Net sales in the Retail segment for the 2011 second quarter totaled $11.4 million, which represented a modest decline of $0.4 million, or 3.4%, from a year ago. The seasonally low second quarter sales were also affected by comparatively lower sales of elliptical products in the cardio category, while sales in the strength category rose 18.9% over the comparable 2010 quarter, primarily due to a large shipment to one customer.

The following table presents comparative net sales by segment for the six months ended June 30, 2011 and 2010:
Net Sales by Segment  

Six months ended June 30,
  Change
(Unaudited and in thousands) 2011   2010 $   %
Direct business $ 52,709 $ 46,946 $ 5,763 12.3 %
Retail business 28,380 27,751 629 2.3 %
Royalty income 1,936   1,589   347   21.8 %
$ 83,025   $ 76,286   $ 6,739   8.8 %

The following table presents comparative operating results by segment for the second quarter ended June 30, 2011 and 2010:
Operating Income (Loss) by Segment  

Three months ended June 30,
  Change
(Unaudited and in thousands) 2011   2010 $   %
Direct business $ (1,022 ) $ (4,978 ) $ 3,956 79.5 %
Retail business 872 1,333 (461 ) (34.6 )%
Unallocated corporate (2,527 ) (3,113 ) 586   18.8 %
$ (2,677 ) $ (6,758 ) $ 4,081   60.4 %

Second quarter 2011 operating results for the Direct segment improved 79.5%, or $4.0 million, over the same quarter last year primarily due to higher sales and lower advertising expenses, offset in part by higher consumer financing fees. Gross margin percent for the Direct business was 50.0% of net sales for the second quarter of 2011, a decrease of 410 basis points compared to the comparable 2010 period. The decrease in gross margin percent was principally due to a change in product mix, higher product costs and higher freight expense, reflecting increased fuel prices.

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