Another Weak Quarter for Logitech

Logitech LOGI reported weak, though not entirely unexpected, financial results July 23 in its seasonally soft first quarter. Overall results are in line with our estimates, and we are maintaining our fair value estimate. Sales declined 35% versus last year, with particular weakness in Europe and the Americas, across virtually all of its product categories. Much of the decline was attributed to retailers reducing inventory levels to conserve cash during this uncertain economic climate. Sell-through, the actual change in sales at the retailer level, is a better indicator of real-time consumer demand, and performed much better for the company, declining in the single digits in many of the company's major markets. Because most of the company's retail partners have reset their inventory levels to the lower consumer demand environment, future sales for the company will more closely reflect changes in end-consumer demand, which is holding up relatively well.