Nautilus Reports 'Disappointing' 2018 Revenue Estimates

Nautilus reports revenue estimates
Nautilus is estimating a decrease of 1.5 percent in its 2018 revenue, after reporting virtually flat revenue in 2017.(Photo courtesy Nautilus.)

Nautilus Inc., Vancouver, Washington, is estimating $396 million in 2018 net sales as well as $115 million in fourth quarter 2018 net sales, according to a preliminary financial report released on Jan. 17. These estimated sums represent year-over-year decreases of 1.5 percent and 10 percent, respectively.

Brands under Nautilus include Bowflex, Nautilus, Octane Fitness, Schwinn and Universal.

Nautilus CEO Bruce Cazenave said the year-end results did not meet his expectations.

The report states: "We expected significantly stronger sales in the fourth quarter of 2018 in the direct segment, driven by the introduction of the new digital platform Max Intelligence (MIP). We expect that as consumers are further exposed to MIP, this unique product will help to accelerate sales across a number of our products and brands in the future starting in 2019."

Nautilus’ fourth quarter retail segment sales grew 16 percent to $64 million, despite weak international sales. The company attributed its international business challenges to inventory issues with its enterprise resource planning (ERP) software that have since been corrected.

We saw broad-based strength with key partners in the mass retail and specialty retail channels across multiple product categories,” Cazenave said in the report. “The continuance of strong double-digit growth in the retail segment underscores the resonance of the Nautilus brands with distribution and the consumer. While the overall results for the quarter are disappointing, they are not illustrative of the underlying strengths of the business.

Operating expenses remained virtually flat during the fourth quarter at $48 million.

In 2019, Cazenave said he is focused on a cost-containment program that is expected to improve the company's profitability while simplifying and streamlining various business processes. He also expressed enthusiasm about Nautilus' marketing opportunities and product launch schedule in the new year.

“As we enter 2019, we remain confident that the market fundamentals for our business are solid and remain intact,” Cazenave said. “However, there are a number of initiatives that we are implementing to further strengthen our business which include a combination of external market opportunities and internally-focused initiatives. … I am confident in the ingenuity and capabilities of our global employee base to execute and deliver on these initiatives and return the business to stronger operating margins.”

Nautilus will deliver its complete financial report on Feb. 25.

The company reported virtually flat revenue in 2017 and a 20 percent revenue increase in 2016, the latter of which was largely influenced by the company's acquisition of Octane Fitness.

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