Clement,
Sales growth will slow down, probably soon. There apparently was something on TV last week or the week before, but I missed it.
The person on TV stated that sales growth was going to slow down for the existing product and that they were going to introduce new product(s), but the type of product was not mentioned . I heard this second-hand in a bar, so it may be crap.
My guess is that they will get into a completely different type of product. I don't see any upside to selling exercycles, treadmills, etc., there's very good product out there already. They could expand their market by selling the existing product in more countries.
I wonder what percentage of the exercise machine buying public actually watches infomercials? I've asked around, and none of my acquaintances has seen the Bowflex ad. If they try to expand their retail channel, they'll lower their margins and either have to stop the direct-selling or get into channel conflict with the retailers. I don't see them going that route.
In a bad case scenario, if sales flatten right now, they end up with 1998 $63M sales and net earnings of $0.75 to $0.90 per share.
I don't know how many units they've sold, but if I assume an average sale of $1,250, then they only sold 12,560 machines last quarter. Not a very big number. |
