Nautilus, Vancouver, Washington, reported second quarter 2017 sales of $77 million, a 1.9 percent decrease year over year, according to financials released July 31.
Due to anticipated declines with TreadClimber products, Nautilus' direct segment sales dropped 13 percent to $39.1 million during the quarter. Retail segment sales, on the other hand, grew 12.7 percent to $37.1 million. This reflects "robust growth across traditional and e-commerce partners in multiple product categories," the report said, specifically citing Octane Fitness-related business. Nautilus purchased Octane Fitness in January 2016.
The company's operating expenses were "approximately flat" due to expense management and a settled royalty dispute. Operating income during the quarter dropped from $6.6 million to $3.8 million year-over-year.
"Second quarter 2017 results were in-line with our expectations," Nautilus CEO Bruce Cazenave said in the report. "Solid double-digit revenue growth and increased gross margins in our Retail segment were driven by strong performance in our traditional retail and Octane Fitness businesses, and across several product categories. In our Direct Segment, we saw increased sales of the recently launched Bowflex Hybrid Velocity Trainer, 'HVT', and continued gains in the Strength category, which were more than offset by continued declines in TreadClimber sales despite increased discounting."
Nautilus' year-to-date revenue stands at $190.3 million, versus $199.5 million through the first two quarters of 2016. By the end of the year, Cazenave still expects the company will see 5 percent to 7 percent growth in revenue and operating income.
"We expect to return to double-digit top line growth for the back half of 2017 due to a number of factors," he said in the report. "In our Direct segment, expected growth from multiple product offerings, including our Bowflex Max Trainer and the added new HVT offering, along with comparable quarter results reflective of reduced TreadClimber sales, will enable us to return to growth in this segment. In our Retail segment, we anticipate continued solid results driven by expanded product offerings across our Octane, Nautilus, and Bowflex brands, which are expected to garner broad commercial, traditional retail, and e-commerce placement this Fall."