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Strong dollar drags down Garmin's Q2 revenue; fitness growth slows

Published July 30, 2015

OLATHE, Kan. (BRAIN) — Garmin shipped 8 percent more units in the second quarter than a year earlier but saw revenue edge slightly lower as unfavorable currency rates reduced revenue by $59 million and negatively affected margins during the period.

Revenue for the quarter totaled $774 million for the quarter, down 1 percent, while revenue for the first half of the year was flat at $1.36 billion.
"Like many global companies, Garmin has experienced downward revenue and profit pressure due to recent unfavorable currency movements. In light of this reality, we feel positive about our first half revenue performance," said Cliff Pemble, president and CEO of Garmin Ltd.

Garmin's fitness segment posted a 5 percent revenue increase during the quarter driven by activity trackers and multisport products. But that increase marks a significant slowdown in growth for Garmin's fitness sales, which rose by 60 percent in the second quarter of 2014 and have posted gains as high as 70 percent in subsequent quarters.

Fitness gross margin and operating margin both fell during the second quarter due to factors including exchange rates, price competition in the activity tracker category, and the company's "significant investment in advertising and research and development to support our long-term goals in the segment," Garmin stated.

"We believe these investments are appropriate and timely given the sizable opportunity that exists in the global fitness and wellness industries. During the quarter we introduced the Edge 520, which adds Strava segment integration and smart notifications when paired to a smartphone. We also introduced the Varia family of cycling products, including smart lights and radar, which are new product categories for Garmin," the company added.

Garmin trades on the Nasdaq Stock Market under the symbol GRMN. Its stock performance is tracked on BRAIN's Industry Stock Chart

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