Nautilus Announces 21 Percent Revenue Decline, New Business Strategies

Nautilus sales decline
(Photo courtesy Nautilus.) Nautilus is currently rolling out new research and communication strategies in addition to implementing subscription-based digital experience services across all its products, Carl Johnson, Nautilus' chairman of the board, said in a media release.

A nearly 22 percent decrease in second quarter 2019 revenue is prompting Nautilus, Vancouver, Washington, to conduct new consumer research, launch fresh advertising campaigns and schedule targeted product launches that executives believe will help stabilize the company.

Quarterly net sales decreased by 21.8 percent to $59 million, according to financials released July 31. This downturn is largely due to direct segment struggles—specifically a 40.2 percent decline related to weakening Bowflex Max Trainer sales.

Nautilus’ operating income experienced a major swing from $1.2 million during the same period last year to a loss of $85.4 million for the second quarter of 2019. EBITDA for continuing operations experienced a similar swing from $3.3 million in 2018 to a loss of $82.5 million in 2019.

These decreases correlate with lower sales, a decline in gross profit dollars and various non-cash impairments, Carl Johnson, Nautilus' chairman of the board and former interim CEO, said in a media release.

“As anticipated, our second quarter results were impacted by continued softness in the Direct segment," he said. "However, we believe the appropriate improvements are being implemented into our overall business to address this trend. … Additionally, as part of our ongoing efforts to right-size the business, we are implementing a workforce reduction and other shared support cost reductions expected to save the company $5 to $6 million on an annual basis.”

No specifics were given on the number of employees affected by the layoffs. 

In addition to new research and communication strategies, Johnson said Nautilus is in the process of implementing subscription-based digital experience services across all its products.

Johnson also expressed optimism about the impact he anticipates recently appointed CEO James Barr will have on the company. Barr’s appointment followed the March resignation of eight-year-long CEO Bruce Cazenave. Johnson temporarily served as interim CEO until Barr’s appointment.

Barr was previously group president at Ritchie Bros., a used industrial equipment company with transaction value of $5.3 billion, according to Nautilus. Prior to Ritchie Bros., Barr was executive vice president and chief digital officer of OfficeMax.

“While the past few quarters have been challenging, we are excited about the future of Nautilus and the new technology, product offerings and improvements in our cost structure,” Johnson said in the release. “In addition, we are very fortunate to have Jim Barr join us as our new CEO to lead Nautilus through its next phase. ... We remain focused on being a differentiated player in the industry by continuing to bring new innovations to market on a regular basis with the goal of growing our top and bottom lines.”

This quarter's news follows Nautilus' 26.5 percent decrease in first quarter 2019 revenue and its 9.7 percent decrease in fourth quarter 2018 revenue.

Nautilus includes equipment from brands Bowflex, Modern Movement, Nautilus, Octane Fitness, Schwinn and Universal.

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