LETTER TO STOCKHOLDERS

DEAR STOCKHOLDERS,

Looking back on 2014, Fossil Group delivered another year of solid sales and earnings per share growth driven by the strength of our diversified business model, our team’s disciplined execution of our strategies and our strong financial position.

We accomplished this while continuing leathers business. We improved an environment that reflects the to invest in the business to fuel future our performance in the category, differentiated and unique aesthetic of growth. We also drove efficiencies in particularly women’s handbags, where the brand. Additionally, we enhanced our operations that we believe position we concentrated efforts to add to our our customers’ digital experience us to generate solid returns for our design team and bolstered our product through the launch of a redesigned shareholders well into the future. offerings to gain broader consumer SKAGEN website, which includes appeal. Our elevated assortment is improved functionality for the During the year, we drove an 8% increase resonating with customers, particularly customer and incorporates rich brand in sales to $3.5 billion and we delivered in our retail stores where we offer content designed to bring greater $7.10 in earnings per share, an 8% the entire brand experience, and in awareness to the brand. increase over 2013. improved presentations through shop-

We begin 2015 intensely focused in-shops within U.S. department stores. PORTFOLIO on taking advantage of the many In jewelry, we spent 2014 repositioning In our multi-brand portfolio, opportunities available to us to our U.S. distribution and believe we we continued to leverage our accelerate our sales momentum. We are well positioned to capitalize on the competitive strengths in branding, are investing in strategic initiatives synergies that jewelry shares design, sourcing and distribution to further grow our owned brands with . to gain increased market share in and developing new categories, while the growing industry. Our continuing to optimize our multi-brand Unlocking the value of the FOSSIL multi-brand watch portfolio grew portfolio to take advantage of the brand is a key priority for us as we 9% for the year with the strongest significant opportunities that exist to believe considerable growth lies gains internationally. We advanced expand these brands around the world. ahead for this powerful brand. To our Swiss watch initiative with achieve this objective, we turned our introductions of Emporio We believe our portfolio of highly attention towards brand awareness Swiss Made and our Tory Burch watch desirable brands, our continuous and demand creation activities that collection. The Swiss opportunity innovation, disciplined execution and can yield dividends for the brand in the represents one of the important considerable white space opportunity future. We increased investments in white space opportunities we see by brand, category and geography, have our customer relationship management available for lifestyle brands. us well positioned to continue our capabilities to allow us to deepen our Given our sourcing and production successful growth for many years in connection with our customers and add capabilities, we are well positioned the future. more consumers to our fold. to take advantage of this long-term In 2014, we made solid progress on many opportunity with our licensed brands, key objectives that we will build upon SKAGEN as well as the continued execution of in 2015. We made solid progress advancing FOSSIL Swiss Made. SKAGEN during the year as evidenced The strength of our capabilities was FOSSIL by a strong double digit top-line further demonstrated through our increase, with all product categories The FOSSIL brand experienced growth renewal of two of our longstanding posting strong gains. In addition to across all of our regions. We leveraged licenses, Emporio Armani and Michael increases in watches, we saw solid our position as a leader in lifestyle Kors, each for ten years. These growth in jewelry, successfully brand watches and saw strong growth renewals clearly solidify our position launched handbags and opened two in the watch category for the brand. as the natural partner for the best new high-profile store locations in Geographically, the brand’s strongest global fashion brands. Following our Frankfurt and New York. These stores, gains were in Asia. successful launch of the Tory Burch along with our remodeled stores in collection in 2014, we look forward to Outside of watches, the year included London, allow us to showcase the leveraging our competitive strengths the successful repositioning of our full array of SKAGEN products in to assist Kate Spade & Company in Outside North America, we saw balanced 2015, our priorities will be very focused growing their watch business under the growth in Europe and Asia. As the world on the most important initiatives to drive kate spade new york label and expanding becomes increasingly globally branded, growth. We will invest to ignite our owned their brand around the globe in 2015. our watch portfolio continues to be a brands—FOSSIL and SKAGEN—to increase powerful tool to gain share in the growing brand awareness, increase demand and CONNECTED ACCESSORIES global watch market. As an innovative accelerate their growth. We will invest in our category leader with a world-class supply digital capabilities to improve the customer We advanced our position in wearable chain and a global distribution network of experience online and increase our omni- technology as well, another white more than 30,000 doors, we are uniquely channel capabilities, and we will leverage our space opportunity for fashion lifestyle positioned to work with the best lifestyle new partnerships to advance our position in brands, announcing two very important brands around the world. the wearable technology space. partnerships with Google and Intel. We are partnering with the best in LOOKING FORWARD We are well positioned as a leader in a technology, leveraging their knowledge growing industry with a strong global and expertise to develop fashionable Our goal as a company is to build a world- footprint and significant competitive connected accessories for our portfolio class entity of excellence where creativity advantages. Our diversification gives us of desirable lifestyle brands. We believe and entrepreneurship are carefully access to multiple sources of growth and our expertise in design and creativity balanced with operational discipline to supports our goal of predictable earnings coupled with our partners’ expertise in enable us to deliver solid returns for our and cash flows. The leverage we believe our technology and innovation will enable shareholders in the near and long term. As operating model can generate, along with our us to introduce wearable technology in a company, we are focused on using all of strong financial position, give us access to the a fashionable and scalable way. As we our resources to drive shareholder value. fuel that we need to drive our business and to look forward to introducing our first deliver solid returns for shareholders. We are also committed to leveraging our connected accessories in 2015, we are strong financial position. In 2014, we working towards a larger objective of We look forward to building on our success in invested $435 million to repurchase 4.1 leveraging our strengths and leadership 2015 and thank you for your support. million shares of common stock. This is an position in fashion lifestyle watches important program for our shareholders, Sincerely, to the point where fashion, design and and we’re fully committed to it, operating technology converge. with a share base that is more than 25% INTERNATIONAL MARKETS lower than it was just three years ago.

We leveraged our diversified business We would like to thank all of our model, broad operational capabilities and associates for their inspired contributions KOSTA N. KARTSOTIS significant strategic advantages to deliver in 2014 as well as our partners and Chairman and Chief Executive Officer growth in all three regions in 2014. In our investors for their continued support. international markets, as lifestyle brands As we reflect on the past year, we are take share from traditional watch brands, pleased with our results, but excited about our goal is to replicate the success that we our ability to improve on the company’s have experienced in the . performance. As we move ahead to FINANCIAL HIGHLIGHTS

FISCAL YEAR 2014 2013 2012 2011 2010 (in thousands, except per share data)

Net sales ($) 3,509,691 3,259,971 2,857,508 2,567,302 2,030,690

Gross profit ($) 2,001,172 1,861,686 1,606,543 1,439,186 1,155,164

Operating income ($) 566,536 561,596 488,840 471,991 376,414

Net income attributable to Fossil Group, Inc. ($) 376,707 378,152 343,401 294,702 255,205

Earnings per share:

Basic ($) 7.12 6.59 5.63 4.66 3.83

Diluted ($) 7.10 6.56 5.59 4.61 3.77

Weighted average common shares and common equivalent shares outstanding:

Basic 52,882 57,401 60,959 63,298 66,701

Diluted 53,080 57,676 61,400 63,965 67,687

Working capital 1,043,025 987,556 737,334 844,124 801,329

Total assets ($) 2,207,552 2,230,414 1,841,989 1,642,922 1,467,573

Total long-term liabilities ($) 776,922 663,141 194,747 134,798 76,377

Stockholders’ equity attributable 977,860 1,068,677 1,233,535 1,105,929 1,044,118 to Fossil Group, Inc. ($)

Return on average stockholders’ equity 37.5% 33.1% 29.9% 28.0% 25.0% attributable to Fossil Group, Inc. 1

1 Calculated by dividing attributable to Fossil Group, Inc. by five quarter average stockholders’ equity attributableto Fossil Group, Inc.

3600 590 400

3450 560 375

3300 530 1250 350

3150 500 1200 325 3000 470 1150 300 2850 440

1100 2700 410 275

2550 380 250 1050

2400 350 225 1000

2250 320 200 950

2000 290 175 900 1850 260

150 850 1700 230

125 800 1550 200

0 0 0 0 10 11 12 13 14 10 11 12 13 14 10 11 12 13 14 10 11 12 13 14

NET SALES OPERATING INCOME NET INCOME STOCKHOLDERS’ EQUITY (in thousands of dollars) (in thousands of dollars) (in thousands of dollars) (in thousands of dollars) CORPORATE INFORMATION

EXECUTIVE OFFICERS & DIRECTORS

Kosta N. Kartsotis Elaine B. Agather Elysia Holt Ragusa Chairman of the Board Director Director and Chief Executive Officer Jeffrey N. Boyer Jal S. Shroff Darren E. Hart Director Director Executive Vice President, HR William B. Chiasson James E. Skinner Jennifer Pritchard Director Director President, Skagen Brand Diane L. Neal James M. Zimmerman Director Director Dennis R. Secor Executive Vice President, Thomas M. Nealon Chief Financial Officer Director and Treasurer Mark D. Quick John A. White Director Executive Vice President and Chief Operating Officer

OUR WEBSITE CORPORATE INFORMATION The company maintains a website at www.fossilgroup.com. Certain event and investor relations information concerning the company are Transfer Agent & Registrar available at the site. Computershare P. O. Box 30170 ANNUAL MEETING College Station, 77842-3170 The Annual Meeting of Stockholders will be held on Wednesday, May 20, 2015, at 9:00am CDT at the company’s Principal Independent headquarters, 901 S. Central Expressway, Richardson, Texas 75080. Auditors Deloitte & Touche LLP COMPANY INFORMATION 2200 Ross Avenue A copy of the company’s Annual Report on Form 10-K, as filed with , Texas 75201 the Securities and Exchange Commission, and the Annual Report to Stockholders, in addition to other company information, Corporate Counsel is available to stockholders without charge upon written request Akin Gump Strauss to Fossil Group, Investor Relations, 901 S. Central Expressway, Hauer & Feld LLP Richardson, Texas 75080-7302, or online at www.fossilgroup.com. 1700 Pacific Avenue | Suite 4100 Dallas, Texas 75201