The Nautilus Group saw shares fall another 12.1% this week to close at $10.64 on Friday after the company issued a warning on Wednesday that Q2 and full year sales and earnings would fall short of expectations.
NLS now expects Q2 net sales in the $95 to $100 million range with EPS ranging from 13 cents to 15 cents, down from its previous forecast of 28 cents. Full year 2003 sales are now forecast $450 million to $470 million and EPS is seen at $1.00 to $1.10, down from its previous outlook of $1.60 to $1.70, and off as much as 64% from the $2.79 EPS recorded in fiscal 2002.
At issue appears to be increased competition to the once wildly successful Bowlfex product.
In a press release, NLS chief executive Brain Cook said, “While we are encouraged with many areas of our business, our success at this point does not offset the adverse environment and competition with regard to the Bowflex we are currently encountering.”
RBC Capital Markets analyst Ed Aaron added that he thought the companys signature Bowflex machines face “a major challenge”. Sales of the product line, which contribute about 75% of the bottom line earnings, started to slow down in the back half of last year and “continue to fall”, Aaron said.
D.A. Davidson analyst James Bellessa said Nautilus sold 240,000 Bowflex machines last year. “We expect that to drop by 100,000 this year”.
>>> Oh man, thats gonna leave a mark
