MONTRÉAL (BRAIN) — Dorel Sports has sold its Sugoi and Sombrio clothing brands to Louis Garneau Sports Inc., Dorel Industries announced Wednesday.
Dorel said it is exiting the performance apparel business to focus on bikes, parts, accessories and electric ride-ons.
"Despite the strong brands and products in Sugoi and Sombrio, apparel is not a strategic priority and has been a drain on Dorel's financials. It is in the best interests of our shareholders for us to focus on our core businesses. Sugoi and Sombrio are a perfect fit for Louis Garneau Sports Inc. They specialize in cycling apparel and I am confident both brands will reinforce their excellent product offerings to retailers worldwide," said Martin Schwartz, Dorel's president & CEO,
Dorel Sports' parent, the publicly traded Dorel Industries, expects to record an estimated $11 million of restructuring and other costs during the second quarter ending June 30, 2018, mainly related to non-cash charges associated with the write-down of trademarks and noncash inventory markdowns.
The company said the amount may be subject to change once Dorel finalizes its analysis of the transaction. Dorel will provide additional details and updates in its 2018 second quarter consolidated financial statements, which is expected to be issued on Aug. 3.
Dorel acquired Sugoi Performance Apparel in 2008 when it bought Cannondale Bicycle Corp. from Pegasus Capital Advisors. Dorel purchased Sombrio in 2014.
Louis Garneau Sports called the deal "a strategic acquisition that will reinforce its positioning on the West Coast of both Canada and the USA and provide strategic opportunities for growth in Western Europe and Asia."
"This acquisition will enable Garneau Group to rapidly increase its sales and become a world leader in cycling apparel," said Louis Garneau, the company's president and founder.
He said the three brands will be on display together at next month's Eurobike show. "We will present our three brands and put forth the Canadian spirit and the strength of our innovations."
Garneau noted that a second generation of family members are increasingly involved in the company. Louis' son William, 28, is general manager of the company while Edouard, 25, is sales director. Their sister, Victoria, 21, has just finished her studies in Fashion Design and will soon be joining her brothers full-time in the family company.
"We are reinventing ourselves because cycling is not only about the professionals, it is also a lifestyle. We will be touching many categories of cycling through apparel. We want to become the leader by introducing a ready-to-wear bike apparel segment for people who practice active transportation, making biking accessible and fun for everyone and, in doing so, create a cycling lifestyle. We want to be the world's cycling solution with our brand portfolio," Louis Garneau said.
"This is my legacy to my three children ... this Never Give Up philosophy that is my motto, and which is demonstrated through this acquisition," the Saint-Augustin-de-Desmaures businessman states.
Louis Garneau Sports will keep sales, marketing and product design operations for Sugoi and Sombrio in Vancouver. The rest of the activities will be transferred to the LGS head office in Saint-Augustin-de-Desmaures, Quebec, where approximately 10 new jobs will be created.
