Sonos shares have dived 23% after the US sound Company who recently launched two new speakers in Australia, slashed their forecast revenues, reported losses, and a slump in gross margins.
Despite the launch of new products revenue at Sonos, decreased 23.9% year-over-year to US$304.2 million with retailers reporting poor sell through for the new Sonos Era 300 and Era 100 speakers.
Gross margin decreased year-over-year to 43.3%, the business also reported a nett loss of $30.7M.
Looking ahead, the company cut its forecast for fiscal 2023 revenue to a range of $1.625 billion to $1.675B from $1.7B to $1.8B previously.
The company attributed the cut to “softening consumer demand and channel partner inventory tightening,” though added that it was taking “swift action” to reduce operating expenses.
The Company is also carrying excess stock with finished goods inventory increasing by $14M or 5%.
Another problem facing the business is that gross margin tailwinds from fewer spot component purchases is set to be largely offset by FX headwind, promotional activity 1Q23 and unfavourable product mix resulting from softer.
run-rate demand of Sonos speakers.
CEO Patrick Spence said The softening, in conjunction with some of our channel partners tightening up on inventory, has led us to reduce our outlook for the remainder of fiscal 2023″.
Specifically, we’re taking our fiscal 2023 revenue guidance down 6% at the midpoint, resulting in a constant-currency year-over-year decline of 3%”.
We knew that this would be a challenging year, but this is disappointing and inconsistent with our ambitions”. “He said.
He added “we began to see softening run rate registration trends in February, which continued through March. The market data that we track showed a pronounced decline in the US.
He said that home theatre sales in March, were also challenging.
He told an investor conference “We are not immune to the widespread category weakness. Second, after being supply constrained in Amp and other key installer-oriented products for most of fiscal 2022, we were able to replenish this channel and clear the vast majority of our backlog in the first quarter of fiscal 2023”.
