The COVID-19 pandemic has been tough on all companies, and action camera maker GoPro is probably feeling the effect more than most. Under a lockdown, no-one should be going outdoors to film themselves undertaking epic stunts. And what demand there might still be for new action cameras — drones are having a moment — is running smack into store closures and product shortages due to distribution challenges.
GoPro was just beginning to recover from its own disastrous foray into drone manufacture (the ill-fated Karma, which was discontinued in 2018), however the COVID-19 pandemic is threatening to trip up that comeback.
GoPro announces layoffs and an emphasis on direct-to-consumer online sales as COVID-19 pandemic … [+]
The company reported preliminary first-quarter earnings on Wednesday and the bottom line is not looking pretty. The company expects just $119 million in sales for Q1 2020. That compares to $528 million over the holiday quarter, and it’s a 51% drop compared to the $243 million in revenue reported at this time last year. As a result of uncertainty caused by the COVID-19 pandemic, GoPro is withdrawing its previous Q1 and full-year 2020 guidance. And the company announced it is making some big changes to address the current situation.
Over 200 employees (more than 20% of the company’s workforce) will be laid off. In addition, with the pandemic wreaking havoc on its global distribution network, GoPro says it will be transitioning toward a direct-to-consumer sales model through 2020.
CEO Nick Woodman commented on the new direction:
We have a clear opportunity to super-serve consumers’ demand for our products in a more direct and efficient manner which can have a positive impact on the profitability of our business.
In 2019, nearly 20% of GoPro’s revenue was generated through sales on its website, so the company has proven it can move cameras online. The shift is expected to save GoPro $100 million in operating expenses including reduced office space requirements, along with reduced sales and marketing costs. It hasn’t given up on in-store sales altogether, though. GoPro says it will continue to sell its products through “select leading retailers in key regions where consumers prefer to purchase offline or indirectly.”
In addition, Woodman will forgo his salary as CEO for the remainder of 2020. The company’s board members will also forgo cash compensation for the rest of the year.
The stock market reaction to the news has been negative. At time of publication, GoPro’s stock had slipped 4.7% on the day.
Despite the measures announced today, GoPro says its 2020 product roadmap remains unchanged. So expect to see the GoPro HERO9 (or whatever the next generation action camera ends up being called) in stores — or more likely, online — in time for the 2020 holiday shopping season.