Fitbit is set to cut 110 jobs following softer than expected sales figures at the end of last year.
The market leader in the wearables market made the announcement as part of the release of its financial results for the fourth quarter of 2016.
Fitbit downgraded an earlier estimate of revenue ranging between $725 million and $750 million in the quarter. The company now expected revenue in the range of US$572 million to US$580 million, and sales of 6.5 million devices.
In a statement, Fitbit’s co-founder and CEO James Park said: “Fourth quarter results are expected to be below our prior guidance range; however, we are confident that this performance is not reflective of the value of our brand, market-leading platform, and company’s long-term potential.”
Park added that while mature markets like the US did not experience the demand expected, particularly during the Black Friday sales period. He said that emerging markets were continuing to grow, with EMEA (Europe, the Middle East and Africa) delivering 58 percent growth in the quarter, for example.
Park saw this latest result as part of a “temporary slowdown and transition period”, and reducing operating costs – including a reduction in the workforce – will help to right the ship.
The loss of 110 jobs – which represents 6 percent of Fitbit’s workforce – is less surprising given the company’s recent acquisition of companies Pebble, Vector Watch and Coin.
Some de-duplication of roles is expected to occur, especially if Park follows through with his plans to expand into the smartwatch market, a move made much easier with the acquisition of two former market players.
“We believe the evolving wearables market continues to present growth opportunities for us that we will capitalise on by investing in our core product offerings, while expanding into the smartwatch category to diversify revenue and capture share of the over $10 billion global smartwatch market,” he said.
“We believe we are uniquely positioned to succeed in delivering what consumers are looking for in a smartwatch: stylish, well-designed devices that combine the right general purpose functionality with a focus on health and fitness.
“With the recent acquisition of assets from Pebble, Vector Watch and Coin, we are taking action to position the company for long-term success.”
Park also said that he and chief technology officer Eric Friedman intend to reduce their 2017 salaries to $1.