Fossil Group Inc

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors contained in Item 1A. Risk Factors in Part I of our Annual Report on 2025 Form 10-K for the fiscal year ended January 3, 2026 and and in other documents we file with the Securities and Exchange Commission, in evaluating the Company and its business. Except as set forth below, there have been no material changes to the risk factors set forth in our Annual Report on 2025 Form 10-K for the fiscal year ended January 3, 2026.

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Operational 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.

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 the International Economic Emergency Powers Act ("IEEPA").

The Section 301 tariffs were imposed via four successive Lists and were first the result of an April 2018 determination by the Office of the U.S. Trade Representative (USTR) that Chinas acts, practices, and policies with respect to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce. Certain of our packaging and handbag products have been subject to an additional 25% ad valorem tariff since July 2018 (List 1). Certain of our handbag and wallet products were subject to an additional 10% ad valorem tariff beginning in September 2018, a rate that was then raised to 25% ad valorem from June 2019 to present (List 3). Finally, smartwatches, certain jewelry products, and several of our traditional watch products were subject to an additional 15% ad valorem tariff beginning in September 2019, a rate that was lowered to 7.5% ad valorem from February 2020 to present (List 4A).

The IEEPA tariffs on China were originally imposed in two executive actions beginning in February and April 2025, with varying rates over the course of 2025. On February 20, 2026, the Supreme Court of the United States held that all tariffs imposed based on IEEPA were unlawful, including the two IEEPA actions that resulted in higher rates on products of China. As a result, these higher IEEPA rates were terminated as of February 24, 2026. We have begun The Company is participating in the administrative refund process set up established by U.S. Customs and Border ProtectionCBP in response to court orders to request recover these funds of IEEPA duties paid.

Meanwhile, new tariffs on products of China take t.

From February 24, 2026 through July 24, 2026, the form of an action under Section 122 of the Trade Act of 1974 (SectU.S. administration 122), which currently includesimposed a 10% ad valorem rate as of February 24, 2026. This action is time-limited by statute, and the rates are currently planned import duty on products of all countries, including China, pursuant to be in effectSection 122 of through e Trade Act of 1974. On July 24, 2026. T, the U.S. administration has announced that it may raise this rate to the maximum allowed under the statute, so in the near term, we may see an increase to 1imposed new Section 301 tariffs of 10% or 12.5% ad valorem under this action. Our producon imports sourced from China are subject to these Section 122 tariff60 economies, in addition to the Section 301 tariffs abovecluding China. The administration has also announcsignaled that it intends to conduct may impose additional investigations against most major trading partners under Setariff action 301 and os in ther tariff aut shoritiest term that may lead to higher, more permanentfurther increased rates.

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.

We have joined litigation before the U.S. Court of International Trade challenging the legality of the Section 301 List 3 and List 4A tariffs and seeking refunds of duties paid on imports that were subject to those tariffs. That lIf the tariffs continue or increase, we may be required to take further mitigation is ongoing in the appeal stages.

If the tariffs continue or actions, which could result in increase, we may be required to raise our prices, which may result d supply chain the loss of customercosts and harm our operating performance. Alternatively, we may seek to shift production outside of China or otherwise change our sourcing strategy for these products, potentially resuldisruptions and/or increased prices, which may harm our operating in significant costs and disruption to our operationsperformance. Even if the U.S. further modifies tariffs under current or future actions, it is always possible that new products we introduce could be impacted by the changes, or that our business will be impacted by retaliatory trade measures taken by China or other countries in response to existing or future tariffs, causing us to raise prices or make changes to our operations, any of which could materially harm our revenue or operating results.

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Any deterioration in the global economic environment, including from the ongoing conflict between the United States, Israel, and Iran and related geopolitical instability, and any resulting declines in consumer confidence and spending, could have an adverse effect on our operating results and financial condition.

Uncertainty in global markets, slowing economic growth, high levels of unemployment, a pandemic, inflation, rising interest rates and eroding consumer confidence can negatively impact the level of consumer spending for discretionary items. In addition, in late February 2026, the United States and Israel launched coordinated military strikes against Iran, which retaliated with missile attacks across the region. Although we do not have material operations in the Middle East, the ongoing conflict and any further escalation, including additional military actions, retaliatory measures, sanctions, disruptions to trade or transportation routes, cyberattacks, or other governmental or market responses, has caused, and could continue to cause, significant disruptions of global energy supplies and increases in global energy prices, heightened inflationary pressures on our input costs and supply chain, negative effects on global supply chains, energy markets, commodity prices, currency exchange rates, financial markets and overall macroeconomic conditions, which may adversely impact customer spending patterns in markets in which we operate. This can affect our business as it is dependent on consumer demand for our products. Global economic conditions remain uncertain, and the possibility remains that domestic or global economies, or certain industry sectors of those economies that are key to our sales, may slow or deteriorate, which could result in a corresponding decrease in demand for our products and negatively impact our results of operations and financial condition.