Nautilus 2005 Annual Report Download - page 13

Table of Contents
During 2005, we distributed our fitness apparel products through approximately 3,200 retailers in over 27 countries. In 2006 the product
mix of the fitness apparel segment will expand to include new product lines and brands of cycling and fitness products.
Fitness Apparel Channels and Marketing
The fitness apparel marketing activities have been focused in a number of different areas. We have placed print advertisements in a
number of sport specific publications to increase the brand awareness and to promote new products. We also participate in a number of trade
shows throughout the year, including hosting a booth at Interbike, which is the bicycle industry’s showcase event. We also have booths at a
number of sporting events. We encourage brand visibility via product seeding to ensure that our product is being used by a number of athletes.
We also encourage brand visibility via product seeding to ensure that our product is being used by a number of athletes. Pearl Izumi was able to
support various top Olympic athletes at the 2004 summer games as well as a number of other endurance athletes who use our products. We use
a dedicated website to promote our fitness apparel products as well as to provide information to our consumers. The website can be found at
www.pearlizumi.com. This website contains Company and product information. None of the information on these websites is part of this Form
10-K.
The fitness apparel segment has four distinct sales channels.
• Wholesale direct;
• International distributors;
• Company leased retail stores; and
The international and domestic wholesale direct sales channels are comprised of independent bike dealers and specialty run accounts as
well as select large outdoor and sports retailers such as REI and Dicks. The primary drivers for our success in specialty channels are
differentiated products, credibility with enthusiast consumers, and value added service. International distributor sales are made to exclusive
distributors primarily in Canada, Australia, Czech Republic, Switzerland, New Zealand, Norway, Russia, Slovenia, Mexico, and Israel. The
fitness apparel segment also leases 10 retail stores (9 in the U.S. and 1 in Europe), which sell primarily closeout items at favorable margins.
Internet sales are comprised of product sales made directly to end consumers, primarily in the U.S.
Marketing activities for the fitness apparel segment have been focused to communicate to running, cycling and outdoor sports enthusiasts.
Print advertisements in sport and enthusiast publications are utilized to increase the brand awareness as well as to promote new products and
technologies. We also participate in a number of retail and consumer trade shows throughout the year including Interbike USA and Eurobike
EU, which are the cycling industry’s leading showcase events. We also attend a number of regional sporting events in conjunction with our
retail partners where we educate consumers about our products and give them a positive experience with our brand.
In addition to consumer marketing, the fitness apparel segment focuses considerable effort on a marketing concept, which is labeled
“Drive Retailer Success” (“DRS”). This program is focused on ensuring the ongoing health and prosperity of our retailers. As part of our DRS
program, we offer the Pearl Izumi Managed Inventory program to retailers. This program, which involves auto stocking of inventory, serves to
increase the breadth of product at retail selection and helps assure the best availability through the season.
Seasonality
• Internet sales.
Sales of our fitness apparel products are seasonal with stronger sales in the first and third quarters as retailers build inventories in
anticipation of the Spring and Fall selling seasons. We expect sales during the fourth quarter to be the weakest as this time period typically
aligns with the coldest months of the year in our target markets when many fitness and outdoor enthusiasts may be less active.
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