Leases

The Company's leases consist primarily of retail space, offices, warehouses, distribution centers, equipment and vehicles. The Company determines if an agreement contains a lease at inception based on the Company's right to the economic benefits of the leased asset and its right to direct the use of the leased asset. Right of use ("ROU") assets represent the Company's right to use an underlying asset, and ROU liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its estimated collateralized incremental borrowing rate, which is based on the yield curve for the respective lease terms and adjusted for each lease country to determine the present value of the lease payments.

Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from one to ten additional years. The renewal options are not included in the measurement of ROU assets and ROU liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Short-term leases are leases having a term of twelve months or less at inception. The Company does not record a related lease asset or liability for short-term leases. The Company has certain leases containing lease and non-lease components which are accounted for as a single lease component. The Company has certain lease agreements where lease payments are based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The variable portion of these lease payments is not included in the Company's lease liabilities. The Company's lease agreements do not contain any significant restrictions or covenants other than those that are customary in such arrangements.

The components of lease expense were as follows (in thousands):


Lease Cost	Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location	Fiscal Year 2025		Fiscal Year 2024
Operating lease cost(1)	SG&A	$	55,062	$	63,524



Short-term lease cost	SG&A	$	725	$	996
Variable lease cost	SG&A	$	17,999	$	20,948

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(1) Includes sublease income, which was immaterial.

The following table discloses supplemental balance sheet information for the Company’s leases (in thousands):


Leases	Consolidated Balance Sheets Location	January 3, 2026		December 28, 2024
Assets
Operating	Operating lease ROU assets	$	118,302	$	121,389


Liabilities
Current:
Operating	Current operating lease liabilities	$	34,768	$	37,327

Noncurrent:
Operating	Long-term operating lease liabilities	$	104,442	$	113,658

The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases:

Lease Term and Discount Rate

January 3, 2026

December 28, 2024

Weighted-average remaining lease term:

Operating leases

6.1 years

6.3 years

Weighted-average discount rate:

Operating leases

15.2

15.1

Future minimum lease payments by year as of January 3, 2026 were as follows (in thousands):


Fiscal Year	Operating Leases
2026	$	55,701
2027	39,087
2028	25,249
2029	22,573
2030	17,744
Thereafter	59,131
Total lease payments	$	219,485
Less: Interest	80,275
Total lease obligations	$	139,210

Supplemental cash flow information related to leases was as follows (in thousands):


	Fiscal Year 2025		Fiscal Year 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	66,605	$	71,570



Leased assets obtained in exchange for new operating lease liabilities	28,185		21,107

As of January 3, 2026, the Company did not have any material operating or finance leases that have been signed but not commenced.

Historical Timeline

Fiscal Year	Filed
2026	Mar 12, 2026	Showing above
2024	Mar 12, 2025

2023	Mar 13, 2024

2022	Mar 9, 2023

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Fossil Group, Inc. Leases Disclosure

Historical Timeline

About Leases Disclosures

Other Available Disclosures