iRobot’s stock (IRBT) has been on autopilot amidst the COVID-19 pandemic, up a cool 75% in the past three months.
The reason for the strong move may be as simple as people buying iRobot’s legendary Roomba robot vacuums as an investment in their homes. It’s not unlike strong demand of late by consumers for power tools, appliances and paint, as heard on first quarter earnings conference calls from home improvement retailers Home Depot and Lowe’s.
“Coming out of the first quarter, we are starting to see a very strong, positive trend,” iRobot co-founder and CEO Colin Angle said on Yahoo Finance’s The First Trade. “I think people spending more time at home, while at the same time having less time particularly if they are caretakers for kids, to keep them organized. They actually need more help, and that’s leading them to invest in their home.”
All of that’s not to say iRobot didn’t have a challenging first quarter as retailers, which sells vacuums and mops, closed stores due to COVID-19. Also, iRobot’s manufacturing operation in China came under stress as the pandemic spread.
First quarter sales fell 19% year-over-year to $192.5 million. Sales dropped 28% in the U.S., 14% in Japan and 11% in Europe. The company’s non-GAAP loss came in at $14.4 million versus a $33.1 million profit a year earlier.
Besides the work from home thesis fueling iRobot’s stock, Wall Street gives Angle and his team high marks for reining in costs. The company recently unveiled a plan to shave $30 million in costs from its business this year mostly through workforce reductions. iRobot has also pushed out the launch of its highly anticipated robotic Terra lawnmower likely to 2021, citing the current volatile operating backdrop.
“We need a robot lawnmower. Everyone knows it. It’s probably the most asked for product,” Angle says.