Cayman Islands - Excess retail-channel inventory caused U.S. and worldwide sell-in of portable navigation devices (PNDs) to drop in the first quarter ending March 27, but sell-through by major U.S. retailers posted year-over-year growth during the quarter, Garmin said in releasing its
Retail-level average selling prices (ASPs) rose in North America in the first quarter after a fourth-quarter decline, the company added.
For the full year, Garmin stood by its forecast that its 2010 worldwide PND sales will be flat in units and that its ASPs worldwide will drop by 5 percent to 10 percent. In North America, however, the company expects its unit sales to grow in the high-single- or low-double-digit percentage rates. Garmin also expects industrywide PND unit growth in North America for the full year.
In other comments, Garmin executives said 80 percent of its PND unit sales worldwide are value-priced models and that 20 percent to 30 percent of its unit sales are replacement sales.
In a written statement, Garmin chairman/CEO Min Kao said Garmin's inventory levels at retail "normalized toward the end of the first quarter," and as a result, "sell-in to the retail channel has begun to more closely align to sell-through trends in the second quarter." A spokesman added that Kao's comments apply to the PND industry as a whole, not just to Garmin's PND sales.
Garmin's sales in its mobile segment "will improve sequentially throughout the remainder of 2010," Kao noted. The majority of Garmin's mobile-segment revenues come from PNDs, but the segment also includes the company's Nuviphone PND-equipped cellphones and sales of its GPS technology for use in third-party aftermarket and OEM in-dash navigation systems. In the first quarter, the mobile segment accounted for 51 percent of company sales, down from a year-ago 59 percent, with the remainder coming from outdoor/fitness, marine and aviation products. Mobile accounted for 20 percent of the company's operating income.
For the quarter, worldwide Garmin net sales fell 1.3 percent to $431 million, and net income fell 27 percent to $37.3 million according to GAAP accounting standards, excluding the impact of currency fluctuations. With a foreign-currency gain of an additional $38.2 million, pro forma net income grew 49.4 percent to $75.5 million, the company said.