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Zebra Technologies Faces Sales Decline


By Robb M. Stewart

Zebra Technologies, a leading technology company, has issued a warning about the expected decline in sales for the current quarter and the full fiscal year. The company attributes this decline to softening demand and cautious customer spending, specifically in the retail and logistics end markets. Additionally, distributor destocking has further impacted Zebra’s sales.

Despite swinging to a profit in the fiscal second quarter, Zebra’s sales have fallen by 17%. As a result, the company’s shares experienced a significant decrease of 13% during premarket trading. Despite this recent drop, shares have increased by 20% since the beginning of the year.

Zebra anticipates that third-quarter sales will decrease by approximately 30% to 35%. This projection includes a negative impact of about 1 percentage point due to foreign currency translation. Looking ahead to the full fiscal year, Zebra expects sales to drop by 20% to 23%. Moreover, the company forecasts adjusted earnings before interest, taxes, depreciation, and amortization to be around 18%. Zebra also predicts positive free cash flows for the second half of the year, but negative free cash flows for the full year due to lower profitability, elevated inventory, and higher cash taxes.

During the three months leading up to July 1st, Zebra’s sales decreased from $1.47 billion to $1.21 billion compared to the previous year. However, the company managed to achieve a net income of $144 million, or $2.78 per share, in contrast to a loss of $98 million, or $1.87 per share, in the second quarter of last year.

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