Fitness financials: Nautilus narrows 3Q loss on slightly lower revenue; plus Gaiam and Big 5

Nautilus narrowed its loss in the third quarter 2011, but its revenue slipped along with its retail sales. Plus, lifestyle media firm Gaiam, which owns Spri fitness products, reported higher revenue, but swung to a loss. And Big 5 sees improving sales after a mixed third quarter.
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Nautilus Inc. (NYSE:NLS) reported slightly lower revenue for the third quarter 2011, but significantly narrowed its loss on better earnings from its continuing operations, despite weaker retail sales.

The Vancouver-based home fitness equipment company reported third-quarter revenue down 2.8 percent to $37.4 million, compared to $38.5 million during the same period a year ago.

Nautilus narrowed its net loss to $92,000, or about break-even per diluted share, versus a loss of $4.3 million, or a loss of $0.14 per diluted share a year ago. Income from the company’s continuing operations, which includes its retail and direct businesses, came in at $300,000, compared to a continuing operations loss of $2.4 million a year ago.

As previously reported by SNEWS, Med-Fit Systems acquired Nautilus-brand commercial in Februay 2010, and Michael Bruno's Core Fitness acquired assets of StairMaster and of Schwinn commercial in January 2010. In separate news also on Nov. 7, 2011, Med-Fit annouced it is acquiring balance-training equipment brand SportKAT.

Nautilus officials said the improved income statement was due to “a 16.8-percent reduction in operating expenses achieved principally through more efficient advertising expenditures.”

By distribution channel, Nautilus increased its direct sales by 5.3 percent to $22.6 million, while the company’s retail sales fell 14.9 percent to $13.7 million in the third quarter, compared to a year ago.

Nautilus officials said the drop in retail sales was due to “a third-quarter 2010 sales promotion of certain cardio products that was not repeated this year, as well as a shift in the timing of customer orders to the fourth quarter.”

Meanwhile, direct sales rose on strong growth in TreadClimber sales partially offset by a decline in sales of strength products.

Gaiam 3Q financials mixed

Gaiam (Nasdaq:GAIA) reported slightly higher revenue, but swung to a loss for the third quarter 2011 on increased digital investments and some lingering effects from Borders’ bankruptcy.

The lifestyle media firm, which also owns Spri Fitness products, reported third-quarter revenue up 1.4 percent to $73.3 million, versus $72.3 million during the same period a year ago.

Gaiam’s third-quarter earnings swung to a net loss of $1.23 million, or a loss of $0.05 per diluted share, versus a profit of $852,000 or $0.04 per diluted share, a year ago.

Company officials said the loss was due to increased investments into its digital distribution capabilities, such as the launch of Gaiam TV online and direct agreements with iTunes. Also hurting earnings were negative effects, albeit lessening, from the Borders’ bankruptcy, where Gaiam sold a lot of its products.

Big 5 3Q revenue up, profit slips

Big 5 Sporting Goods (Nasdaq:BGFV) reported higher revenue, but decreased profit for the third quarter 2011.

The El Segundo, Calif.-based sporting goods retailer, which also sells fitness equipment, reported third-quarter revenue of $234 million – up 1.3 percent from the same period a year ago. Same-store sales declined barely by 0.1 percent versus a rise of 2 percent a year ago.

Big 5’s net income fell to $5.8 million, or $0.27 per diluted share, versus a net income of $6.8 million, or $0.31 per diluted share, a year ago.

Company officials said customer traffic declined, but those who shopped spent more per item.

“After a soft start to the quarter that we believe was largely attributable to unfavorable weather conditions in many of our markets, sales trends improved during August and September," company officials said in the earnings release. “We produced positive same store sales in both our apparel and footwear categories for the quarter, while our hardgoods category comped slightly down."

Company officials said the positive sales trends have continued into the fourth quarter, although they stopped short to predict consumer behavior for the holiday shopping season.

-- Compiled by David Clucas



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