Garmin Faces Investor Concerns After Earnings Miss, Announces New Features Amid Price Hike Debate
OLATHE, KS – February 29, 2024 โค – garmin Ltd. (NYSE: GRMN) reported fourth-quarter and full-year 2023 earnings today, โfalling short ofโ analyst โexpectations andโ sparking investor scrutiny. While the company highlighted new product integrations, including Peloton and enhanced sleep โฃtracking, the report comes amidst growing โขdebate over meaningful price โincreases in its premium Fenix smartwatch line.
Garmin’s Q4 revenue reached $1.55 billion, a 12% decrease year-over-year. Full-year revenue totaled โค$6.24 โbillion, down 6% from 2022. Earnings โper share (EPS) for โฃthe quarter were $1.85, below the $1.98 consensusโ estimate. The โคcompany cited challenging macroeconomic conditions โand a โstronger U.S. dollar as contributing factors to theโฃ miss. Despite the revenueโค decline, Garmin โฃmaintained a gross margin of 56.3% for the year.
The earnings โcall featured announcements of several new featuresโ aimed at bolstering user experience โฃand expanding market reach. Notably, garmin โฃunveiled integration with Peloton, allowing users to seamlesslyโฃ sync workout โคdata betweenโฃ the two platforms. Enhanced โsleep mode functionality, providing more detailed sleep analysis and personalized insights, was also highlighted. โThese updates are rolling โฃout across select Garmin devices.
Though, the positiveโค feature announcements areโ overshadowed by โขconcernsโ regardingโค theโ escalating prices of Garmin’s Fenix series.As DC Rainmakerโค noted in a recentโฃ analysis, โtheโ Fenixโ 7 Pro series sawโ significant price increases, and anticipation builds for the Fenix 8 Pro (expected September 2025) with โaโ rumored startingโ price of $1,199 for the AMOLED model. This represents a significantโ jump from previous generations, raising โขquestions โabout value and affordability for consumers.
“The last year has seen the biggest jumps in price toโฃ date in the Fenix lineup,” wrote DC Rainmaker. “All of those Fenix’s had cool new features and โขfunctions at the timeโฆwhich didn’t seem toโ require โa $400 price hike โin the โขpast two years.”
Garmin executives acknowledged the price increases during the earnings call, attributing themโค to investments in โขnew technology, such โฃas inReach satellite messaging, and overall inflationary pressures. The company pointed to โthe success of its fitness segment as โคjustification for the pricing strategy, but analysts question whether thisโข model will scale effectively for higher-priced products likeโฃ the Fenix series.
Looking โคahead, Garminโข forecasts full-yearโค 2024 revenue to be โapproximately flat, with โคEPS expected to be betweenโค $6.00 and $6.20. Investorsโ willโฃ be closelyโ watching theโ company’s ability โto navigate economic โคheadwinds โขand โฃjustify its premium pricing strategy in the coming quarters.