What the changes say
- Fossil added extensive risk disclosures regarding its $205.1 million indebtedness, new revolving credit facility, and springing maturity features.
- The company updated its fashion license expiration dates and reported persistent net losses and negative operating cash flows.
What changed since the prior 10-K
New
- NewRisks Related to our Indebtedness
As of January 3, 2026, we had $205.1 million of outstanding indebtedness, not including $18.5 million of debt issuance costs and $8.8 million of original issuance discount
As of January 3, 2026, we had $205.1 million of outstanding indebtedness and a new $150 million senior secured asset-based revolving credit facility.
- NewRisks Related to our Indebtedness
We paid $16.1 million of interest during fiscal 2025
We paid $16.1 million of interest during fiscal 2025, and our high leverage increases vulnerability to economic downturns and rising tariffs.
- NewRisks Related to our Indebtedness
Our ability to meet our debt service obligations is dependent upon our ability to maintain and improve our operating performance, which is subject to general economic and competitive conditions and to financial, legislative, regulatory, business and other factors, many of which are beyond our control
Our ability to service debt depends on operating performance, and existing agreements limit our options to raise capital or restructure.
- NewRisks Related to our Indebtedness
Our debt agreements subject us to certain covenants and other provisions that may restrict our ability to operate our business and to pursue our business strategies
Our debt indentures and credit agreement subject us to restrictive covenants that limit dividends, investments, asset sales, and additional debt incurrence.
- NewRisks Related to our Indebtedness
These restrictions on our ability to operate our business could seriously harm our business and our ability to grow in accordance with our growth strategy
We must maintain minimum availability under the revolving credit facility, and our receivables, inventory, and intellectual property are pledged as collateral.
- NewRisks Related to our Indebtedness
Our failure to comply with the covenants and other provisions contained in our debt agreements, including as a result of events beyond our control, could result in events of default under our debt agreements, which could lead to bankruptcy or liquidation
Defaulting on debt covenants or experiencing change of control events could trigger cross-defaults and lead to bankruptcy or liquidation.
- NewRisks Related to our Indebtedness
In some cases, events beyond our control may cause an event of default to occur
Events beyond our control could cause defaults, and lenders may refuse waivers or demand costly amendments.
- NewRisks Related to our Indebtedness
If an event of default is continuing and we are not able to successfully obtain a waiver or amendment or refinance our indebtedness, our lenders or noteholders could accelerate the maturity of our indebtedness. In such event, we may not be able to repay or refinance our indebtedness
Unresolved defaults allow creditors to enforce liens against our pledged assets, potentially forcing us to cease operations or liquidate.
- NewRisks Related to our Indebtedness
Despite our current indebtedness levels, we may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverage
We may still incur substantial additional debt and trade payables, increasing our leverage risks despite having $66.9 million in unused availability.
- NewRisks Related to our Indebtedness
We may be required to repay the New Revolving Credit Facility prior to its stated maturity date if the springing maturity feature is triggered or to establish reserves if certain material indebtedness is outstanding
The new revolving facility matures on August 13, 2030, but features springing maturities on October 2, 2028 and March 31, 2029 tied to outstanding notes.
- NewRisks Related to our Indebtedness
The Credit Agreement also provides that if on the 91st day prior to the scheduled maturity date there is any indebtedness in excess of $5.0 million, the administrative agent under the Credit Agreement may establish a reserve in an amount equal to the aggregate principal amount of indebtedness coming due
If springing maturity is triggered, the administrative agent may establish reserves equal to maturing indebtedness, cutting off our access to credit.
- NewRisks Related to our Indebtedness
We may be required to repay the New Revolving Credit Facility and repurchase the Notes upon a change of control
Change of control events require us to repurchase notes at a 7.50% premium for First-Out Notes and repay borrowings, which we may lack funds to do.
- NewRisks Related to our Indebtedness
We may be unable to repay or refinance the New Revolving Credit Facility or the Notes at maturity
- NewLegal, Compliance and Reputational risks
our systems could make them inaccessible for a period of time pending the payment of a ransom to unlock the systems or our ability to otherwise restore our access to our systems
- NewLegal, Compliance and Reputational risks
Beginning in July 2018, certain of our products have been subject to additional ad valorem duties imposed by the U.S. government on products of China under Section 301 of the Trade Act of 1974 (“Section 301”) and IEEPA
- NewLegal, Compliance and Reputational risks
We continue to monitor tariff developments that pose potential risks. In this fast-paced international trade environment, we also monitor developments for any negotiated resolutions to offset some of the tariff exposure
Dropped
- DroppedStrategic Risks
We may not fully realize the expected cost savings, operating efficiencies or balance sheet and liquidity improvements from our restructuring plans
Restructuring plans and Turnaround Plan cost savings target of $100 million.
- DroppedStrategic Risks
and user-friendly e-commerce platforms could negatively impact our consumers’ shopping experience, resulting in reduced website traffic, diminished loyalty to our brands and lost sales
- DroppedOperational Risks
net sales for fiscal year 2024, including MICHAEL KORS product sales, which accounted for 17.4% of our consolidated net sales, and ARMANI product sales, which accounted for 11.5% of our consolidated net sales
- DroppedRisks Related to our Indebtedness
As of December 28, 2024, we had $168.1 million of outstanding indebtedness, not including $3.3 million of debt issuance costs, and we paid $23.8 million of interest during fiscal year 2024
- DroppedRisks Related to our Indebtedness
The occurrence of certain specified change of control events would cause an event of default under the Revolving Facility. In such event, we may not be able to repay, refinance or restructure the Revolving Facility, or obtain a waiver of such event of default, on commercially reasonable terms, or at all
E-commerce platform friction points and digital shopping experience risks.
- DroppedRisks Related to our Indebtedness
In the future, our business may not generate sufficient cash flow from operations and future sources of capital under the Revolving Facility or otherwise may not be available to us in an amount sufficient to enable us to pay our debt service obligations and to fund our other liquidity needs
- DroppedRisks Related to our Indebtedness
We may not be able to repay, refinance or restructure any of our indebtedness, including the Revolving Facility, on commercially reasonable terms, or at all. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants
- DroppedRisks Related to our Indebtedness
We may be able to incur significantly more debt, including secured debt. This could intensify already-existing risks related to our indebtedness
- DroppedLegal, Compliance and Reputational risks
Tariffs or other restrictions placed on imports from China and any retaliatory trade measures taken by China could materially harm our revenue and results of operations
- DroppedRisks Relating to our Common Stock
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities
Reworded
- 100% rewrittenRisks Related to our Indebtedness
We may not be able to generate sufficient cash flows to meet our debt service obligations and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
Updated to explicitly state fiscal 2025 liquidity expectations and note that failure to meet targets forces asset sales, restructuring, or refinancing.
- 86% rewrittenOperational Risks
The loss of any of our license agreements for globally recognized fashion brand names may result in the loss of significant revenues and may adversely affect our business
Updated licensed sales figures for fiscal 2025, showing Michael Kors at 19.2% and Armani at 10.1%, with license expirations moved to between 2027 and 2029.
- 76% rewrittenStrategic Risks
If we are unable to effectively execute our e-commerce business strategy and provide a reliable digital experience for our customers, our reputation and operating results may be harmed
Clarified that e-commerce platform failures could reduce website traffic, diminish brand loyalty, and result in lost sales.
- 64% rewrittenRisks Related to our Indebtedness
Our indebtedness exposes us to interest rate risk
Updated floating interest rate risk from the Revolving Facility to the New Revolving Credit Facility, noting an average SOFR borrowing rate of 8% in fiscal 2025.
- 59% rewrittenRisks Related to our Indebtedness
The restrictive covenants in the Credit Agreement and the Notes Indentures are subject to a number of important qualifications, exceptions and limitations, and to amendment
Expanded restrictive covenant amendment terms to include specific consent requirements for both the Credit Agreement and Notes Indentures.
Was: The restrictive covenants in the Revolving Facility are subject to a number of important qualifications, exceptions and limitations, and to amendment
- 58% rewrittenRisks Related to our Indebtedness
The maximum amount that we are permitted to borrow under the New Revolving Credit Facility is limited, is subject to seasonal fluctuations, and is subject to the discretion of the lenders, which may adversely affect our liquidity, results of operations and financial position
Updated the maximum borrowing capacity of the New Revolving Credit Facility to $150 million with $66.9 million available as of January 3, 2026.
Was: The maximum amount that we are permitted to borrow under the Revolving Facility is limited, is subject to seasonal fluctuations and is subject to the discretion of the lenders, which may adversely affect our liquidity, results of operations and financial position
- 56% rewrittenStrategic Risks
The risks associated with climate change and other environmental impacts could negatively affect our business and operations
Added enterprise risk management framework references regarding our ability to achieve climate-related goals and reduce emissions.
- 49% rewrittenFinancial Risks
We have a recent history of net losses and negative cash flow and may not achieve consistent profitability or positive cash flow in the future
Updated net loss figures to $78.3 million for fiscal 2025 and reported $57.9 million used in operating activities.
- 49% rewrittenStrategic Risks
Rapidly changing, and in some cases diverging, sustainability-related regulatory requirements and political scrutiny of sustainability matters could result in additional costs or risks and adversely impact our reputation
Was: Rapidly changing regulatory requirements and political scrutiny of ESG matters could result in additional costs or risks and adversely impact our reputation
- 42% rewrittenLegal, Compliance and Reputational risks
A data security or privacy breach could damage our reputation, harm our customer relationships, expose us to litigation or government actions, and result in a material adverse effect to our business, financial condition and results of operations
- 40% rewrittenFinancial Risks
A significant portion of our cash, cash equivalents and investments are held by our foreign subsidiaries, which could negatively affect future liquidity needs
- 39% rewrittenOperational Risks
We rely on domestic and foreign suppliers to provide us with merchandise in a timely manner and at favorable prices. Among our foreign suppliers, China is the source of a substantial majority of our imports
- 33% rewrittenStrategic Risks
Our ability to grow our sales is dependent upon the implementation of our business strategy, which we may not be able to achieve
- 29% rewrittenLegal, Compliance and Reputational risks
Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling certain of our products
- 25% rewrittenFinancial Risks
Foreign currency fluctuations could adversely impact our financial condition
- 22% rewrittenOperational Risks
Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs
All 66 risk factors
Headings as the filing states them, in filing order.
Strategic Risks
- 01Our success depends upon our ability to anticipate and respond to changing fashion, functionality and product trends
- 02Our success depends upon our ability to continue to develop innovative products
- 03If we are unable to effectively execute our e-commerce business strategy and provide a reliable digital experience for our customers, our reputation and operating results may be harmed76% rewritten
- 04We regularly develop new products and features, and new products introduced by us may not achieve consumer acceptance comparable to that of our existing product lines
- 05Our ability to grow our sales is dependent upon the implementation of our business strategy, which we may not be able to achieve33% rewritten
- 06Rapidly changing, and in some cases diverging, sustainability-related regulatory requirements and political scrutiny of sustainability matters could result in additional costs or risks and adversely impact our reputation49% rewritten
- 07The risks associated with climate change and other environmental impacts could negatively affect our business and operations56% rewritten
Operational Risks
- 08Our supply chain may be disrupted by changes in U.S. trade policy with China or as a result of a pandemic
- 09We rely on domestic and foreign suppliers to provide us with merchandise in a timely manner and at favorable prices. Among our foreign suppliers, China is the source of a substantial majority of our imports39% rewritten
- 10The loss of any of our license agreements for globally recognized fashion brand names may result in the loss of significant revenues and may adversely affect our business86% rewritten
- 11Our inability to effectively manage our retail store operations could adversely affect our results of operations
- 12Certain key components in our products come from limited sources of supply, which exposes us to potential supply shortages that could disrupt the manufacture and sale of our products
- 13Seasonality of our business may adversely affect our net sales, operating income and liquidity
- 14The amount of traffic to our retail stores depends heavily on the success of the shopping malls and retail centers in which our stores are located
- 15We have key facilities in the U.S. and overseas, the loss or shut down of any of which could harm our business
- 16Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs22% rewritten
- 17We rely on third-party assembly factories and manufacturers; and problems with, or loss of, assembly factories or manufacturing sources could harm our business and results of operations
- 18We do not maintain long-term contracts with our customers and are unable to control their purchasing decisions
- 19We face intense competition in the specialty retail and e-commerce industries and the size and resources of some of our competitors are substantially greater than ours, which may allow them to compete more effectively
- 20We face competition from traditional accessory competitors as well as technology companies in the watch category
- 21Any material disruption of our information systems could disrupt our business and reduce our sales
- 22Factors affecting international commerce and our international operations may seriously harm our financial condition
- 23Because we depend on foreign manufacturing, we are vulnerable to changes in economic and social conditions in Asia, particularly in China, and disruptions in international travel and shipping
- 24Risks associated with foreign government regulations and U.S. trade policy may affect our foreign operations and sourcing
- 25The loss of key senior management personnel or our failure to attract and retain qualified personnel could negatively affect our business
Risks Related to our Indebtedness
- 26As of January 3, 2026, we had $205.1 million of outstanding indebtedness, not including $18.5 million of debt issuance costs and $8.8 million of original issuance discountNew
- 27We paid $16.1 million of interest during fiscal 2025New
- 28Our ability to meet our debt service obligations is dependent upon our ability to maintain and improve our operating performance, which is subject to general economic and competitive conditions and to financial, legislative, regulatory, business and other factors, many of which are beyond our controlNew
- 29Our debt agreements subject us to certain covenants and other provisions that may restrict our ability to operate our business and to pursue our business strategiesNew
- 30These restrictions on our ability to operate our business could seriously harm our business and our ability to grow in accordance with our growth strategyNew
- 31Our failure to comply with the covenants and other provisions contained in our debt agreements, including as a result of events beyond our control, could result in events of default under our debt agreements, which could lead to bankruptcy or liquidationNew
- 32In some cases, events beyond our control may cause an event of default to occurNew
- 33If an event of default is continuing and we are not able to successfully obtain a waiver or amendment or refinance our indebtedness, our lenders or noteholders could accelerate the maturity of our indebtedness. In such event, we may not be able to repay or refinance our indebtednessNew
- 34Despite our current indebtedness levels, we may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial leverageNew
- 35The maximum amount that we are permitted to borrow under the New Revolving Credit Facility is limited, is subject to seasonal fluctuations, and is subject to the discretion of the lenders, which may adversely affect our liquidity, results of operations and financial position58% rewritten
- 36We may not be able to generate sufficient cash flows to meet our debt service obligations and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful100% rewritten
- 37We may be required to repay the New Revolving Credit Facility prior to its stated maturity date if the springing maturity feature is triggered or to establish reserves if certain material indebtedness is outstandingNew
- 38The Credit Agreement also provides that if on the 91st day prior to the scheduled maturity date there is any indebtedness in excess of $5.0 million, the administrative agent under the Credit Agreement may establish a reserve in an amount equal to the aggregate principal amount of indebtedness coming dueNew
- 39We may be required to repay the New Revolving Credit Facility and repurchase the Notes upon a change of controlNew
- 40We could face a downgrade in our debt ratings which could restrict our access to, and negatively impact the terms of, current or future financings or trade credit
- 41Our indebtedness exposes us to interest rate risk64% rewritten
- 42The restrictive covenants in the Credit Agreement and the Notes Indentures are subject to a number of important qualifications, exceptions and limitations, and to amendment59% rewritten
- 43We may be unable to repay or refinance the New Revolving Credit Facility or the Notes at maturityNew
Financial Risks
- 44We have a recent history of net losses and negative cash flow and may not achieve consistent profitability or positive cash flow in the future49% rewritten
- 45A significant portion of our cash, cash equivalents and investments are held by our foreign subsidiaries, which could negatively affect future liquidity needs40% rewritten
- 46Changes in the mix of product sales demand could negatively impact our gross profit margins
- 47Geographic mix: International sales typically produce gross margins in excess of our historical consolidated gross profit margins, while domestic sales typically provide gross margins below our historical consolidated gross profit margins
- 48The global implementation of Pillar Two may adversely affect our business, results of operations, financial condition and cash flow
- 49We have recorded impairment charges in the past and may record impairment charges in the future
- 50Increased competition from online only retailers and a highly promotional retail environment may increase pressure on our margins
- 51Our license agreements may require minimum royalty commitments regardless of the level of product sales under these agreements
- 52Foreign currency fluctuations could adversely impact our financial condition25% rewritten
Legal, Compliance and Reputational risks
- 53A data security or privacy breach could damage our reputation, harm our customer relationships, expose us to litigation or government actions, and result in a material adverse effect to our business, financial condition and results of operations42% rewritten
- 54our systems could make them inaccessible for a period of time pending the payment of a ransom to unlock the systems or our ability to otherwise restore our access to our systemsNew
- 55Beginning in July 2018, certain of our products have been subject to additional ad valorem duties imposed by the U.S. government on products of China under Section 301 of the Trade Act of 1974 (“Section 301”) and IEEPANew
- 56We continue to monitor tariff developments that pose potential risks. In this fast-paced international trade environment, we also monitor developments for any negotiated resolutions to offset some of the tariff exposureNew
- 57The loss of our intellectual property rights may harm our business
- 58Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling certain of our products29% rewritten
- 59If an independent manufacturer or license partner of ours fails to use acceptable labor practices or otherwise comply with laws or suffers reputation harm, our business could suffer
Risks Relating to our Common Stock
- 60Our business could be negatively affected as a result of actions of activist stockholders, and such activism could impact the trading value of our securities
- 61Our organizational documents contain anti-takeover provisions that could discourage a proposal for a takeover
- 62Failure to meet our financial guidance or achieve other forward-looking statements we have provided to the public could result in a decline in our stock price
- 63Any deterioration in the global economic environment, and any resulting declines in consumer confidence and spending, could have an adverse effect on our operating results and financial condition
- 64The effects of economic cycles, terrorism, acts of war and retail industry conditions may adversely affect our business
- 65The COVID-19 pandemic caused global uncertainty and disruption in the geographic regions in which we run our business and where our suppliers, third-party manufacturers, retail stores, wholesale customers and consumers are located, particularly in China
- 66There are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected
Other Fossil Group 10-Ks
- FY2024 10-K risk factors60 risks
Heavy reliance on foreign manufacturing in China and foreign-held cash presents significant geopolitical and supply chain vulnerabilities. Substantial debt and a recent history of net losses threaten ongoing liquidity and operations. Extensive reliance on licensed fashion brand names creates severe revenue concentration risks.
Filed Mar 12, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.