Logitech 2006 Annual Report Download - page 100

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mouse and value cordless offerings also contributed to higher sales during fiscal year 2005. Cordless desktops
sales were also higher due to strong demand for the Company’s new LX desktop family. Contributions from the
Company’s value desktop offerings and the cordless desktop for notebooks further drove growth in the cordless
desktop category.
Retail Corded. The migration by consumers to cordless peripherals impacted sales for the Company’s
corded products. The largest component of the corded product category, corded mice, was essentially flat and
unit shipments were lower by 1% compared with fiscal year 2004. Sales of corded keyboards declined 7% while
unit shipments increased 11%. The decrease in sales, despite an increase in unit shipments, reflected a shift in the
product mix.
Retail Video. Demand for video products was strong due to the increased popularity of PC webcams
spawned by the growth of instant messaging and broadband connectivity. Sales of PC webcams grew 32% and
unit shipments increased 53% due to demand for both the Company’s premium high-end products and lower
priced mass-market offerings. The increase in video sales was mitigated by the absence of the Company’s
dualcam products, a category Logitech discontinued late in fiscal year 2004.
Retail Audio. Sales of audio products were higher by 33% in fiscal year 2005 and unit shipments increased
12% compared with the prior fiscal year. The growth in both sales and units in the audio category was driven
primarily by strong demand for the Company’s Logitech branded PC speaker line. In particular, the success of
the X family series, a mid-range speaker line, made a major contribution to this growth. The Company also
benefited from higher PC headset sales. To a lesser extent, higher sales of headsets for mobile phones and the
Xbox™ also contributed to higher sales in the audio category.
Retail Gaming. Sales of retail gaming peripherals grew considerably in fiscal year 2005 compared with
fiscal year 2004. The growth came primarily from the Company’s console gaming peripherals, with sales
increasing 172% and unit shipments growing 219% compared with a year ago. The most significant growth came
from sales of cordless gamepads for the Playstation®2 and Xbox™ platforms. Sales of console steering wheels
also showed growth and contributed to the increase in console gaming. Sales of gaming peripherals for the PC
grew at a slower rate, increasing 21% with unit shipments higher by 24%. The growth in PC gaming peripherals
was driven by higher sales for both PC gamepads and steering wheels.
Retail Regional Performance. Retail sales in the Company’s Americas region grew 30% in fiscal year
2005, significantly faster than the 6% growth in fiscal year 2004. Strong demand for cordless, video, audio and
console gaming products contributed to the increased sales, partially offset by reductions in sales of corded and
PC gaming products. Contribution from the remote control line also benefited sales in the region. In Europe,
retail sales also showed growth, increasing 32% compared with fiscal year 2004. While the Euro was stronger
compared with the prior year, the benefit from the strengthening Euro in fiscal year 2005 was less than in fiscal
year 2004. Further, this benefit did not take into account the impact that currency fluctuations had on the
Company’s pricing strategy resulting in lowering or raising selling prices in a currency to avoid disparity with
U.S. dollar prices and to respond to currency-driven competitive pricing actions. European sales growth occurred
across all core product categories in fiscal year 2005, with the most significant growth coming from sales of
cordless mice, PC webcams, headsets and console gaming. Retail performance in Asia Pacific declined 3% in
fiscal year 2005, due to significantly lower sales in China, partially offset by higher sales in Japan.
OEM. OEM revenues declined 24% in fiscal year 2005 compared with fiscal year 2004 and represented
13% of total sales compared with 20% of total sales in the prior year. The most significant driver of the decline
was the absence of sales to Sony of peripherals for the Playstation®2, which included USB headsets and the
EyeToyTM camera. While corded products were the most significant component of OEM sales, demand for OEM
cordless products continued to grow. In particular, sales of OEM cordless mice grew considerably compared with
fiscal year 2004.
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