MONTREAL, Quebec (BRAIN) — Dorel Industries’ earnings for the fourth quarter and all of 2013 in its recreational and leisure segment — which includes Cannondale, GT, Mongoose, Schwinn and Dorel’s mass-market bike brands — will come in lower than a year earlier due to “a poorer product mix” and late order delivery at Cycling Sports Group, the company announced. Full earnings results will be announced March 4.
Sales volume to Pacific Cycle's mass merchant customers was lower during the fourth quarter than a year earlier as retailers in general saw fewer consumer visits during the holiday period and curtailed orders, the company said. Meanwhile, Cycling Sports Group’s sales to IBDs were more profoundly affected as dealers were reluctant to increase inventories going into the new year. “Industry discounting continued to be a market reality and the number of 2013 model year bicycles sold carrying lower margins was greater than anticipated,” Dorel stated.
In addition, supply for customer orders for more than $10 million of CSG 2014 models did not arrive in time for fourth-quarter delivery, and those bikes are now being shipped during the first quarter. Dorel also cited unfavorable foreign exchange rates as a drag on earnings.
"We had felt that things were improving at the end of the third quarter, but the issues outlined above had more of an impact than originally expected,” Dorel president and CEO Martin Schwartz said. “With January completed, normally the quietest month of the year, and barring any disasters in weather, Recreational/Leisure earnings for the first quarter should improve by at least 20 to 25 percent over the corresponding quarter last year.
“There are now several positive trends working in our favor,” Schwartz continued. “Dealer orders are being driven by a firming consumer demand with new models selling at full margins, new SKUs at some of our largest customers, increased licensing revenue, strict cost controls and foreign exchange benefits."
Dorel is traded on the Toronto Stock Exchange under the symbols DII.B and DII.A. Its stock performance is tracked on BRAIN’s Industry Stock chart