Garmin’s fitness division had a stellar performance in the first quarter. Revenues in this segment soared by 24 percent to $180.3 million, as the group benefited from the home fitness boom due to the lockdowns in place in many countries. Sales were driven by advanced wearables and Tacx indoor bike trainers. The gross margin in the segment declined by 0.2 percentage points to 50.2 percent, while its operating income jumped by 71 percent to $31.0 million.
In the Outdoor division, Garmin’s sales climbed by 14 percent to $175.1 million, driven by higher sales of adventure watches. The gross margin gained 0.8 percentage points to 64.1 percent, while operating income progressed by 12 percent to $47.2 million.
The company’s aviation and marine segments went up by 10 percent and 22 percent, respectively, while the auto segment declined by 17 percent.
Overall, Garmin’s revenues rose by 12 percent to $856 million. The gross margin improved by 0.2 percentage points to 59.2 percent, and the operating margin progressed by 0.9 percentage points to 20.7 percent. Net income increased by 15 percent to $161.2 million.
The company has taken steps to strengthen its supply chain and has accelerated efforts to increase its mix of online sales with business partners and on garmin.com. The management pointed out that the company has plenty of inventory to capture market share.
The group has withdrawn its previous guidance for 2020, citing uncertainty in the current coronavirus context, but signaled that interest in outdoor activities was likely to increase, as they are compatible with social distancing guidelines while governments around the world ease restrictions. At the moment, it is seeing continued strong sell-through in countries that have allowed some outdoor activities, but not in those where strict self-confinement measures are still in place.