By now, watchmaker Fossil (NASDAQ:FOSL) is well beyond fashionably late with its SEC filings.

"Atrociously out of style" might be a better description. Fossil, which today reported a 15% improvement in revenue for Q1, last filed a quarterly report with the SEC in August, for its 2006 second quarter.

Management blames the delay on an ongoing probe into its stock-option practices. Last week, the internal investigation, led by a committee of independent members of Fossil's board, found $16 million worth of accounting errors that will result in a restatement.

Well, at least no one got caught wearing white slacks after Labor Day.

But I digress. Annoying as the filing delays must be to investors -- especially for investors in a company whose primary business is to keep time -- Fossil's preliminary Q1 report contained some good news.

First, gross profit, up 17.4%, rose faster than revenue. Fossil attributed some of the gains to a better mix of high-margin products sold overseas and in its own retail stores.

Second, total company-owned retail store revenue climbed 22.6%, thanks mostly to expansion. But same-store sales did fine, too, up 4.6%. Overall, 3% of Fossil's 15.4% top-line improvement was traced to positive exchange rates.

Third, domestic watch sales declined 3.7%. That might sound bad, but it's roughly in line with earlier quarters and much better than the double-digit declines that had been commonplace in 2005.

Fourth and finally, Fossil appears to be getting better at inventory management. Total inventory declined for the second straight quarter, down 7.2% in Q1.

All in all, Fossil, though lacking the appeal of Pacific Sunwear (NASDAQ:PSUN), Urban Outfitters (NASDAQ:URBN), or Zumiez (NASDAQ:ZUMZ), seems to be doing a decent job of transforming itself. And the effort has paid off hugely for CEO Kosta Kartsotis, who was spending millions buying up stock from January through July of 2006. He's earned very stylish returns since.

Maybe it's finally time to watch this watchmaker.

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Fool contributor Tim Beyers, ranked 6,142 out of more than 28,700 rated players in Motley Fool CAPS, will take the stockinistas over the fashionistas any day. Tim didn't own shares of any of the companies mentioned in this article at the time of publication. Tim's portfolio holdings can be found at his Fool profile. His thoughts on Foolishness and investing may be found in his blog. The Motley Fool's disclosure policy is always in fashion.