Fossil Group, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Fossil Group's second quarter 2026 earnings call. At this time, all parties are in listen-only mode. This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company. Now, I'll turn the call over to Christine Greeney of the Blue Shirt Group to begin.

Hello, everyone, and thank you for joining us. With me on the call today is Franco Fogliato, Chief Executive Officer, and Randy Greben, Chief Financial Officer. Before we begin, I would like to remind you that information made available during this conference call contains forward-looking information and actual results could differ materially from those that will be discussed during this call. Fossil Group's policy on forward-looking statements and additional information concerning a number of factors that could cause actual results to differ materially from such statements is readily available in the company's Form 8-K, 10-Q, and 10-K reports filed with the SEC. In addition, Fossil assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During today's call, we will refer to constant currency results as well as certain non-GAAP financial measures. Please note that you can find reconciliation of actual results to constant currency results and other information regarding non-GAAP financial measures discussed on this call in Fossil's earnings release, which was filed today on Form 8K and is available in the Investors section on FossilGroup.com. With that, I'll now turn the call over to Franco to begin.

Good afternoon. Thank you, Christine, and welcome, everyone. We're pleased to deliver another quarter of strong financial performance, which reflects the compounding benefits of our turnaround plan and discipline execution. Our Q2 net sales totaled $211 million, led by strength in key brands, channels, and geographies, which is setting the stage for our return to top line growth in the fourth quarter of this year. Growth margin of 62.4% were above our expectation, largely attributable to our full price selling model and adjusted operating income doubled versus a year ago coming in at 8.6 million. These standout results and continuing momentum enable us to confidently raise our full-year outlook, underscoring the strength of our turnaround pillars and our commitment to driving durable growth and value creation. During the quarter, we saw notable strength in two of our biggest and most scalable markets, the US and India. From a regional perspective, the Americas region stabilized and was highlighted by mid-single-digit growth in the U.S., and the Asia region increased 4% with strong double-digit growth in India. Solid performance in these two regions is particularly gratifying given the headwinds we're seeing in the EMEA, which is being increasingly impacted by the geopolitical climate in the Middle East. Another standout this quarter was our fossil brand traditional watch business, which delivered impressive growth of 12% globally in the wholesale channel. We're pleased that our solid top line results, healthy gross margins, and effective cost management translated to strong bottom line delivery in the quarter. We view this as a testament to the hard work and commitment of our teams around the world and would like to express our gratitude for their ongoing dedication to helping us consistently deliver on our plans. Now, I will turn to some updates on the initiatives under our three strategic turnaround pillars. First, returning to profitable growth. We're strengthening the fossil brand platform through action to fuel innovation, deepen consumer engagement grow the traditional watch business and reinvigorate our jewelry and leather categories. Our product engine is key to growing our business. As a market share leader, we are benefiting from structural tailwind that are driving traditional watch growth across markets and demographics. And we're uniquely positioned to capture this opportunity by continuing to deliver a steady pipeline of innovation. We're building a portfolio that allows Fossil to win at every level, from attainable everyday style to elevated watchmaking. We're thrilled to have recently been nominated for American Watch Brand of the Year, Volume Watch Brand of the Year, and Best Marketing Campaign for Big Tick Y2K for the upcoming Watch Pro Awards in September, a premier watch industry event. This is a tremendous honor that speaks to the enduring strength of the Fossil brand and the talented teams driving our product engine and storytelling. Fossil has over 40 years of design heritage that we are drawing from to inspire innovation for the future. By bringing back iconic products from our archives, we're transforming nostalgia into a competitive advantage. And we're just getting started in 2026, In the first half of the year, we launched Big Tech, introduced a Warflex collection to coincide with the World Cup games, and continued to bring high-profile collaboration with Star Wars and Marvel to market. At the same time, fossil icons like the Everett, Machine, Neutra, and Townsman collection for men, and the Arlo, Raquel, and Scarlett collection for women continue to drive scale and market share. and were continually innovating on our icons forward, which was enabled us to create best sellers like watch rings and minis, two categories that fossils have defined within the industry. This fall, we are launching an exciting evolution of our machine platform, the X1, which is bolder, sportier, and marks another step forward in our premiumization strategy. We're focused on elevating our brand equity through innovation, material, craftsmanship, and now Swiss watchmaking. Among our biggest product stories in the second half of the year is the launch of Signature, a premium platform that introduced a new level of technical sophistication and Swiss-made craftsmanship. We're incredibly proud of this offering. and believe it represents an important new chapter for the fossil brand. The signature collection will premiere at New York Watch Week in October, supported by a dedicated campaign designed to celebrate craftsmanship and drive engagement with watch industry press and influencers. This will be quickly followed by a large event in India where consumers are increasingly seeking premium products. We will be amplifying the India Lounge by partnering with Putmu Nab Singh, our Global Signature Ambassador. Putmu is the Maharaja of Jaipur and one of India's leading polo players. He represents a unique blend of heritage, modern style, and global influence that we believe will help drive excitement and engagement. Storytelling is also critical to our brand-led, consumer-focused operating model, and in Q2, we accelerated our investment and demand creation. In the first half of 2026, the combination of robust product innovation and targeted marketing investment helped us drive brand heat and new customer acquisition. Our global marketing teams have been focusing on putting Fossil at the Center of Culture with a digital-first approach, social engagement, and immersive events. During Q2, we had a Fossil Fun event featuring K-pop star ELLE at our flagship store in the capital of Malaysia. The event drew an overwhelming response from hundreds of fans, far exceeding the capacity of our store. It also captured live media attention drove exceptionally high engagement rates on social media and generated 600,000 impressions in one day. We're continuing to invest behind marketing and events to drive cultural relevance and have more storytelling on deck for the second half, including our signature lounge and other key moments leading up to the holiday season. Looking further out, there is much more to come next year in terms of product innovation and creative marketing. We just held our Spring-Summer 2027 Global Sales Meeting at our headquarters in Dallas last month. The energy, collaboration, and enthusiasm from our teams from around the globe was tremendous and reflective of the exciting opportunities in front of us. Turning to our omnichannel initiatives, which are focused on modernizing our brand expression at Wholesale, improving our e-commerce business and optimizing our fossil store portfolio. On the wholesale front, we're driving growth with our long-term partners and extending our footprint in specialty retail doors. This is primarily being driven by three major factors, great product support by a robust innovation pipeline, engaging storytelling, and our commitment to full-price selling. During Q2, we saw traditional watch growth in both the Americas and Asia region, with strength across brands in key markets. This includes the important US market, where wholesale channel performance was highlighted by traditional watch growth of 16%, led by even stronger performance from the fossil brand. Looking now at DTC, In the e-commerce channel, we're continuing to drive higher product margin and AUR as we prioritize full price integrity and implement initiatives to provide a more engaging customer journey. In the retail channel, we're pleased to note that our store of the future strategy is continuing to gain traction, driving improved performance in our full price stores during the quarter. Most notably, we're seeing accelerating trends across product margin and AUR. Building on the momentum we have seen across channels, we recently strengthened our leadership in the Americas region by bringing in seasoned industry veterans to lead our wholesale and retail businesses. We believe this leadership addition will accelerate our efforts to strengthen operational excellence drive productivity and increase market share. Moving now to our core licensed brands. In the Michael Kors brand, watches and jewelry deliver another quarter of improved performance in our most important channels and geographies. The brand is undergoing a successful turnaround and we're following their lead on style and fashion authority. We're evolving our strong hero watch collection like Lexington that resonates globally with consumers while also building new platforms beginning with the Chelsea collection this fall. We're also focused on radiating jewelry through elevated design and a redefined pricing strategy and bringing new energy to demands across collection and price points. In Emporio Armani, the brand continues to generate strong sell-through. driven by innovation and a focus on premium offerings, while the Armani Exchange brand is benefiting from product newness and curated events featuring celebrity collaboration. This fall, Emporio Armani will introduce the next evolution of the archetypal, a classic dress watch positioned in the 200-300 price segment, in one of the brand's most iconic timepieces, which will serve as the foundation of the collection for the years to come. Looking now at India, one of our most important strategic markets, where we are seeing ongoing strength in all brands and channels. During Q2, we delivered double-digit growth in the Fossil, Armani, Diesel, and Coors brands, with strong performance in both the wholesale and direct-to-consumer channels. This was driven by product newness, disciplined full-price selling, and great storytelling, as our experienced team continue to deliver strong execution. We're actioning a number of initiatives to continue the momentum. In the fossil brand, we're maintaining a robust pipeline of newness to drive consumer engagement and branding. At Microcourse, we're leveraging the brand image and amplifying our bridge to luxury positioning as we cater to local consumers with a strong desire for upscale product. In the Armani brand, we're delivering newness and premiumization at Emporio Armani. We'll continue to focus on product innovation Premiumization and Customer Engagement Initiative at Armani Exchange. To support the pace of growth we're seeing in this market, our operational and supply chain teams have been working fast and furious and delivering strong execution. Our India factory has been delivering increased throughput and recently achieved ISO certification, indicating outstanding commitment to quality procedures and protocols. We believe there is still a tremendous runway ahead to unlock additional growth in India as we double down on product marketing and channel expansion opportunities. Moving to our second turnaround pillar, optimizing our operating model. Major areas of focus include sharpening go-to-market execution, enhancing our digital and technology infrastructure, delivering best-in-class supply chain performance, and prioritizing high impact projects and key performance indicators. During the quarter, we made several important tactical advancements that we are mentioning. First, the deployment of AI is supercharging automation and productivity improvements across our back office. Next, we completed a transition of our South Africa subsidiary to a distributor model, which is expected to lower our operating costs and drive greater flow-through of gross profit to the bottom line. We also transition our Malaysia-Singapore markets to a new hybrid operating model, capturing synergies in the region while yielding GNI reduction. Another key initiative is the restricted execution of lease extension on more than 25 of our best performing stores in the Americas region. Lastly, during Q2, we also execute and Lisa for a new North American fulfillment and distribution center. The new facility, located in Sunnyvale, Texas, will come online later this year, replacing our existing retro-drawn. The upgraded space is not only fit for purpose based on our current business space, but also accommodates our future growth plans at a lower cost, further underscoring our commitment to optimizing our cost structure as with a turn to profitable growth. These are just a few examples that demonstrate the rigor with which our teams are executing across the business on a wide range of operational initiatives to capture efficiencies, unlock value, and strengthen performance. Now, turning to our third pillar, building shareholder value. We're pleased to be delivering a second year of traction under our turnaround plan. were driving improved top-line trends, have established healthy gross margin profile, demonstrated disciplined cost management, and returned the business to profitability. As we look at the balance of the year, based on our strong first start and positive business trends, we're pleased to be raising our full-year outlook on the top and bottom line. Most importantly, We continue to expect to return the business to sustainable top-line growth beginning Q4 and now expect to generate positive free cash flow on a full year basis in 2026. We believe our strategy, talented teams, and disciplined execution position us to deliver long-term profitable growth and remain committed to driving value creation for all of our stakeholders. Now, I will turn the call to Randy to discuss the financial. Thank you, Franco.