Fitbit warned investors yesterday that growth in the final quarter of 2016 has undershot earlier forecasts.
The company said markets should expect Q4 sales of around 6.5 million fitness trackers across the world. Revenue will be in the range of $572 million to $580 million, compared to the company’s previously announced guidance range of $725 million to $750 million.
For the full-year 2016, Fitbit expects annual revenue growth to be approximately 17% from the previous forecasted growth of 25% to 26%.
“Fourth quarter results are expected to be below our prior guidance range; however, we are confident this performance is not reflective of the value of our brand, market-leading platform, and company’s long-term potential. While we have experienced softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday, we have continued to grow rapidly in select markets like EMEA, where revenue grew 58% during the fourth quarter. To address this reduction in growth and what we believe is a temporary slowdown and transition period, we are taking clear steps to reduce operating costs,” said James Park, Fitbit co-founder and CEO.
Fitbit’s share price, which was $17 as recently as September last year, is today down to $6.
Cost-cutting will see a reorganisation of the business, including a reduction in force. Around 110 employees, approximately 6% of the company’s global workforce, will lose their jobs.
Mr Park says that the slowing growth for wearables is not irreversible. “We believe the evolving wearables market continues to present growth opportunities for us that we will capitalise on by investing in our core product offerings, while expanding into the smartwatch category to diversify revenue and capture share of the over $10 billion global smartwatch market,” he states.
“We believe we are uniquely positioned to succeed in delivering what consumers are looking for in a smartwatch: stylish, well-designed devices that combine the right general purpose functionality with a focus on health and fitness. With the recent acquisition of assets from Pebble, Vector Watch and Coin, we are taking action to position the company for long-term success.”