Fossil Group, Inc. announced its financial results for the first quarter ended April 5, 2025, on May 14, 2025. The company reported worldwide net sales of $233.3 million, an 8.5% decrease (6.2% in constant currency) compared to the prior year quarter. Despite the sales decline, the core sales decline narrowed to 8%, a sequential improvement from the 12% decline in Q4 2024.
Gross profit increased to $143 million, and the gross profit margin rate surged to 61.3%, an impressive 880 basis point increase from 52.4% in the prior year quarter. This expansion was driven by the strategic decision to exit the smartwatch category, focus on higher-margin traditional watches, reduced promotions, improved product margins, and favorable product mix.
Operating expenses decreased to $133.8 million, or 57.4% of net sales, down from 59.7% in the prior year quarter. These cost reductions, stemming from restructuring programs, contributed to a significant narrowing of the operating loss from $29.2 million to $6.7 million. On an adjusted basis, the company achieved a positive operating income of $10 million, translating to a 4.3% adjusted operating margin, a substantial swing from a $20 million adjusted operating loss in the prior year quarter.
The company ended Q1 2025 with $100 million in total liquidity, comprising $78 million cash and $21 million ABL availability. Fossil Group reiterated its full-year 2025 guidance, which anticipates worldwide net sales to decline in the mid- to high teens and a full-year adjusted operating margin in the negative low single digits. The company is actively pursuing initiatives to improve working capital and monetize non-core assets, including a planned sale-leaseback of its German distribution center expected to close in Q2 2025.
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