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Decline in activity trackers puts brakes on Garmin Q2 revenue growth

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Garmin has announced results for its second fiscal quarter ended 1 July 2017. In the quarter, total revenue was up 1% year on year to US$817 million. Collectively, outdoor, aviation, marine and fitness grew 8% over the prior year quarter and contributed 74% of total revenue. However, on an individual business unit basis, the performances of Garmin’s outdoor and fitness operations were mixed.

Revenue in the fitness segment declined 15% during the quarter, with gross and operating margins of 56% and 21%, respectively. The drop in revenue was primarily driven by a decline in the activity tracker category. Here, Garmin points to the general decline of the basic activity tracker market and the timing of product introductions. Looking forward, the company added that it is focused on growth opportunities in advanced wearables.

During the Q2 2017, the outdoor segment grew 46% driven by strong demand for Garmin’s f?nix 5 watch series. Here, gross margin improved to 66% while operating margin improved to 38%, resulting in operating income growth of 53%. Garmin launced a number of new products in the outdoor category including the Approach S60 GPS golf watch, and recently announced new offerings in Garmin’s Foretrex and Rino lineup. Looking forward, Garmin added that it remains focused on growth opportunities in wearables and its inReach product lines.

“We delivered another quarter of revenue and earnings growth led by strong double?digit growth in our outdoor and aviation segments,” said Cliff Pemble, President and CEO of Garmin. “The demand for advanced wearables was particularly strong, but was partially offset by negative trends in the activity tracker market. Our results thus far give us confidence in raising our outlook for the remainder of the year.”




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