Garmin's fitness segment had a stellar second quarter, with a 24 percent increase from the year-ago quarter to $225.1 million In contrast, sales in Garmin's so-called outdoor segment improved by 4 percent to $201.6 million with all product categories contributing to the growth. The gross margin in this segment declined by 2 percentage points to 64 percent, and the operating margin was also down by 2 percentage points to 36 percent.
During the quarter, the company launched the Fe?nix 5 Plus series, adding color maps, Garmin Pay mobile payments and music to all three watch sizes. It also expanded its sensor technology with the addition of Pulse Ox to the Fenix 5X Plus, to track blood oxygen saturation for athletes and outdoor enthusiasts. In addition, it launched the inReach mini, a compact satellite communicator that allows for two-way communication from anywhere.
Meanwhile, Garmin's fitness division launched the Vi?voactive 3 Music, expanding its music offerings into the advanced wellness category. The segment's double-digit growth was also spurred by the launch of new products, a GPS for bikes called Edge, and Varia, described as the world's first cycling radar that warns the rider that a vehicle is approaching from behind at a distance of up to 140 meters. The gross margin remained flat in the fitness segment at 56 percent, while the operating margin increased by 2.0 percentage points to 23 percent.
Garmin's marine and aviation segments also performed well, with sales rising by 24 percent to $134.6 million and by 23 percent to 153.0 million respectively. However, they were down by 19 percent to $180.1 million in the automotive segment, primarily due to the ongoing contraction of the PND (Personal Navigation Device) market.
By region, the company's overall revenues increased by 9 percent to $437.1 million in the Americas, and by 28 percent to $148.2 million in Asia-Pacific, but declined by 2 percent to $309.1 million in Europe and the Middle-East and Africa (EMEA).
Overall, Garmin's gross margin for the quarter advanced by 0.3 percentage points to 58.5 percent, while the operating margin fell by 0.9 percentage points to 24.3 percent. Net income, was up by 7.5 percent to $190.3 million.
The good performance of the fitness division contributed significantly to Garmin's overall turnover, with sales for the second quarter rising by 8 percent to $894 million. This led the company to raise its full year guidance. It now anticipates revenues of about $3,300 million, driven primarily by higher expectations for its fitness and aviation segments, partially offset by slightly lower expectations for the marine segment. This is up from a previous guidance calling for revenues of $3,200 million.