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Garmin sales and profits blow past expectations as fitness wearables take off

Published July 28, 2016
Company doesn't mention cycling products in quarterly presentations.

SCHAFFHAUSEN, Switzerland (BRAIN) — Garmin stocks hit a 52-week high on Wednesday after earnings and revenue far exceeded analyst expectations for the first half. The company also raised its guidance for the second half.

The company's Fitness segment — which includes its bicycle products — saw the biggest growth, with sales up 34 percent in the quarter largely due to wearable devices. The company's Vivoactive activity trackers, Forerunner running watches and Vivomove analog-style watch were all top sellers in the quarter. In its press release and web presentation, the company made no mention of its cycling products, which include head units, pedal-based power meters, radar trackers and smart lights.

Garmin's Outdoor segment also grew 23 percent, Marine grew 8 percent, Aviation grew 6 percent and the Auto division saw an 18 percent slump as the company attempts to transition from aftermarket GPS auto products to OEM sales of integrated systems.

Garmin's Fitness division now accounts for 26 percent of revenue, up from 21 percent a year ago. The Auto division's sales fell from 39 percent of Garmin's revenue to 30 percent.

Overall, the company posted pro forma earnings of 87 cents a share on revenues of $812 million. Analysts had expected the company to report earnings of 67 cents a share on $763 million in revenue, according to a Thomson Reuters consensus estimate.

The stock hit at 52-week intraday high of $52.14.

Garmin also raised its guidance after evaluating its performance in the first half of the year, President and CEO Cliff Pemble said in a statement.

"Fitness and outdoor achieved impressive revenue and profit growth driven by our strengthening position in the wearables market. Aviation and marine also delivered revenue and profit growth while auto remains a solid base of profit contributions to the overall business," Pemble said.

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