Business News: Fossil Is Restructuring As Debt And Tariffs Take Toll

Fossil Group, once one of the biggest watchmakers in the world, is financially restructuring in a legal process in the U.K. as well as U.S. bankruptcy court, as the retailer and owner of the historic Swiss marque Zodiac and the maker of mass market timepieces for a slew of well-known fashion brands, including Michael Kors, seeks breathing room from creditors. The filing comes after Fossil’s sales declined and its financial losses increased as it abandoned a major push into smartwatches and is now facing a downturn in gross margins that company executives blame on U.S. tariff and trade policy. 

Fossils’ bankruptcy court filing underscores the difficulties that manufacturers and retailers of relatively low-priced, mass market timepieces are facing as economic concerns prompt some consumers to delay discretionary purchases on non-essential goods, and the global watch industry accelerates a shift to higher quality and more expensive watches produced at lower volumes. At the same time, smartwatches produced by industry giants, including Apple and Samsung, have come to dominate both the category and the wrists of many value-conscious consumers, taking market share from manufacturers like Fossil and its brands. What may have finally tipped Texas-based Fossil into seeking creditor protection, however, are the changes to U.S. tariff and trade policies impacting the cost of importing its mostly made-in-Asia products, according to filings in U.S. Bankruptcy Court.