Revenues rose by 5% in the company’s fitness segment in the quarter and is up 15% in the first half of the year. Auto sales are still nearly double sales in fitness, but revenue fell 15% for the quarter and and is down 13% year-over-year in the first half of 2015.
Outdoor segment sales rose 4%and aviation sales are up 5% year-over-year. Gross profit corporate-wide slipped from 57% to 54%, and adjusted EPS dropped 29% in the quarter and is down 20% for the year.
Garmin lowered guidance two weeks ago and today reaffirmed what the company had already said. Full-year revenue is now expected to total $2.9 billion, including the negative impact of about $160 million due to currency exchange rates. The company now expects gross margin for the full year in the range of 54% to 55% and operating margin of 20% to 21%. Adjusted EPS is forecast at $2.65.
Consensus estimates call for third quarter EPS of $0.69 on revenues of $708.02 million and full-year EPS of $2.78 on revenues of $2.88 billion.
The company’s CEO said:
Like many global companies, Garmin has experienced downward revenue and profit pressure due to recent unfavorable currency movements. In light of this reality, we feel positive about our first half revenue performance. With our ongoing research and development efforts and exciting advertising plans, we believe that the foundation for long-term success is being established now.
Garmin’s shares are inactive in this morning’s pre-market session, having closed at $42.79 in a 52-week range of $41.20 to $61.75. Thomson Reuters had a consensus analyst price target of $47.90 before today’s report. Year-to-date Garmin’s stock price is down 19% and for the trailing 12 months the shares are down more than 21%.
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