Stocks: Tough Competition Leaves Fitbit Winded -- WSJ
August 02 2019 - 03:02AM
Dow Jones News
By Michael Wursthorn
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 2, 2019).
Fitbit's smartwatch business is running low on power in the
battle for arm space with rivals Apple Inc. and Samsung Electronics
Co.
Shares of the fitness-wearables maker fell 21% Thursday, its
second-worst decline in a single day since it started trading in
2015. That knocked its market cap below $1 billion after executives
lowered guidance for the year, citing disappointing watch sales due
in part to fierce competition.
Fitbit launched a new smartwatch, the Versa Lite, earlier this
year and sold it at a lower price than its other models. But Chief
Executive James Park told analysts on an earnings call late
Wednesday that sales were tepid, as consumers were willing to pay
higher prices for smartwatches that have additional features.
Fitbit's revenue from smartwatches fell 27% in the second quarter,
while the average selling price of all of its devices declined 19%,
crimping the company's profit margin.
Fitbit's disappointing product launch coincided with a period of
strong growth for the wearables market. Global shipments of
wearable devices hit nearly 50 million in the first quarter, up 55%
from a year earlier, according to International Data Corp. Apple
controls 26% of the wearables market, according to IDC's data,
while Huawei and Samsung account for 10% and 9%, respectively.
Fitbit's market share stood at 6%, down from 9% at the end of last
year.
Mr. Park says Fitbit won't be caught flat-footed again,
promising the company is re-evaluating its pricing and promotional
strategy for future launches, and plans to shift to an annual
product-launch cycle in an effort to make sales more steady and
predictable.
Investors don't appear convinced of the company's quick
recovery. Shares are down 24% since the end of June, extending its
decline so far this year to 33%. Apple, meanwhile, is up 32%, while
Samsung has risen nearly 17%.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
August 02, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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