Nautilus Inc., the parent of Bowflex, slashed its loss in the fiscal first quarter ended June 30 due to an uptick in gross margins and a steep reduction in expenses with the year-ago period including a $27.0 million asset impairment charge. Sales were down 23.8 percent with a decline of 17.5 percent in the Direct segment and 29.0 percent in the Retail segment.

The company reaffirmed its FY24 guidance, expecting significant year-over-year improvement in the adjusted EBITDA loss. Members of its JRNY digital fitness platform reached 535,000 at the quarter’s end, up 48 percent versus the same period a year ago. The company’s brand family also includes Nautilus and the Schwinn fitness products range.

“Driven by our operational and supply chain efforts and cost reduction actions, we made progress on our path back to profitability in the first quarter with significant improvement in gross margin and adjusted EBITDA loss,” said Jim Barr, Nautilus, Inc.’s CEO. “We also delivered our seventh consecutive quarter of sequential improvements in our inventory levels, solidified our liquidity position, and strengthened our balance sheet, providing us with the necessary financial flexibility to navigate the volatile retail environment while continuing to execute on our North Star Strategy.”

Barr concluded, “We continue to scale our differentiated digital offering, JRNY, reaching over 535,000 members at the end of the quarter. Continued momentum in our Direct business reflects enhancements we’ve made to our product portfolio in this category. We are excited to further build on our strong portfolio with an exciting new pipeline of products with our new BowFlex visual branding this Fall. With improving profitability, ample liquidity, and traction on our North Star strategy, we feel well positioned to capitalize on the enduring shift to at home fitness over the long term.”

Total Company Results

Fiscal 2024 First Quarter Ended June 30, 2023, compared to June 30, 2022

• Net sales were $41.8 million, compared to $54.8 million, a decline of 23.8 percent versus last year. The sales decline versus last year was driven primarily by lower customer demand.
• Gross profit was $8.6 million, compared to $7.0 million last year, an increase of 24.3 percent versus last year. Gross profit margins were 20.7 percent compared to 12.7 percent last year. The 8.0 ppt increase in gross margins was primarily due to lower landed product costs (+11 ppts), decreased discounting (+2 ppts), favorable logistics overhead absorption (+1 ppt), offset by unfavorable absorption of JRNY COGS (-5 ppts), and increased outbound freight (-1 ppts).
• Operating expenses were $19.2 million compared to $58.1 million last year. The decrease of $39.0 million, or 67.0 percent, was primarily due to a $27.0 million asset impairment charge in fiscal 2023, a $4.3 million decrease in personnel expenses, a $4.0 million lower media spending, $2.1 million decrease in contracted services, $1.3 million decrease in other costs, and $0.7 million in other variable selling, and marketing expenses due to decreased sales, offset by $0.4 million increase in restructuring-related charges. Total advertising expenses were $1.1 million this year versus $5.1 million last year.
• Operating loss was $10.5 million compared to an operating loss of $51.2 million last year, primarily driven by lower operating expenses and higher gross profit.
• Income tax expenses were $0.5 million this year compared to $8.1 million last year. Expenses this quarter are primarily driven by foreign-related taxes and FIN 48 reserves related to an income tax audit. No tax benefit associated with domestic losses was recognized due to the U.S. deferred tax asset valuation allowance position established last year. Income tax expense for the three months ended June 30, 2022, was primarily a result of the U.S. deferred tax asset valuation allowance.
• Loss from continuing operations was $4.9 million, or $0.15 per diluted share, compared to a loss of $60.2 million, or $1.92 per diluted share, last year.
  Net loss was $4.9 million, or $0.15 per diluted share, compared to net loss of $60.2 million, or $1.92 per diluted share, last year.