Logitech International (NASDAQ:LOGI) has experienced strong growth from its video collaboration and gaming business, but on Tuesday, the company warned that the outbreak of COVID-19 will ding its operating profit in the short term.
While management reaffirmed its net sales outlook, they lowered the outlook for operating profit for fiscal 2020 to a range of $365 million to $375 million on a non-GAAP basis. This is only slightly down from the previous range of $375 million to $385 million.
Demand remains strong for gaming and video products
Investors are on pins and needles over the spread of the coronavirus and its potential impact on the economy, especially supply chain disruptions. But investors should feel confident that Logitech is only expecting a small impact to its bottom line.
CEO Bracken Darrell cited the supply chain uncertainties for the lower guidance, but also said, "We are encouraged by continued strong demand for our products."
The maker of computer accessories is coming off a record quarter in sales and profit, in which quarterly sales exceeded $900 million for the first time in company history. Logitech's three largest categories are gaming, PC peripherals, and video collaboration, and all reported strong growth last quarter. Most importantly, Logitech saw its gross margin remain firm, despite the impact of tariffs on Chinese imports.
Management remains confident in the long-term growth trajectory of high single-digit growth in sales. Logitech is benefiting from the rising popularity of gaming and adoption of video equipment in conference rooms around the world. These are areas where Logitech "can deliver ongoing category leadership and long-term success," as Darrell stated in a press release.