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Nautilus Inc. Message Board

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  • ranni.malmsteen ranni.malmsteen Jan 30, 2010 7:17 AM Flag

    Fitness equipment sales picking up.

    “fcsuperman: If NLS doesn't make $$$$ this quarter, the stock price will be back to .75 cents by mid April when the report comes out.
    20 year old race horses (Bowflex) don't make money on the track, they end up becoming Alpo.”

    We will see. I’m quite confident that, we are back in black at first half 2010, because economy is growing again and we don’t need so high volumes to make money, with their current leaner cost structure. With others (Cybi, BC-fitness division etc) you cannot say same, because commercial side will be burden long time. Also I haven’t seen same kind of improvement their fundamentals like Nautilus.

    And now when this major restructuring is completed, I bet that no one would ever be willing to sell that wonderful company at $0.75 prices.

    Nautilus is best play in this industry. I think Sherborne and I (along with other owners) will make some serious money with this one.

    Disclosure: Long Nautilus

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    • I don't know the business side and the internals of NLS. I am not a stock holder either and could not care less what the stock price is. You should stop hoping that NLS's previous market presence and branding hold serious value to the consumer which will cause the pheonix phenomenon.

      What I do know is the other end of the business as a consumer, trainer, inventor, and marketer of exercise products, understand that there are more gyms closing over the past 2 years than ones opening. Same with the housing problem and a direct link to new home gym sales. This leads to surplus used equipment, commercial and residential.
      I also follow DRTV avidly and I'm quite aware of how many shows, short form and long, you are putting on the air waves from IMS reports.
      I don't follow shilled comments from BODs from any companies that forcast bright shiney days to come because that is all they ever report.

      I'm not on here to bash NLS, I'm putting a shot across the bow to get those on the business end to get in touch with what is really going on in the front lines of the indusrty. I have access to industry reports from the sporting goods assoc's to know what is starting to happen as a trend or a fad. Cardio equipment is down and is likely to stay down or flat for some time. Mobia is not going to resurrect this decline. Resistance equipment is on the rise as new studies and science is reported it is more effective at weight control, hormonal regulation, depression, sex drive, osteopenia, sarcopenia, sports perfomance, etc. and a certain socio-economic demographic popualtion (boomers) are warming up to strngth training.
      NLS better come up with a newer strength training device that is affordable (sub $1000), stronger, faster, lighter, safer, and more versatile than any previous platform. It's a tall order to reinvent NLS but THAT is exactly what they will need to do to thrive again.
      Also, quit going to retail with their products, that is the best way to kill a long form infomercial campaign. And THAT is what brought them fame and fortune in the first place.
      And I know all this because I make it my business to know, since I am bringing an exercise device to market via long form DRTV very soon and it has exactly the parameters and attributes that I mentioned above. If I had NLS's marketing dollars and launch pad this product would be a lock on the next home gym to net a billion.
      You are right about one thing. The conditions are getting better for revenues in the fitness industry. It is just a matter of who has the best horse and jockey to win market share. I used to dred thinking about competing against Total Gym and Bowflex, but poor business straegies, bloated corp managment, over saturated and over priced products, and finally a tough economy has made it survival of the fittest in the DRTV field.
      Stay tuned,....

    • I think fcsuperman has a point but so do you.

      NLS is less connected to consumer sentiment (buying mood in general) and more dependent on offering a compelling product to the fitness consumer. You can't escape the fact that all of the Bowflex products have a low price knock-off competitor. To win market share they need a NEW hit, product line extensions just won't cut it (think soloflex).

      The second point is definitely about consumer credit availability. Bowflex is a premium brand with a premium price (regardless of the leaner structure now they are not a low cost leader). In the past they have reported as much as 60-70% of sales coming from financing. There is no reason to think the percentage would decrease given the lack of free cash flow for most consumers these days. So with banks tightening lending (HSBC basically shut down consumer lending a year ago) you can't expect to see gains from this payment method.

      Bottom line, NLS needs a compelling new product at a price point that doesn't require financing for the majority of buyers. Without that you will see a profitable NLS but barely and definitely not throwing off tens of millions a quarter as they did in the hey day.

      • 1 Reply to bobhopenlsgodown
      • "bobhopenlsgodown: Without that you will see a profitable NLS but barely and definitely not throwing off tens of millions a quarter as they did in the hey day."

        I agree generally what you said, but still we should keep in mind, today's market value. They don't have to throw cash, tens of millions per quarter, to be very profitable investment. Their EV is somewhat $ 70M and, if they generate even fraction of free cash what they made those good old days, we will make lot of money.

        And what comes to new produts and that side, in my view, nature of their recent difficulties is more temporary, consumer sentiment and credit availibilty than poor product offerings. Even one earlier guy bashed Mobia. Who knows, but i think it will sell just fine for its own target audience.

        Most exciting thing in Nautilus is their current "asset light" business model. If i understand correctly their direct segment is negative working capital business. Retail too should have nice margins. And they dont have to invest too much on business itself. That means, most of their operating cash flow is surplus and free to used for buybacks etc (value creation) and market place should give some credit of that over time.

        Who knows about timing, but when unemployment begin to set down, people should be more confident to make again big ticket purchases, that´s why i would be amazed if we aren't back in black first half 2010 and about these times next year 'flying again'.

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