Garmin explains 71% drop in its cycling fitness division

Garmin has released its 2022 financial results. The company has suffered a 71% drop in profits in fitness and cycling, which they blame on the fact that sales have returned to pre-pandemic levels and the complicated global economic situation.

Garmin loses its big post-pandemic numbers and assumes a return to normality

Garmin, one of the world's leading manufacturers of GPS devices and applications for athletes, has released a report analyzing last year's financial results.

The U.S. brand has suffered a hard fall in its cycling and fitness division, where it has seen its profits fall by 71%. In numbers, they claim they were around $105 million in the fitness division - which also includes cycling devices - while in 2021 they were more than $359 million.

Garmin president and CEO Cliff Pemble explains that this figure is in response to cycling products returning to normal after an industry-wide boom in the wake of Covid-19. "We saw cycling products returning to normal levels, which we think is very healthy," he said.

Even so, this figure is also below pre-pandemic levels, when they posted a profit of $191 million in 2019.

Sales also declined. If Garmin closed 2022 with $1.11 billion, it closed the previous year with $1.5 billion, a drop of 28%.

The good performance of other divisions - such as the one dedicated to boat products - cushions the balance of the year. Thus, the overall drop in the brand's sales fell by 9%; while last year's figure was 15 million units sold, the previous year's figure was 16.6 million.

Pemble notes that "going forward, we see the cycling market stabilizing. Secondly, we have an interesting product roadmap and we know that we benefit from the introduction of new products."

The president assures that he is confident in the brand, while he is overlooking the idea that Garmin may update some of its products during this 2023, and predicted that fitness revenues would have a 5% decline at the end of this year.

The economic context is also behind the losses

However, Garmin has accepted the results naturally, aware that it was the pandemic numbers that were exceptional, so they expect the figures to settle down again.

In the report, the U.S. company blames part of these results on the global economic situation. For example, they explain that high inflation, rising interest rates, cost fluctuations or logistical constraints may be behind this drop in performance.

On the other hand, they expect this situation to continue, at least in part, this year, as well as the effects of the Ukrainian war and the tails that Covid-19 still gives to the markets.