Logitech Cuts Supplier-Shutdown Hit To $70 Million-$80 Million, From Up To $200 Million
CEO Hanneke Faber credits redesigned products and new chip sources, though the supplier's fab is still short of full capacity.
Logitech now expects a semiconductor supplier's shutdown to cost $70 million to $80 million in third-quarter net sales, CEO Hanneke Faber said on the company's earnings call Tuesday. That is "significantly lower than what we said in July, which was up to 200 million."
How the damage shrank
Logitech, which designs and sells keyboards, mice, webcams, gaming gear and meeting-room cameras, did not get relief from the factory itself. Faber said the accident happened at the end of June and the fab reopened in mid-September, but "not at full capacity." She does not expect full output until later this quarter.
The savings came from the company's own work: more chips from secondary suppliers, products redesigned "on the go faster than ever" to fit the chips on hand, and reworked commercial plans around the world. Faber called it "a gargantuan piece of work." She expects the supply impact to be largely gone in the fourth quarter.
Chief Financial Officer Matteo Anversa said the third-quarter sales guide is down 5% to flat in constant currency. The supplier hit equals about five points of year-over-year pressure at the midpoint, and the Middle East conflict plus slightly more promotion add roughly one more point. Adjusted for both, he said, demand is about up 4%.
A second quarter that still grew
Second-quarter net sales were $1.2 billion, up 2% in constant currency, the company's 11th straight quarter of year-over-year growth. Anversa said that without the supplier incident and the Middle East conflict, growth would have been about 4%. Video collaboration grew 12%, gaming 7%, and the Americas 13%, while EMEA fell 6%.
Adjusted operating income was $231 million, and the adjusted gross margin was 45.2%. For the third quarter, Logitech guides adjusted operating income of $220 million to $255 million and a gross margin of 41% to 42%, about 200 basis points lower than a year earlier. Anversa blamed freight, logistics and component costs, and said he expects that inflation to last through the fiscal year.
Planes for the holidays
To protect holiday supply, Logitech plans 30 to 40 basis points of premium freight. "We're going to put products on planes if we have to," Anversa said, in substance, to get product to shoppers. Faber added that component shortages have spread from memory to basically all electrical components.
Anversa said fiscal 2027 adjusted operating margin should land at the high end of the long-term 15% to 18% range, even without $61 million of tariff refunds from last quarter.
Faber's next check-in with investors comes in January, after the holiday quarter that bears the brunt of the supplier hit.
Sources
- Logitech beats profit forecast as sales of gaming, conferencing products rise - CNA — channelnewsasia.com
- Logitech (LOGI) Beats Q2 Earnings and Revenue Estimates — Yahoo Finance
- Logitech expects Q3 net sales down 5% to flat as supplier incident drives $70M-$80M impact (NASDAQ:LOGI) | Seeking Alpha — seekingalpha.com
- Logitech Stock: Peripherals Maker Tops Fiscal Q2 Views | Investor's Business Daily — investors.com
- Logitech slips even as consumers keep buying PC peripherals (LOGI:NASDAQ) | Seeking Alpha — seekingalpha.com
