Considering the current business state of the company, it has revised its target for the year and it said it now expects its overall revenue to drop by 13-15%.
Swiss multinational manufacturer of computer peripherals and software, Logitech International SA (SWX: LOG) has tapered down its expectations and business outlook for the 2023 Fiscal Year. The company reduced its forecast for the year following a relatively poor performance as recorded in the third quarter of the 2023 fiscal year ended December 31, 2022.
According to Logitech, the third quarter net sales fell in between the range of $1.26 billion and $1.27 billion, down between 22 and 23% in US dollars. The sales also fall between 17 and 18% in constant currency, compared to Q3 of the prior fiscal year.
“We are disappointed in these preliminary third-quarter results. They reflect challenging macroeconomic conditions including a slowdown in sales to enterprise customers in the quarter. Based on the softer than expected third-quarter results, and uncertainty in supply availability related to the current Covid outbreak in China, we are reducing our full-year outlook,” said Bracken Darrell, Logitech president, and chief executive officer.
As a tech gadget manufacturer, the disruptions to the manufacturing processes and the global supply chain had a major toll on its operations in the third quarter and over the past year. The company reported a shunted operating income which is pegged between $171 million and $176 million, down between 33 and 35%, compared to $263 million in the same quarter a year ago.
While Logitech’s preliminary operating margin for the quarter is expected to be between 13.5 and 13.8%, The company’s gross margin came in between 37.5 and 37.6% respectively. Amid the plunging revenue and cash flow, the company’s top executive said more attempts will be made to cut costs and improve profitability in the near future.
“We will continue to manage our costs to drive solid operating performance and will provide more detail on our earnings call later this month. We remain confident in our strategy and the long-term trends that fuel our business,” Bracken said.
Logitech Renewed Forecast
Considering the current business state of the company, it has revised its target for the year and it said it now expects its overall revenue to drop by 13-15%. These revised bearish estimates compare to an earlier drop of 4-8%. This will effectively place its operating income at a range of $550 to $600 million as against the earlier guidance of $650-$750 million.
Logitech is hoping to do many things differently in order to correct the losses. At this time, it remains unclear if the cost management plans will entail the laying off of its workforce as has been done by many tech giants including Amazon.com Inc (NASDAQ: AMZN) which recently laid off 18,000 of its workers.
The company’s shares trading in Switzerland plummeted by 14.13% to CHF 53.84 while the company’s shares on the NASDAQ Global Select Market slumped by 13.18% in the Pre-Market in what looks like a vote of no confidence from investors on the future potentials of the firm.
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