Nautilus made big strides over the summer, but it may not be enough to overcome a slow start to the year, executives said Monday. The news helped drive shares down 20.25 percent.
Revenues from the Vancouver-based fitness equipment maker grew 9 percent to $88.1 million in the fiscal third quarter, which ended Sept. 30. Growth was driven by sales of its new Bowflex-branded Hybrid Velocity Trainer, a product that combines cardiovascular and strength workouts.
However, CEO Bruce Cazenave told investors that declining sales of the TreadClimber line of treadmills have weighed down their hopes for the year. Nautilus had projected to grow 5 to 7 percent in revenues and operating income in 2017 but now expects to finish flat.
“While we expect that recent new product contributions will again drive growth in the fourth quarter, they will not likely be enough to offset the slow first half of the year,” Cazenave said.
Total revenue for the first three quarters dropped from $280.3 million in 2016 to $278.4 million in 2017. Direct sales, where customers buy straight from Nautilus, dropped 7.6 percent to $147.8 million. Retail sales have ticked up slightly but not enough to compensate.
Chief Operating Officer Bill McMahon told investors that new products and innovation will be key to addressing a drop in direct sales. Nautilus plans to launch a new Schwinn-branded exercise bicycle around the turn of the year that will “surprise” the market, he said.
“When consumers see it, we hope they will be as excited about it as we are,” he said.
Nautilus has tripled its research and development expenses since 2012. The company’s stock, which trades on the New York Stock Exchange, closed at $13 on Tuesday, down $3.30.