Logitech raises sales guidance, but market remains skeptical

Swiss consumer technology brand Logitech International delivered a slightly curious third-quarter trading update on Tuesday, in which full-year guidance was raised despite quarterly sales showing a 1% year-on-year decline.

The narrative appeared to be one of incremental improvement though, given that this time last year, sales were down more than 20%, narrowing to just 8% come the second quarter.

Even though sales are yet to return to growth, Logitech’s margins are definitely trending in the right direction, with operating income up 26% year on year and earnings per share up 80% to $1.55.

Cash flow from operations was $443 million, marking a 58% improvement compared to the third quarter of fiscal 2023.

Logitech also signed off on $188 million worth of share repurchases in the latest quarter.

Before today’s trading update, Logitech warned that full-year sales would show a 9-12% yearly decline, but that guidance has now been tightened to a 6-7% yearly decline.

“We delivered solid results in our third quarter,” said Hanneke Faber, Logitech's chief executive officer. “Our teams executed well, continuing our long record of exceptional product innovation, market share gains, strong operational discipline and prudent financial management.”

However, Faber said he will “not be satisfied” until Logitech returns to top-line growth.

Chief financial officer Chuck Boynton added: “Our third-quarter results show our continued focus on operational discipline.

“While revenue declined 3% in constant currency, we delivered strong gross margins of 42.3% and grew profitability.

“We generated $443 million in operating cash flow in the quarter and returned a total of $188 million to our shareholders through share repurchases.”

Shares took a drubbing in response to the results, falling more than 6% in morning trades, suggesting that the market is still wary of Logitech’s return to form.

Shares were swapping for 77.16 Swiss francs ($1.15) at the time of writing.