Fitbit cuts jobs for fiscal health
Demand for wearable devices declines, slowing growth to 8% less than forecast
Fitbit will cut more than 100 jobs as its financial struggles continue, reflecting an ongoing pessimism in the wearables market. The fitness band maker will cut 6 per cent of its workforce, 110 jobs globally, as part of a bid to save US$200 million as it fights declining revenue forecasts.
The company disclosed that it had failed to meet targets with demand for wearable devices ailing.
After selling just 6.5m products in the last quarter of 2016, Fitbit has cut its guidance by more than a fifth to $572m. It had expected to grow around 25 per cent in the year, but in fact expects to have grown just 17 per cent.
Following the news Fitbit’s shares dropped 13 per cent to an all time low of $6.33 compared to the $30.40 it reached on its first day when it floated in New York in June 2015.
The company, which will release its official results next month, is expecting 2017 to be more challenging than the year before, “as new products introduced in the first half of 2016 comprised more than half of revenues”. It predicts revenues of $1.5 billion to $1.7b in 2017.
It remains optimistic, however, and said the results are a reflection of a “temporary slowdown” in the wearables market.
“We are confident this performance is not reflective of the value of our brand and company’s long term potential,” said James Park, Fitbit’s chief executive. Last year Fitbit launched its own smartwatch, the Blaze.
The company, which has 23.2m active users and a 75 per cent share of the market, acquired its main rival Pebble last year in a bid to cement its position as market leader.