Sonos CEO Eyes Upbeat Holiday Season as Supply Chain Bottlenecks Ease

Sonos CEO Patrick Spence said that existing customers accounted for 44 percent of new product registrations in the year to October 1.

Sonos CEO Eyes Upbeat Holiday Season as Supply Chain Bottlenecks Ease

Sonos is under pressure from a strong dollar

Highlights
  • Sonos beat quarterly revenue estimates
  • Existing customers accounted for 44 percent of new product registrations
  • The company added only 1.4 million net new households

Sonos, which has been grappling with weak demand for its high-end speakers, is counting on easing supply chain bottlenecks and a rare set of promotions to lift sales in the holiday quarter, Chief Executive Patrick Spence told Reuters.

The company beat quarterly revenue estimates on Wednesday, as it stays resilient even as the broader retail industry struggles with a consumer spending slump caused by decades-high inflation.

The trend mirrors the strength seen at other luxury goods companies such as LVMH, whose focus on higher-income consumers have shielded them from economic gyrations.

Sonos is seeing strong demand for its $349 (roughly Rs. 28,500) entry-level sound bar Ray and the wireless loudspeaker Sub Mini priced at $429 (roughly Rs. 35,000), Spence said.

He added that existing customers accounted for 44 percent of new product registrations in the year to October 1, a sign that brand loyalty was helping Sonos fend off competition from bigger rivals Apple, Google and Amazon.com — which offer cheaper, voice-enabled speakers.

Still, the company added only 1.4 million net new households in the period, compared with 1.8 million a year earlier.

Its growth was throttled by a shortage of chips and product components, exacerbated by strict COVID-19 lockdowns in China. Sonos also saw some softness in orders from peak pandemic levels as consumers spent more time outside.

"China is important in terms of our overall supply chain, but we are also in Malaysia and Vietnam. So, we have also recreated a more resilient supply chain," Spence said.

Sonos is also under pressure from a strong dollar, which is expected to shave off $79 million from sales in 2023.

"We have our fingers crossed that the holiday season will be good for us because it's one of those rare times when we do put some things on sale," said newly appointed finance chief Eddie Lazarus, who served in the role on an interim basis since September.

© Thomson Reuters 2022


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