year-to-date performance, Fossil Group raised its full-year 2026 financial outlook. The company now expects worldwide net sales between $980 million and $990 million, excluding the impact of foreign currency. The guidance also includes an adjusted operating margin range of 5.5% to 6.5% and positive free cash flow for the fiscal year.
