Though Nautilus, Inc. saw an increase in sales for its retail business, decreases in the commercial and direct businesses caused the company to post a net loss for the second quarter, compared to a modest profit in Q2 last year. Net sales from continuing operations for the quarter declined 6.8% to $95.6 million, compared to $102.5 million last year.
Direct sales fell 23.8% to $41.3 million from $54.2 million last year and commercial sales decreased 7.0% to $30.5 million from $32.8 million for the year-ago quarter. Retail was the lone bright spot, jumping 52.6% to $22.9 million from $15.0 million last year. Commercial sales were said to be soft due to the companys suspending sales of its Commercial TreadClimber in anticipation of a new model being introduced at a future date.
Gross margins declined 180 basis points for the second quarter to 35.5% of net sales from 37.3% last year. That decline paired with a sharp increase in operating expenses led to the quarterly net loss of $8.9 million compared to net income of $1.1 million last year. Excluding discontinued operations, the company posted a second quarter net loss of $9.6 million compared to a net profit of $671,000 for the year-ago quarter. However, a litigation benefit of $18.3 million in the 2007 quarter would put the year-ago result at a net loss of $17.6 million.
