Nautilus 2001 Annual Report Download - page 6

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o Continuing to capture premium price points and accelerate demand by researching and developing high quality, branded products that better
meet the needs of our customers and retailers; and
o Expanding our international opportunities by leveraging our recently acquired network of international distributors and operations.
INDUSTRY OVERVIEW
CONSUMER TRENDS
We believe that our organic growth has benefited from a number of demographic and market trends that we expect will continue, including:
o Growing consumer awareness of positive benefits of good nutrition and fitness;
o Expanding media attention on health and fitness;
o An aging population that is maintaining a more active lifestyle;
o Continued attention to appearance and weight by consumers, which is expected to increase as the "baby-boomers" pass through their 40's;
o High healthcare costs that are focusing more attention on preventative practices including an increase in the number of corporate fitness
programs and wellness centers;
o Expansion of the market for sophisticated high-quality fitness equipment due to consumers' continued demand for higher levels of efficiency
in their workout regimes; and
o The continued growth of direct to consumer marketing, which is estimated to exceed $1.0 trillion in annual sales in the United States in 2002.
We believe these consumer trends bode well for our future growth prospects. Just as the "baby boomers," those Americans born between 1946
and 1964, started the modern fitness movement, they will continue to be a driving force as they age. We believe baby boomers will use more of
their increasing leisure time for exercise and more of their disposable income for fitness equipment purchases as they strive to counter the
effects of aging.
TRENDS IN FITNESS EQUIPMENT
We market our Nautilus, Bowflex, Schwinn Fitness and StairMaster equipment in the United States, as well as internationally. According to the
Sporting Goods Manufacturing Association ("SGMA"), United States consumers were projected to spend $16.6 billion on sports equipment in
2001. Based on a study performed by the SGMA, U.S. consumers spent roughly $5.8 billion specifically on home fitness equipment in 2000.
Due to a difficult economic climate and the fact that sports equipment may be considered as discretionary spending, the market experienced a
difficult year in 2001. According to the SGMA, the sports equipment market in the U.S. is expected to have declined 4.5% in 2001. However,
the exercise equipment market is expected to have only declined 3.6%.
The SGMA expects the overall sports equipment market to continue to contract a further 0.7% in 2002; however, they are projecting a quick
recovery for fitness equipment and expect the category to grow 4.0% in 2002 to return to 2000 levels.
6
2002. EDGAR Online, Inc.