Sonos shares crash as forecast fails to strike a chord

Sonos

11/05/2023 14:12

May 11 (Reuters) - Sonos Inc  SONO.O  was set to shed
more than a fifth of its market valuation on Thursday after a
revenue forecast cut fueled worries that consumers were dialing
down purchases of its premium speakers in a turbulent economy.
    The stock was down 21% in premarket trading, on course to
erase nearly all of the year-to-date gains. At least three of
the seven analysts covering Sonos cut their price targets.  
    "While the revised guidance takes numbers lower, we have no
reason to 'call the bottom' at this point," said Raymond James
analyst Adam Tindle.
    Consumer electronics makers have taken a beating this year
as people prioritize essentials over products such as laptops,
speakers and smartphones in the face of rising borrowing rates
and sticky inflation. 
    A shift to services spending from goods has also hurt the
consumer hardware businesses following a pandemic boom, analysts
noted. 
    Sonos said it now expects annual revenue of between $1.63
billion and $1.68 billion, compared with its prior range of $1.7
billion to $1.8 billion. Analysts were expecting annual revenue
of $1.69 billion. 
    "We are reducing our expectations for the second half of
fiscal 2023 due to softening consumer demand and channel partner
inventory tightening", said Sonos CEO Patrick Spence. 
    The company also lowered its annual gross margin forecast to
between 44.3% and 44.8%, compared with 45% to 46% previously. 
    In the second quarter, sales at its mainstay speaker
business fell about 24% to $241.2 million from a year earlier. 



 (Reporting by Vansh Agarwal in Bengaluru; Editing by Sriraj
Kalluvila)
 ((Vansh.Agarwal@thomsonreuters.com;))