Cuộc họp công bố kết quả kinh doanh Q2 2026 của Fossil Group (FOSL): Biên lợi nhuận mở rộng thúc đẩy nâng triển vọng

Thông tin trọng tâm

• Doanh thu thuần quý 2/2026 đạt 211 triệu USD, giảm 4% so với cùng kỳ năm ngoái, bao gồm tác động khoảng 220 điểm cơ bản từ việc đóng cửa cửa hàng.
• Biên lợi nhuận gộp tăng 490 điểm cơ bản lên 62,4%, chủ yếu nhờ bán đúng giá niêm yết, các sáng kiến chuỗi cung ứng và thuế quan thấp hơn.
• Lợi nhuận hoạt động đã điều chỉnh tăng gấp đôi so với cùng kỳ năm ngoái lên 8,6 triệu USD. Lợi nhuận hoạt động đã điều chỉnh trong nửa đầu năm tăng 35% lên 18,1 triệu USD dù doanh thu giảm.
• Doanh số đồng hồ truyền thống thương hiệu Fossil tăng 12% ở kênh bán buôn toàn cầu. Doanh số bán buôn đồng hồ truyền thống tại Mỹ tăng 16%, trong khi Ấn Độ đạt mức tăng trưởng hai chữ số.
• Tập đoàn Fossil đã nâng triển vọng cả năm và hiện dự báo doanh thu thuần giảm 3% đến 5% và biên lợi nhuận hoạt động đã điều chỉnh đạt 4% đến 6%.
• Ban lãnh đạo tiếp tục kỳ vọng doanh thu tăng trưởng trở lại trong quý 4/2026 và hiện dự phóng dòng tiền tự do cả năm đạt mức dương.

Dữ liệu tài chính cốt lõi

Kết quả kinh doanh và hoạt động

Khu vực Châu Mỹ đã ổn định trở lại nhờ mức tăng trưởng một chữ số ở tầm trung tại Mỹ. Doanh số tại Châu Á tăng 4%, dẫn đầu là mức tăng trưởng hai chữ số mạnh mẽ tại Ấn Độ. Khu vực EMEA tiếp tục chịu áp lực từ tình hình địa chính trị ở Trung Đông và hoạt động bán lẻ du lịch suy yếu.

Đồng hồ truyền thống là động lực tăng trưởng chính. Doanh số đồng hồ truyền thống thương hiệu Fossil tăng 12% ở kênh bán buôn toàn cầu, trong khi doanh số bán buôn đồng hồ truyền thống tại Mỹ tăng 16% tính trên tất cả các thương hiệu, trong đó Fossil đạt kết quả vượt trội hơn.

Ban lãnh đạo cho rằng đà tăng trưởng này đến từ việc đổi mới sản phẩm, hoạt động tiếp thị và kỷ luật bán đúng giá niêm yết. Các đợt ra mắt sản phẩm được lên kế hoạch trong nửa cuối năm bao gồm mẫu Machine X1 thể thao hơn và Signature - nền tảng cao cấp sản xuất tại Thụy Sĩ dự kiến ra mắt trong Tuần lễ Đồng hồ New York vào tháng 10, sau đó sẽ ra mắt tại Ấn Độ.

Đồng hồ và trang sức Michael Kors đã cải thiện tại các kênh và thị trường trọng điểm. Emporio Armani tiếp tục ghi nhận doanh số bán lẻ mạnh mẽ, trong khi Armani Exchange hưởng lợi từ các sản phẩm mới và các sự kiện gắn liền với người nổi tiếng. Tại Ấn Độ, các thương hiệu Fossil, Armani, Diesel và Michael Kors đều đạt mức tăng trưởng hai chữ số trên cả kênh bán buôn lẫn kênh bán hàng trực tiếp tới người tiêu dùng.

Tập đoàn Fossil tiếp tục tinh gọn hoạt động vận hành. Công ty đã chuyển đổi công ty con tại Nam Phi sang mô hình nhà phân phối, áp dụng cấu trúc hỗn hợp cho Malaysia và Singapore, đồng thời ký hợp đồng thuê một trung tâm hoàn tất đơn hàng và phân phối mới tại Sunnyvale, Texas. Công ty cũng gia hạn hợp đồng thuê hơn 25 cửa hàng hoạt động hiệu quả nhất tại Châu Mỹ.

Công ty kết thúc quý 2 với số lượng cửa hàng giảm 17 địa điểm, bao gồm 6 cửa hàng đóng cửa và 11 địa điểm tại Nam Phi chuyển sang nhà phân phối. Công ty dự kiến đóng cửa thêm 2 cửa hàng, với tổng số khoảng 178 địa điểm trên toàn cầu vào cuối năm.

Dự báo của Ban lãnh đạo

Khoảng 360 điểm cơ bản trong mức giảm doanh thu cả năm dự phóng có liên quan đến việc đóng cửa cửa hàng và tuần báo cáo bổ sung trong năm 2025. Ban lãnh đạo cho biết triển vọng quý 4 được củng cố bởi danh mục sản phẩm mới, sự gắn kết với đối tác, trưng bày tại cửa hàng được cải thiện và các hoạt động tiếp thị, đồng thời ghi nhận những bất định chung của thị trường.

Rủi ro và yếu tố cần theo dõi

• Kết quả hoạt động tại khu vực EMEA đang bị ảnh hưởng bởi tình hình địa chính trị ở Trung Đông, hoạt động du lịch giảm sút và những thay đổi trong mô hình vận hành khu vực.
• Ban lãnh đạo xác định điều kiện thị trường bất ổn và giá xăng dầu là những yếu tố có thể ảnh hưởng đến triển vọng tăng trưởng quý 4.
• Thiếu hụt tiền bản quyền từ các thương hiệu được cấp phép đã làm giảm biên lợi nhuận gộp quý 2 khoảng 1,5 điểm phần trăm.
• Triển vọng biên lợi nhuận gộp cả năm ở nửa trên của khoảng 50% giả định Tập đoàn Fossil không nhận được thêm bất kỳ khoản hoàn thuế quan nào trong năm 2026.
• Doanh thu cả năm sẽ tiếp tục phản ánh tác động từ việc đóng cửa cửa hàng và tuần báo cáo bổ sung trong năm 2025.

Điểm nhấn phần Hỏi & Đáp với chuyên gia phân tích

Ban lãnh đạo cho biết sự tăng trưởng bền vững của đồng hồ truyền thống phụ thuộc chủ yếu vào việc tiếp tục đổi mới trong thiết kế, công nghệ, truyền tải câu chuyện sản phẩm và tiếp thị. Franco Fogliato nói thêm rằng danh mục sản phẩm trong nửa cuối năm 2026 và năm 2027 củng cố niềm tin của ban lãnh đạo vào ngành hàng này.

Về tiếp thị, công ty đang chuyển hướng đầu tư nhiều hơn vào việc xây dựng thương hiệu ở phễu trên và kích cầu. Ban lãnh đạo kỳ vọng các chiến dịch dành riêng cho sản phẩm, tương tác kỹ thuật số và các sự kiện văn hóa sẽ mở rộng việc thu hút khách hàng, đồng thời hỗ trợ bán đúng giá niêm yết.

Liên quan đến tăng trưởng quý 4, ban lãnh đạo chỉ ra sự kết hợp giữa các sản phẩm mới, mở rộng kênh bán buôn, trưng bày bán lẻ tốt hơn, các hoạt động tiếp thị và đà hợp tác cải thiện với các đối tác. Công ty vẫn duy trì quan điểm thận trọng do điều kiện thị trường bên ngoài tiếp tục bất định.

Đối với Châu Âu, ban lãnh đạo cho biết công ty đang ưu tiên khả năng sinh lời dài hạn và rủi ro vận hành thấp hơn thay vì theo đuổi doanh số ngắn hạn, bao gồm cả việc chuyển đổi từ hoạt động trực tiếp sang mô hình do nhà phân phối dẫn dắt tại một số thị trường được lựa chọn.

Toàn văn Biên bản cuộc họp kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Thank you. Good afternoon, ladies and gentlemen, and welcome to the Fossil Group Second Quarter 2026 Earnings Call. [Operator Instructions] 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 Greany of The Blueshirt Group to begin. Thank you.

Christine Greany

Hello, everyone, and thank you for joining us. With me on the call today is Franco Fogliato, Chief Executive Officer, and [ Randy Grevin ], Chief Financial Officer. Before we begin, I would like to remind you that information made available during this conference call 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 is available on the Fossil website, was filed today on Form 8-K, and is available in the Investors section on fossilgroup.com. With that, I'll now turn the call over to Franco to begin.

Franco Fogliato

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 disciplined 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. Gross margins 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. Momentum enables 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 U.S. and India. From a regional perspective, the Americas region stabilized and was highlighted by mid-single-digit growth in the U.S. 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 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 to 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 tailwinds that are driving traditional watch growth across markets and demographics.

And we are 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 Tic Y2K for the upcoming WatchPro 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.

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 Tic, introduced a [ War Plex ] collection to coincide with the World Cup games, and continued to bring high-profile collaborations with Star Wars and Marvel to market. At the same time, Fossil icons like the Everett, Machine, Neutra, and Townsman collections for men, and the Harlow, Raquel, and Scarlette collections for women continue to drive scale and market share. We're continually innovating our icons forward, which has enabled us to create best sellers like watch rings and minis, two categories that Fossil has 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 are 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 introduces a new level of technical sophistication and Swiss-made craftsmanship. We're incredibly proud of this offering and believe it to represent 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.

It will be quickly followed by a launch event in India, where consumers are increasingly seeking premium products. We will be amplifying the India launch by partnering with Padmanabh Singh, our global senior ambassador. Padmanabh 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 in demand creation. In the first half of 2026, the combination of robust product innovation and targeted marketing investment helped us drive brand heat in 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 [ HAL ] 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 launch 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 supported 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 regions, with strength across brands in key markets. This includes the important U.S. 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 margins 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 margins 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 delivered 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 collections like Lexington that resonate globally with consumers, while also building new platforms beginning with the Chelsea collection this fall. We're also focused on rejuvenating jewelry through elevated design and a redefined pricing strategy, bringing new energy to demand across collections 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 collaborations. This fall, Emporio Armani will introduce the next evolution of the Archetipo, a classic dress watch positioned in the $200 to $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 Kors 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 continues to deliver strong execution. We're executing 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 Michael Kors, 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 initiatives 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.

The 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. Within the quarter, we made several important tactical advancements that are worth 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 transitioned our Malaysia-Singapore markets to a new hybrid operating model, capturing synergies in the region while yielding G&A reduction.

Another key initiative is the recent execution of lease extensions on more than 25 of our best-performing stores in the Americas region. Lastly, during Q2, we also executed a lease 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 Richardson ground. 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 we return 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. We're driving improved top-line trends, have established a 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 half and positive business trends, we are 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 in 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 financials.

Unknown Executive

Thank you, Franco. Q2 was another strong proof point that our turnaround plan is delivering on all fronts. Sharp execution across our initiatives enabled us to exceed expectations on the top line, expand gross margins, capture operating efficiencies, and deliver 2x in adjusted operating income versus last year. Net sales in Q2 totaled $211 million. That represented a decline of 4% versus last year and includes approximately 220 basis points of impact related to our store closure program. This was better than our expectations and marks another quarter of improving sales trends with the rate of decline continuing to narrow. Gross margin performance in the second quarter was strong, expanding 490 basis points to 62.4%.

The year-over-year improvement is first and foremost attributable to our commitment to full-price selling, which drove strong product margins, and is a continued testament to the strength of our supply chain initiatives. Lower tariffs compared to last year also served as a tailwind. We are pleased with our healthy gross margin profile and based on Q2's particularly strong performance, we now anticipate that full-year gross margins will be in the upper 50s. It's worth noting that this assumes we do not capture any additional tariff refunds in 2026. Turning now to operating expenses. SG&A came in at $123 million, essentially flat, excluding an $11 million gain recorded in Q2 of last year, resulting from the sale of our European distribution center.

In aggregate, SG&A in Q2 2026 reflects fewer stores in operations, as well as lower compensation and administrative expenses, which more than offset a planned increase in marketing spend to support our storytelling engine. Disciplined cost management remains a core tenet of our turnaround strategy. That said, we have continued to balance demand-generating marketing with some of our savings reinvested back into the business, as seen this quarter, as we've worked to support key product launches in Q3 and the seasonally important Q4. In Q2, we ended the quarter with 17 fewer stores, including 6 closures and 11 stores that we transitioned to a distributor in South Africa, which we talked about last quarter.

We have another two closures planned for this year and expect to end the year with approximately 178 locations globally. Stepping back, we believe the hard work of optimizing the store portfolio is largely behind us. Going forward, we will continue to deploy our successful store of the future strategy and evaluate longer-term opportunities to drive growth and productivity of the fleet. Physical retail remains a core pillar of our omnichannel business, and we are pleased to have extended our lease agreements on more than 25 of our best retail locations in the Americas, as Franco referenced earlier. Zooming out, we remain focused on optimizing our operating model by capturing efficiencies and rationalizing investments across key areas of the business, including go-to-market, IT, and back-office functions.

Looking at the bottom line, driving flow-through remains a priority. Gross margin expansion and disciplined SG&A management converted our top-line performance into bottom-line delivery. Q2 adjusted operating income doubled compared to last year, coming in at $9 million. I believe it's worthwhile to pause here and reflect on our bottom-line performance for the first six months of 2026. Year-to-date adjusted operating income of $18.1 million is 35% greater than last year's $13.4 million even on reduced sales. And as we have continued to advance our turnaround, the cost of restructuring is far less impactful this year than last, which translates to a meaningful increase in GAAP operating income, up nearly $14 million versus a year ago, even before normalizing for the gain of the European distribution center sale in last year's Q2.

Turning to the balance sheet, we ended the quarter in solid financial condition with $79 million of cash and cash equivalents and $18 million of availability under our ABL. Additionally, during the quarter, we collected $4.9 million of the $5.9 million tariff refund we recognized in Q1, and we had no utilization under our ATM program of $178 million. That's approximately flat compared to Q2 of last year and in line with our seasonal expectations, leaving the business well-positioned to support an anticipated return to growth in the fourth quarter, consistent with our emphasis on a full-price selling model. Importantly, higher year-over-year profitability and improved working capital management enabled us to narrow operating cash use versus a year ago. Moving now to guidance.

Given our strong first half performance and business momentum, we are raising our full-year outlook on the top and bottom line. Worldwide net sales are now expected to decline in the range of 3% to 5%, which compares to our prior expectation for a decline in the range of 4% to 6%. As a reminder, about 360 basis points of the decline can be traced to the net impact of store closures and the extra week in 2025. Of note, our outlook assumes an expected return to top-line growth in Q4 as we continue to unlock the benefits of our turnaround plan. On the bottom line, we now expect adjusted operating margins in the range of 4% to 6%, up from our prior range of 3% to 5%.

As a result of this improved profitability outlook, we now expect to generate positive free cash flow on a full-year basis. We are incredibly pleased with the way the business is performing, which is a testament to the work our teams are doing to reignite sales growth and strengthen our operating model, putting us firmly on a path to generate durable, profitable growth. Now I'll ask the operator to open the call to Q&A.

Operator

[Operator Instructions] Our first question comes from the line of [ Henry Dare ] with Maxim Group LLC. Your line is now open.

Phần hỏi đáp

Unknown Analyst

Hi, so [ Henry Dare ], I'm in for Tom Forte. First of all, congratulations on the quarter. I have two questions. The first is sales and traditional watches were up year-over-year in the previous quarter, and they were strong in this quarter. You've guided to a return to consolidated revenue growth in the fourth quarter. What would it take for traditional watches to consistently and sustainably grow revenue year-over-year in the future? Thank you.

Franco Fogliato

Hi, [ Ari ]. Thank you very much for the question. I really appreciate it. We are extremely excited about our performances with our traditional watches. You've probably seen in the quarter our wholesale traditional watch growth was 12% globally, which is beyond our expectation and is really driven by the innovation that we started to develop and to enforce since I joined the company in September '24. To answer your question, it's really all about innovation. Innovation design, the creativity, the storytelling, the technology. I always repeat to the teams, I'm very excited about what we have achieved so far, but I'm even more excited about what is coming next, in particularly the second half of the year, and even further down into 2027 as we're building the alliance for 2027.

I think that our teams are gaining confidence. We have world-class teams. The company is in a much better position than for many years. We're excited, and we're excited about doing what we like to do, which is really building great products. So, you know, really, the answer is we need to continue to build the best product in the world, continue to really create that emotional connection the brand has created over 40 years with our consumer, and continue to make our consumer dreaming about this brand. We're ahead of what we said, we're ahead of our original plan, and I can't say how thankful we are to our teams that are showing once more that once we put them in the best condition to operate, they can create the best product in the world, and we're excited about what's coming next.

Unknown Analyst

Thank you. And my other question is, last year you had a big marketing effort with Nick Jonas in the back half of 2025. This year it seems like your marketing efforts are a little more spread out across the year. I know you touched on this a little bit during your comments, but could you compare and contrast your marketing efforts for 2026 with 2025? And also discuss high level, your future marketing spending plans as you continue to strengthen the company?

Franco Fogliato

Yes, look, a great question. Thanks for asking. I think you've seen in Q2 our commitment to return the company to growth. We're here to build a sustainable long-term growth. We have downsized the structure, simplified the company, ultimately with the goal to invest more in demand creation, and we have done that in Q2. So I can't say how thankful I am with our teams that have been delivering on the strategy. Q2 has been exceptional. The first half have been exceptional and the second half will be even better. Our Big Tic Y2K campaign has been named as best watch campaign of the year, nominated as the best marketing campaign for the year. We're so honored of this.

I'm so happy about the work that's been done. The campaign was so innovative and caught so much attention from our consumer. What's coming next, again, it will continue to improve. Nick Jonas is a great partner, will continue to unleash the opportunities to the brand. We're creating more stories focused into each media channel, and this will drive additional consumers into the funnel. I made clear when I joined the company we were moving investment for performance into upper funnel to drive the stronger brand and drive the brand heat, and that's what we are delivering on.

Unknown Analyst

Okay, that's very helpful. Thank you.

Operator

Thank you very much, [ Henry ]. Our next question comes from the line of [ Owen Rickert ] with Northland Capital Markets. Your line is now open.

Owen Rickert

First for me, the 490 bps of gross margin expansion was really impressive, but you called out some accelerated licensed brand minimum royalty recognition as a partial offset. How should we think about the cadence of that royalty headwind in the back half of the year? And is the 62% plus gross margin level sustainable, or is that more of a first-half weighted dynamic?

Franco Fogliato

Hi, [ Owen ]. Thank you very much for the congratulations for the question. Look, let me get started. And I'm asking [ Randy ] to chime in on this one. The gross margin is probably another statement on the way we're now running the company. We're disciplined, we're focusing into innovation, we're focusing into best presentation in the store, and the great news is consumers are responding, are buying. So I want to make sure this is the discipline we're now installing with the company, is coming in even better than what we thought, honestly. But I'm so proud of the work the teams did globally. We have changed and transformed this company into a full-price selling model.

Unknown Executive

Absolutely right, and just to answer the specific components of your question with respect to the timing of our royalty shortfalls, the impact on the quarter was approximately a point and a half, so not super meaningful. The real story continues to be, as Franco pointed out, the power of our full-price selling model. It's also worth noting its margin accretion for the Fossil Group, which also translates directly to our operating partners, our wholesale partners. It's truly a rising tide lifting all boats. It's a wonderful result for the business, and we're excited about it.

Owen Rickert

Got it. Super helpful there. And then secondly for me, more of a general guidance question. What are the specific drivers that get you to that year-over-year growth in 4Q? Or is it mostly new product launches, wholesale door expansion, easier comps, or is it something else? And then just how much visibility do you have into that today?

Franco Fogliato

Look, it's a great question. I think it's a combination of all of these. We're learning more about the business we're building. We're working close with our partners to build the visibility. We're presenting better our products in the stores, right? All of this gives us better confidence on anticipating our future. We obviously take always, I would say, a cautious look at the future. Not immune for what will happen in the market. I don't know what's going to happen with gas prices. There is another work, but we are very confident about the innovation, the product pipeline coming out, the marketing, the storytelling.

I think I mentioned in my opening remarks, we had our global teams coming into Dallas to look even at next year range early and talk about the remaining five months of the year. And they were super excited and they never seen such a great momentum for many years. Our partners, which I get to them on the phone regularly every week, they're excited. They see the Fossil Group coming back. They see the Fossil Group they used to know, that great partner that was driving profit and sales, and they just love us, and we love them. And we will continue to build into this momentum, and all of that will be based on innovation in product marketing and discipline of running the company.

Owen Rickert

Got it, got it. And then lastly for me, it was great to see the Americas, Asia year-over-year in terms of net sales. Can you maybe just walk us through the primary drivers of some of that weakness in the European region? And what specific actions are you guys taking to stabilize that business?

Franco Fogliato

Yes, it's a great question. Look, you can imagine Europe is pretty close to me. I was there actually maybe a couple of weeks ago. Look, we're not immune from any other brands. We benchmark with everybody else. There is a few things, obviously the war did have an impact, in particularly in the Middle East. Travel retail has been impacted. I have a lot of data showing how people are traveling less or they're traveling in the country. We also made significant changes to the business model through moving some direct territories into subsidiaries, which ultimately improved and simplified the company and took some risk out of the company and that drives a better profit, but has some pain in the short term.

Now, we have a great management team there. We have a global team supporting Europe. I keep remembering everyone, Europe was actually relatively speaking the best-performing market last year for our company. So we think we're doing the right things there. So, we believe on the long run that the market is coming back and it's an important market obviously for the watch industry, and we're doing all what is necessary to have a long-term review without chasing short-term success.

Owen Rickert

Got it. Got it. Super helpful, guys. Thanks again, and congratulations again on the quarter.

Operator

So thanks, [ Owen ]. And I'm currently showing no further questions at this time. I'd now like to hand the call back over to management for any closing remarks.

Franco Fogliato

Thank you everyone for joining our call today. We're looking forward to talking to you next quarter.

Operator

This concludes today's conference. Thank you for your participation. You may now disconnect.