Weak growth in Garmin’s fitness division and the strong U.S. dollar contributed to a 24 percent drop in second-quarter earnings, the company said Wednesday.
Garmin, based in Olathe, earned $137.8 million, or 72 cents a share, in the three months that ended June 27. A year ago, it earned $181.98 million, or 93 cents a share, in the quarter.
Revenues were down less than 1 percent despite a negative $59 million impact that Garmin attributed to the strong U.S. dollar’s effect. The company expects currency exchange rates to weigh on revenues and earnings through the rest of 2015.
Garmin’s stock fell 10 cents a share, closing at $42.69.
Chief executive Cliff Pemble attributed the quarter’s weakness to “unfavorable currency movements.” Foreign buyers face higher prices when the value of the U.S. dollar rises against their currency.
Pemble, however, painted a brighter picture of future results.
“With our ongoing research and development efforts and exciting advertising plans, we believe that the foundation for long-term success is being established now,” Pemble said in the company’s announcement.
Garmin had said earlier this month that its fitness division’s sales grew only 5 percent in the quarter, well below original expectations. The company’s legacy operations labeled auto, which includes personal navigational devices, saw revenues fall 15 percent.
Analyst Andrew Spinola at Wells Fargo Securities said Wednesday’s report was in line with the market’s new expectations. And he summed up the company’s business in a sentence.
“Revenue trends in the non-auto businesses are soft while auto continues its relentless decline of 15 percent, and Garmin continues to invest heavily in advertising” and research and development, Spinola’s note to clients said.