Lamar leaves Nautilus, changing of guard continues

In a sudden move that took some by surprise, Kevin Lamar resigned from The Nautilus Group last week, leaving the company with no current senior management members who went through the acquisitions and early integration of Schwinn and StairMaster, as well as the fits and sputters of growth and changes in the last three years.

In a sudden move that took some by surprise, Kevin Lamar resigned from The Nautilus Group last week, leaving the company with no current senior management members who went through the acquisitions and early integration of Schwinn and StairMaster, as well as the fits and sputters of growth and changes in the last three years.

The resignation follows continued management shuffling and general turnaround efforts put into high gear since Gregg Hammann came aboard as CEO and president in July 2003 and follows founder Brian Cook's retirement as of March 2004.

"It was time for me to move on," Lamar told SNEWS®, who also said he hasn't decided where he's headed next, but added he has "irons in the fire." "I have no plans to go outside the health and fitness business, and I want to continue to share my philosophy on serving the dealer. I'm excited to look to the future."

Gregg Hammann, Nautilus CEO and president, didn't return several calls and emails before deadline seeking comment. No press release or official statement had been issued as of June 1, and the website still reflected Lamar as part of the management team.

Lamar's last day was May 24. As a part of the changes, Holly Valkama started May 24 as senior vice president of manufacturing and operations, and Pat Warner, long-time product developer, was promoted to senior vice president of product development. Lamar officially became chief operations officer in March, after being president of the commercial and retail divisions. When Lamar officially began at then-Direct Focus in June 2001 to lead it through the bankruptcy acquisitions of Schwinn Fitness (September 2001) and StairMaster (February 2002), he was coming off his most recent position as president of Schwinn/GT. Direct Focus left NASDAQ in May 2002 to join the New York Stock Exchange as The Nautilus Group (NLS).

Other recent changes include not only Cook's retirement, announced in February, but also the addition of two former colleagues of Hammann's from outside the industry: Tim Hawkins, formerly vice president of sales at Levi Strauss, came onboard in the spring as the new chief customer officer (CCO) and is running all sales; and Darryl Thomas, also coming from Levi Strauss, became Nautilus' senior vice president of strategic planning and project management in January 2004. Randal Potter has assumed the title of chief marketing officer; previously, he was COO and president of the direct side.

For some, surprise was toned down after consideration of the company's continued turnaround efforts.

"This leads me to believe the company is still in turnaround mode," said Carole Buyers, who follows Nautilus as a senior analyst for RBC Capital Markets. "Kevin was clearly a good leader. He had excellent relationships in the commercial and retail sector of the business, but I'm not surprised since this is what turnaround CEOs do."

Buyers said that Hammann, in contrast to other turnaround CEOs, has moved relatively slowly in phasing out current management and bringing in his own team, pointing to the six or seven months that went by before he began to shuffle the deck.

Despite noting that the company will continue to move forward, she and others expressed a sense of loss – partly because of personal relationships that Lamar had built in his open and straightforward manner.

"He's a great guy, and I'm sorry to see him leave," Mike Cirillo, president of The Fitness Store based in Northridge, Calif., and a large Nautilus dealer. "Kevin did a great job building the company and going through the changes it did.

"We are hopefully optimistic the future will continue to grow in a positive direction," Cirillo said. "He's a relationship guy, and corporations can be colder. It's all about hoping, and no one will know anything 'til the cards are dealt. At this point we're still in the game."

Judy Griffin, director of retail for North Carolina-based Superior Fitness, said she hopes there will be no impact long term on their business. Although it was a benefit to deal with Lamar, since her company's owners have a long history with him, it wasn't the foundation of their business with Nautilus, she said.

"Kevin WAS a presence and was very good at relationship building," she said. "You hate to pin a whole company on one person, and you want to make sure the business goes on if any change takes place."

Meanwhile, changes continue at Nautilus with its continued emphasis on increasing its commercial/retail channels and decreasing its reliance on direct-to-consumer products and the Bowflex, with a patent that expired in late April; Nautilus stock closed June 1 at 15.40, up 2.19 percent on a volume of 277,200. That's closing in on its 52-week high of 17.63 from early April and its low from July 2003 of 10.00, but is still far off prices in the 30s and 40s its stocks demanded a few years ago.

No matter what the business status, Lamar leaves with a smile and few words for the industry: "I'm so thankful for the relationships and the people I've worked with and for the people who have helped me through this period with the Nautilus, Schwinn and StairMaster integrations. I can't thank people enough. I've been truly blessed."

To reach Lamar, email or call 303-717-1442. He said he plans to be wandering the aisles of the Health & Fitness Business Show in August in Denver.

SNEWS® View: It's been a bit of a roller coaster following Nautilus in the last 4-5 years. It was 1999 when it acquired the Nautilus strength company and made a statement about its trek to become more than just the Bowflex. Lamar, after consulting unofficially in early 2001 for then-Direct Focus after leaving Schwinn/GT, landed square in the ring and came out swinging as he worked to not only acquire Schwinn in a lengthy and twisted court bankruptcy auction, but also to hardly take a breath before taking on the StairMaster acquisition. We hear from company insiders that his departure was done basically by the dark of night, without official goodbyes, a company meeting or any other fanfare or adieu: One day, he's there; one day, he's not. That must have been tough not only for Lamar, who is a huge relationship guy, but also for the staff in the Louisville, Colo., commercial/retail headquarters who had come a long way with Lamar always their captain at the helm. In fact, that may have been his final downfall. Lamar was Nautilus in many ways to many people in the industry. Hardly could Nautilus (and its acquired companies) be separated from Lamar's persona. He wandered the booths, slapped people on the back, and was generally the company's ambassador. If a company is to truly become a larger entity, a truly Big Business, then it needs to be identified not with one person no matter how strong or well-liked that personality, but rather it needs to stand on its own legs. With Brian Cook retired and Hammann at the wheel – hand-picked by Cook to lead the company -- Lamar had possibly become less of an asset to Nautilus' growth. And Lamar's love of the battle – nurturing small companies as they grow -- had begun to peter out we think since Nautilus was a much larger company these days, and it was all just perhaps less fun for him. Indeed, the company's culture had seemed to change. That's not saying the change was good or bad -- different interpretations will exist -- but it seems to have changed.

What's missing at Nautilus in its growth and restructuring, however, is the tie to the fitness industry. It's still a small industry and history means a lot. The fact that none of the top management comes from within the industry, and none went through the integration is a failing that could come back to bite. As we know, history repeats itself and, as the oft-repeated philosophical words from George Santayana from 1905 go, "Those who do not remember the past are condemned to relive it." Finding a way to mix the newcomers, who can bring broader-reaching insights to a growing company, and long-timers, who have deep roots and often far-reaching loyalties that bring an understanding in good and bad times, can help a company grow more strongly while helping it to miss a few rocks on the trail.

Whatever happens, we know Lamar even with his former football player size will land softly like a cat on both feet, likely in the fitness or perhaps in the cycling business, likely at a smaller company or perhaps even, as the entrepreneur that he is, on his own. We wish him luck, as we know many others do too.



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