OLATHE, Kan. (BRAIN) — Garmin reported Wednesday that revenue and margins continued to slide in the third quarter as the strong U.S. dollar undercut growth in unit sales.
Revenue fell 4 percent to $680 for the period ended Sept. 26. The company reported gross and operating margins of 53 percent and 18.5 percent, respectively, compared with 56 percent and 25 percent a year earlier. Overall unit sales rose 4 percent to 3.9 million.
"The reduction in margins from the prior year reflects a combination of factors, including downward pressure from unfavorable currency movements, a more competitive pricing environment, particularly in the fitness market, and continued investments in advertising and R&D," said Cliff Pemble, Garmin's president and CEO.
Garmin's fitness segment posted a revenue increase of 23 percent on strength in activity trackers and cycling and multisport products. It was the sole segment of Garmin's business to grow revenue during the quarter, as the auto, outdoor and aviation segments reported declines and marine revenue was flat.
"It's interesting to note that currency headwinds disproportionately impact the fitness segment due to the geographical revenue mix. These headwinds softened revenue growth while unit deliveries have remained strong. We believe this indicates that the underlying business case remains sound," Pemble said.
During the current fourth quarter, Garmin is introducing fitness products including a new lineup of Forerunner running watches and the vivosmart HR wrist-based heart rate monitor. And the company's auto segment expands into a new product category with the babyCam backseat video monitor.
Garmin trades on the Nasdaq Stock Market under the symbol GRMN. Its stock performance is tracked on the BRAIN stock page.
