Fitness financials: Nautilus narrows Q3 loss, sales down 7.1 percent, plus Gaiam, Garmin, adidas, Hanesbrands, Costco

Nautilus narrowed it third-quarter loss, Gaiam's net revenue dropped 2.8 percent drop for Q3, Garmin's Q3 profit rose while its revenue fell, adidas posted a 25-percent rise in Q3 profit, Hanesbrands said it's planning an offering of $750 million in senior notes to refinance debt, and Costco's same-store sales rose 6 percent in October.
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Nautilus narrows Q3 loss, sales down 7.1 percent

Nautilus (NYSE: NLS) narrowed its net loss for the third quarter, but said it hadn’t shaken it yet as a result of lower sales and lower margins in its direct business.

Net loss, including continuing and discontinued operations, in the third quarter of 2010 was $4.3 million, or $0.14 loss per share, compared to a net loss of $24.4 million, or $0.80 loss per share, in the same period in 2009.

To circumvent previous issues they were having getting credit approvals, Nautilus said it worked out its own program with GE Money, and since September, more approvals have been coming in.



“We do believe the quality of the customers has not declined in proportion with the approvals,” said Edward Bramson, Nautilus’ chairman and CEO, in a call with investors.

Net sales were down 7.1 percent to $38.5 million, compared to $41.4 million in 2009.

Direct sales were down 14.8 percent to $21.5 million versus $25.2 million last year. Retail sales were up 3 percent to $16.1 million, compared to $15.6 million.



“We are pleased with the continued sales growth and positive contribution of the retail division. We are confident we’ll be able to build on these results,” Bramson told investors.



Operating loss was $3.2 million for the third quarter 2010, compared to a loss of $2.8 million for the third quarter 2009.

Looking ahead, Bramson told investors, “We are pleased with the prospects of the fourth quarter as we move toward the next year.”



Bramson also told an analyst on the call that he thinks fourth-quarter profit was off a bit due to the issue with getting credit approvals. So, with that in mind, Bramson said he expected the fourth quarter to show a profit. Regarding October, after the resolution of the credit, Bramson said, “It’s a plus…I’d rather not put a number on it.”



With regard to product, Bramson noted, “We are spending more on a lower-cost TreadClimber and on a refreshed bike line, which is important at retail.” Other than that, product development funds are going into lower-cost direct products, he said.

He added the company is looking to introduce a Tread Climber that can drop to $1,000, or several hundred dollars less than the current lowest-priced model. Bramson said margin may be a little less with that kind of price, but that should be made up for in quantity that can be sold.



Gaiam’s Q3 sales drop slightly

Gaiam (Nasdaq: GAIA), parent of Spri, posted a 2.8-percent drop in net revenue for the third quarter.

For the quarter ended Sept. 30, revenue was $72.3 million, down from $74.4 million during the same quarter last year.

The company said the decline was primarily a result of its focus on improving operating income by reducing TV advertising and catalog circulation, partially offset by sales growth in the business and solar segments.

Net income was $0.9 million, or $0.04 per share, compared to $0.4 million, or $0.02 per share, during the same quarter last year.

Gross profit decreased to $33.2 million, or 45.9 percent of net revenue, during the third quarter of 2010, from $35.8 million, or 48.1 percent of net revenue, during the comparable quarter last year.

Excluding the solar segment, gross profit, as a percentage of net revenue, was 56.5 percent during the third quarter of 2010.

Expenses decreased $2.8 million, or 240 basis points as a percentage of net revenue, to $32.1 million, or 44.4 percent of net revenue, from $34.9 million, or 46.8 percent of net revenue, last year.



Garmin Q3 profit rises, revenue falls


Garmin (Nasdaq: GRMN) reported higher earnings but lower revenue for the third quarter. It also plans to halt efforts to break into the Smartphone market.

Its net income rose to $279.5 million, or $1.43 per share, for the three months ended Sept. 25, up from $215.1 million, or $1.07 per share, a year ago.

Excluding a tax adjustment and other one-time items, it said it earned $0.70 a share.

Revenue fell to $692.3 million from $781.3 million a year ago.

The company said it is "winding down" its Smartphone efforts, and will instead focus on the divisions that grew this quarter -- namely, those that make fitness and outdoor gadgets, such as watches for runners that record distance and speed, and those that sell GPS hardware to plane and boat makers.

Garmin's revenue in outdoor and fitness products rose 9 percent in the third quarter, while its aviation and marine divisions rose 4 percent and 1 percent, respectively. Revenue for its automobile and mobile division dropped 19 percent.

Sales in Asia grew 47 percent, and 2 percent in Europe. Revenue in North America fell 8 percent.

Garmin revised its year-end forecast to predict 2010 revenue between $2.65 billion and $2.75 billion, with earnings per share landing between $2.70 and $2.90.



adidas posts 25 percent rise in Q3 profit


adidas reported a 25-percent increase in third-quarter profit, saying the boost was partially a result of business recovery in China.

Its net income was EUR 266 million (USD $373.3 million), or EUR 1.27 per share (USD $1.78), up from EUR 213 million (USD $298.9 million), or EUR 1.03 per share (USD $1.44), a year earlier.

The company’s revenue grew 20 percent to EUR 3.47 billion (USD $4.87 billion).

The company said its sales in China grew 9 percent, excluding currency swings. After the company’s Chinese revenue declined in the last year and a half, hurt by discount sales of inventory from the Beijing Olympics, adidas said it was able to raise prices in the country.

Looking ahead, adidas said it is predicting that group sales will rise by about 8 percent this year, on a currency neutral basis, which is higher than a previous outlook for a mid-single-digit increase. It also expects earnings per share to rise between 10 percent and 15 percent in 2011.



(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Nov. 4.)

Hanesbrands plans notes offering

Hanesbrands (NYSE: HBI), parent of Champion and Duofold, said it’s planning an offering of $750 million in senior notes to refinance debt.

The company said it plans to use the proceeds from the offering to repay part of its debt under a senior secured credit facility. The notes, which are due in 2020, are being sold to institutional buyers, it noted.

Oct. same-store sales up 6 percent for Costco

Costco (Nasdaq: COST) said its same-store sales climbed 6 percent in October as international results improved in part because of the weaker dollar.

In the U.S., Costco's revenue at stores open at least a year increased 4 percent, while it surged 14 percent internationally.

Excluding the impact of gasoline prices and the softer dollar, U.S. results rose 3 percent and international results climbed 10 percent.

Its total sales for October rose 11 percent to $6.3 billion from $5.69 billion in the same period last year.



--Compiled by Wendy Geister

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