Stock analyst Eric Wold has had a hard getting access to Nautilus executives and decision-makers. Apparently he was too concerned about the dramatic distribution moves that have decimated the company's once-proud Direct-to-consumer distribution system:
...in April 2002 most of the company's products, especially Bowflex, were promoted in television infomercials and sold directly to consumers...in July 2003, Gregg Hammann was hired as chief executive, succeeding longtime boss Brian Cook. Mr. Hammann, with a background that included stints at Procter & Gamble Co., Coca-Cola Co. and Levi Strauss & Co., shifted the company away from its direct-sales model to also selling products through retailers...by early 2006, sales growth had started to stumble...it was then he realized the new strategy was "cannibalizing existing sales and shifting sales from high-margin channels to low-margin channels...retail checks that showed "Bowflex sales down to zero in some stores...
After an Analyst's 'Sell' Call, Nautilus Flexes Its Muscles',
By HERB GREENBERG, WSJ, July 14, 2007; Page B3
All of this is a big dissappointment to us given the exciting product leadership moves the company made in 2005 (see our post here). It brings into focus the increasingly critical role of distribution in enabling, supporting and driving essential product innovations.
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