Logitech faces a rare major drop in its sales; now pinning its hope on hybrid working to boost demand

On Tuesday, Logitech lowered its 2023 outlook, an unusual drop from the computer mouse and webcam maker, but said it still expected to benefit from consumers purchasing equipment as they…

By Nivedita Bangari

May 4, 2022

2 min read

Comments

On Tuesday, Logitech lowered its 2023 outlook, an unusual drop from the computer mouse and webcam maker, but said it still expected to benefit from consumers purchasing equipment as they transition to hybrid working.

The Swiss-American firm, which had good sales during the pandemic, blamed the downgrade on the Ukraine crisis and has ceased operations in both Ukraine and Russia, where it produces 2% of its revenue.

Logitech, whose products are used to outfit home offices, said it now expects sales growth of 2 to 4% in constant currency in the 12 months to the end of March 2023, up from a previous prediction of a mid-single-digit gain.

Logitech had a drop of 3.6 percent of the stock in Switzerland as a result of the more cautious evaluation

Apart from Ukraine, CEO Bracken Darrell believes the company will continue to develop strongly because hybrid work patterns will drive demand for its goods both at home and at work.

“We are focused on three categories – gaming, PC peripherals, and video collaboration. These categories grew by 12% last year on top of 74% the year before,” Darrell told Reuters in an interview.

“The businesses we are focused on are growing,” he added.

Workers were still buying new keyboards and mice to work from home, he said, while companies continued to enhance their video conferencing and other equipment ahead of their return.

“The general story will be hybrid work, the debate is over,” said Darrell, a former Whirlpool and Procter & Gamble executive who has led Logitech for the past nine years.

“People are going to be upgrading at home, as they keep working at home, but companies are going to keep buying for their offices.”

Logitech, whose keyboards and headsets are also used by gamers and esports competitors, reported a 20% reduction in revenue to $1.23 billion in the three months ending March 31, despite high year-over-year comparisons.

As the company spent more time creating new goods, non-GAAP operating income plummeted 52 percent to $156 million.

Analysts, on the other hand, said the quarter was better than predicted because Logitech decreased operating costs. Logitech might benefit from “customers buying the equipment as they migrate to hybrid working, e-gaming, and developing their content,” according to Mueller.