Garmin, Schaffhausen, Switzerland, reported $274 million in fourth quarter fitness segment revenue, a 20 percent growth year-over-year, according to financials released last week. The fitness segment brought in $818.5 million in year-end 2016 revenue, which was a 24 percent increase from 2015.
As a whole, Garmin reported $861 million in fourth quarter revenue and $3 billion in year-end revenue. This marks growth of 10 percent and 7 percent, respectively. Garmin’s outdoor, fitness, marine and aviation segments grew a combined 25 percent and contributed 74 percent of all revenue, the statement said.
“2016 was a remarkable year of growth driven by strong sales in our outdoor, fitness, marine and aviation segments,” Garmin President and CEO Cliff Pemble said in a public earnings statement. “Entering 2017, we see additional growth opportunities ahead, and we are well positioned to seize these opportunities with a strong lineup of great products.”
Pemble attributed the fitness segment’s growth to a greater demand for wearables, such as the Garmin Elevate and vívofit jr, both of which experienced strong holiday sales. In total, fitness sales comprised 32 percent of the company’s quarterly revenue and 27 percent of its year-end revenue.
Garmin also reported operating income growth of 19 percent for the segment, along with gross and operating margins of 53 percent and 20 percent, respectively.
Executives are forecasting fitness revenue growth of approximately 5 percent in 2017. The company’s strategy is to “deliver feature-rich products” that engage new and pre-existing customers.
"We believe fitness will be our largest revenue contributor in 2017 and enter the year confident in our product lineup,” the statement said.
After Fitbit's fourth quarter underperformance, financial analysts at L&F Capital Management speculated that consumer boredom and added competition have convoluted the greater wearables market.
“In stark contrast to FIT's underwhelming results, competitor Garmin (NASDAQ:GRMN) put up stellar Q4 results before the bell on Wednesday,” the analysts said in a Seeking Alpha assessment. “The contrast between the two companies could not be any more stark, and it serves to underscore just how many new players are getting into (and excelling in) the wearables market.
“Overall, what was a not-so-competitive marketplace is turning into a hyper-competitive marketplace, and Fitbit's and Garmin's recent results and fiscal 2017 guidance speak profoundly to this dynamic,” the article said.
Garmin (NASDAQ:GRMN) closed Friday at $50.53 per share. Its stock price is trading in a 52-week range between $38.40 and $56.19.