Retail: 67
0.85%
Retail: 199
1.52%
Mon, Aug 28, 2017
Vol 1, Issue No. 33

Fitness
Brunswick Fitness Sold; Nautilus Overhauling Direct Biz

Photo courtesy of Bowflex.

Two years after agreeing to acquire TaylorMade Golf from Adidas for $425 million, New York private equity firm KPS Capital Partners agreed to acquire Brunswick’s fitness equipment unit, led by Life Fitness, for $490 million cash. The two acquisitions give KPS eight brands in its portfolio, ranging from TaylorMade, Adams Golf and Ashworth to Life Fitness, Cybex, Hammer Strength, SCIFIT and Indoor Cycling. Brunswick, which intends to go forward as a marine-only focused company after closing the divestiture sometime in Q2, announced plans to spin- or sell-off its Fitness unit in late January.

At the time, Brunswick said its fitness segment, projected to generate a mid-single decline in FY19 revenues due to lower sales to value-oriented health clubs and flat market demand, was developing a strategic plan for the business that focused on increased investments in new products, expansion of digital and online content and numerous cost-reduction initiatives largely focused on freight and manufacturing. It’s likely KPS will adopt these approaches, developed by a re-organized senior management team, when its assumes ownership of the business. In FY18, Brunswick Fitness had flat sales of $1,038.2 million and operating margin of 2.2 percent.

Meanwhile, Nautilus, now being led by interim CEO Carl Johnson, a veteran consumer marketing and strategy executive, is developing a strategy shift for its Direct business that it hopes will result in a profitable growth trajectory in 2020. Through research and analysis, NLS discovered Q4 creative for its  Bowflex Max Trainer failed to resonate with consumers and that the product’s differentiated digital capabilities were not communicated properly. To that end, the company will introduce an improved advertising strategy and media campaign for the product in September. In the Fall, Nautilus will roll out the Bowflex Max Trainer M10 that combines cardio with upper body strength training and new Bowflex treadmills with custom workouts and advanced, personalized artificial intelligence coaching.

On the retail side, the company is banking on Dick’s Sporting Goods carrying its new Max Trainer products later this year despite some current softness in Max Trainer sellthroughs. Anticipating a retail sales rebound in Q3 and Q4, Nautilus is undertaking a number of initiatives currently to improve segment profitability at the current revenue level. These actions include a workforce reduction, broad cost-containment controls and value engineering initiatives.

“I believe we have the right plans and people in place to work through our temporary setbacks and position Nautilus for continued growth,” Johnson told analysts last week.