Cycling products “back to normal levels” says Garmin president, as tech brand’s fitness division reports 71 percent profit drop

Garmin, one of the leading manufacturers of GPS computers for sports tracking and cycling, has reported a 71 percent fall in operating profit across its cycling and fitness division in 2022, which the US tech brand’s president says is a result of the ‘normalisation’ of the cycling industry in the wake of the Covid-19 pandemic.

The company’s final report for the 2022 fiscal year, published on Wednesday, revealed that the operating income for Garmin’s fitness section, which includes it bike computers, smart watches, and Tacx indoor trainers, was $105m (£87m) – a drastic 71 percent drop compared to the company’s 2021 figures, which saw the same division secure an operating profit of $359m (£298m).

The 2022 profit also falls far below Garmin’s pre-pandemic figures, with the brand reporting an operating profit of $191m (£158m) in 2019.

Revenue for the fitness division also fell by 28 percent from $1.5 billion (£1.24 billion) to $1.1 billion (£910m) for 2022.

The outlook was somewhat brighter for other parts of Garmin’s business, which also includes products for motor vehicles and boats. With those sectors performing well in 2022, the company managed to report just an 11 overall percent fall in pre-tax profit to $1.06billion (£880m), while revenue fell just 2.5 percent to $4.9 billion (£4 billion).

> Ratings agency downgrades Wahoo, warning company’s finances are “unsustainable”

Garmin’s president and CEO, Cliff Pemble, told investors this week that the current state of the company’s cycling business was a direct and predictable result of the recent bursting of the Covid-19 lockdown bubble affecting the entire bike industry.

“In fitness we saw the indoor cycling area and bike trainer market has normalised after the pandemic, we saw cycling products coming back to their normal levels, which we feel is very healthy,” Pemble said.

 “Going forward we see the cycling market stabilising so that shouldn’t be a factor. Secondly, we have an exciting product roadmap and we know we benefit from new product introductions.”

With the brand rumoured to be updating some of its bike computers this year, Pemble stressed to investors that, while Garmin’s fitness products belong in a highly competitive market, he had faith that the company offered something unique and valuable to its consumers.

To coincide with this positivity, the US manufacturer forecast that revenue in its fitness section would fall by just five percent in 2023.

> Cycling industry layoffs: Strava and Wahoo cut 15% of workforce

Garmin’s struggles in 2022 reflect the wider trends currently affecting the bike industry in the wake of the pandemic boom.

Last month, a leading ratings agency downgraded Garmin rival Wahoo’s credit rating, warning that it believes that unless the company can raise further funding or restructure its debt, its finances as they currently stand are “unsustainable.”

That news came just a month after Wahoo confirmed that it had let go of around 15 percent of its workforce, as part of a “restructuring of its organisation to support the long-term growth of its global business”.

Also, in December, Strava – the ride-tracking app which claims to have the world's largest sports community of more than 100 million users – let go at least 40 employees, including product designers and product managers.

> "Our intention was not to hide these changes": Strava apologises for price hike controversy

A month later, the popular app apologised to its users for “not providing enough information directly to our community” about a controversial subscription price hike of almost 30 percent.

Strava, who told road.cc that the price rise was made to “reflect the growing subscription features, as well as local market changes”, insisted that their “intention was not to hide these pricing changes”.