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Nautilus' Planned Exit Leaves Questions for Industry

VANCOUVER, WA — As Nautilus Inc., Vancouver, WA, searches for a buyer for its commercial business, club operators are left to wonder what the move means for them.

In August, Ed Bramson, Nautilus chairman and CEO, notified shareholders that the company would divest itself of its commercial business and focus solely on its consumer business. Nautilus has not given an official date for the exit, but Bramson said in August that he expected to present the commercial business as a discontinued operation beginning with the third quarter.

In a letter to customers last month, Nautilus said it would not take new orders for commercial equipment past Oct. 30, and all outstanding orders will be shipped by Dec. 31.

The letter said that Nautilus would accept orders for the new Schwinn AC line, IC Pro and Stairmaster SM/SC 916 models if delivery could be completed by Dec. 31. The company is looking for a buyer to continue the Nautilus, Schwinn and Stairmaster brands, the letter states.

“[While] it is not possible to make predictions about the future of the commercial business, the company remains hopeful about the future availability of these products, albeit under different ownership, beyond the end of 2009,” the letter noted.

One industry expert says that finding another manufacturer or a financial firm to purchase the commercial business would be difficult in this economy.

The main concern for club operators, the expert says, is who will service their existing Nautilus equipment after Nautilus exits the business. Although Nautilus did not respond to inquiries about the sale, its letter to customers assured them that warranties on products made and manufactured through Dec. 31 would be fully supported by the company.

Mike May, spokesperson for the Sporting Goods Manufacturers Association, says: “From a consumer's perspective, Nautilus is a brand name that many club members have come to know and trust over the years. And many health club members expect to see that brand on display in clubs. The void left by Nautilus will be filled by other brands that have similar standards of excellence.”

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