Following up on a disappointing full-year 2008 and a 2009 first quarter that saw sales plummet 44.4%, Nautilus didnt see much improvement in Q2 as a flopping commercial business continues to negate meager improvement in other business segments.
The Vancouver, WAbased fitness product manufacturer said net sales fell 36.4% to $60.8 million compared to net sales of $95.6 million in the second quarter of 2008.
The company reported a net loss of $20.8 million, or 68 cents per diluted share, as compared to a loss of $9.6 million, or 30 cents per share, in the comparable period of 2008. Included in the 2009 results were pre-tax restructuring charges related to a non-cash write-off of $11.8 million.
On an operating basis, the company said the retail and direct businesses were profitable but were more than offset by weakness in the commercial segment. As a result of continued weakness in the commercial segment, management for the company confirmed in a conference call with analysts that they were considering a sale of Nautilus commercial operations.
“ the company is considering streamlining its activities to place greater emphasis on its direct and retail businesses, and thus will be evaluating the strategic long-term alternatives for the commercial business,” said Edward Bramson, chairman and CEO, in a release. “ we continue to believe that Nautilus commercial provides an attractive and under-exploited asset in the commercial fitness equipment market.”
The company has engaged Robert W. Baird & Co. to assist in the evaluation.
The commercial segment, impacted by weakness in strength equipment, fell 39.7% to $20.7 million from $20.7 million a year ago. Operating loss for the segment was $7.2 million compared to a loss of $1.1 million. Margins for the commercial segment declined to 3.5% of net sales compared to 19.9% in the year-ago period.
The commercial segment, impacted by weakness in strength equipment, fell 39.7% to $20.7 million from $20.7 million a year ago. Operating loss for the segment was $7.2 million compared to a loss of $1.1 million. Margins for the commercial segment declined to 3.5% of net sales compared to 19.9% in the year-ago period.
Nautilus direct segment, which has seen TreadClimber sales nearly overtake sales of the Bowflex home gym of recent, were down 31.7% to $28.2 million from $41.3 million a year ago. Operating income for the direct business was $600,000 compared to an operating loss of $600,000 a year ago. Gross margins were essentially flat at 58.5%
Retail sales, affected by inventory reductions from retailers, fell 40.2% to $11.4 million from $19.0 million a year ago. Gross margins for the segment improved to 27.3% of net sales compared to 17.7% a year ago.
