FossilGroupDelivers Q1 2024 Results Aligned with Expectations

Fossil Group reports Q1 2024 earnings meeting expectations, driven by its Transform & Grow Plan. The plan's initiatives contributed to a 300 basis points increase in gross margin and cost reduction.

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Bijay Laxmi
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FossilGroupDelivers Q1 2024 Results Aligned with Expectations

FossilGroupDelivers Q1 2024 Results Aligned with Expectations

Fossil Group, Inc. (NASDAQ:FOSL) reported its first quarter 2024 earnings on May 8, with net sales and operating margin meeting expectations. The company's Transform & Grow Plan (TAG), initiated in 2023, has been a key driver behind the positive results, focusing on gross margin expansion and cost reduction.

Why this matters: The success of Fossil Group's Transform & Grow Plan has implications for the broader retail industry, as companies struggle to adapt to changing consumer behaviors and market trends. As Fossil Group continues to implement its cost-cutting measures and improve its financial performance, it may serve as a model for other companies looking to revamp their business strategies.

TAG, a broad-based program encompassing seven work streams, is expected to accelerate benefits in 2024 and 2025. The initiatives contributed to a 300 basis points increase in gross margin compared to the previous year. This improvement was driven by the exit from the smartwatch category, enhanced product margins in core categories, and lower freight costs.

Fossil Group aims to deliver year-over-year improvement in gross margin through the TAG program, with the goal of reaching historical gross margin levels in the mid-50s over the next two years. The company is also focused on reducing costs by recalibrating its operating model for greater efficiency and lower fixed costs, driving savings in procurement practices, and optimizing direct channel operating costs.

Jeff Boyer, Interim CEO of Fossil Group, commented on the results, stating,"As we continue to navigate challenging top line trends, our ability to drive gross margin expansion and reduced costs, enabled us to narrow our operating loss and improve our free cash flow from a year ago. "Free cash flow

Fossil Group's Q1 2024 earnings demonstrate the company's progress in executing its Transform & Grow Plan, which has been instrumental in driving gross margin expansion and cost reduction. As the company continues to implement the TAG initiatives, it expects to see further improvements in its financial performance and move closer to achieving its historicalgross marginlevels in the coming years.