Total Revenue

8.5% decline: Q1 2025 revenue fell from $254.9M to $233.3M

Total revenue declined by roughly 8.5% due to persistent consumer and channel softness compounded by reduced promotional activity and strategic shifts that started in previous periods. These trends continued to impact sales in Q1 2025, reflecting a carryover of challenges experienced in Q1 2024. " "

Smartwatches Revenue

55% decline: Dropped from $8.9M to $4.0M

Smartwatches revenue plunged by about 55% as a direct result of the company’s strategic decision to exit the smartwatch category—a decision already impacting previous periods and now further reducing revenue in Q1 2025. " "

Leathers Revenue

38% decline: Fell from $27.6M to $17.2M

Leathers revenue dropped by approximately 38% driven by continued channel softness and structural declines noted in earlier periods, reflecting a further contraction under the ongoing TAG plan and shifting focus toward higher margin products. "

Operating Income

Loss narrowed by 77%: Improved from $(29.2)M to $(6.7)M

Operating income improved markedly, with losses reduced by roughly 77% as cost optimization measures and operational efficiencies taken in previous periods began to yield results. This improvement demonstrates a continued effort to strengthen operations despite ongoing revenue headwinds. "

Gross Margin

Increased by 9 percentage points: From 52% to 61%

Gross margin expanded from about 52% to roughly 61% thanks to a favorable product mix, improved pricing power, reduced promotional activity, and the strategic exit from lower-margin segments (like smartwatches) that had been underway in previous periods. " "

Revenue – Americas

11% decline: Revenue decreased to $97.7M

Americas revenue declined by around 11% due to reduced store presence, continued consumer softness, and the impact of strategic shifts (such as the exit from the smartwatch category) that had already affected this region in earlier periods. " "

Revenue – Asia

12.5% decline: Revenue fell to $57.4M

Asia revenue dropped by about 12.5% as the region suffered from steep cuts in smartwatch and traditional watch sales, combined with broader consumer and channel pressures that extended the challenges observed in prior periods. " "

Revenue – Europe

Relatively stable: Approximately $77.3M versus $78.7M

European revenue remained nearly flat, indicating regional stability and resilience compared to the more volatile performance in other regions, despite the broader market challenges that impacted global sales. " "

Cash and Cash Equivalents

36% decrease: Reduced from $123.6M to $78.3M

The cash and cash equivalents position weakened by roughly 36% primarily due to increased short-term debt, restructuring costs, and higher financing outflows in Q1 2025, a notable shift from the relatively stronger cash flow position at the end of FY 2024. "

Worldwide Net Sales

FY 2025

Expected to decline in the mid- to high teens, including an impact from store closures of approximately $45M or 4 percentage points "

Expected to decline in the mid- to high teens for full-year 2025; includes approx $45M impact "

no change

Adjusted Operating Margin

FY 2025

Expected to be in the negative low single digits "

Expected to be in the negative low single digits "

no change

SG&A Savings

FY 2025

Projected to generate approximately $100M of savings in FY 2025 compared to FY 2024 "

Expected to generate approximately $100M of SG&A savings compared to 2024 "

no change

Gross Margin

FY 2025

Anticipated to improve compared to FY 2024 "

Expected to remain strong for the rest of the year "

lowered

Tariff Impact

FY 2025

no prior guidance

Assumes no material softening of the macroeconomic environment with potential tariff rise up to 145% (if current 30% holds, guidance could prove conservative) "

no prior guidance

Turnaround Strategy Execution

In Q2, Q3, and Q4 earnings calls the turnaround plan was consistently described as being built on three pillars – refocusing on its core, rightsizing the cost structure, and strengthening the balance sheet. " " " " " " " " "

In Q1 2025, the company emphasized exceptional progress with markedly improved sales performance, significant gross margin expansion, and the achievement of positive adjusted operating margins. "

Positive – An increased confidence with improved operational execution is evident.

Cost Management (SG&A Reductions and Store Closures)

Previous quarters detailed broad initiatives including workforce reductions, store closures (20–55 stores closed by year‐end), and SG&A reductions (e.g. reductions of $31 million and expectations of capturing $100 million in savings). " " " " " "

Q1 2025 continues this focus with a reported reduction in SG&A expenses by $17 million, closure of 28 stores (with plans to close approximately 50 stores in 2025), and transitions in international markets. " " "

Steady – The company maintains a disciplined and consistent cost reduction strategy.

Margin Expansion and Operating Profit Improvement

In Q2 there was a 390bps gross margin expansion, in Q3 a 240bps expansion and narrowed operating loss, and in Q4 margins improved by 630bps with the realization of positive operating income. " " " " "

Q1 2025 reported a gross margin of 61.1% with an 880bps improvement and a positive adjusted operating margin of 4.3%. " "

Accelerated – Ongoing margin improvements have led to robust profitability in Q1 2025.

Declining Sales and Weak Consumer Demand

Q2 reported a 19% decline, Q3 a 16% decline, and Q4 an 18% decline in constant currency, often coupled with comments regarding weak consumer sentiment and challenging macro conditions. " " " " "

Q1 2025 exhibited a moderated decline with net sales dropping by only 6% (with core sales decline narrowing sequentially) while management maintained confidence in their turnaround plan. " " "

Improving – Despite persistent headwinds, the sequential improvement in sales decline is evident.

Execution Risks in Turnaround and Cost-Cutting Measures

In Q2 and Q4 there were references to ongoing structural reviews and challenges such as debt maturities and the complexity of store closures, while Q3 did not explicitly address risks. " " "

Q1 2025 provided a more explicit discussion on execution risks tied to workforce reductions, store closures, and transitions, while also emphasizing mitigating actions like strategic cost control and global diversification. " " " "

Balanced – Greater transparency in risk factors is coupled with strong confidence in mitigation.

Strategic Exits (Smartwatch Exit and Retail Streamlining)

Q2 detailed the exit from the smartwatch category and significant retail streamlining (46–55 store closures), Q3 and Q4 reiterated these exits as key strategic actions contributing to margin and cost benefits. " " " " "

In Q1 2025, the exit from the smartwatch category was cited as contributing to a 500bps impact on core sales but also to margin expansion, alongside the closure of 28 additional stores, reinforcing the strategic initiative. " "

Continued – The strategic exits are consistently pursued and are yielding improved efficiency.

Liquidity and Cash Flow Management

Q2 ended with $156 million, Q3 with $130 million, and Q4 saw an improved liquidity position of $177 million, with positive free cash flow achievements noted amid asset monetization efforts. " " " " "

Q1 2025 reported a liquidity position of $100 million, along with active initiatives like a sale-leaseback agreement and debt refinancing efforts to strengthen cash flow management. "

Focused – Liquidity management remains a top priority with strategic refinancing amid seasonal shifts.

Brand Repositioning and Marketing Initiatives

Q2 emphasized pressures in licensed brands and early signs of brand repositioning; Q3 outlined a new brand platform, global ambassador plans, and product refreshes; Q4 described a comprehensive brand relaunch with a new website and omnichannel campaign. " " " "

Q1 2025 highlighted extensive product innovation, notable collaborations (e.g., Fossil x Minecraft, Fossil x Shelby, Superman collection), and the active promotion of Nick Jonas as a global ambassador. " "

Elevated – There is an increasing focus on innovation and strategic campaigns to drive consumer engagement.

Global Diversification and Tariff Mitigation/Exposure

Q4 discussed transitioning smaller markets to a distributor model and anticipated minimal gross margin impact from tariffs " " " " ; Q2 and Q3 did not explicitly mention these topics.

Q1 2025 renewed focus with over 60% revenue from outside the U.S., strategic price increases, and plans to geodiversify production to mitigate tariff exposure. "

Re-emerging – An intensified focus on leveraging global revenue and supply chain diversification has returned.

Reduced Promotional Activity Impact

Q3 mentioned a return to normalized promotion cadence creating a short-term headwind but aiding margins; Q4 attributed reduced e-commerce promotions to margin improvements and higher quality traffic. " " "

Q1 2025 reaffirmed that reduced promotional activities contributed to an 880bps gross margin improvement and enhanced e-commerce channel performance. "

Consistent – The deliberate reduction in promotional activity continues to yield favorable margin outcomes.