© Reuters. FILE PHOTO: Logitech keyboards are seen in the computer shop in Zenica, Bosnia and Herzegovina October 20, 2020. REUTERS/Dado Ruvic
By John Revill
(Reuters) -Logitech International said on Tuesday it expects the downturn in spending by business customers which hit its third quarter sales to be temporary, after the computer accessories maker reported a sharp drop in sales and profit.
The maker of computer mice, keyboards and video conferencing equipment said its sales fell 22% in the three months to the end of December, confirming its preliminary results.
Chief Executive Bracken Darrell said the downturn reflected the more difficult global economic situation and expected spending to pick up again.
“This is temporary and will eventually come back,” Darrell told Reuters in an interview. “I can’t say when, but growth will continue.
“At the end of the day, this is part of the cycle. We’ve had a long strong growth cycle and now we’re in a cycle of adjustment,” he said.
The Swiss-U.S. company said consumers had also spent less during the quarter and concentrated their purchases on weeks when sales promotions took place.
Darrell declined to say what he thought would happen with consumer spending, saying Logitech (NASDAQ:) would give its latest guidance at its investor day in March.
Still, long-term growth trends which have propelled Logitech, like gaming and hybrid working between the office and home, remained intact, he added.
Other positives included an expected easing of supply bottlenecks in China as the country opens up after Beijing scrapped its zero-COVID policy, Darrell said.
The Chinese market – Logitech’s second biggest – would also recover as the country opened up, he added.
Its shares were up 1.9% in early afternoon trading in Zurich.
Logitech’s sales in the three months to end-December fell to $1.27 billion. The company’s preliminary figures published on Jan. 11 showed its sales had fallen to between $1.26 and 1.27 billion.
Its non-GAAP operating income fell 32% to $204 million from $302 million a year earlier. It had previously reported preliminary operating income in the range of $198 to $203 million.
It still expects sales to drop 13% to 15% in the 12 months to end-March, and generate non-GAAP operating income of $550 to $600 million.