In a difficult context due to the coronavirus pandemic, while many other sports equipment companies faced a grueling first quarter, Nautilus released strong preliminary figures. It posted sales for the first three months of the year that gained 11 percent to around $94 million. It was the first time that Nautilus’ quarterly sales have grown year-over-year since the third quarter of 2018. The American fitness equipment supplier even raised its guidance and now expects Ebitda from continuing operations for the first quarter to be in the range of $0.0 million to positive $1.5 million. Previously, it anticipated a loss in the range of $4.0 million to $1.0 million.
The management attributed this performance to the popularity of the Bowflex and Schwinn brands, recent strategic and operational changes, disciplined execution, and a near-term trend toward home fitness. Although numerous retailers have temporarily closed store locations due to Covid-19, Bowflex and Schwinn experienced strong year-over-year sales increases through retail partners’ e-commerce and curbside pick-up platforms. Coronavirus has created a heightened need for home-fitness products, and demand for many home-fitness products continues to outpace supply.
In the Direct segment, preliminary sales were up by about 1 percent to $47 million, driven by the Bowflex SelectTech, dumbbells and kettlebells, as well as the Bowflex C6 and Schwinn IC4 connected-fitness bikes. This more than offset lower Max Trainer sales.
This is a reversal of fortunes for the Bowflex line, which had sluggish sales last year. The company’s new chief executive, Jim Barr, who took up his position in 2019, blamed this on sub-optimal advertising. He implemented a new restructuring plan and re-launched the company’s digital platform under the new JRNY name on Oct. 30, featuring a personalization engine driven by artificial intelligence that suggests customized workouts and adjusts to individual fitness levels. In addition, the company launched several digitally connected products, including the Bowflex 216 and 116 treadmills, the Schwinn IC4 bike, and the Bowflex C6 bike.
In the Retail segment, the company’s sales soared by 24 percent to $46 million, also boosted by strong sales of the Bowflex and Schwinn home fitness products, especially the Bowflex SelectTech 552 adjustable weights and Schwinn IC4 connected-fitness bikes, despite a weaker performance from the Octane Fitness commercial line.
Looking ahead, the management said that while these results have exceeded expectations, it is remaining prudent as the coming quarters may present added challenges for all businesses. However, it noted that while a significant volume of Nautilus products is manufactured in China, most workers in the factories the company uses have returned to work. Further, ground transportation to the ports and shipping capabilities from China are improving daily. The management said it is working closely with partners across its entire supply chain to improve production and delivery timelines and has expedited deliveries to the U.S. and Europe to meet increased customer demand.
