(Reuters) – Barcode scanner maker Zebra Technologies Corp beat third-quarter profit and revenue estimates on Tuesday but forecast a bigger-than-expected drop in the fourth-quarter net sales due to slowing tech spending in a tough economy.
The company, which counts U.S. Postal Service and Walgreens Boots Alliance as its customers, has previously said it expects a hit from poor demand and growing inventory levels at its clients, primarily in the retail, ecommerce and logistics sectors.
“While we believe demand trends are leveling, we are not seeing signs of a market recovery based on customer behavior, and remain cautious in our planning for the remainder of the year and first half of 2024,” said CEO Bill Burns.
With inflation and weak consumer spending still weighing on the company’s operations, it expects free cash flow to remain negative this year.
Zebra Technologies initiated several cost-cutting measures in the second quarter, such as slowing hiring and downsizing its offices, to combat the impact of soft demand across its end-markets.
The Lincolnshire, Illinois-based company said it expects fourth-quarter net sales to fall between 32% and 36%, while analysts had estimated a drop of 32.3%, according to LSEG data.
Its third-quarter revenue of $956 million beat expectations of $926.3 million, while adjusted earnings of 87 cents per share came above estimates of 81 cents per share.
The company said it now expects annual cost savings to be about $100 million, up from $85 million, from its cost initiatives.
(Reporting by Yamini Kalia in Bengaluru; Editing by Saumyadeb Chakrabarty)
