Latest Nautilus Bowflex recall one of company’s six in five years

The latest recall by the U.S. Consumer Product Safety Commission is the fifth time a Bowflex gym or component has been called back due to injuries or lack of safety in five years, according to CPSC records and SNEWS® stories, with a sixth recall affecting a Nautilus bench.

Of the many millions of Bowflex gyms sold since its introduction in 1986, the five recalls mean nearly 1.3 million have been affected by a federal recall.

In addition, the company paid a civil penalty of $950,000 in April 2005 to settle allegations by the CPSC that Nautilus (NYSE: NLS) failed to give the agency timely reports of serious injuries and safety defects for several hundred thousand gyms recalled in 2004. (Click here to see an April 13, 2005 story, “Nautilus pays ‘tough’ CPSC fine of nearly a million; still expects good Q1.”)

Nautilus did not respond to a voicemail or email questions by SNEWS for comments including about the future of the Bowflex, the cost of the recalls over the years, or if any changes in the gyms are planned.

The company’s full year and fourth quarter call to discuss its status with analysts is set for March 10, a delay of nearly five weeks from its original date. Since then the stock has hit an all-time low of 0.45 on Feb. 19 and closed on March 6 at 0.50 on a volume of 65,491. In 2002, the stock had hit highs into the 30s and peaked at nearly $45.45 on May 1, 2002.

In the latest recall, 78,000 Bowflex Ultimate2 gyms were affected. Per the CPSC, the company had received 18 reports of injuries due to unlatched seat rails that have fallen and caused head and shoulder lacerations, some requiring stitches or staples. Click here to see a March 3, 2009 SNEWS Industry News Release and a photo.

The other actions have affected the Ultimate2, Ultimate, and a Power Pro Lat Tower, as well as Power Pro XL, XTL and XTLU.

At the time of the 2004 recalls, then Nautilus senior vice president of manufacturing and operations told SNEWS, “CPSC is taking a tough position on penalties and has assessed a number of larger penalties recently. No one likes to pay penalties, but we are happy to put the matter behind us.

“As a result of the process, we are designing and manufacturing all of our products to meet a tough new Nautilus standard for quality. We also have improved our reporting processes in close coordination with the CPSC.”

-Therese Iknoian



SNEWS® View: We will be interested to hear how Nautilus executives handle analysts’ questions on March 10 not only about the recall and its cost but also about the future of the company considering its plummeting stock price. Perhaps luckily, the New York Stock Exchanged announced on Feb. 26, 2009 that it would relax rules for continuing to be listed on the exchange through June 2009 in acknowledgement of the economic downturn. Specifically, the NYSE will allow companies to remain listed despite a price that falls below $1 for 30 days, which is normally one guideline for delisting. In addition, the NYSE noted it would continue its relaxation of a minimum of $15 million in global capitalization (normally a minimum of $25 million) through June from a previous expiration of April 22, 2009 after a relaxation of that rule in late January. Nautilus has been below $1 since Feb. 12 (four days short of the 30 days as of March 6) and its global cap as of March 6 was $15.3 million – both dancing on the edges of the allowed values for continued listing during the downturn. If the company can’t spark a dramatic turnaround – difficult indeed in these times – some changes will be in the offing.

-SNEWS® Editors