Garmin Q3 Profit Fell 11% Amid Higher Freight Costs; Stock Down
Garmin typifies virtually all tech companies that are facing “one of the most challenging supply chain environments in history,” said CEO Cliff Pemble on a Q3 call Wednesday. “Supplies are tight, and we expect freight costs to remain elevated.” Operating…
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profit declined nearly 11% year over year to $283 million, due partly to “higher freight costs affecting gross margin,” he said. Garmin invested in a fourth production facility in Taiwan that's now operational and “will help us fill more orders,” he said. “We’ve been able to secure the kind of inventory that we feel we need to make for a successful year,” said Pemble. “Nobody would ever say they have too much in this environment, and with shipping delays that are taking place that we hear of every day in the news, definitely a higher level of inventory is required.” Garmin sees little to no supply chain improvement “in the near to intermediate term that really changes what’s happening right now, until there is really more capacity brought into the system and some of these bottlenecks get solved,” said the CEO. Pemble answered with a simple “yes,” when asked if he’s confident in Garmin’s ability to have products on shelves for the holiday season. The stock closed down 8.8% Wednesday at $146.21.