Garmin Ltd.¡¯s said its strategy of developing or acquiring high-margin niche products, such as GPS devices for training dogs and watches for golfers, helped drive impressive growth at its Outdoor and Fitness segments in the fourth quarter. Outdoor and Fitness now generate 13 and 11 percent respectively of the company's revenues in the quarter, but 30 and 20 percent of its operating income.
Outdoor segment revenue increased 35 percent to $121 million in the fourth quarter ended Dec. 31, 2011, while Fitness segment revenue grew 17 percent to $95 million. For all of 2011, Outdoor revenue increased 14 percent to $363 million, while Fitness revenue rose 24 percent to $298 million. Operating margins slipped 400 basis points to 49 percent in Outdoor but remained level at 43 percent in Fitness and are expected to remain steady this year.
The company reported that it sold almost 16 million units in 2011 with unit growth in outdoor, fitness, marine and automotive OEM nearly offsetting declines in personal navigation devices.
Growth reaccelerated in the outdoor segment in the fourth quarter as supply constraints that affected results in the third quarter were resolved. Best sellers included the Approach S1 golf watch, the premium Montana GPS series, the entry-level eTrex GPS series and the Astro series.
Growth in the Fitness segment fell slightly short of expectations as Garmin was unable to ship the Forerunner 910XT in time for the holiday season. The company is now filling back orders. Garmin expects its Vector power meter for cyclist to drive growth this year, although it has pushed out deliveries of the device by three months to the June time period.
Garmin expects revenue to reach $2.7-$2.8 billion this year as growth in the outdoor, fitness, marine and aviation segments continues to offset ongoing declines in the PND market.
