Nautilus Inc NLS CEO Jim Barr chatted with Benzinga’s PreMarket Prep team to discuss the turnaround of the company, what’s next in the connected fitness world and why the stock is still attractive after a 1,000% increase in 2020.
Nautilus Mounts Turnaround During Pandemic: The CEO discussed the turnaround he helped steer since taking over the company in July.
Nautilus just reported its “most profitable quarter in its 40-year history,” Barr said.
Barr joined Nautilus from Ritchie Bros, where he helped the 60-year-old company with its digital transformation.
"I came here because this is a great company with fantastic brands and a broad portfolio of different types of products at different price points.”
A survey done by Nautilus showed that between 12% and 30% of respondents will never go back to the gym, while others said they would only go back to gym with a vaccine. Some will balance a gym membership with at-home fitness.
The gym membership market is worth $40 billion compared to the $3.6-billion at-home fitness market, Barr said, adding tha tthis could change over time.
Nautilus saw seven times more new customers in the recently reported quarter than the prior year, which he sid could lead to long-term growth.
Competing With Peloton: Nautilus was late to the connected fitness game, Barr said: “We missed some trends in market.”
The company had to accelerate the portfolio after realizing it didn’t have a replacement for its Max Trainer, he said — and the company wasn’t digital enough.
The first Bowflex bike launched by Nautilus is half the price point of Peloton Interactive PTON offerings and allows an open software platform, which are key differentiators, Barr said.
Nautilus recently launched the VeloCore bike under the Bowflex brand. “We think we have a real winner here," the CEO said.
The VeloCore bike is the first "unstationary" bike that can lean from side to side and offers a better core and arm workout than competitive products.
Nautilus' digital membership platform JRNY (pronounced Journey) offers trainer-led on-demand videos and adaptive workouts.
People can watch Netflix NFLX or other streaming apps in the background while being coached or working out.
Barr pointed to the “combination of the differentiated product and connected fitness” as being a game-changer for the VeloCore.
Nautilus Stock Performance, Valuation: Barr said the timing of the Nautilus earnings announcement on Monday with Pfizer's vaccine news was bad news for the stock.
“Those two things happening the same day didn’t help our stock.”
Shares of Nautilus are up over 1,000% in 2020.
Barr pointed to Mirror selling to Lululemon Athletica LULU for around 5x sales. Peloton also has a higher price-to-sales ratio than Nautilus, Barr said.
“Those valuations are fantastic.”
Watch the full interview with Jim Barr in the clip below, or listen to the podcast here
PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET Benzinga's YouTube channel, and the podcast is on Spotify, iTunes, Google Play, Soundcloud, Stitcher and Tunein.
Courtesy photo.
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