Following up on a disappointing fiscal 2008 that saw sales fall 18.0%, things have only gotten worse for Nautilus, Inc. as 2009 first quarter sales plummeted 44.4% on significant weakness in all business segments.
The company recorded a net loss of $13.8 million, or 45 cents per diluted share, which included $3.8 million in restructuring charges related to the companys closure of a manufacturing facility in Tulsa, OK and a write-off related to abandoned information technology software. Excluding the charges, the companys net loss before taxes was $8.3 million down from an adjusted net income of $1.2 million from last years first quarter. Operating expenses in the first quarter of 2008 included $10.7 million in restructuring charges, a portion of which reflected the cancellation of the companys agreement to purchase Land America Health & Fitness Co.
Nautilus Commercial business contributed to $7.1 million of the net loss in the first quarter as Commercial sales fell 46.5% to $18.0 million from $33.7 million in the year-ago period. Management said the sales decline in Commercial was due to a reduced availability of credit for the companys customers. Additionally, NLS maintained that 44% of commercial sales were generated from international customers who have been “ negatively affected by the strengthening of the U.S. dollar compared to the Euro.”
The companys Direct segment, which consists almost entirely of the Bowflex brand home gym, saw sales drop 41.5%, while Retail sales fell 50.3% for the quarter as sales volumes of broad-based home gyms sank due to inventory cuts by the companys retail partners. Management noted that sales for the Schwinn cardio product were relatively strong.
In the future, management said the company plans to cut costs by an additional $17 million, and added that the company implemented cost cutting measures in the first quarter that saved the company $17 million.
