Nautilus continues recovery with 3Q gain, profit

Nautilus Inc. (Nasdaq:NLS) continued its recovery in 2012, posting a small sales gain and swinging to a profit for the third quarter.

Nautilus Inc. (Nasdaq:NLS) continued its recovery in 2012, posting a small sales gain and swinging to a profit for the third quarter.

The Vancouver, Wash.-based fitness equipment manufacturer reported third-quarter revenue up 1.7 percent to $37.4 million, versus a year ago. Nautilus’ quarterly net income rose to $1 million, or 3 cents per diluted share, compared to a loss of $100,000, or breakeven per diluted share, a year ago.

The third-quarter improvement came largely from a 10.3 percent increase in Nautilus’ direct sales to $25.1 million during the period, “reflecting strong demand for the company’s cardio products,” officials said. Increased advertising reach and higher U.S. consumer credit approval rates — now at 31 percent versus 27 percent a year ago — also helped. Operating income for the direct segment came in at $1.9 million, versus $200,000 a year ago.

Nautilus’ third-quarter retail sales fell 16.8 percent to $11.4 million, but this was expected, officials said, after a 22.9 percent increase in retail sales for the second quarter 2012 as retailers shifted their orders to get ahead of previously announced price increases. Operating income for the retail segment came in at $800,000, versus $1.3 million a year ago.

Nautilus CEO Cazenave said the company is achieving its goals to improve margins from both the direct and retail segments. He pointed to the direct segment’s success in selling higher margin products, and said retail margins stabilized, despite the latter being adversely affected by the sales shift.

Investors cheered the gains, sending the stock up more than 6 percent post mid-day trading, Nov. 6. For the year to date, Nautilus’ stock is up nearly 75 percent.

The fourth quarter will bring more telling signs if consumers and retailers are taking on the price increases. Next quarter will also mark a good comparison of any substantial progress — it was the fourth quarter 2011 when Nautilus began its recovery in results in earnest.

Nautilus is parent to its namesake home fitness products, plus Bowflex, TreadClimber, Schwinn Fitness, Universal and CoreBody Reformer.

“New products remain a top focus area for the company and we have a number of exciting products hitting the marketplace during the fall / winter season, including a new and unique DVD-based exercise program, new and refreshed items for our retail segment, and the marketing re-launch of our CoreBody Reformer,” Cazenave said.

--David Clucas