Fitbit, not immune to the struggles facing wearables makers, is having a tough start to the new year.
The maker of increasingly diverse fitness trackers reported on Monday that growth is down and it would be laying off 110 employees.
In the fourth quarter of 2016, which notably includes the holiday shopping frenzy, Fitbit’s revenue was as much as $170 million lower than expected, at $580 million. It also reported that annual revenue growth was 17 percent, despite previously forecast growth of up to 26 percent.
Fitbit expects to report that 6.5 million devices were sold during the fourth quarter of 2016, and losses per share were as much as 56 cents during the quarter, despite anticipated profits of as much as 18 cents a share.
Company co-founder and chief executive officer James Park said that he was confident this was not reflective of the value of the brand, its platform or the company’s long-term potential. But he did acknowledge “softer-than-expected” holiday demand for trackers.
“To address this reduction in growth and what we believe is a temporary slowdown and transition period, we are taking clear steps to reduce operating costs,” he said today. This will come in the form of a reorganization of the business, trimming the workforce by 6 percent, and “realigning sales and marketing spend” and improving the “optimization of research and development investments.”
“Looking forward, we believe Fitbit is in a unique position to stimulate new areas of demand by leveraging the data we collect to deliver a more personalized experience while developing upgraded versions of existing products and launching additional products to expand into new categories,” Park said, adding that one such expanding sector was the smartwatch category. (The company began with a simple wrist-worn tracker.)
Park said the company’s more than 23 million active users made Fitbit “uniquely positioned to be the partner of choice for the healthcare ecosystem, which is a key component of our long-term strategy.”
This sluggish performance from Fitbit reiterates the ongoing challenges to make wearables more, well, worn. According to a December quarterly report from the International Data Corporation, basic wearables from Fitbit were maintaining momentum, while advanced fitness trackers and smartwatches were lagging.
Fitbit, which just acquired smartwatch-maker Pebble, claimed 23 percent market share, which is about the same as a year ago.