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Despite second-quarter sales drop, Nautilus expects to bounce back

Vancouver-based Nautilus posted its second-quarter results on Wednesday, which showed a continued trend of declining sales, although executives expressed confidence that measures are in place to reverse the pattern. Nautilus manufactures exercise equipment products such as Bowflex.

The report comes a few weeks after Nautilus named a new CEO, Jim Barr, who was to begin on Monday.

Net second-quarter sales were reported at $59 million, a decrease of 21.8 percent compared with the $75.5 million in sales reported in the second quarter of 2018. The biggest sales decrease was in the company’s direct sales segment, which saw a 40.2 percent year-over-year decline, due primarily to lower sales of the Bowflex Master Trainer.

Retail sales dropped 4.4 percent during the quarter, which executives attributed to reduced orders in anticipation of new products being introduced in the second half of the year.

Nautilus posted an operating loss of $85.2 million for the second quarter, compared with earnings of $1.2 million during the second quarter of 2018. The company attributed the reversal to lower sales and lower margins — gross margins for the second quarter were 29.7 percent, compared with 44.6 percent in the prior year.

“As anticipated, our second quarter results were impacted by continued softness in the direct segment,” said Carl Johnson, chairman of the Nautilus board of directors and former interim CEO. “However, we believe the appropriate improvements are being implemented into our overall business to address this trend.”

Those improvements include new customer research aimed at repositioning the Bowflex brand, a new advertising campaign expected to launch in the third quarter and a series of new products introduced in the second half of the year. The company also plans to aggressively build out its digital offerings, including digital experience platforms on its new products and a goal of offering subscription-based digital experiences. Barr was chosen as CEO in part for his expertise in the digital field.

The company’s stock, which trades on the New York Stock Exchange as NLS, closed at $1.93 on Wednesday, a 2.6 percent increase, but dropped 11.9 percent in after-hours trading.


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