Fossil Group shares surged on Wednesday, 11 November 2026, after the American watchmaker reported a return to profit in its third quarter and raised its outlook for the full year. The stock closed at $9.97, up 26.7 percent on the previous close of $7.87, having traded as high as $10.55 during the session and set a new 52-week high.

The company, based in Richardson, Texas, reported its results late on Tuesday. Net income came in at $11.7 million, or 19 cents per share, compared with a net loss of $39.9 million, or 76 cents per share, in the same quarter a year earlier. Revenue of $271.2 million beat analysts' expectations of about $249 million, while earnings of 19 cents per share topped a consensus estimate of a 4-cent loss.

Margins drive the turnaround

The profit recovery was driven mainly by a sharp improvement in margins rather than by sales growth. Gross profit rose to $162.3 million from $132.4 million a year earlier, and gross margin widened by 10.8 percentage points to 59.8 percent, against 49.0 percent in the third quarter of 2025. The company said the gain reflected lower licensed-brand minimum royalties, improved product margins from full-price selling and sourcing work, and lower tariff costs.

Operating income swung to $25.3 million from a loss of $21.7 million a year earlier, giving an operating margin of 9.3 percent against negative 8.0 percent. Operating expenses fell 11.1 percent to $137.0 million as restructuring and cost-cutting programmes continued to take effect.

Sales growth itself was modest. Net sales rose 0.4 percent on a reported basis and 2.0 percent at constant currency, but that still ended a long run of declines: it was the company's first year-on-year increase in sales since the first fiscal quarter of 2022. Asia led the recovery, with sales up 15.1 percent at constant currency, while the Americas rose 0.1 percent and Europe fell 5.6 percent. Traditional watch sales grew 6.4 percent at constant currency and the Fossil brand itself rose 13.6 percent, although leather goods fell 20.5 percent and jewellery declined 10.8 percent.

Guidance raised for 2026

Fossil raised its guidance for the full 2026 financial year, lifting its expected worldwide net sales to between $980 million and $990 million and forecasting an adjusted operating margin of 5.5 to 6.5 percent, alongside positive free cash flow. Chief executive Franco Fogliato said the three pillars of the turnaround plan were translating into sales growth and faster profitability, and that results so far this year were running ahead of expectations. He has described the turnaround as running about a year and a half ahead of its original timeline.

The balance sheet remains tight. As of 3 October 2026, Fossil held total liquidity of $111.7 million, made up of $77.0 million of cash and $34.7 million available under its asset-based revolving credit facility, against total debt of $208.0 million. Direct-to-consumer sales fell 5.9 percent in the quarter as the company continued to shrink its store estate, and smartwatch sales came in at under $1 million.

The company also extended its global Diesel licensing agreement for five years and renewed its partnership with Nick Jonas for two watch collections. Despite the strong quarter, Fossil's shares remain far below their levels of a decade ago, and the recovery still depends on sustaining sales growth after years of decline.