Nautilus 2005 Annual Report Download - page 32

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Table of Contents
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2005 AND DECEMBER 31, 2004
Net Sales
Net sales were $631.3 million for 2005 compared to $523.8 million for 2004, an increase of $107.5 million or 20.5%. The acquisitions of
Pearl Izumi and the Canadian distributor in 2005 represented $45.6 million of this increase in net sales.
Net sales from the fitness equipment segment were $607.3 million for 2005 compared to $523.8 million in 2004.
•
Net sales from the commercial channel were $72.9 million in 2005 compared to $67.4 million in 2004, an increase of $5.5 million or
8.2%. The increase is primarily attributed to the introduction of the commercial grade TreadClimber during the second quarter of
2005, in addition to continued sales of the Nautilus Commercial Series treadmills that started shipping during the first quarter of
2005.
•
Net sales from the specialty retail channel were $76.3 million in 2005 compared to $68.2 million in 2004, an increase of $8.1 million
or 11.9%. The increase in net sales is due primarily to increased unit sales from new products introduced into the specialty channel
during 2005, specifically the Bowflex SelectTech, TreadClimber and home
-
gym products.
•
Net sales from the retail channel were $111.1 million in 2005 compared to $72.4 million in 2004, an increase of $38.7 million or
53.5%. The increase in net sales is a result of new products being introduced into the retail channel, specifically SelectTech,
TreadClimber and new Bowflex home-gym products. The increase was also due to gaining additional retail customers as well as
expanding the number of products offered at existing customer locations.
•
Net sales from the direct channel were $293.9 million in 2005 compared to $266.5 million in 2004, an increase of $27.4 million or
10.3%. The increase in direct channel sales was due to increased sales volumes of Bowflex home gyms, TreadClimber products and
SelectTech dumbbells. In addition, net sales increased approximately $12.4 million as the result of a price increase in certain
TreadClimber and Bowflex home gym products that took place during 2005.
Since the acquisition of Pearl Izumi, net sales from the fitness apparel segment totaled $24.0 million for 2005. The fitness apparel
segment primarily sells high quality fitness apparel for cyclists, runners and fitness enthusiasts under the Pearl Izumi brand name.
Gross Profit
•
Net sales from the international channel were $53.1 million in 2005 compared to $49.5 million in 2004, an increase of $3.7 million or
7.4%. The international channel represents fitness equipment sales outside of the Americas and includes sales through the
commercial, retail and direct channels. The increase in net sales was attributed to continued formation of new commercial, retail and
direct marketing relationships in Australia, Germany, New Zealand, and the United Kingdom.
Gross profit was $278.8 million in 2005 compared to $244.8 million in 2004, an increase of $34.0 million or 13.9%. The acquisitions of
Pearl Izumi and Belko Canada in 2005 represented $22.3 million of this increase in gross profit. Our overall gross profit margin decreased to
44.2% in 2005, compared to 46.7% in 2004. The fitness equipment segment’s gross profit was $267.8 million in 2005 compared to $244.8
million in 2004, an increase of $23.0 million or 9.4%. The gross profit margin for the fitness equipment segment was 44.1% in 2005 compared
to 46.7% in 2004. The decrease in gross margin was attributed to a combination of drivers that include shift in product sales mix; inventory,
warranty and factory-related costs and adjustments; higher transportation costs; and additional costs incurred to introduce and support several
new product launches. This decline in 2005 gross margin as compared to 2004 was partially offset by the absence of additional warranty and
product safety reinforcement related costs associated with doubling of the Bowflex Power Pro warranty and greater than anticipated customer
response for the Bowflex Power Pro reinforcement kit during the first half of 2004. The fitness apparel segment’s gross profit was $11.0
million, with a gross profit margin of 45.9%.
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