Fitbit CEO Says 'People Shouldn't Be Concerned About The Inventory Levels'

With EPS for the second-quarter coming in at $0.21 on revenue of $400 million, while analysts were expecting EPS of $0.08 on revenue of $319 million, saying that Fitbit Inc FIT's first quarterly since it went publicwere good would be an understatement. However, shares of the company slumped heavily during trade on Thursday due to decline in gross margin and concerns about rising inventory.

James Park, Fitbit CEO, was recently seen discussing the company's results with CNBC's Jim Cramer. Here is what Park said.

Gross Margin Decline

"It's important to note on the gross margins side, it was well within guidance and there are 3 contributing factors to the gross margin decline," Park began. "One was FX, which a lot of other companies have experienced and the other two have to do with, one increasing capacity for bestselling product and mix shift to our higher ASP product. So, both of those two things actually contributed to our big beats on revenue."

Rising Inventory

On the company's rising inventory levels, Park said, "Right, so historically the company has been production constrained and people shouldn't be concerned about the inventory levels. In fact, those levels are at a point where our channel partners are really, really comfortable. They don't want to see our products out of stock."

Facebook Deal

Park was asked if the company's recent deal with Facebook help in the next leg of growth for the company. He replied, "Absolutely, what we want to do is try to make the social experience much more compelling on Fitbit. So, we integrated Facebook friend finding. We really want to increase the density of our social graph; Fitbit is one of the largest fitness social networks in the world and that results in much greater engagement for our users."

At the time of this writing, Fitbit shares were trading down 14.4 percent.