Garmin: Drastic Fall In Fitness Sales Q1.2022

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Garmin Financials for Q1.2022 are out today

Garmin’s financial results are a mixed bag with significant highlights and explainable lowlights.

The bad news is that FITNESS revenues fell by a whopping 28%. Garmin explains this as a normalisation of fitness revenues – meaning sales were crazily high last year and, reading between the lines, there were no significant launches in Q1 for Garmin’s FITNESS division (which includes cycling). Indeed, similar sentiments on the end of the cycling boom are echoed today in Shimano’s financial results.

The good news, and not unexpected, is that OUTDOOR revenues grew by 50%. That’s coming from the Garmin Epix 2, Garmin Fenix 7 and Garmin instinct 2.

Revenue from the outdoor segment grew a robust 50% in the first quarter primarily due to strong demand for our adventure watches.

Take Out

Overall the picture is not quite as rosy as it seems for Garmin. Sure it’s awesome in the OUTDOORS (Fenix) sector but is the rest of the company bouncing back as it should after the pandemic? Check out Q1 from last year and Q4.

Looking forward there are more releases to come and, indeed, I expect May and June to see more new products in the FITNESS division with new EDGE and FORERUNNER devices to excite us. (Edge 1040, Edge 1040 Explore, Garmin Forerunner 955, Garmin Forerunner 955 Solar and maybe others too). These will all sell very well but will they recoup the $100m shortfalls from Q1? Possibly not, it’s the OUDOORS’ Fenix 7/Epix 2 that have sold massively. Indeed, they’ve sold so well that some SKUs are still out of stock.

Don’t feel too bad for Garmin though. The statement also says this,

We ended the quarter with cash and marketable securities of approximately $3.0 billion.

Not a bad bank balance at all.

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14 thoughts on “Garmin: Drastic Fall In Fitness Sales Q1.2022

  1. I wonder if they could make more profit by reducing their margin and selling more. I guess they probably don’t want to sell huge volumes, that sounds like hard work!

    1. they do sell relatively large volumes.
      they do sell cheaper products…often ones from previous years that are more discounted
      i think ultimately they target 50% for their shareholders. If they change that there will be hell to pay with the share price. if anything they will want to raise prices/margins in areas where they have effectively zero competition
      they have a good and successful business model. as I’ve said before the problems will only start to happen from them once the competitors start catching up at the lower end of garmin’s ranges. even a recession is nothing to garmin, as shown above they have more than enough cash-like assets to see out stagflation let alone recession

  2. While I appreciate the analysis, this is extremely expected, no? They haven’t updated any running line this quarter and launched multiple new outdoors watches. I’d be blown away if they had grown the fitness unit this quarter while not making any new product launches. The market also didn’t seem to really react to this earnings call, so it appears this is not “bad news” by any stretch.

  3. They are actually severely supply constrained on the Oudoor f7/e2 SKUs. I think they would have launched months earlier and booked a lot more sales if not for component shortages due to supply chain disruption.

  4. garmin outperformed a falling NASDAQ
    yes without shortages they could have booked more. perhaps they focussed on most profitable??? eg they could have such in the FR255/m + FR55, rather than likely just the 955 and 955 solar that we’ll see.

  5. Yeah I would assume that the e2/f7 have the highest profit margin. To some extent the SKUs compete with each other so a sale of one of the lower price SKUs forgoes a sale of a more expensive one for some set of people. That’s one of the reasons why the high end features tend to trickle down after a couple of years rather than being launched on 7 models across the range of prices simultaneously.

    Outside of the handful of people on the forums that buy an epix 2, a fenix 7X, and a tactix 7 for different days of the week, someone that buys an f955 is unlikely to buy an e2 or anything other Garmin watch for a couple of years at least.

    Although by this logic they should have launched the Marq 2 first — unless they didn’t sell in enough volume to be worthwhile. Didn’t they launch the Marq before the f945 and fenix 6?

    1. yes they did and that was my logic too.
      maybe they’ll do something fancy with LTE on Marq2 instead?
      otherwise if you have 50,000 chips its best to stick em in an Epix than in a fr255

  6. Yes agree all around. The fitness side will come back. 1,000% boom from pandemic before and the absence of new products. This will drastically change June 1st as I expect them to take over a little more market share as others aren’t releasing any new competitive products and Garmin continues to release a slew. I can’t imagine what others are even doing? Where are Polar, Suunto, Coros?

    1. it’s literally entirely true. it’s a 28% fall !!! (overuse of punctuation). Jeez, if your salary fell by 28% would that be a minor blip?

      do you not consume media elsewhere?

      What headline would you have used if you were a major news media editor? ideal number is 6.

      this is what clickbait means: https://en.wikipedia.org/wiki/Clickbait

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