GoPro, the undisputed leader in the action camera market and a popular brand in photo specialty stores, has hit some financial turbulence, with a sales slump in its last quarter leading to a loss of around $50 million on sales of around $600 million.
There was a dramatic share price slump in response, but the company actually turned a profit for the year, and still enjoys gross margins above 30 percent.
Sales were in fact up 16 percent in 2015, but that compares to 41 percent growth in 2014 and 87 percent growth in 2013.
GoPro appears to be making the transition from a company experiencing the kind of growth that masks all sorts of management inadequacies to one where sound management will be critical to future survival.
For instance, the current in-house ‘creative team’ of 230 people out of a workforce of 1500 seems somewhat extravagant.
GoPro has announced it would lay off 7 percent of its workforce and will drop all the lower-riced cameras from its range. The Hero+ LCD, Hero+ and Hero cameras will go in April, with the $299 Hero4 Session the new entry-level camera, accompanied by the Hero4 Black and Hero4 Silver. This halves the range, and represents something of a U-turn, as GoPro focussed devoted 2015 to adding de-featured entry-level models to its range, arguably ignoring its established customer base. The Hero4 range was released in September 2014 and there hasn’t really been anything at the high end to excite the GoPro fans since.
The big hopes for the company in 2016 are the Hero5 and a drone called Karma. Karma is first cab off the ranks, with the Hero5 probably not launching until deep into the second half of the year.
The Karma drone will be backward-compatible with the company’s cameras.
GoPro’s founder and CEO Nick Woodman is attributing the sales slow-down to poor retailer sell-through (it’s always the lazy/stupid/greedy retailer’s fault!) but conceded it needs to do a better job developing ‘software solutions that make it easier for our customers to offload, access and edit their GoPro content.’ Increased competition? Meh.
It’s hard to see more user-friendly software alone reversing the downwards sales trend until some new products are added to the mix. Woodman also talked about spending more on conventional ‘above-the-line’ advertising rather than relying on its user generated content (UGC) strategy.
GoPro anticipates its first quarter sales will be dramatically below analysts’ US$300 million expectation, falling between US$160 and US$180 million.