The fitness company, which has reduced its workforce by 15 percent and is lowering its annual expenses by $30 million, expects lower levels of retail re-orders that hampered Q3 revenues to continue through the first half of 2023.
Nautilus reported an operating loss of $10.3 million against a loss of $19.3 million for the period ended Dec. 31, but gross margin improved to 23.3 percent from 20.3 percent, because of lower product costs and inventory adjustments. The net loss was $11.1 million against $13.5 million in the year-ago period. Revenues slipped by 33 percent to $98.1 million from $147.3 million. Inventory was down 40 percent year-over-year at $77.3 million.
| Nautilus | |||
|---|---|---|---|
| Income (unaudited) ($ thousand) | |||
| 2022 | 2021 | Change | |
| Q3 | |||
| Net sales | 98,079 | 147,258 | -33.4% |
| Cost of sales | 75,219 | 117,342 | -35.9% |
| Gross profit | 22,860 | 29,916 | -23.6% |
| Operating expenses | 33,148 | 49,230 | -32.7% |
| Operating loss | 10,288 | 19,314 | -46.7% |
| Net other expenses | 471 | 1,142 | -58.8% |
| Pre-tax | -10,759 | -20,456 | -47.4% |
| Tax | 322 | -7,001 | – |
| Net from continuing operations | -11,081 | -13,455 | -17.6% |
| Net from discontinued operations | -1 | -44 | -97.7% |
| Net | -11,082 | -13,499 | -17.9% |
| Earnings per share (diluted) | -0.35 | -0.43 | -18.6% |
| 9 months | |||
| Net sales | 218,354 | 469,810 | -53.5% |
| Cost of sales | 177,078 | 342,336 | -48.3% |
| Gross profit | 41,276 | 127,474 | -67.6% |
| Operating expenses | 117,090 | 130,871 | -10.5% |
| Operating loss | 75,814 | 3,397 | 2131.8% |
| Net other expenses | 2,175 | 1,930 | 12.7% |
| Pre-tax | -77,989 | -5,327 | 1364.0% |
| Tax | 8,573 | -1,321 | – |
| Net from continuing operations | -86,562 | -4,006 | 2060.8% |
| Net from discontinued operations | 2,101 | -211 | – |
| Net | -84,461 | -4,217 | 1902.9% |
| Earnings per share (diluted) | -2.75 | -0.13 | -2015.4% |
| Source: Nautilus | |||
Direct segment sales fell by 23.0 percent to $46.7 million from $60.7 million, driven by a return to pre-pandemic seasonal demand. Cardio sales were down 8.9 percent year-over-year, driven by lower demand for Max Trainer and elliptical equipment, and strength product sales fell by 43 percent on fewer orders for SelectTech weights. Direct was able to improve its quarterly loss to $6.5 million from a loss of $9.0 million by lowering its media spend by 45 percent to $8.9 million.
| Nautilus | ||||
|---|---|---|---|---|
| Revenues (unaudited) ($ thousand) | ||||
| 2022 | 2021 | Change | ||
| Q3 | ||||
| Direct sales | ||||
| Cardio products | 32,403 | 35,558 | -8.9% | |
| Strength products | 14,326 | 25,147 | -43.0% | |
| Total | 46,729 | 60,705 | -23.0% | |
| Retail sales | ||||
| Cardio products | 20,949 | 37,199 | -43.7% | |
| Strength products | 29,652 | 48,502 | -38.9% | |
| Total | 50,601 | 85,701 | -41.0% | |
| Royalty | 749 | 852 | -12.1% | |
| Consolidated sales | 98,079 | 147,258 | -33.4% | |
| 9 months | ||||
| Direct sales | ||||
| Cardio products | 66,029 | 89,394 | -26.1% | |
| Strength products | 31,657 | 72,560 | -56.4% | |
| Total | 97,686 | 161,954 | -39.7% | |
| Retail sales | ||||
| Cardio products | 47,345 | 185,971 | -74.5% | |
| Strength products | 70,604 | 119,367 | -40.9% | |
| Total | 117,949 | 305,338 | -61.4% | |
| Royalty | 2,719 | 2,518 | 8.0% | |
| Consolidated sales | 218,354 | 469,810 | -53.5% | |
| Source: Nautilus | ||||
Retail segment sales, meanwhile, declined by 41 percent year-over-year to $50.6 million from $85.7 million, with revenues outside the U.S. falling by 66.7 percent. Year-over-year cardio sales declined by 43.7 percent on lower demand for Max Trainer, and strength sales slipped by 38.9 percent, largely because of lower demand for home gyms. Retail segment gross margin improved to 19.4 percent from 12.8 percent, because of lower inventory adjustments and discounting that was partially offset by unfavorable logistics overhead and other increased costs.
Meanwhile, the group’s digital fitness platform, JRNY, reached 450,000 members at Q3 end and is projected to surpass 500,000 by FY end.
Nautilus is preparing to roll out updated connected fitness products in FY23.
