As promised in January, Nautilus on Monday delivered a disappointing fourth-quarter earnings report.
So with that out of the way, it was up to CEO Bruce Cazenave and other executives with the Vancouver-based exercise equipment brand to offer stock analysts reasons to believe the ship would be righted over the course of this year.
Following the earnings report release, Cazenave spent part of an hourlong conference call describing plans to overhaul the marketing campaigns for products that did not sell as well as expected during the crucial fourth quarter that ended Dec. 31. He mentioned acquisitions or partnerships with other companies to strengthen the company’s research and development credibility. And he talked about cost containment and other internal steps, such as laying off about 30 employees, many of them in Vancouver, earlier this month.
But still, analysts wanted to know: What happened?
“We’re knee-deep in research,” Bill McMahon, special assistant to the CEO, told one of the questioners.
Nautilus had been counting on better sales for its Max Trainer and a companion digital program for consumers called Max Intelligence. Bowflex Max Trainer is easy enough to understand: It’s a machine and you exercise on it.
Max Intelligence is not quite so easy to translate for health-minded consumers. In short, it takes data supplied by the consumer and crafts a specific exercise plan using the machine.
But it’s more complicated than that. Here’s how the most prominent part of the Max Intelligence website describes it: “Bring ‘Max’ to life with a subscription to the Max Intelligence™ App, an evolving platform available on iOS and Android devices that adapts to your capabilities, combining your data and insights with an expanding array of content and partners to help you achieve incredible results.”
In response to another analyst’s question in the conference call, Cazenave conceded that the company faces a challenge in the first part of this year as it refines its marketing message while simultaneously reducing bloated inventory.
“We have to get the message so there’s clarity and no confusion about what it can do,” Cazenave told D.A. Davidson analyst Michael Kawamoto. “Once we have that honed in, then there are other things that open up in terms of marketing, social media … and other possibilities.
“But first we have to get the message right and break through.”
For the quarter that end Dec. 31, Nautilus reported fourth-quarter sales totaled $115.4 million, a decrease of 9.7 percent compared with $127.8 million in the same quarter of 2017. The decrease was driven by a 30.3 percent decline in the direct segment partially offset by 16.1 percent growth in overall retail sales, compared with the prior year’s same quarter.
Fourth-quarter profit was $1.4 million compared to $8.4 million for the previous year’s same quarter.
Nautilus shares closed up 3 cents at $8 per share Monday on the New York Stock Exchange.
