While cutting costs, GoPro has decided to shift more of its business to the direct-to-consumer (DTC) channel as its sales have gone down because of the quarantine-shuttered brick-and-mortar retail sector. Accordingly, the American brand of action cameras has hired a chief digital officer – Aimée Lapic, former chief marketing officer at Banana Republic and, most recently, Pandora – to lead DTC growth initiatives for the sale of its hardware, software and subscription programs.
Last year, GoPro.com drew seven million unique visitors per month on average, and DTC sales exceeded 20 percent of overall revenue in Europe’s top markets and almost 20 percent in the U.S. During the first quarter of 2020, the percentage was substantially higher because of the coronavirus pandemic. Brian McGee, chief financial and operating officer, said that DTC is “better aligned with the current business climate, is accretive to ASP [average selling price] and gross margin, and positions us well for when consumer demand begins to normalize.” This along with reduced operating expenses “significantly lowers the threshold to achieve profitability.”
GoPro will, however, continue to sell to retailers in profitable regions. The cuts in expenditures, says GoPro, will not affect the new hardware, software and subscriptions in this year’s product pipeline.
Meanwhile, GoPro is cutting its staff by 200 employees, or more than 20 percent, and shedding office space in five regions. It will be reducing other expenses as well, notably in sales and marketing, both now and in the future. The company’s founder and chief executive, Nicholas Woodman, and the members of the board of directors will waive their compensation for the rest of the year.
The company is restating its guidance for its first-quarter results and withdrawing its forecast for the remainder of the year. The reorganization should involve charges of $31 to $49 million. Next year, it hopes have operating expenses of no more than $250 million, and to get there it will reduce them now by $100 million.
By the company’s new preliminary estimates, the first quarter of 2021 will generated an indicated net loss of more than $44 million on revenues of about $119 million. It saw the sell-through of about 700,000 GoPro cameras with a street ASP of $350. The company still has a positive cash balance of $150 million.
