Nautilus Inc., Vancouver, Wash., the parent company of Octane Fitness, increased net sales by more than 14 percent in third quarter 2016, according to financials released on Monday.
Nautilus generated $80.8 million in third quarter 2016 net sales compared to $70.7 million in third quarter 2015. The company said the acquisition of Octane Fitness in January drove sales, along with organic sales growth in the retail segment, offset by a decline of sales in the direct segment.
Net sales for the direct segment were $33.7 million in third quarter 2016, a 21.4 percent decrease from third quarter 2015. Nautilus said the decline in the direct segment reflected a weak consumer response to its media investments and the resulting strategic decision the company made to defer a significant portion of its planned advertising media spending during the quarter.
Net sales for the retail segment were much better — $46.2 million in third quarter 2016, an increase of 79.6 percent compared to the same period last year. For the first nine months of 2016, overall net sales were $280.3 million, an increase of 23.7 percent compared to the same period last year.
“Despite these challenges in the direct business, the strong organic retail and Octane Fitness sales growth combined with improved gross margins in each business and disciplined cost management enables us to generate significant operating leverage and report another quarter of profit growth well in excess of double digit revenue growth,” Nautilus CEO Bruce Cazenave said on a call with analysts, according to a transcript on SeekingAlpha.com.
Nautilus CFO Sidharth Nayar said during the call with analysts that revenue for Octane Fitness in third quarter 2016 was $16.2 million and acknowledged the company projects a revenue decline or a flat projection year-over-year for Octane Fitness revenue.
Nautilus reported net income of $7.6 million in third quarter 2016 compared to $3.7 million in third quarter 2015.