Pay a visit to the headquarters of Nautilus Inc., the Vancouver-based maker of fitness equipment, and you quickly realize the company is busy reviving itself.
Near its current east Vancouver corporate offices at the Columbia Center at Columbia Tech Center, construction is under way on a new, slimmed-down flagship building.
Nautilus also is rolling out its first new type of fitness equipment in several years. Called the CoreBody Reformer, the T-shaped device, which combines Pilates, dance and yoga, is primarily aimed at women age 25 to 55.
“It’s a new market for us,” said the company’s new CEO, Bruce Cazenave, who took the Nautilus helm in late May.
Plus, the company is hiring again.
All of this suggests a promising transformation for a business that, since late 2007, has seen its shareholders revolt, its leadership reshuffled, its priorities refocused and its fortunes sag under the weight of a down economy.
While it’s too early to tell whether the months ahead will see the company return to regular profitability, Nautilus leaders say they’re charging ahead with renewed vigor.
A new price point
On Wednesday, Cazenave, accompanied by Chief Operating Officer Bill McMahon, walked downstairs to the company’s lower floors to show off the new product and the company’s research and development lab.
Inside a Nautilus fitness room, eight employees, directed by a DVD workout, curled their arms, stretched their limbs and balanced themselves using the CoreBody Reformer. Not only are they getting a solid workout, Cazenave said, but they’re also becoming “champions” of the new product — people who’ve used it, understand it and who therefore know how to sell it and answer consumers’ questions about it.
The company has given the CoreBody Reformer a soft launch led by a website through which consumers may pre-order it. The product initially will be sold through direct-to-consumer channels, including TV, social media and other advertising. Nautilus also reaches consumers through stores such as Dick’s Sporting Goods.
The product’s price tag reveals the company’s attempts to reach more consumers: $279, which includes accessories such as a carrying strap and workout DVDs. That’s much lower than what you’d pay for many of Nautilus’ signature products, such as its Bowflex muscle-building machines or its cardio-focused TreadClimbers, which can run several thousands of dollars.
Those more costly fitness machines require many consumers to buy them on credit, Cazenave said. The tightening of credit that ensued after the U.S. financial meltdown posed a challenge to Nautilus’ sales efforts. With the CoreBody Reformer, Nautilus is heralding a move into a more-affordable price point, one that doesn’t necessarily require a financing plan
“It definitely fits the budget better, just by virtue of the price,” Cazenave said. Nevertheless, he said, “we would be doing this even if the economy was going gangbusters. It’s just a neat product that we feel has a lot of consumer appeal to it.”
Looking to grow
The CoreBody Reformer also speaks volumes for what it’s not: another foray into products that have nothing to do with the company’s central focus on fitness equipment.
That continues efforts started by Edward Bramson, a partner in New York investment firm Sherborne Investors LP, who in early 2008 became CEO of Nautilus after his firm’s hostile takeover of the company.
Bramson made several cost-cutting moves, including shedding Pearl iZumi, Nautilus’ unsuccessful bid to break into fitness apparel.
Cazenave said he sees ways in which the company can expand its lineup while maintaining its focus on fitness equipment. The company plans to introduce more products, he said, and it’s considering allowing others to license the company’s brands, including Nautilus, Bowflex and Schwinn Fitness.
These moves come as Nautilus seeks to put years of financial losses behind it. For the three months ended March 31, Nautilus posted a profit of $1.6 million, returning to profitability after annual losses every year since 2006. That compares with a loss of $7.8 million for the first quarter of 2010.
For its second quarter, which ended June 30, the company posted a loss of $3.3 million. That compares with a $10.7 million loss in the second quarter of 2010. Net sales in the company’s second quarter climbed to $34.7 million, up 13 percent year over year.
Third-quarter results for Nautilus should be out soon, although the company has not yet announced a date for its earnings release.
By Sept. 1, 2012, Nautilus will leave its current offices at Columbia Center at Columbia Tech Center for a smaller building that broke ground two weeks ago at Southeast 177th Avenue and Southeast Sixth Way.
The company, which in early 2008 employed more than 1,400 people worldwide, now has 320 employees, most of whom work in Vancouver and Portland.
Next year, though, the company plans to add 10 to 15 employees to its product-development staff, according to McMahon, the company’s chief operating officer.
While the company continues to update its other lines of fitness equipment, Cazenave said, it also plans to introduce new products at favorable price points. “That fits into our strategy to get into some different categories, all within the fitness arena,” he said.