Sonos begins a very long road back
Subscribe to enjoy similar stories. There’s never a great time to infuriate your most loyal customers. For Sonos, the timing couldn’t have been worse.
The maker of premium wireless speakers and other audio products issued an ambitious overhaul to its app in early May. Too ambitious, as it turns out. Bugs left many customers unable to connect or use their speakers.
The severity of the issue was made clear in the company’s fiscal third-quarter call in August, when Sonos slashed its forecast for the fiscal year and put a hold on new product launches while working to resolve the issue. It isn’t over yet. In its fiscal fourth-quarter report Wednesday, Sonos reported a 16% drop year-over-year in revenue and a 17% drop in unit sales.
This was despite the fact that the September-ending period included the first full quarter of sales of the company’s first headphone product, which was inconveniently launched just weeks after the initial rollout of the disastrous new app. Sonos also projected revenue in the range of $480 million to $560 million for the crucial December quarter, the midpoint of which would represent a 15% decline in sales from the same period last year. The one saving grace is that the forecast came in a bit above Wall Street’s already slashed projections, producing a “beat" that sent the stock up nearly 6% in after-hours trading.
It is a small salve; Sonos shares have regained some ground over the past couple of months, but the stock is still down 21% from the day the new app launched. The S&P 500 is up 15% in that same period. Can Sonos ever fully recover? The company definitely has dented its brand, but that brand has also long established itself as a strong player in premium home audio.
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