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Bowflex recall hurts Nautilus shares

By Kristina Shevory
Times Eastside business Reporter

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Nautilus Group shares dropped 6.9 percent yesterday after the fitness-machine maker announced a voluntary recall of more than 700,000 Bowflex home gyms after more than 80 reported injuries.

Nautilus' stock fell $1.47 to $19.69 in trading yesterday.

The Vancouver, Wash., company says it will pay for the recall out of a $2 million warranty reserve and does not expect the recall to have a "material impact on business performance," Rod Rice, Nautilus' chief financial officer, said in a statement.

The recall is the second for Nautilus this year. The company recalled 420,000 Bowflex fitness machines in January because of product defects linked to more than 70 reported injuries. The recall cost the company $3.8 million, with most of the cost covered by a $3 million warranty reserve fund.

The January recall required more expensive repair kits than this recall requires.

Nautilus' stock has recovered from January and climbed more than $6.

Over the past year, Nautilus has introduced more cardio machines, expanded the Bowflex line and moved into more commercial and retail markets as part of Chief Executive Gregg Hammann's turnaround plan. Hammann joined the company in July 2003 to pump up sales and profit.

Nautilus has received 46 reports of the seat pin breaking or falling out, causing head injuries. There also have been 42 reports of the incline support bracket failing and causing back, neck and head injuries.

The recall covers 102,000 Bowflex Ultimate Fitness Machines and 680,000 Bowflex Power Pro units with and without the Lat Tower attachment.

The machines were built before September 2002.
 
The Lat Tower attaches to the back of the bench and has pull-down pulleys. The units were sold at specialty fitness stores and through infomercials nationwide from January 1995 to April 2004. The machines cost $1,200 to $1,600 each.

Consumers should stop using the incline-support mechanism and contact Bowflex at 800-820-8604, or visit the company's Web site at www.bowflex.com for a free repair kit.

Kristina Shevory: 206-464-2039 or kshevory@seattletimes.com