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Bike business profitable for Dorel Industries

Published March 7, 2013

MONTREAL, Quebec (BRAIN) — Dorel Industries’ bike division saw a 7 percent gain in revenue in 2012. Total revenue across the recreational and leisure segment was $928 million, up from $861 million the previous year. The segment includes all of its bicycle brands. 

The company said sales increased across the IBD and mass-market channels. 

While the company doesn’t break out sales by individual brands, Dorel credited Cannondale for much of its sales success last year. It also owns GT, Sugoi, Schwinn, Mongoose, Iron Horse, Pacific and RoadMaster.

In an earnings call on Wednesday Dorel executives Martin and Jeffrey Schwartz said Cannondale saw double-digit sales growth and they expect the brand’s momentum to continue this year.

Dorel president and CEO Martin Schwartz pointed to Cannondale’s sponsorship of its own cycling team, Cannondale Pro Cycling, which was unveiled at a gala event in January and drew lots of media attention. The team has an “impressive roster comprised of new and seasoned riders,” he said. 

“We have established a positive trend in bikes, particularly over the last two years,” Schwartz added. “There is a well-rounded, diversified team in recreation, and senior management is committed to continue making investments to further build the business. In recreation and leisure, it’s an exciting start to the year.”

Operating profit in the segment also saw a boost, up 18.6 percent for the full year and 42 percent for the fourth quarter. 

For the fourth quarter, ending Dec. 30, revenue in the segment reached $226.6 million, up from $202.4 million in 2011, a 12 percent gain. Schwartz said Dorel was able to ship more product in the fourth quarter of 2012 compared to the previous year, and strong preseason orders of 2013 bikes from IBDs fueled that revenue growth. In the previous year, its sales were hampered by delivery problems. 

He also indicated that improvements at Sugoi are starting to bear fruit, as the brand was modestly profitable in the fourth quarter. In 2011, profitability suffered from having to write down excess inventory and costs related to outsourcing custom manufacturing to a third party. The apparel brand is now the official sponsor of the Cannondale Pro Cycling team, and recently secured an exclusive to become the provider of apparel for Ironman triathlons. 

Topics associated with this article: Earnings/Financial Reports

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