MONTRÉAL (BRAIN) — Dorel Sports reported that revenue dipped $12.4 million or 5.4 percent in the first quarter, to $216.5 million compared to $228.9 million last year. Organic revenue was down about 3 percent, accounting for the impact of foreign exchange rates.
Dorel Sports brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse, Sugoi, Fabric and Charge.
The company attributed the decline to shipments of 2016 model year bikes from Cycling Sports Group, its IBD bike division, happening in December, rather than the first quarter of this year. Dorel also said that sales to European dealers were down as those dealers stocked up last year to prepare for expected price increases due to currency pressures.
"Price competition in the IBD sector is making for a challenging first half and demand for premium bicycles is uncertain," — Martin Schwartz, Dorel president.
The declines were offset, in part, by strong sales in the mass market of Schwinn and Mongoose brands, the company said.
The drop in overall sales resulted in $5.3 million in operating profit, down from $11.6 million. Also contributing to the lower operating profit were lower margins from discounting at IBDs in the U.S. to maintain market share as competitors dropped prices to sell excess inventory, Dorel said in its financial statement.
"The Pacific Cycle division will continue to grow modestly through the year and will surpass 2015 in both sales and earnings," said Dorel president and CEO Martin Schwartz. "The Schwinn brand has strong traction with consumers and this has been translated into a solid first quarter in the mass channel. Despite the situation in Brazil, Caloi is on target to meet its earnings objectives, although sales will be down year-over-year. Price competition in the IBD sector is making for a challenging first half and demand for premium bicycles is uncertain. We foresee improvement during the second half as Dorel's line of model year 2017 bikes is compelling and there has been good reaction to the recently introduced Quick and Scalpel models. Additional models will be introduced later this year. We will continue to be proactive in CSG and we will closely monitor the situation throughout the year. However, despite the slow start, Dorel Sports is expected to exceed 2015's performance."
Dorel Sports' parent, Dorel Industries, which also has furnishings and juvenile divisions, reported total revenue of $645.9 million, down 2.9 percent from $665.5 million a year ago.
Adjusted net income for the quarter was up 66.7 percent to $19.7 million from $11.8 million. Reported net income increased 43.9 percent to $16.7 million, compared to $11.6 million in the first quarter of 2015.
