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Fitbit attempted to reassure investors that a shortfall in holiday sales was just a temporary problem, after its unit sales fell by a fifth in the fourth quarter of last year.
The San Francisco-based company said it swung to a net loss of $146.3m in the three months ending in December, in full results published on Wednesday.
Despite concerns about the longer-term future for wearable devices, Fitbit said its problems in the second half of last year were due to saturation among “early adopters” and discounting by competitors, as consumers swapped basic fitness trackers for more feature-rich products such as smartwatches.
Sales of Fitbit’s wristbands grew just 3 per cent last year to 22m units, while the number of people actively using its devices grew 37 per cent year on year to 23.3m.
Fitbit has already lost a fifth of its value so far this year, after warning last month that holiday sales would fall short of investors’ expectations. It plans to cut 107 positions, or 6 per cent of its global workforce, as part of an effort to save $200m in annual costs. Its shares traded only slightly higher in after-hours trading after closing down 2.7 per cent at $5.88.
“Our ten-year history of building this category, coupled with our powerful brand and engaged global community gives us confidence we are making the right investments to support our vision and drive long-term success,” said Fitbit chief executive James Park.
“We will leverage our leadership position, recently acquired talent and IP, and the valuable data we collect to improve demand and continue to set the pace of innovation for the industry through more personalized experiences, deeper insights and guidance, expansion into new categories and deeper integration within the healthcare system.”
As the standard-bearer for wearable technology, Fitbit’s struggles have contributed to a more pessimistic view of smartwatches and fitness trackers among analysts in recent months. Nonetheless, tech companies continue to push out new products in the sector, with Google releasing a new version of Android Wear, and watch-maker Fossil last week citing wearable tech as a potential “catalyst to drive growth”.