Fitness company Nautilus, Inc. is seeking to sell its commercial operations, and will focus on reaching the consumer market through direct and retail channels. The company’s commercial operations focus on sales to gyms, hotel workout centers and other non-residential venues.
In August, Nautilus said it would begin exploring strategic alternatives for this unit’s assets, liabilities and ongoing operations. The company has engaged Robert W. Baird & Co. to aid in the sale of the commercial business.
Assets of the Company’s commercial business include a manufacturing facility and three warehouses in Virginia; the StairMaster cardio brand and related stepper and StepMill lines; the commercial indoor cycling line including the newly launched Authentic Cycling bikes with true power measurements; and commercial strength and cardio equipment including the Nautilus ONE strength line. Liabilities of the commercial business include normal trade payables and accrued expenses, such as warranty obligations.
The main sales office for Europe, Middle East & Africa is located in Cologne, Germany and the main sales office for North America and Asia-Pacific/ Latin America is located in Vancouver, Washington.
“Many of our leading fitness brands including Nautilus and Schwinn have strong recognition and customer loyalty in both the commercial and consumer markets,” chairman and CEO Edward Bramson said in a statement.
Bramson continued, “In addition to the pure consumer brand, Bowflex, we will be retaining the Nautilus, Schwinn, and Universal brands as part of our ongoing consumer efforts through our direct and retail businesses. This will enable consumers to bring brands they associate with leading strength and cardio fitness equipment into their homes. “While recent results in our commercial business did not meet expectations, we continue to believe that Nautilus Commercial has many attractive and under exploited assets in the commercial fitness equipment market.”
Nautilus will present the commercial business as a discontinued operation in its financial statements beginning with the third quarter of 2009.
The Tskers Take: One has to assume Nautilus knows its market, and that the dollars and cents for the commercial market weren’t adding up. That said, Nautilus items aren’t exactly low-cost impulse buys, and their presence in commercial venues is essentially free advertising, as Bramson backhandedly acknowledges. One wonders if the company took into account brand equity and exposure the commercial market offered?
