Nautilus Inc. said its first-quarter earnings would fall far short of previous expectations. The Vancouver-based exercise equipment maker now expects a first-quarter profit of 8 cents to 9 cents per share, less than half its previous guidance of 18 cents to 21 cents per share. Nautilus also said it expects revenue of about $160 million, rather than $185 million to $195 million.
Shares of Nautilus Inc. plunged in after-hours trading Wednesday night.
The company said it still expects 20-30 percent earnings growth on sales growth of 5 to 10 percent for the full year.
“Our international, apparel and commercial businesses performed well. However, the North American market for home fitness was sluggish, which resulted in a substantial shortfall in March retail replenishment orders, and softness in direct,” said Gregg Hammann, Chairman and CEO of Nautilus.
“We believe the North American consumer has been spending more discretionary dollars on higher priced and aggressively promoted electronic items instead of fitness equipment. Further, the slowdown in housing is affecting our retail business as fewer homes are being built or remodeled, which means fewer new home gyms being filled with equipment.
“We believe discretionary spending will pick up in the latter half of 2007 and, as a leader in fitness, we are taking proactive steps to move fitness back to the forefront of consumer decision-making. To counter the softness in fitness sell-through, we are bringing forward new products that were previously planned for 2008, introducing new promotional programs, and making necessary organizational changes that assure our key management is close to the customer.
“We are confident that these steps will help us make up some ground later in the year, along with managing expenses wisely and continuing to improve our gross margins through supply chain improvements. We are better positioned than any other fitness company with our strong and diversified brands, channels and supply chain.”
Nautilus's brands include Nautilus, Bowflex, Schwinn Fitness, StairMaster, and Pearl iZUMi.
