MONTREAL, Quebec (BRAIN)—Dorel Industries’ bike business grew by 11.3 percent in the fourth quarter of 2009, propelling the segment to a year-end sales increase of almost 4 percent.
Revenue increased to $175.6 million in the fourth quarter of 2009 compared with $157.8 for the same period in 2008.
Two-thirds of the increase can be attributed to new business acquired, including the particular success of Hot Wheels, a UK distributor bought by Dorel last October, said Martin Schwartz, CEO of Dorel Industries, during a conference call Wednesday to discuss the company’s fourth-quarter and year-end earnings.
The remaining revenue was generated by the Cycling Sports Group, Dorel’s IBD division, which posted sales gains of 25 percent in the fourth quarter.
"The overall significant year-over-year improvement in bikes was a clear sign that newer models, particularly in the Cycle Sports Group division, are being well accepted by dealers," Schwartz said. "…The Cycling Sports Group Europe dealers also reacted well to new models and we are optimistic about prospects abroad.”
For the year, Dorel’s Recreation and Leisure segment, which includes its specialty and mass market bike business, was up 3.8 percent, from $656.6 million in 2008 to $681.3 million last year.
The company did not break down numbers, but said in a press release that organic sales dropped by just over 3 percent due to a decline in mass-market sales, partially offset by growth in lower priced bikes within CSG.
Earnings from operations fell 4.9 percent from $41.8 million in 2008 to $39.8 million last year.
“With the recession, consumers purchased less high end products, trading down to lower priced items, which carry lower margins. In addition, some of the segment's competitors chose to discount their lines early in the year, resulting in an erosion of overall industry profitability,” the company said.
Looking ahead, Schwartz said Dorel would expand its custom branded apparel business (through Sugoi) and improve P & A in the IBD channel.
For more details on Dorel’s bike business including plans for the Iron Horse brand in 2010 be sure to read the April 1 issue of Bicycle Retailer & Industry News.