ZURICH (Reuters) -Logitech International on Thursday reported lower earnings and sales between October and December and cut its sales outlook, sending its shares down by almost a fifth in opening trade.
The Swiss-American maker of keyboards, mice and headsets cited a difficult economic backdrop and supply chain uncertainties linked to China’s COVID-19 outbreak for numbers that CEO Bracken Darrell described as disappointing.
Preliminary third quarter GAAP operating income fell around 35% year on year to between $171 million and $176 million. Sales were down 22% to between $1.26 billion and $1.27 billion.
The company said it now expected year to March sales to fall between 13% and 15% on a constant currency basis, compared with an earlier outlook for a drop of 4 to 8%.
Logitech shares fell 18.6% in opening Zurich trade.
Darrell said the weaker-than-expected results reflected “challenging macroeconomic conditions including a slowdown in sales to enterprise customers in the quarter.”
The company was cutting its outlook based on the results and on “uncertainty in supply availability related to the current COVID outbreak in China.”
In its last fiscal year, COVID restrictions drove Logitech to its highest ever second-quarter sales on the back of strong demand for home office products and computer gaming devices.
But since then it has faced a slowdown as many lockdowns have been lifted while consumers have become more downbeat and components and transport costs have risen, eating into profit margins.
Vontobel analyst Michael Foeth said the weaker results reflected a harsher macro environment though Logitech’s strategy was sound.
“The ongoing burden of inflation and slowing economy on consumers will continue to impact Logitech in coming quarters,” he said in a note.
“Even though the company is clearly not immune to economic cycles the business model remains agile and robust for the long-term.”
(Reporting by Noele Illien and John Stonestreet; Editing by Noele Illien and Elaine Hardcastle)
