Fossil Group, Inc. reported its financial results for the third quarter and year-to-date periods ending September 28, 2024, revealing significant challenges and strategic shifts. Consolidated net sales for the third quarter were $287.8 million, a decline of 16.4% from $344.1 million in the same period last year. This downturn was attributed to decreased consumer demand, particularly in the Americas, where sales fell by 20.5% to $121.3 million. The Europe and Asia segments also experienced declines of 9.9% and 16.9%, respectively.

The company's gross profit for the quarter was $142.2 million, down 12.0% from $161.7 million a year earlier. However, the gross profit margin improved to 49.4%, up from 47.0%, due to better product margins and the exit from the smartwatch category. Operating expenses decreased by 19.9% to $166.7 million, reflecting the impact of the Transform and Grow (TAG) initiative aimed at reducing costs and improving margins. The operating loss for the quarter was $24.5 million, an improvement from a loss of $46.4 million in the prior year.

Fossil's net loss attributable to the company for the third quarter was $32.0 million, or $0.60 per diluted share, compared to a loss of $61.1 million, or $1.16 per diluted share, in the prior year. The year-to-date net loss was $95.1 million, or $1.80 per diluted share, an improvement from a loss of $128.9 million, or $2.47 per diluted share, in the same period last year.

The TAG initiative, launched in early 2023, aims to generate approximately $300 million in annualized operating benefits by the end of 2025. The company has closed 45 underperforming stores in 2023 and plans to close an additional 55 in fiscal 2024. Charges related to TAG are estimated between $100 million and $120 million, with approximately $40 million expected in fiscal 2024.

Fossil's cash and cash equivalents as of September 28, 2024, were $106.3 million, down from $117.2 million at the end of the previous fiscal year. The company reported total assets of $812.4 million, a decrease from $978.0 million, and total stockholders' equity of $161.9 million, down from $251.7 million.

In terms of strategic leadership, Franco Fogliato was appointed CEO in September 2024, with a focus on redefining the core business and strengthening the balance sheet. The company continues to navigate macroeconomic challenges, including inflation and supply chain risks, while implementing its restructuring plans to enhance operational efficiency.