Garmin Shares Fall Despite Record Revenue Due to Projected Margin Contraction
Garmin (GRMN) reported record quarterly revenue of $1.99 billion, representing a 12% year-over-year increase driven by strong performance in its fitness and outdoor device segments. While the company achieved significant margin expansion this quarter—with gross margins reaching 63.3%—the stock faced selling pressure following management's guidance on future profitability. CEO Cliff Pemble warned that gross margins are expected to contract in the fourth quarter to approximately 61%, eventually returning to a historical range of around 58.5%. This projected decline is attributed to soaring memory component costs caused by supply constraints driven by AI infrastructure demand. Despite the stock's intraday drop, analysts note the company maintains strong underlying growth and a reasonable P/E ratio.
Tickers: $GRMN
Topics: earnings report guidance profit margins revenue growth supply chain costs
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