Fossil Group (NASDAQ:FOSL) shares climbed 16.9% in premarket trading on Wednesday after the watch and accessories manufacturer reported third-quarter 2026 earnings and revenue above analyst expectations, alongside improved profitability and an increase in its full-year financial guidance.
The company reported adjusted earnings of $0.19 per share, compared with analysts’ expectations for a loss of $0.10 per share. Quarterly revenue reached $271.2 million, exceeding the consensus estimate of $248.88 million.
Fossil also returned to year-over-year sales growth for the first time in four years and recorded a net profit of $11.7 million, compared with a net loss in the corresponding period of 2025.
The results followed the company’s implementation of operational and financial measures aimed at improving margins and restoring profitability.
Third-Quarter Revenue Exceeds Expectations
Fossil reported third-quarter revenue of $271.2 million, approximately $22.3 million above analysts’ consensus forecast.
The result marked the company’s first year-over-year quarterly sales increase in four years, representing a change from the revenue declines recorded during the preceding period.
Adjusted earnings of $0.19 per share also exceeded market expectations, which had anticipated a loss of $0.10 per share.
The difference represented a positive earnings surprise of $0.29 per share relative to consensus estimates.
On a reported basis, Fossil generated net income of $11.7 million during the quarter, compared with a net loss in the same period of the previous year.
The company attributed its improved financial performance to changes in pricing, licensing arrangements and supply chain operations.
Gross Margin Expands to 59.9%
Fossil reported a gross margin of 59.9% for the third quarter, representing an increase of 10.9 percentage points compared with the corresponding period of 2025.
The improvement reflected several operational and commercial factors, including reductions in minimum royalty payments associated with licensed brands.
A greater proportion of products sold at full price also contributed to the increase in gross profitability.
The company additionally cited improvements in supply chain operations as a factor supporting margins.
These developments helped Fossil generate positive net income during the quarter and contributed to the earnings result exceeding analyst forecasts.
The increase in gross margin occurred alongside the company’s return to annual sales growth, indicating changes in both revenue performance and the cost structure of its operations.
Fossil Raises 2026 Revenue and Operating Margin Guidance
Following the third-quarter results, Fossil increased its full-year 2026 revenue forecast to between $980 million and $990 million.
The revised range exceeds the previous analyst consensus estimate of approximately $966 million.
The company also raised its adjusted operating margin guidance to between 5.5% and 6.5%, compared with its previous forecast of 4% to 6%.
The updated projections reflect management’s expectations for the remainder of the financial year following the improvement in third-quarter profitability.
Chief Executive Officer Franco Fogliato indicated that the company’s operational turnaround was progressing approximately 18 months ahead of its original schedule.
The comments followed the reported improvements in gross margin, quarterly earnings and revenue performance.
The revised guidance remains subject to the company’s operating results during the final quarter of 2026.
Diesel Licensing Agreement Extended Through 2032
Fossil also announced a five-year extension of its licensing agreement with fashion brand Diesel, extending the partnership through 2032.
The agreement provides continuity for the company’s relationship with the licensed brand as part of its watch and accessories business.
In addition, Fossil extended its partnership with brand ambassador Nick Jonas through 2028.
The announcements accompanied the company’s financial results and updated annual outlook.
Fossil did not disclose additional financial terms associated with the licensing extension or the ambassador agreement in the supplied announcement.
The arrangements form part of the company’s ongoing brand and commercial activities.
Shares Rise Above Previous 52-Week High
Fossil shares advanced 16.9% in premarket trading, reaching approximately $9.20.
The indicated price exceeded the stock’s previous 52-week high of $8.25.
The increase followed the company’s earnings announcement, which included higher-than-expected revenue, positive adjusted earnings and improved full-year guidance.
The share price movement occurred against a broader market backdrop that included declines in major US equity indices on November 10, following inflation data that exceeded expectations.
The S&P 500 and Nasdaq declined during that session as investors reassessed the outlook for US interest rates.
However, equity index futures recovered before Wednesday’s opening bell, with S&P 500 futures advancing approximately 0.6% and Nasdaq futures gaining 1.5%.
Fossil’s premarket increase was substantially larger than the gains in the broader index futures, following the release of company-specific financial results.
Investors Assess Turnaround Progress Following Earnings
Fossil’s third-quarter announcement showed improvements across several financial measures, including revenue growth, gross profitability and net income.
The company’s return to year-over-year sales growth after four years, combined with a gross margin increase of 10.9 percentage points, contributed to its revised financial outlook.
Management’s higher revenue and adjusted operating margin forecasts indicate expectations that the improvements will continue through the remainder of 2026.
The extension of the Diesel licensing agreement and the expanded Nick Jonas partnership also provided updates on the company’s commercial arrangements.
The 16.9% premarket share price increase followed these developments, although subsequent trading performance will depend on market conditions and investor assessments of Fossil’s financial outlook.
Investors will continue to monitor the company’s sales performance, operating margins and progress against its updated full-year targets.