The past few years have been challenging for Illinois-based Zebra Technologies, which designs and manufactures a wide range of products and services used in grocery stores and other retail businesses.
But the company, which operates 122 facilities worldwide and employs about 10,000 people, got some good news in late May when it announced it had completed a private offering of $500 million in unsecured notes.
Zebra said in a May 28 Securities and Exchange Commission filing that the $492 million in proceeds will be used to repay $172 million in outstanding debt. The remainder will be used “for general corporate purposes, including replenishment of cash on hand following repayments of our accounts receivable facility.”
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The company, which makes products including mobile computers, barcode scanners and radio frequency identification devices (RFID), said in its annual report for fiscal 2023 that it faces headwinds of global cost inflation, rising interest rates and a stronger U.S. dollar, “which are adversely affecting our results for the current fiscal year.”
“As the year progressed, we experienced broad-based declines in customer demand across our core products. The decline in demand was most pronounced in our mobile computing and printing businesses…” the company noted.
Net sales for 2023 are expected to be $4.58 billion, down from $5.78 billion a year ago, while operating income will be $481 million, down about 9% from 2022. Net income will be down 36% year over year to $296 million, or $5.72 per diluted share.
Although Zebra continued to face challenges in the first quarter of 2024, the company's financial results improved from the fourth quarter of 2023, thanks in part to a 16.5% increase in quarterly revenue.
“Total sales decreased $230 million, or 16.4%, year over year, reflecting declines in both segments primarily due to continued weakness in end markets across all geographies,” the company said in its first-quarter 2024 report.
Mid-May, Supermarket News He visited Zebra Technologies' headquarters in Lincolnshire, Illinois for an Innovation Day event, showcasing some of the company's latest innovations, including self-checkout technology that uses computer vision to reduce theft.
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Self-checkout is gaining attention, Zebra Technologies CEO Bill Burns said in an interview after the presentation, as some of the nation's largest retailers, including Dollar General, Walmart, Target and Safeway, have frequently refrained from adopting the technology because of losses.
“Self-checkout is important to a lot of our customers, even though there's a bit of a fuss about it at the moment,” Burns said. “I think the key is how to make it faster.
“I find it interesting because in Europe self-scanning is mainstream. All of the retail in Europe uses handheld devices. The customer walks into the store, uses their customer card or loyalty card, scans their groceries and uses their bag. In the U.S., self-scanning has never taken off.”
Self-scanning has evolved differently in the U.S. because many stores don't have loyalty programs in place, and many don't want them. “So people pick up the self-scanner, go do whatever they want in the store, and then they don't pay with their credit card until the end, which creates a loss prevention issue.”
As a result, many stores didn't know who was there until customers were at the register, and they weren't very careful about determining whether all items had been scanned.
Other U.S. stores have tried letting customers use their mobile devices through an app to add items to their shopping carts, but that, too, has caused problems, Burns said.
“I think the reason it failed there is because customers want to use their phones for other things,” he said. “Customers want to text someone at home saying, 'Hey, can you go and see if they have Cheerios?' Customers want to listen to music. Customers don't want to use their devices to scan at the supermarket.”
During an Innovation Day presentation to investors, Burns said the company's position as a leader in mobile computing, scanning and printing gives Zebra an opportunity to capture emerging markets.
Those areas of expansion include, for example, retail software that leverages Zebra's mobile device technology, Burns added. Machine vision, fixed industrial scanning and robotics are also areas of expansion and new investment for Zebra, he said.
Burns concluded that the technology company's core business combined with adjacent expanding markets “should drive our growth by 5% to 7%.”
