Nautilus CEO Bruce Cazenave, credited with leading Nautilus to stability after years of turmoil, has resigned, just a week after the Vancouver-based exercise equipment company announced disappointing fourth-quarter results.
The company’s board accepted Cazenave’s resignation Feb. 26, says a U.S. Securities and Exchange Commission filing. The resignation took effect Friday.
Cazenave’s departure came the day after Nautilus announced its fourth-quarter and year-end results for 2018. The company had issued a warning to investors in January that fourth-quarter performance had fallen below expectations.
M. Carl Johnson III, board chairman since 2010, was named interim chief executive at the Feb. 26 board meeting. The company said a search for Cazenave’s replacement already was underway at the time of his resignation.
In a conference call with investment analysts last week following release of fourth-quarter results, Cazenave tried to explain how the company would improve its performance in 2019. However, he also signaled Nautilus may struggle through midyear.
In addition to describing a reinvigorated marketing plan for key products, Wall Street appeared to focus more on this statement from Cazenave in the conference call: “2018 was a challenging year and we expect 2019 to be equally challenging with stepped-up competition, marketing retooling in the works and high retail channel inventories that need to be drawn down. Although we remain confident in the fundamentals of the business and that our strategic priorities are the right ones.”
In response, shares of Nautilus Inc. plummeted nearly 24 percent the next day.
The share price had taken another beating in mid-January when Nautilus issued a preliminary announcement about fourth-quarter results, telling investors its earnings would fall far below what had been projected. Share prices fell more than 30 percent.
Nautilus offered a glimpse of the company’s troubles in mid-February when it announced that 30 employees, most of them in Vancouver, had been laid off. Nautilus, which sells equipment under that brand name, Bowflex and others, has nearly 500 employees.
Cazenave, 63, became chief executive in 2011, arriving at a time of tumult. The company had posted consecutive quarters of losses, moved out of a huge headquarters building, and slashed its workforce from 1,550 to 350 employees. The quarter before his arrival, the company reported a loss at the end of its fiscal year, the sixth consecutive year in which it finished in the red.
By his second year, Nautilus moved into a new, smaller building near the giant building where it made an ill-fated move in 2005.
More significantly, his arrival coincided with a companywide push to emphasize research and development of exercise equipment, opening a separate research and development building at the same time as its smaller office building. While direct sales remain an important component of company sales — as with any sporting goods company, especially Nike — Nautilus steered away from the late-night infomercials that it had long been associated.
Search underway
Johnson was appointed as the company’s interim chief executive officer effective Saturday.
Johnson, 70, retired in October 2015 as executive vice president, marketing and chief growth officer of Big Heart Pet Brands, now a division of J.M. Smucker Company. From 2001 until April 2011, he was senior vice president and chief strategy officer of the Campbell Soup Co.
The board had begun a search for Cazenave’s replacement before his departure. The company said in a statement that, in accordance with its existing succession planning procedures, it’s working with an executive search company in the process.
Nautilus’ stock closed at $6.62 Friday, up 9 cents, on the New York Stock Exchange. Its 52-week low is $6; its high is $17.05.
