Is the lockdown bonanza over for Signify’s consumer goods?

Aug. 16, 2022
Hue and WiZ enjoyed a boost in the stay-at-home days. Not now.

It’s not hard to generate a list of products that fared well during lockdown. Signify’s connected home lighting and smart lamps were certainly among them. People bought more of the company’s Hue and WiZ gear to brighten up their prolonged, enforced domesticity.

But the stay-at-home bonanza days are over, now that lockdown itself has become a thing of the past in most countries.

That became evident recently when Signify reported financial results for the second quarter ending June 30.

On a conference call with analysts to discuss the results, Signify CEO Eric Rondolat noted that sales and margins on connected home products both declined compared to the same quarter a year earlier.

Hue and WiZ are part of a Signify business division called Digital Products. The division itself reported a 2.6% comparable sales growth (CSG) to €598 million — a larger-than-it-seems increase given that the division grew by 20.4% in 2021s second quarter.

But Digital Products is not all about Hue and WiZ, nor is it all about the home market. It also includes a category that Signify calls LED Electronics, which consists of LED drivers and modules that Signify sells on an OEM basis to luminaire makers who in turn sell to the office, industrial, outdoor, and retail segments. It is that part of the business that grew, as Rondolat told analysts in late July.

“In the second quarter, the Digital Products division reported a comparable sales growth of 2.6% on a strong comparison base of 20.4% last year,” Rondolat said, adding that, “the positive CSG was driven by strong demand for LED electronics, while consumer connected sales slowed down versus the strong comparison base in the previous year.”

One analyst asked Rondolat to elaborate on performance in the consumer market.

“Overall, we see a consumer market, which is going down,” the Signify boss said. “But we need also to remember that the base of comparison for Hue last year was absolutely huge. … So you have the confidence of the consumer, which is [now] going down and you’re comparing to a very high base. So that’s how we need to judge the performance in Q2.”

He noted that Hue growth a year ago was “strong double-digit.”

As a whole, including both consumer goods and LED Electronics, the Digital Products division was less profitable. The adjusted EBITA margin fell from 12% a year ago to 10.6% in this year’s second quarter. Rondolat attributed the drop to higher costs (supply chain logistics, for example) and the “sales mix,” among other things.

Indeed, Hue and WiZ both enjoyed an extended run of sales resulting from lockdown, which LEDs Magazine has noted several times over the last 18 months or so. In the fourth quarter of 2020, for example, Rondolat noted that both Hue and the lower-priced WiZ connected products have found their spot on the market and “they’ve been progressing extremely well.”

In the first quarter of 2021, Rondolat had noted “a very strong traction in our consumer business compared to our professional business, which is still pretty much hit by lockdowns around the world.”

While consumer sales are now down, overall company revenue for 2Q22 was €1.84 billion, marking a 5.1% increase in comparable sales over 2Q21. Sales in the professional sector jumped 11.6% on a comparable basis, to €1 billion. Rondolat noted a renewed market interest in energy efficiency amid soaring energy prices.

Sales of UV-C products appear to be below expectations. The company continues to withhold UV-C sales figures from LEDs, and it recently designated its family of UV-C surface-disinfection products with the accounting term “obsolete” regarding inventory value. It has possibly done the same with UV-C products aimed at disinfecting objects. LEDs is still awaiting an answer from Signify on that question.

Products aimed at disinfecting air have fared better.

From an overall UV-C perspective, “the pandemic caused a big spike in demand,” a Signify spokesperson recently told LEDs. “What we now see is more sustained demand especially for upper-air disinfection devices, particularly in schools, offices, etc.”

MARK HALPER  is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).

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About the Author

Mark Halper | Contributing Editor, LEDs Magazine, and Business/Energy/Technology Journalist

Mark Halper is a freelance business, technology, and science journalist who covers everything from media moguls to subatomic particles. Halper has written from locations around the world for TIME Magazine, Fortune, Forbes, the New York Times, the Financial Times, the Guardian, CBS, Wired, and many others. A US citizen living in Britain, he cut his journalism teeth cutting and pasting copy for an English-language daily newspaper in Mexico City. Halper has a BA in history from Cornell University.