Via blogs.marketwatch.com/greenberg:
The more I read the first quarter earnings warning release from Nautilus (nls), the more confused I get.
On one hand the company is blaming consumer spending on high-priced "and aggressively promoted" electronics "instead of fitness equipment. Further, the slowdown in housing is affecting our retiail business as fewer homes are being built or remodeled, which means fewer new home gyms being filled with equippment."
On the other hand, it says, "We believe discretionary spending will pick up in the latter half of 2007" and that, as if to help, it's "bringing forward new products that were previously planned for 2008..."
Never mind if America is turning into a giant couch potato; I'm more preplexed by the company's believe that discretionary spending will pick up in the second half. If you believe in the mortgage mess expanding, as I do -- especially if option ARMS see a swarm of forced refinancings later this year -- discretionary spending will go DOWN, not up. If that happens, all of the new products in the world won't help a business that, as I've said before, is hard in the good times; terrible in the worst of times.
Remove the economy from the equation and the picture doesn't look much better, at least not based on a recent channel check by Merriman Curhan Ford analyst Eric Wold, who rates the stock a sell. On April 3 he wrote that the fitness industry acutally looks "healthy," but that Nautilus was being hurt by slowing sales trends, increased competition and other issues. Based on the company's pre-announcement, it looks like he was on to something.
$14.0 (04/12/07)
