Logitech Sales Surge, Shares Climb 6.6% As They Struggle To Keep Up With Demand
The last few weeks have been chaotic for Swiss American Company Logitech as consumers swarmed online sites and retail stores looking for new webcams, mouse and keyboard for those working from home, even their conference cameras have been in big demand including their gaming headsets and top end gaming mice.
This has led to a 62% climb in demand for video collaboration equipment gear while webcam sales surged by 32%, gaming products rose by 8% this led to an overall increase in sales of 14% for the quarter.
Overall sales across all brands including Ultimate Ears, Jaybirds were Logitech’s highest ever at US$2.98 billion. Cash flow from operations was a record $425 million, compared to $305 million a year ago.
Chief Executive Officer Bracken Darrell said that demand for video collaboration products boomed during the three months to the end of March as schools and offices shut down to prevent the spread of the virus, with locked-down staff relying on video conferencing equipment, software and webcams.
Families also connected via video conferencing as lockdown restrictions prevented them from seeing loved ones during the pandemic.
“As people shelter and self-isolate from each other physically, you need some way to get an emotional connection, and video is the way to do that,” he said.
According to local CE retailers the big issue now is getting hold of Logitech products running into the next quarter due in part to demand and shipping problems.
After shares rose 6.6% Darrell said, “We have delivered five consecutive years at or near double-digit growth, and Logitech’s products have never been more relevant,”
He added “Video conferencing, working remotely, creating, and streaming content, and gaming are long-term secular trends driving our business. The pandemic has not changed these trends: it has accelerated
Nate Olmstead, Logitech chief financial officer said “The COVID-19 pandemic introduces operational challenges, yet our ability to execute and strong long-term growth drivers give us the confidence to maintain our financial outlook for Fiscal Year 2021.”
“It has accelerated a trend which was already moving sharply upward,” Darrell said.
Schools were holding lessons via video conference, while hospitals were using technology to lower the risks of infection, he added.
“In my hometown Owensboro, Kentucky, they have mounted one of our video cameras inside a room with COVID-19 patients, and linked it to the nurse’s station,” Darrell said.
“This has enabled the doctors and nurses to enter less often and limit their exposure.”
Andrea Mueller, an analyst at Zuercher Kantonalbank, said the operating results were better than expected, and the stock was attractive because of the company’s strong balance sheet.
Sales of gaming accessories – keyboards, mice, and headsets – also increased, by 8%, as people locked down at home tried to relax.
People were playing esports like motor racing against each other, and watching professionals compete as real-life sporting events disappeared from the calendar, Darrell said.
“(They) are also having game nights and playing Monopoly and Scrabble remotely using our equipment to do it,” he said.
“It’s a way to connect with people when social distancing, and it will stay the way to connect with people even when social distancing is not required.”
Logitech confirmed its Fiscal Year 2021 outlook of mid-single-digit sales growth in constant currency and $380 million to $400 million in non-GAAP operating income.
All $ is in US currency.