The Nautilus Group may have just been thrown a much-needed life preserver as it continues its downward spiral amid higher ad costs and stiff competition. A U.S. District Court in Washington State last week ruled in favor of the maker of the Bowflex machine in its motion for a preliminary injunction barring ICON Health & Fitness from using the mark “CrossBow” on any exercise equipment.
In its ruling, the Court concluded that Nautilus showed “a probability of success on the merits and irreparable injury” on its trademark infringement claim.
The company said the Bowflex, which sells for an average of $1,500, is hurting from the competitive pressure for the $600 CrossBow from ICON. NAUT said Bowflex sales maintained at sporting goods stores, but fell nearly 50% through infomercials and the Internet.
The downturn pushed overall second quarter sales down more than 28% to $100.6 million from $140.4 million in Q2 LY. Net income plunged almost 82% to $4.7 million, or 14 cents per diluted share, as the company spent 30% of their revenues on ad costs in an effort to bolster sales compared to just 20% in Q2 LY.
NAUT sees revenues for the year in the $450 million to $470 million range, with EPS between $1.00 and $1.10.
>>> The company can take some comfort in the disruption of a key challenger, but will need to get things moving fast in the StairMaster, Schwinn and Nautilus lines if they expect long-term results to improve.