OLATHE, KS (BRAIN) — Revenue for Garmin Ltd.'s fitness division increased 2 percent in the company's first quarter, which ended March 30, to $72 million. The company said sales of its new cycling models contributed to the segment's growth.
Net sales across all business segments was $532 million in the quarter, down from $557 million in 2012. Most of the decline came in Garmin's automobile/mobile division, where sales declined from $279 million in 2012 to $253 million this year. Operating income in the quarter declined from $90 million in 2012 to $80 million in 2013.
The company said the relatively modest growth in the fitness segment during the quarter came from comparison to the first quarter 2012, when sales of its newly introduced Forerunner running products contributed to a 26 percent revenue increase.
“Even with the difficult comparable, we were pleased to see the strong reception by the cycling community to our Edge 510 and 810 which began to ship in the quarter. In addition, consumers continue to gravitate to our Forerunner 10, capturing a new subset of the running market,” said Cliff Pemble, president and CEO of Garmin Ltd.
CFO Kevin Rauckman said Garmin's revenue and pro forma earnings per share came in largely as expected, with growing revenue contributions from outdoor, fitness and aviation, Garmin's most profitable segments.
“It highlights that we are a company that will continue to be highly profitable even as our automotive/mobile segment declines," Rauckman said.
Gross margin reached 62.1 percent in the fitness segment and 58.3 percent at outdoor, up 100 and down 290 basis points, respectively, compared with the companywide gross margin of 51.9 percent.