Garmin Faces Investor Concerns After Earnings Miss, Announces New Features Amid Price Hike Debate
OLATHE, KS – February 29, 2024 – garmin Ltd. (NYSE: GRMN) reported fourth-quarter and full-year 2023 earnings today, falling short of analyst expectations and sparking investor scrutiny. While the company highlighted new product integrations, including Peloton and enhanced sleep tracking, the report comes amidst growing debate over meaningful price increases in its premium Fenix smartwatch line.
Garmin’s Q4 revenue reached $1.55 billion, a 12% decrease year-over-year. Full-year revenue totaled $6.24 billion, down 6% from 2022. Earnings per share (EPS) for the quarter were $1.85, below the $1.98 consensus estimate. The company cited challenging macroeconomic conditions and a stronger U.S. dollar as contributing factors to the miss. Despite the revenue decline, Garmin maintained a gross margin of 56.3% for the year.
The earnings call featured announcements of several new features aimed at bolstering user experience and expanding market reach. Notably, garmin unveiled integration with Peloton, allowing users to seamlessly sync workout data between the two platforms. Enhanced sleep mode functionality, providing more detailed sleep analysis and personalized insights, was also highlighted. These updates are rolling out across select Garmin devices.
Though, the positive feature announcements are overshadowed by concerns regarding the escalating prices of Garmin’s Fenix series.As DC Rainmaker noted in a recent analysis, the Fenix 7 Pro series saw significant price increases, and anticipation builds for the Fenix 8 Pro (expected September 2025) with a rumored starting price of $1,199 for the AMOLED model. This represents a significant jump from previous generations, raising questions about value and affordability for consumers.
“The last year has seen the biggest jumps in price to date in the Fenix lineup,” wrote DC Rainmaker. “All of those Fenix’s had cool new features and functions at the time…which didn’t seem to require a $400 price hike in the past two years.”
Garmin executives acknowledged the price increases during the earnings call, attributing them to investments in new technology, such as inReach satellite messaging, and overall inflationary pressures. The company pointed to the success of its fitness segment as justification for the pricing strategy, but analysts question whether this model will scale effectively for higher-priced products like the Fenix series.
Looking ahead, Garmin forecasts full-year 2024 revenue to be approximately flat, with EPS expected to be between $6.00 and $6.20. Investors will be closely watching the company’s ability to navigate economic headwinds and justify its premium pricing strategy in the coming quarters.
